SECURITY AGREEMENT
Exhibit
4.4
THIS SECURITY
AGREEMENT (this "Agreement") dated as of ______, 2009, is made by Z TRIM HOLDINGS, INC., an Illinois corporation,
with an address at 0000 Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("Debtor") in
favor of the
Secured Parties listed on Annex A attached hereto (the “Secured
Parties”) (as defined below).
RECITALS
A. Pursuant
to the terms of an 8% Senior Secured Convertible Note by and between the Debtor
and each Holder (as amended, restated, supplemented or otherwise modified, the
"Note" and collectively, the "Notes"; capitalized terms used in this Agreement
shall have the meanings set forth in the Note unless specifically defined
herein), the Holders have agreed to make loans
to the Debtor (the
"Loans"), as offered by that certain Private Placement
Memorandum dated March 25, 2009 (the "Offering").
B. Each
Holder hereby agrees that any and all action, agreements, extensions,
adjustments, waivers, notices, or amendments may be made by the consent of the
Requisite Holders (as herein after defined), including, if deemed appropriate,
the appointment of a collateral agent.
C. In
order to induce the Secured Parties to make the Loans, the Debtor has agreed to
execute and deliver this Agreement granting a security interest in all of the
Debtor's assets to the Secured Parties.
AGREEMENT
NOW THEREFORE, in
consideration of the foregoing recitals, the mutual agreements and covenants set
forth herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions The following additional
terms, when used in this Agreement, shall have the following
meanings:
"Account
Debtor" shall mean any Person who is obligated under an Account.
"Accounts"
shall mean, for any Person, all "accounts" (as defined in the UCC), now or
hereafter owned or acquired by such Person or in which such Person now or
hereafter has or acquires any rights and, in any event, shall mean and include,
without limitation, (a) all accounts receivable, contract rights, book debts,
notes, drafts and other obligations or indebtedness owing to such Person arising
from the sale or lease of goods or other property by such Person or the
performance of services by such Person (including, without limitation, any such
obligation which might be characterized as an account or general intangible
under the Uniform Commercial Code in effect in any jurisdiction), (b) all of
such Person's rights in, to and under all purchase and sales orders for goods,
services or other property, and all of such Person's rights to any goods,
services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit), (c) all monies due to
or to become due to such Person under all contracts for the sale, lease or
exchange of goods or other property or the performance of services by such
Person (whether or not yet earned by performance on the part of such Person),
and (d) all collateral security and guarantees of any kind given to such Person
with respect to any of the foregoing.
"Chattel
Paper" shall mean all "chattel paper" (as defined in the UCC) now owned or
hereafter acquired by the Debtor or in which the Debtor has or acquires any
rights, or other receipts of the Debtor, evidencing or representing rights or
interest in such chattel paper.
"Collateral"
shall mean, collectively, all of the following:
(i) all
Accounts;
(ii) all
Chattel Paper;
(iii) all
Deposit Accounts;
(iv) all
Documents;
(v) all
Equipment;
(vi) all
Fixtures;
(vii) all
General Intangibles;
(viii) all
Instruments;
(ix) all
Inventory;
(x) all
Investment Property;
(xi) all
Software;
(xii) all
money, cash or cash equivalents;
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(xiii)
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all
other goods and personal property, whether tangible or
intangible;
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(xiv)
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all
Supporting Obligations and Letter-of-Credit Rights of the
Debtor;
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(xv)
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all
books and records pertaining to any of the Collateral (including, without
limitation, credit files, Software, computer programs, printouts and other
computer materials and records, including customer
lists);
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(xvi)
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the
commercial tort claims; and
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(xvii)
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all
products and Proceeds of all or any of the Collateral described in clauses
(i) through (xvi) hereof.
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"Copyright License" shall mean any and all rights of the Debtor under any written agreement granting any right to use any Copyright or Copyright registration.
"Copyrights"
shall mean all of the following now owned or hereafter acquired by the Debtor or
in which the Debtor now has or hereafter acquires any rights: (a) all copyrights
and general intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals
thereof.
"Debtor"
shall have the meaning given to that term in the introductory paragraph
hereof.
"Deposit Accounts" shall mean all "deposit
accounts" (as defined in the UCC) now owned or hereafter acquired by the Debtor
or in which the Debtor has or acquires any rights, or other receipts, of the
Debtor covering, evidencing or representing rights or interest in such deposit
accounts.
"Documents"
shall mean all "documents" (as defined in the UCC) now owned or hereafter
acquired by the Debtor or in which the Debtor has or acquires any rights, or
other receipts, of the Debtor covering, evidencing or representing
goods.
"Equipment"
shall mean all "equipment" (as defined in the UCC) now owned or hereafter
acquired by the Debtor and wherever located, and, in any event, shall include
all machinery, equipment, furniture, furnishings, processing equipment,
conveyors, machine tools, engineering processing equipment, manufacturing
equipment, materials handling equipment, trade fixtures, trucks, trailers,
forklifts, vehicles, computers and other electronic data processing and other
office equipment of the Debtor, and any and all additions, substitutions and
replacements of any of the foregoing, together with all attachments, components,
parts, equipment and accessories installed thereon or affixed thereto, all
leasehold improvements, all fuel therefor and all manuals, drawings,
instructions, warranties and rights with respect thereto.
"Event of Default" shall have the meaning set
forth for such term in Section 8
hereof.
"Fixtures"
shall mean all "fixtures" (as defined in the UCC) now owned or hereafter
acquired by the Debtor or in which the Debtor has or acquires any rights, or
other receipts, of the Debtor covering, evidencing or representing rights or
interest in such fixtures.
"GAAP"
shall mean generally accepted accounting principles set forth in the opinions
and pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accounts and statements and pronouncements of the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"General Intangibles" shall mean all "general
intangibles" (as defined in the UCC) now owned or hereafter acquired by the
Debtor or in which the Debtor has or acquires any rights and, in any event,
shall include all right, title and interest in or under all contracts, all
customer lists, Licenses, Copyrights, Trademarks, Patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in Intellectual
Property, interests in partnerships, joint ventures and other business
associations, licenses, permits, copyrights, trade secrets, proprietary or
confidential information, inventions (whether or not patented or patentable),
technical information, procedures, designs, knowledge, know-how, software, data
bases, data, skill, expertise, experience, processes, models, drawings,
materials and records, goodwill (including the goodwill associated with any
Trademark or Trademark License), all rights and claims in or under insurance
policies (including insurance for fire, damage, loss and casualty, whether
covering personal property, real property, tangible rights or intangible rights,
all liability, life, key man and business interruption insurance, and all
unearned premiums), un-certificated securities, choses in action, deposit,
checking and other bank accounts, rights to receive tax refunds and other
payments, rights of indemnification, all books and records, correspondence,
credit files, invoices, tapes, cards, computer runs, domain names, prospect
lists, customer lists and other papers and documents.
"Instruments"
shall mean all "instruments" (as defined in the UCC) now owned or hereafter
acquired by the Debtor or in which the Debtor has or acquires any rights and, in
any event, shall include all promissory notes, all certificates of deposit and
all letters of credit evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of, any of
the Accounts or other obligations owed to the Debtor.
"Intellectual Property" shall mean all of the
following now owned or hereafter acquired by the Debtor or in which the Debtor
has or acquires any rights: (a) all Patents, patent rights and patent
applications, Copyrights and copyright applications, Trademarks, trademark
rights, trade names, trade name rights, service marks, service xxxx rights,
applications for registration of trademarks, trade names and service marks,
fictitious names registrations and trademark, trade name and service xxxx
registrations, and all derivations thereof; and (b) Patent Licenses, Trademark
Licenses, Copyright Licenses and other licenses to use any of the items
described in the preceding clause (a), and any other items necessary to conduct
or operate the business of the Debtor.
"Inventory"
shall mean all "inventory" (as defined in the UCC) now owned or hereafter
acquired by the Debtor or in which the Debtor has or acquires any rights and, in
any event, shall include all goods owned or held for sale or lease to any other
Persons.
"Investment Property" shall mean all "investment
property" (as defined in the UCC) now owned [or hereafter acquired] by the
Debtor or in which the Debtor has or acquires any rights and, in any event,
shall include all "certificated securities", "uncertificated securities",
"security entitlements", "securities accounts", "commodity contracts" and
"commodity accounts" (as all such terms are defined in the UCC) of the
Debtor.
"Letter-of-Credit Rights" shall mean
"letter-of-credit rights" (as defined in the UCC), now owned or hereafter
acquired by the Debtor, including rights to payment or performance under a
letter of credit, whether or not the Debtor, as beneficiary, has demanded or is
entitled to demand payment or performance.
"License"
shall mean any Copyright License, Patent License, Trademark License or other
license of rights or interests of the Debtor in Intellectual Property or
authorization by any Person or political entity entitling the Debtor to sell
products or perform services.
"Lien"
shall have the meaning given that term in Section 5(d) hereof.
"Patent
License" shall mean any written agreement now owned or hereafter acquired by the
Debtor or in which the Debtor has or acquires any rights granting any right with
respect to any property, process or other invention on which a Patent is in
existence.
"Patents"
shall mean all of the following now owned or hereafter acquired by the Debtor or
in which the Debtor has or acquires any rights: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or any other
country, including 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 or Territory thereof, or any other country; and (b) all
reissues, continuations, continuations-in-part and extensions
thereof.
"Permitted
Liens" shall have the meaning given that term in Section 5(d)
hereof.
"Person"
shall mean an individual, corporation, partnership, limited liability company,
association, trust or unincorporated organization, or a government or any agency
or political subdivision thereof.
"Proceeds"
shall mean all "proceeds" (as defined in the UCC) of, and all other profits,
rentals or receipts, in whatever form, arising from the collection, sale, lease,
exchange, assignment, licensing or other disposition of, or realization upon,
the Collateral, and, in any event, shall mean and include all claims against
third parties for loss of, damage to or destruction of, or for proceeds payable
under, or unearned premiums with respect to, policies of insurance in respect of
any Collateral, and any condemnation or requisition payments with respect to any
Collateral and the following types of property acquired with cash proceeds:
Accounts, Inventory, General Intangibles, Documents, Instruments and
Equipment.
"Requisite Holders" shall mean, as of any date,
Secured Parties holding more than 50% of the aggregate outstanding principal
amount of the Loans.
"Secured Obligations" shall mean (i) the full and
prompt payment when due (whether at the stated maturity, by acceleration or
otherwise) of all obligations under the Notes and this Agreement and all other
indebtedness, liabilities, or other obligations of the Debtor to the Secured
Parties, however and whenever incurred or evidenced, whether direct or indirect,
absolute or contingent, or due or to become due (the "Additional Obligations"')
(including obligations under the Notes and this Agreement and the Additional
Obligations which, but for the automatic stay under Section 362(a) of Title 11
of the United States Code entitled "Bankruptcy," as now or hereafter in effect,
or any successor thereto, would become due), indebtedness and liabilities
(including, without limitation, indemnities, fees and interest thereon and all
interest that accrues after the commencement of any case, proceeding or other
action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of the Debtor at the rate provided for in the Notes or with respect
to the Additional Obligations, as applicable, whether or not a claim for
post-petition interest is allowed in any such case, proceeding or other action)
of the Debtor owing to the Secured Parties, now existing or hereafter incurred
under, arising out of or in connection with the Notes and this Agreement and
with respect to the Additional Obligations and the due performance and
compliance by the Debtor with the terms, conditions and agreements of the Notes,
this Agreement and any agreements with respect to the Additional Obligations;
(ii) any and all sums paid by the Secured Parties in order to preserve the
Collateral or preserve its Security Interest (as defined below) in the
Collateral; and (iii) in the event of any proceeding for the collection or
enforcement of any indebtedness, obligations or liabilities of the Debtor
referred to in the preceding clause (i) after an Event of Default (as defined
hereinafter) shall have occurred and be continuing, the expenses of re-taking,
holding, preparing for sale or lease, selling or otherwise disposing of or
realizing on the Collateral (as defined below), or of any exercise by the
Secured Parties of its rights hereunder, together with attorneys' fees actually
incurred and court costs.
"Security Interests" shall mean the security
interests granted to the Secured Parties pursuant to Section 3. as well as
all other security interests created or assigned as additional security for the
Secured Obligations pursuant to the provisions of this Agreement.
"Software"
shall mean all "software" (as defined in the UCC), now owned or hereafter
acquired by the Debtor, including all computer programs, computer programming
source code, and all supporting information provided in connection with a
transaction related to any program.
"Supporting Obligations" means all "supporting
obligations" (as defined in the UCC), including letters of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Trademark License" shall mean any written
agreement now owned or hereafter acquired by the Debtor or in which the Debtor
has or acquires any such rights granting to the Debtor any right to use any
Trademark.
"Trademarks"
shall mean all of the following now owned or hereafter acquired by the Debtor or
in which the Debtor has or acquires any such rights: (i) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, web addresses/url's, 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 (whether
registered or unregistered), now owned or existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all 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 or any political subdivision thereof, (ii) all reissues, extensions or
renewals thereof and (iii) all goodwill associated with or symbolized by any of
the foregoing.
"UCC"
shall mean the Uniform Commercial Code as in effect, from time to time, in the
State of Delaware; provided that if by
reason of mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the Security Interests in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than Delaware, "UCC" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
"United
States" shall mean the United States of America, any of the fifty states
thereof, and the District of Columbia.
2. Appointment and
Authorization of Collateral Agent.
(a) The
Requisite Holders may, if determined necessary or convenient, appoint and
authorize a person to act as Collateral Agent to take such action as collateral
agent on their behalf and to exercise such powers and discretion under this
Agreement as are delegated to the Collateral Agent by the terms of such
appointment, together with such powers and discretion as are reasonably
incidental thereto. The Debtor shall be entitled to prompt written notice of any
such appointment and acceptance by the collateral agent together with such
evidence of appointment and authority as it may reasonably
request.
(b) All
notices and other communications provided for hereunder shall be in writing with
respect to each Secured Party, sent to the address set forth in the Note, and
delivered in the manner required by each Note.
3. Grant of Security
Interest.
As
security for the prompt and complete payment and performance when due of the
Secured Obligations, Debtor hereby collaterally assigns and pledges to the
Secured Parties and grants a continuing security interest to the
Secured Parties in and to all of the Debtor's right, title and interest in to
and under all of the Collateral (and all rights therein), or in which or to
which the Debtor has any rights, in each case, whether now existing or hereafter
from time to time acquired.
4. Authorization to File
Financing Statement and other Actions.
(a) Debtor
hereby agrees to file on behalf of the Secured Parties and, if one is
subsequently duly appointed, authorizes the collateral agent or its counsel at
any time and from time to time to file one or more financing statements,
continuation statements or other documents in any Uniform Commercial Code
jurisdiction as collateral agent may deem necessary or desirable, which
financing statements, continuation statements or other documents (a) indicate
the Collateral (i) as all assets of the Debtor or words of similar effect,
regardless of whether any particular asset comprised in the Collateral falls
within the scope of Article 9 of the UCC, or (ii) as being of an equal or lesser
scope or with greater detail, and (b) contain any other information required by
part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance
of any financing statement or amendment. The Debtor agrees to furnish
any such information to the collateral agent, if one is duly appointed by the
Requisite Holders promptly upon request.
(b) If the
Debtor shall at any time hold or acquire a commercial tort claim, the Debtor
shall promptly notify the Secured parties or, if one has been duly
appointed, the collateral agent, in a writing signed by the Debtor of the brief
details thereof and granting in such writing a security interest therein and in
the proceeds thereof, all upon the terms of this Agreement.
(c) The
Debtor agrees to take any other action reasonably requested by the Requisite
Holders or if one is duly appointed the collateral agent, including, without
limitation, delivery of certain Collateral or a control agreement granting
control of certain Collateral , to the person designated by the Requisite
Holders or, to the collateral agent, if one is duly appointed, to insure the
attachment, perfection and priority of, and the ability of the Secured Parties
to maintain or enforce, the Security Interest in any and all of the
Collateral.
(d) The
Debtor hereby irrevocably agrees to make, constitute and appoint the collateral
agent, if one is duly appointed, as the Debtor's true and lawful
attorney-in-fact (with full power of substitution or resubstitution, in the name
of the Debtor, the collateral agent or otherwise) upon an Event of Default with
the power (i) to do any and every act that the Debtor is obligated by this
Agreement to do, (ii) to do all things necessary to preserve and protect the
Collateral, and to preserve, protect, and keep perfected the Secured Parties’
security interest in the Collateral, (iii) to demand, xxx for, collect, receive
and give acquittance for any and all monies due or to become due with respect to
any Collateral, (iv) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect to any Collateral, (v) to sell, transfer,
assign or otherwise deal in or with the collateral or the proceeds or avails
thereof, as fully and effectually as if the collateral agent were the absolute
owner thereof, and (vi) to extend the time of payment of any or all thereof and
to make any allowance and other adjustments with reference to the Collateral.
The Debtor acknowledges and agrees that the power of attorney to be granted
herein is a power coupled with an interest and shall be irrevocable. The powers
to be conferred on the collateral agent hereunder are solely to protect its
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers.
5. Representations
and Warranties. Debtor represents,
warrants and agrees as follows:
(a) Debtor
has full power and authority to enter into this Agreement;
(b) All
corporate action on the part of the Debtor, its directors and its stockholders
necessary for the authorization, execution, delivery and performance of this
Agreement by the Debtor has been taken. This Agreement shall
constitute the valid and binding obligation of the Debtor enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors;
(c) All
material consents, approvals, orders, or authorizations of, or registrations,
qualifications, designations, declarations, or filings required on the part of
the Debtor in connection with the valid execution and delivery of this Agreement
have been obtained and are effective, other than such filings to be made or to
become effective after the date hereof with respect to the Security
Interests. The Debtor has the right to pledge and grant the
Security Interests or otherwise transfer the Collateral free and clear of any
liens, claims, encumbrances or other security interests, other than the
Permitted Liens (as defined below);
(d) The
Debtor is the owner of the Collateral, free from any lien, mortgage, pledge,
charge, security interest, hypothecation or encumbrance of any kind ("Liens")
except (i) Liens imposed by law for taxes not yet due which are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves are being maintained in accordance with GAAP, (ii) statutory Liens of
landlords and Liens of carriers, warehousemen, mechanics, material men and other
Liens imposed by law created in the ordinary course of business for amounts not
yet due which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in accordance with
GAAP, (iii) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations, (iv) Liens constituting encumbrances in the nature
of zoning restrictions, easements and rights or restrictions of record on the
use of real property, which in the aggregate are not substantial in amount and
which do not, in any case, detract from the value of such property or impair the
use thereof in the ordinary conduct of business, (v) purchase money Liens
incurred prior to ________ , 2009 upon or in any fixed or capital assets to
secure the purchase price or the cost of construction or improvement of such
fixed or capital assets or to secure indebtedness incurred solely for the
purpose of financing the acquisition, construction or improvement of such fixed
or capital assets (including Liens securing any capital lease obligations);
provided, that
(x) such Lien attached to such asset concurrently or within 90 days after the
acquisition, improvement or completion of the construction thereof; (y) such
Lien does not extend to any other asset; and (z) the debt secured thereby does
not exceed the cost of acquiring, constructing or improving such fixed or
capital assets and (vi) Liens in favor of the Secured Parties granted pursuant
to this Agreement (the Liens described in the preceding clauses (i) - (vi)
collectively, "Permitted Liens")
(e) None of
the account debtors or other persons obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such
Collateral;
(f) The exact
legal name of the Debtor and its state of incorporation is set forth
below:
Z Trim
Holdings, Inc., Illinois
(g) The
Debtor has at all times operated its business in compliance in all material
respects with all applicable provisions of federal, state and local statutes and
ordinances, including, without limitation, those dealing with the control,
shipment, storage or disposal of hazardous materials or
substances;
(h) When
the UCC financing statement in appropriate form is filed in the Office of the
Secretary of State of the State of Illinois, the Security Interests shall
constitute valid and perfected security interests in the Collateral in favor of
the Secured Parties, to the extent that a security interest therein may be
perfected by filing pursuant to the UCC, assuming the proper filing and indexing
thereof; and
(i)
Except as set forth on Schedule I attached
hereto, the Debtor does not have any interest in, or title to, any registration
or pending application for any Patent, Trademark or Copyright. This Security
Agreement is effective to create a valid and continuing Lien on Debtor's
Intellectual Property. Upon filing of the Patent Security Agreement in the form
attached hereto as Exhibit A and the
Trademark Security Agreement in the form attached hereto as Exhibit B with the
United States Patent and Trademark Office and the filing of an appropriate
financing statement referenced in subsection (h) above, all action necessary or
desirable to protect and perfect the Secured Parties' Lien on Debtor's
Intellectual Property shall have been duly taken.
6. Covenants.
(a) Except
for the Permitted Liens, the Debtor shall be the owner of the Collateral free
from any lien, security interest or other encumbrance. Debtor agrees
that Debtor will not create, permit or suffer to exist any lien, security
interest or encumbrance on any of the Collateral other than Permitted Liens and
will defend the right, title and interest of the Secured Parties in and to
any of its right, title and interest in and to the Collateral against the claims
and demands of all other persons.
(b) The
Debtor agrees that (i) without providing at least twenty (20) days prior written
notice to the Secured Parties, or to the Collateral Agent, if one is duly
appointed, the Debtor will not change its name, its place of business or, if
more than one, chief executive office, or its mailing address or organizational
identification number if it has one, and (ii) the Debtor will not change its
type of organization, jurisdiction of organization or other legal
structure.
(c) The
Collateral, except for sales of inventory in the ordinary course of business,
will be kept at the collateral locations listed on Schedule n. and the
Debtor will not remove the Collateral from such locations, without providing at
least twenty (20) days prior written notice to the Secured Parties or to the
collateral agent, if one is duly appointed.
(d) The
Debtor shall keep the Collateral in good order and repair and will not use the
same in violation of law or any policy of insurance thereon.
(e) The
Debtor shall permit a representative of the Requisite Holders or the Collateral
Agent, if one is duly appointed, or its designee, to inspect the Collateral
during business hours with reasonable prior written notice, wherever
located.
(f) The
Debtor will promptly pay when due all taxes, assessments, governmental charges
and levies upon the Collateral or incurred in connection with the use or
operation of the Collateral or incurred in connection therewith. Furthermore,
the Debtor shall maintain current all fees and licenses on all Intellectual
Property.
(g) The
Debtor shall continue to operate its business in compliance in all material
respects with all applicable provisions of federal, state and local statutes and
ordinances, including, without limitation, those dealing with the control,
shipment, storage or disposal of hazardous materials or
substances.
(h) The
Debtor shall not sell, transfer or otherwise dispose, or offer to sell, transfer
or otherwise dispose, of the Collateral or any interest therein except in the
ordinary course of the Debtor's business, and in the event of any sale not in
the ordinary course of Debtor's business, the Security Interest and Lien created
herein shall continue in the Collateral itself.
(i) The
Debtor shall notify the Secured Parties or the Collateral Agent, if one is duly
appointed immediately upon the occurrence of each of the following
(i) acquisition after the date of this Agreement of any material
Intellectual Property, (ii) registration of any of the Debtor's
Intellectual Property with the Untied States Copyright Office, the United States
Patent and Trademark Office or any other office or court, or (iii) Debtor's
obtaining knowledge, or reason to know, that any application or registration
relating to any material Intellectual Property owned by or licensed to the
Debtor is reasonably likely to become abandoned or dedicated, 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 Copyright Office, the United States Patent and Trademark
Office or any court) regarding the Debtor's ownership of any material
Intellectual Property, its right to register the same, or to keep and maintain
the same.
(j) The
Debtor shall notify the Secured Parties or, if one is duly appointed, the
Collateral Agent immediately upon awareness of any potential or actual lawsuit
against the Debtor or any material adverse or positive business
development.
(k) The
Debtor shall take such action and provide such assistance as the Requisite
Holders, or if one is duly appointed, the Collateral Agent, may request to
transfer any Licenses or enter into any agreement or document required with a
licensor to transfer any interest in or obligation under any Licenses to enable
the Secured Parties or, if one is duly appointed the collateral
agent to enforce the rights and remedies under this
Agreement.
7. Insurance.
The Debtor shall
at all times maintain insurance on the Collateral with reputable insurance
companies against loss or damage by fire, theft, burglary, pilferage, loss in
transit and such other hazards and risks and in such amounts as is customarily
maintained by similar businesses or as may be required by applicable
law. All premiums on such insurance shall be paid by the Debtor
and certified copies of the policies, or other evidence of insurance, shall be
delivered to the representative of the Requisite Holders or, if one is duly
appointed the Collateral Agent promptly upon request. At the request of the
Requisite Holders, or, if one is duly appointed, the Collateral Agent, all
insurance policies required under this Section shall contain standard lender's
loss payable clauses, naming the Secured Parties as loss payee, and providing
that: (a) no such insurance shall be affected by any act or neglect of the
insured or owner of the property described in such policy; and (b) such policies
and loss payable clauses may not be canceled, amended or terminated with respect
to the Secured Parties unless at least thirty (30) days' prior written notice is
given to the Secured Parties or, if one is duly appointed, the Collateral
Agent.
8. Event of
Default. Failure of the Debtor to
pay any of the Secured Obligations when due shall constitute an Event of
Default.
9. Rights and
Remedies.
(a) If
any Event of Default has occurred and is continuing, the Requisite Holders, or
if one is duly appointed, the Collateral Agent may, without further notice,
exercise all rights and remedies under this Agreement or the Notes or that are
available to a secured creditor under the UCC or that are otherwise available at
law or in equity, at any time, in any order and in any combination, including to
collect any and all Secured Obligations from the Debtor, and, in addition, the
Secured Parties, or, if one is duly appointed, the Collateral Agent may sell the
Collateral or any part thereof at public or private sale, for cash, upon credit
or for future delivery, and at such price or prices as the Requisite Holders or
, if one is duly appointed, the Collateral Agent may deem
satisfactory. The Secured Parties, or , if one is duly appointed, Collateral
Agent shall give Debtor not less than ten (10) days' prior written notice of the
time and place of any sale or other intended disposition of Collateral, except
any Collateral which is perishable or threatens to decline speedily in value or
is of a type customarily sold on a recognized market. The Debtor agrees that any
such notice constitutes "reasonable notification" within the meaning of Section
9-611 of the UCC (to the extent such Section or any successor provision under
the UCC is applicable).
(b) The
Secured Parties, or, if one is duly appointed, the Collateral Agent for the
benefit of the Secured Parties, may be the purchaser of any or all of the
Collateral so sold at any public sale (or, if such Collateral is of a type
customarily sold in a recognized market or is of a type that is the subject of
widely distributed standard price quotations or if otherwise permitted under
applicable law, at any private sale) and thereafter hold the same, absolutely,
free from any right or claim of whatsoever kind. The Debtor agrees to
execute and deliver such documents and take such other action as the Requisite
Holders, or, if one is duly appointed, the Collateral Agent deems necessary or
advisable in order that any such sale may be made in compliance with
law. Upon any such sale the Secured Parties, or, if one is duly
appointed Collateral Agent shall have the right to deliver, assign and transfer
to the purchaser thereof the Collateral so sold. Each purchaser at
any such sale shall hold the Collateral so sold to it absolutely, free from any
claim or right of any kind, including any equity or right of redemption of the
Debtor. To the extent permitted by law, the Debtor hereby specifically waives
all rights of redemption, stay or appraisal which it has or may have under any
law now existing or hereafter adopted. The notice (if any) of such
sale shall (i) in case of a public sale, state the time and place fixed for such
sale, and (ii) in the case of a private sale, state the day after which such
sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Requisite Holders, or, if one is duly appointed, the Collateral Agent may fix in
the notice of such sale. At any such sale Collateral may be sold in
one lot as an entirety or in separate parcels, as the Requisite Holders or, if
one is duly appointed, Collateral Agent may determine. The Secured
Parties, or , if one is dully appointed, the Collateral Agent shall not be
obligated to make any such sale pursuant to any such notice. The
Secured Parties, or , if one is duly appointed, the Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned, in case of any sale of all or any
part of the Collateral on credit or for future delivery, such Collateral so sold
may be retained by the Secured Parties or, if one is duly appointed, the
Collateral Agent until the selling price is paid by the purchaser thereof, but
the Collateral Agent shall not incur any liability in case of the failure of
such purchaser to take up and pay for such Collateral so sold and, in case of
any such failure, such Collateral may again be sold upon like
notice. The Secured Parties, or, if one is duly appointed, Collateral
Agent, instead of exercising the power of sale herein conferred upon it, may
proceed by a suit or suits at law or in equity to foreclose the Security
Interests and sell Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction. The Debtor shall remain
liable for any deficiency.
(c) For the
purpose of enforcing any and all rights and remedies under this Agreement, the
Secured Parties, or, if one is duly appointed, the Collateral Agent may (i)
require the Debtor to, and the Debtor agrees that it will, at the expense of the
Debtor, and upon the request of the Requisite Holders or, if one is duly
appointed, the Collateral Agent, forthwith assemble all or any part of its
Collateral as directed by the Secured Parties, or if one is duly appointed, the
Collateral Agent and make it available at a place designated by the Secured
parties, or if one is duly appointed, the Collateral Agent which is, in the
Secured Parties’ or, if one is duly appointed, the Collateral Agent's opinion,
reasonably convenient to the Secured Parties, or, if one is duly appointed,
the Collateral Agent and the Debtor, whether at the premises of the
Debtor or otherwise, (ii) to the extent permitted by applicable law, enter, with
or without process of law and without breach of the peace, any premise where any
such Collateral is or may be located and, without charge or liability to the
Secured Parties, seize and remove such Collateral from such premises, (iii) have
access to and use such Debtor's books and records, computers and software
relating to the Collateral, and (iv) prior to the disposition of any of the
Collateral, store or transfer such Collateral without charge in or by means of
any storage or transportation facility owned or leased by the Debtor, process,
repair or recondition such Collateral or otherwise prepare it for disposition in
any manner and to the extent the Secured Parties, or, if one is duly appointed,
the Collateral Agent deems appropriate and, in connection with such preparation
and disposition, use without charge any trademark, trade name, copyright, patent
or technical process used by the Debtor.
(d) Without
limiting the generality of the foregoing, if any Event of Default has occurred
and is continuing:
(i) the
Requisite Holders, or, if one is duly appointed, the Collateral Agent may
(without assuming any obligations or liability thereunder), at any time and from
time to time, enforce (and shall have the exclusive right to enforce) against
any licensee or sublicensee all rights and remedies of the Debtor in, to and
under any Licenses and take or refrain from taking any action under any thereof,
and the Debtor hereby releases the Requisite Holders or, if one is duly
appointed, the Collateral Agent from, and agrees to hold the
Requisite Holders or, if one is duly appointed, the Collateral Agent free and
harmless from and against any claims arising out of, any lawful action so taken
or omitted to be taken with respect thereto except for the
Requisite Holders’ or, the Collateral Agent's (as the case may
be) gross negligence or willful misconduct as determined by a final
and nonappealable decision of a court of competent jurisdiction;
and
(ii) upon
request by the Requisite Holders or, if one is duly appointed,
the Collateral Agent, the Debtor agrees to execute and deliver to the
duly appointed representative of the Requisite Holders or, if one is duly
appointed, the Collateral Agent powers of attorney, in form and
substance satisfactory to the duly appointed representative of the Requisite
Holders or, if one is duly appointed, the Collateral Agent, for the
implementation of any lease, assignment, license, sublicense, grant of option,
sale or other disposition of any Intellectual Property. In the event
of any such disposition pursuant to this Section, the Debtor shall supply its
know-how and expertise relating to the manufacture and sale of the products
bearing Trademarks or the products or services made or rendered in connection
with Patents or Copyrights, and its customer lists and other records relating to
such Intellectual Property and to the distribution of said products, to the duly
appointed representative of the Requisite Holders or, if one is duly appointed,
Collateral Agent.
10. No Waiver by Secured
Parties, etc. The Secured Parties or, if one is duly appointed,
Collateral Agent shall not be deemed to have waived any of their rights and
remedies in respect of the Secured Obligations or the Collateral unless such
waiver shall be in writing and signed by the duly appointed representative of
the Requisite Holders or, if one is duly appointed, Collateral Agent. No delay
or omission on the part of the duly appointed representative of the Requisite
Holders or, if one is duly appointed, Collateral Agent in exercising any right
or remedy shall operate as a waiver of such right or remedy or any other right
or remedy. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion. All rights and remedies of
the duly appointed representative of the Requisite Holders or, if one is duly
appointed, Collateral Agent with respect to the Secured Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the duly appointed representative
of the Requisite Holders or, if one is duly appointed, Collateral Agent
reasonably deems expedient. Marshalling. The duly appointed
representative of the Requisite Holders or, if one is duly appointed, Collateral
Agent shall not be required to marshal any present or future collateral security
(including but not limited to the Collateral) for, or other assurances of
payment of, the Secured Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of the rights and remedies of the duly appointed representative of the
Requisite Holders or, if one is duly appointed, Collateral Agent hereunder in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights and remedies, however existing or
arising. To the extent that it lawfully may, the Debtor hereby agrees
that it will not invoke any law relating to the marshalling of collateral which
might cause delay in or impede the enforcement of the Secured Parties’ or, if
one is duly appointed, Collateral Agent's rights and remedies under this
Agreement or under any other instrument creating or evidencing any of the
Secured Obligations or under which any of the Secured Obligations is outstanding
or by which any of the Secured Obligations is secured or payment thereof is
otherwise assured, and, to the extent that it lawfully may, the Debtor hereby
irrevocably waives the benefits of all such laws.
11. Application
of Proceeds. The proceeds of any sale
of, or other realization upon, all or any part of the Collateral of the Debtor
shall be applied by the duly appointed representative of the Requisite Holders
or, if one is duly appointed, Collateral Agent to the Secured Obligations as
follows:
(a) First, to
the payment of, or reimbursement of the Collateral Agent for or in respect of
all reasonable costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Collateral Agent in connection with the exercise or
enforcement of all or any of the rights, remedies, powers under this
Agreement;
(b) Second,
to the payment of interest on the Secured Obligations, to be applied for the
ratable benefit of the Secured Parties;
(c) Third, to
the payment of principal in respect of the Secured Obligations, to be applied
for the ratable benefit of the Secured Parties;
(d) Fourth,
to the payment of all other Secured Obligations, if any, to be applied for the
ratable benefit of the Secured Parties; and
(e) Fifth,
the excess, if any, shall be returned to the Debtor or to such other Persons as
are legally entitled thereto.
It is
understood and agreed that the Debtor shall remain liable to the Secured Parties
to the extent of any deficiency between (a) the amount of the proceeds of the
Collateral received by the Secured Parties hereunder and (b) the
aggregate amount of the Secured Obligations.
13. Limitations
on Duty of the Secured Parties or Collateral Agent in Respect of
Collateral.
Anything
herein to the contrary notwithstanding, the Debtor shall remain obligated and
liable under each contract or agreement comprised in the Collateral to be
observed or performed by the Debtor thereunder. The Secured Parties or, if one
is duly appointed, the Collateral Agent shall not have any obligation
or liability under any such contract or agreement by reason of or arising out of
this Agreement or the receipt by the Secured Parties of any payment relating to
any of the Collateral; nor shall the Secured Parties be obligated in any manner
to perform any of the obligations of the Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Parties in respect of the Collateral or as to
the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to the Secured Parties or to which the duly appointed
representative of the Requisite Holders or, if one is duly appointed, Collateral
Agent may be entitled at any time or times. The Secured Parties’ or, if one is
duly appointed, Collateral Agent's sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to deal with such Collateral in
the same manner as the Secured parties or ,if one is duly appointed,
the Collateral Agent deals with similar property for its own
account.
14. Expenses;
Indemnification. The Debtor agrees to pay
to the Secured Parties, or, if one is duly appointed, the Collateral Agent on
demand any and all reasonable expenses, including reasonable attorneys' fees and
disbursements, incurred or paid by the Secured Parties, or, if one is duly
appointed, the Collateral Agent, in protecting or preserving the Secured
Parties’ rights and remedies under or in respect of any of the Secured
Obligations or any of the Collateral. The Debtor agrees to pay to the
duly appointed representative of the Requisite Holders or, if one is duly
appointed, Collateral Agent any and all expenses, including
attorneys' fees and disbursements, reasonably incurred or paid by the Secured
Parties in enforcing the Secured Parties’ rights and remedies under or in
respect of any of the Secured Obligations or any of the Collateral. The Debtor
agrees to indemnify and hold the Secured parties or, if one is duly appointed,
the Collateral Agent harmless from and against any claim, loss, damage, action,
cause of action, liability, cost and expense or suit of any kind or nature
whatsoever, brought against or incurred by the Secured Parties, or if one is
duly appointed, the Collateral Agent, in any manner arising out of or, directly
or indirectly, related to or connected with any reasonable and valid action
taken by the Requisite Holders or, if one is duly appointed, the Collateral
Agent pursuant to the terms of this Agreement.
15. Term;
Termination. This Agreement shall remain in full force and
effect with respect to the Notes, throughout the term of the Notes, and until
all of the Secured Obligations have been fully paid or satisfied and such Notes
have been terminated and canceled. Upon the termination of this
Agreement as provided above (other than as a result of the sale of the
Collateral), duly appointed representative of the Requisite Holders or, if one
is duly appointed, Collateral Agent will release the security
interests and liens created hereunder (including, without limitation, the
execution and delivery to Debtor of UCC termination statements and any related
documents, agreements or instruments that Debtor may reasonably
request).
16. Assignment. This Agreement and all
obligations of the Debtor hereunder shall be binding upon the successors and
assigns of the Debtor (including any debtor-in-possession on behalf of such
Debtor) and shall, together with the rights and remedies of the Secured Parties
hereunder, inure to the benefit of the Secured Parties, all future holders of
any instrument evidencing any of the Secured Obligations and their respective
successors and assigns. No sales of participations, other sales, assignments,
transfers or other dispositions of any agreement governing or instrument
evidencing the Secured Obligations or any portion thereof or interest therein
shall in any manner affect the Security Interest granted to the Secured Parties
hereunder. The Debtor shall not assign, sell, hypothecate or
otherwise transfer any interest in or obligation under this
Agreement.
17. Notices.
All notices and
other communications provided for hereunder shall be in writing sent to the
address set forth in introductory paragraph hereof and delivered in the manner
required by each Note.
18. Further
Documents and Cooperation. The Debtor and the
Secured Parties agree to execute, acknowledge and deliver to each other all
instructions, agreements, documents and other instruments reasonably required to
consummate the transactions contemplated by and the purposes of this Agreement.
The Debtor and the Secured Parties further agree that they will take such action
and execute such further documents and agreements as may be reasonably necessary
or appropriate to fulfill the purposes expressed in this Agreement and to
perform the terms and conditions of this Agreement.
19. Governing Law; Waiver of
Jury Trial.
(a) THIS
AGREEMENT AND THE RIGHTS AND SECURED OBLIGATIONS OF THE PARTIES HEREUNDER SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF DELAWARE, EXCEPT TO
THE EXTENT THAT PERFECTION (AND THE EFFECT OF PERFECTION AND NONPERFECTION) AND
CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN
DELAWARE.
(b) THE
DEBTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, OR ITSELF AND ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT OF THE
NORTHERN DISTRICT OF DELAWARE, AND OF ANY STATE COURT LOCATED IN XXXXXX COUNTY
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED
IN SUCH DELAWARE STATE COURT OR, TO THE EXTENT PERMITTED BY APPLICABLE LAW, SUCH
FEDERAL COURT. THE DEBTOR AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT THE LENDER MAY OTHERWISE HAVE TO BRING ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE DEBTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION IN WHICH THE PROPERTY THAT IS THE
SUBJECT OF SUCH ACTION OR PROCEEDING IS LOCATED.
(c) THE
DEBTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
DESCRIBED IN PARAGRAPH (b) OF THIS SECTION AND BROUGHT IN ANY COURT REFERRED TO
IN PARAGRAPH (b) OF THIS SECTION. THE DEBTOR IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(d) THE
DEBTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN THE MANNER PROVIDED FOR
NOTICES IN EACH NOTE. NOTHING IN THIS AGREEMENT WELL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW.
(e) THE
DEBTOR HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY (WHICH THE LENDER ALSO WAIVES) IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR HE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). THE DEBTOR (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER, AND (ii) ACKNOWLEDGES THAT IT HAS NOT BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
20. Section
Headings. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
21. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one
instrument.
IN WITNESS WHEREOF, the Debtor
has each executed and delivered this Security Agreement as of the date first
written above.
By:
Acknowledged
and Agreed:
Secured
Parties: [Contained
in Omnibus Signature Xxxx in Subscription Agreement]
Schedule
I
Intellectual
Property
|
|
Patents/Registration
or Application
Numbers
|
|
|
Registration Number:
5,766,662 Filing Date:
11/28/1995 Issue Date
6/16/1998
|
Title:
Dietary
fiber gels for calorie reduced
foods and method for preparing
the same
Country:
USA
|
|
Trademarks/Registration
or Application
Numbers
|
Registration
Number:
3,069,709
Filing
Date:
12/08/2003
Registration
Date:
03/21/2006
Trademark:
ZTRIM®
Country:
USA
|
|
Copyrights/Registration
or Application
Numbers
|
Registration
Number:
EP 0 873
054
Filing Date:
11/26/1996
Issue
Date
06/08/2005
Title:
Dietary
fiber gels for calorie reduced
foods and method for preparing
the same
Countries:
Switzerland,
France,
Germany,
Great Britain and
The
Netherlands
Registration
Number:
N/A
Filing
Date:
06/08/2004
Registration
Date:
Varies by
country
Trademark:
ZTRIM®
Country:
Madrid,
Hungary, Singapore,
Ireland,
Turkey, Denmark and
Norway
Registration
Number:
PR
199800943
Filing
Date:
11/26/1996
Issue
Date
8/21/1998
Title:
Dietary
fiber gels for calorie reduced
foods and method for preparing
the same
Country:
Registration
Number:
3,350,203
Filing
Date:
05/15/2006
Registration
Date:
12/04/2007
Trademark:
"LIVE
LIFE BETTER"
Country:
USA
Turkey
Patent Application
Number:
11/844,878
Filing
Date:
1/17/2008
Title:
Amorphous
Insoluble Cellulosic
Fiber and Method For
Making Same
Country:
USA
Application
Number:
PCT/US05/25197
Filing
Date:
7/15/2005
Title:
Amorphous
Insoluble Cellulosic
Fiber and Method for Making
Same
Countries:
Brazil,
Mexico, Canada, European
Union, Japan and Australia
Application
Number:
11/491297
Filing
Date:
11/23/2006
Title:
Emulsified
Liquid Shortening Compositions
Comprising Dietary Fiber Gel, Water and Lipid
Country:
USA
Application
Number:
PCT/US03/36667
Filing
Date:
11/17/2003
Title:
Emulsified
Liquid Shortening Compositions
Comprising Dietary Fiber Gel, Water and Lipid
Country:
European
Union
Schedule II
Locations
of Collateral
0000
Xxxxxx Xx., Xxxxxxxxx, Xxxxxxxx 00000 000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx
00000
Exhibit
A
THIS PATENT SECURITY AGREEMENT
(this "Agreement"), dated as of ______ _, 2009, executed by Z TRIM
HOLDINGS, INC., an Illinois corporation (the "Grantor"), in favor of the Secured
Parties listed on Appendix A hereto (the “Secured Parties” ).
Capitalized terms used in this Agreement shall have the meanings set forth in
the Security Agreement (as defined below) unless specifically defined
herein.
WITNESSED:
WHEREAS, the Grantor and the
Secured Parties are parties to an 8% Senior Secured Convertible Note (as
amended, restated, supplemented or otherwise modified, the "Note") pursuant to
which the Secured Parties have agreed to make loans to the Grantor (the "Loans")
as offered by that certain Private Placement Memorandum dated March 11, 2009
(the "Offering"):
WHEREAS, the Grantor has
entered into a Security Agreement dated the date hereof (the "Security
Agreement") pursuant to which the Grantor has granted to the Secured Parties a
continuing security interest in, among other things, the Intellectual Property
of the Grantor, including, without limitation, (a) all of the Grantor's Patents
(as herein defined), whether presently existing or hereafter acquired or
arising, or in which the Grantor now has or hereafter acquires rights and
wherever located; (b) all of the Grantor's Patent Licenses (as herein defined),
whether presently existing or hereafter acquired or in which the Grantor now has
or hereafter acquires rights and wherever located; and (c) all products and
proceeds of any of the foregoing, as security for all of the Secured
Obligations;
NOW, THEREFORE, in
consideration of the premises and of the mutual covenants herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. For
purposes of this Agreement and in addition to terms defined elsewhere in this
Agreement, the following terms shall have the meanings herein specified (such
meaning to be equally applicable to both the singular and plural forms of the
terms defined):
"Patent
License" shall mean any written agreement now owned or hereafter acquired by the
Grantor or in which the Grantor has or acquires any rights granting any right
with respect to any property, process or other invention on which a Patent is in
existence, including, without limitation, the agreements listed on Schedule I attached
hereto.
"Patents"
shall mean all of the following now owned or hereafter acquired by the Grantor
or in which the Grantor has or acquires any rights: (a) all letters patent of
the United States or any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or any
other country, including 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 or Territory thereof, or any other country or
political subdivision thereof (except in any jurisdiction in which the grant of
a security interest in the patents is prohibited and except for any intent to
use application unless or until a statement of use or amendment to assert use
has been filed with the United States Patent and Trademark Office), including,
without limitation, those letters patent and applications for letters patent
listed on Schedule
I attached hereto, together with all the rights, benefits and privileges
derived therefrom and the goodwill of the business symbolized thereby; and (b)
all reissues, continuations, continuations-in-part and extensions
thereof.
2. As
security for all of the Secured Obligations, the Grantor hereby pledges,
hypothecates, sets over and conveys a security interest to the Secured Parties
in, and does hereby grant to the Secured Parties, a continuing security interest
in all of the Grantor's right, title and interest in, to and under the following
(collectively, the "Property"):
(a) each
Patent now or hereafter owned by the Grantor or in
which the Grantor now has or hereafter acquires rights and wherever located, including, without limitation, each Patent
referred
to in Schedule
I hereto and any renewals of registrations thereof;
and
(b) each
Patent License now or hereafter held by the Grantor
or in which the Grantor now has or hereafter acquires rights
and wherever located, including, without limitation, the Patent
Licenses, if any, referred to in Schedule I hereto;
and
(c) all
products and proceeds of the foregoing, including, without limitation, any
claim by the Grantor against third parties for past, present or future
infringement of any Patent or breach of Patent
Licenses, if any, including, without limitation, any Patent or Patent
License referred to in Schedule I
hereto.
Notwithstanding
the foregoing or anything else contained in this Agreement to the contrary the
grant set forth above shall not be effective as a transfer of title to the
Property unless and until the Secured Parties exercises the rights and remedies
accorded to it under the Security Agreement and by law with respect to the
realization upon its security interest in the Property, and until such time, the
Grantor shall own and may use and enjoy the Property in connection with its
business operations and exercise all incidents of ownership, including, without
limitation, enforcement of its rights and remedies with respect to the Property,
but with respect to all Property being used in Grantor's businesses, only in a
manner consistent with the preservation of the current substance, validity and
registration of, and the security interest granted in, such Property; provided,
however,
that the foregoing shall not impose an obligation on the Grantor to continue to
use any of the Property in the Grantor's businesses to the extent that such
Property is not necessary in the normal conduct of its businesses. The Grantor
agrees not to sell or assign its interest in, or grant any sublicense under, the
Property, except that the Grantor may sublicense the Property in the ordinary
course of the Grantor's businesses, including, without limitation, licensing or
cross-licensing any of the Property to others in connection with settlement of
claims or counterclaims for infringement of intellectual property rights, but
only in a manner consistent with. the preservation of the current substance,
validity, and registration, and the security interest granted in, such Property.
Upon the exercise by the Secured Parties of the rights and remedies accorded to
it under the Security Agreement and by law with respect to the realization upon
its security interest in the Property, Grantor's ownership of the Collateral, in
which a continuing security interest under this paragraph has been granted to
the Secured Parties and, if one is duly appointed, the Collateral Agent, shall
be terminated.
3. The
Grantor does hereby further acknowledge and affirm that the
representations, warranties and covenants of the Grantor with respect to
the Property and the rights and remedies of the Secured Parties with
respect to the security interest in the Property made and granted hereby
are more fully set forth in the Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth
herein.
4. This
Agreement shall terminate upon termination of the Security
Agreement. At any time
and from time to time prior to such termination, the Secured Parties may, in
accordance
with the terms of the Security Agreement, terminate its security interest in or
reconvey to the Grantor any rights with respect to any or all of the Property.
Upon termination of this Agreement and following a request from the
Grantor, duly appointed representative of the Requisite Holders or, if one is
duly appointed, the Collateral Agent shall, at the expense of
the Grantor, execute and deliver to the Grantor all deeds, releases and
other instruments as the Grantor may reasonably request (but without
recourse or warranty by the Secured Parties, or the Collateral Agent) in
order to evidence such termination.
5. If at any
time before the termination of this Agreement in accordance with Section
4, the
Grantor shall obtain or acquire rights to any new patent (including any Patent
application), whether
under a Patent License or otherwise, the provisions of Section 2 shall
automatically apply
thereto and the Grantor shall comply with the terms of the Security Agreement
with respect to such new Patent. The Grantor authorizes
the duly appointed representative of the Requisite Holders or, if one is duly
appointed, to modify this Agreement by amending Schedule I
to include any future Patents and Patent Licenses covered by Section
2 or by this Section 5.
6. The
Grantor further agrees that (a) the Secured Parties shall not have any
obligation
or responsibility to protect, defend, file, prosecute, obtain or maintain the
Property and the Grantor shall, at its own expense protect, defend, file,
prosecute, obtain and maintain the same in accordance with the terms and
conditions set forth in the Security Agreement and in accordance with its
prudent business judgment, (b) the Grantor shall forthwith advise the duly
appointed representative of the Requisite Holders or, if one is duly
appointed, promptly in writing upon detection of infringements of any
of the Property being
used in the Grantor's businesses and (c) if the Grantor fails to (i) comply with
the requirements
of the preceding clause (a) with regard to the maintenance of any
registered Property or, (ii) with regard to infringements of or actions
against any Property, commence efforts to comply with the requirements of
the preceding clause (a) within thirty (30) days after the Grantor gives notice
of such infringement or action to duly appointed representative of the Requisite
Holders or, if one is duly appointed, the Collateral Agent (or such
shorter time determined by the duly appointed representative of the Requisite
Holders or, if one is duly appointed, Collateral Agent if waiting thirty days
would diminish the Collateral Agent's security interest in or other rights in
and to the Property), the duly appointed representative of the Requisite Holders
or, if one is duly appointed, Collateral Agent may do so in the Grantor's name
or in its own name, but in any case at the Grantor's expense, and the Grantor
hereby agrees to reimburse the duly appointed representative of the Requisite
Holders or, if one is duly appointed, Collateral Agent for all reasonable
expenses, including attorneys' fees incurred by the Collateral Agent in
protecting, defending and maintaining the Property. For the purpose of
permitting the duly appointed representative of the Requisite Holders or, if one
is duly appointed, Collateral Agent to fulfill its obligations set forth above,
the Grantor hereby appoints Collateral Agent as its agent for the purpose of
filing, prosecuting, obtaining, and maintaining, at its own expense, any new
patent (including any patent application), and appointing attorneys and/or
agents to appear before the U.S. Patent & Trademark Office and before
corresponding foreign patent offices, to file, prosecute, obtain, and maintain
Patents (including any Patent applications) on behalf of the Grantor and the
duly appointed representative of the Requisite Holders or, if one is duly
appointed, Collateral Agent, to the extent necessary under the Security
Agreement, on behalf of the Grantor.
7. This
Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original and all of
which shall constitute together but one and the same
agreement.
8. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE
PARTIES
HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, EXCEPT TO
THE EXTENT THAT PERFECTION (AND THE EFFECT OF PERFECTION AND
NONPERFECTION) AND CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS OF
ANY JURISDICTION OTHER THAN DELAWARE.
[Signatures
on Following Page]
IN
WITNESS WHEREOF, the Grantor has caused this Patent Security Agreement to be
duly executed under seal and delivered by its duly authorized officer as of the
date first above written.
Name:
Title:
Signed,
sealed and delivered
this day
of ,
2009
Notary
Public
My
Commission expires:
Witness
Witness
[Signature
Page to Patent Security Agreement]
SCHEDULE
I
to Patent
Security Agreement
Item A.
Patents
|
Issued Patents
|
|||
|
*
Country
|
Registration No.
|
Issue Date
|
Title
|
|
USA
|
5,766,662
|
6/16/1998
|
Dietary
fiber gels for calorie reduced foods and method for preparing the
same
|
|
Pending Patent Applications
|
|||
|
*Country
|
Application No.
|
Filing Date
|
Title
|
|
USA
|
1
1/844,878
|
1/17/2008
|
Amorphous
Insoluble Cellulosic Fiber and Method For Making Same
|
|
USA
|
11/491,297
|
1
1/23/2006
|
Emulsified
Liquid Shortening Compositions Comprising Dietary Fiber Gel, Water and
Lipid
|
Exhibit B
FORM
OF TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT
(this "Agreement"), dated as of ______ ,
2009, executed by Z TRIM HOLDINGS, INC., an Illinois corporation (the "Grantor")
in favor
of the Secured Parties. Capitalized terms used in this Agreement shall have the
meanings set forth in the Security Agreement (as defined below) unless
specifically defined herein.
WITNESSED:
WHEREAS, the
Grantor and the Secured Parties are parties to an 8% Senior Secured Convertible
Note (as amended, restated, supplemented or otherwise modified, the "Note")
pursuant to which the Secured Parties have agreed to make loans to the Grantor
(the "Loans") as offered by that certain Private Placement Memorandum dated
March 11, 2009 (the "Offering"):
WHEREAS, the Grantor has
entered into a Security Agreement dated the dated hereof (the "Security
Agreement") pursuant to which the Grantor has granted to the Secured Parties a
continuing security interest in, among other things, the Intellectual Property
of the Grantor, including, without limitation, (a) all of the Grantor's
Trademarks (as herein defined), whether presently existing or hereafter acquired
or arising, or in which the Grantor now has or hereafter acquires rights and
wherever located; (b) all of the Grantor's Trademark Licenses (as herein
defined), whether presently existing or hereafter acquired or in which the
Grantor now has or hereafter acquires rights and wherever located; and (c) all
products and proceeds of any of the foregoing, as security for all of the
Secured Obligations;
NOW, THEREFORE, in consideration
of the premises and of the mutual covenants herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. For
purposes of this Agreement and in addition to terms defined elsewhere in this
Agreement, the following terms shall have the meanings herein specified (such
meaning to be equally applicable to both the singular and plural forms of the
terms defined):
"Trademark
License" means any written agreement now or hereafter acquired by the Grantor or
in which the Grantor has or acquires any right, title or interest and wherever
located granting to the Grantor any right to use any Trademark, including,
without limitation, the agreements listed on Schedule I attached
hereto.
"Trademarks"
means all of the following now owned or hereafter acquired by the Grantor or in
which the Grantor has or acquires any right, title or interest and wherever
located: (i) all trademarks, trade names, corporate names, company names,
business names, fictitious 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 all 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 or any political
subdivision thereof (except in any jurisdiction in which the grant of a security
interest in trademarks is prohibited and except for any intent to use
applications unless or until a statement of use or amendment to assert use has
been filed with the United States Patent and Trademark Office), including,
without limitation, those U.S. registrations and applications for registration
listed on Schedule
I attached hereto, together with all the rights, benefits and privileges
derived therefrom and the goodwill of the business relating thereto or
symbolized thereby, (ii) all renewals thereof and (iii) all proceeds of the
foregoing.
2. For
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, to secure all of the Secured Obligations, the Grantor hereby
pledges, mortgages, hypothecates, sets over and conveys a security interest to
the Secured Parties, and does hereby grant to the Secured Parties, a continuing
security interest in, all of the Grantor's right, title and interest in, to and
under the following (collectively, the "Property"):
(a) each
Trademark; and
(b) each
Trademark License; and
(c) all
products and proceeds of, and rights associated with, the foregoing,
including, without limitation, any claim by the Grantor against
third parties for past, present or future infringement or dilution of any
Trademark or Trademark registration, for breach or enforcement of any
Trademark License or for any injury to the goodwill associated with the use
of any such Trademark, and all rights corresponding thereto throughout the
world, if any, including, without limitation, with respect to any
Trademark or Trademark License referred to in Schedule I
hereto.
Notwithstanding
the foregoing or anything else contained in this Agreement to the contrary, the
grant set forth above shall not be effective as a transfer of title to the
Property unless and until the Secured Parties exercise the rights and remedies
accorded to them under the Security Agreement and by law with respect to the
realization upon its security interest in the Property, and until such
time, the
Grantor shall own, and may use and enjoy the Property in connection with its
business operations, and exercise all incidents of ownership, including, without
limitation, enforcement of its rights and remedies with respect to the Property,
but with respect to all Property being used in the Grantor's business, only in a
manner consistent with the preservation of the current substance, validity and
registration of, and the security interest granted in, such Property; provided,
however, that the foregoing shall not impose an obligation on the Grantor to
continue to use any of the Property in the Grantor's business to the extent that
such Property is not necessary in the normal conduct of its business. The
Grantor agrees not to sell or assign its interest in, or grant any sublicense
under, the Property, except that the Grantor may sublicense the Property in the
ordinary course of the Grantor's business but only in a manner consistent with
the preservation of the current substance, validity and registration, and the
security interest granted in, such Property. Upon the exercise by the Secured
Parties of the rights and remedies accorded to it under the Security Agreement
and by law with respect to the realization upon its security interest in the
Property, the Grantor's ownership of the Property, in which a continuing
security interest under this paragraph has been granted to the Secured Parties
shall be terminated.
3. This
Agreement has been executed and delivered by the Grantor for the purpose of
registering the security interest of the Secured Parties in he Property with the
United States Patent and Trademark Office. The security interest
granted thereby has been granted as a supplement to, and not in limitation of,
the security interest granted to the Secured Parties under the Security
Agreement. The Security Agreement (and all rights and remedies of the Secured
Parties thereunder) shall remain n full force and effect in accordance with its
terms.
4. The
Grantor does hereby further acknowledge and affirm that the representations,
warranties and covenants of the Grantor with respect to the Property and the
rights and remedies of the Secured Parties with respect to the security interest
in and collateral assignment of the Property made and granted hereby are more
fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth
herein.
5. This
Agreement shall terminate upon termination of the Security
Agreement. At any time and from time to time prior to such
termination, the Secured Parties may, in accordance with the terms of the
Security Agreement, terminate their security interest in or reconvey to the
Grantor any rights with respect to any or all of the Property. Upon termination
of this Agreement and following a request from the Grantor, the Secured Parties
shall, at the expense of the Grantor, execute and deliver to the Grantor all
deeds, releases and other instruments as the Grantor may reasonably request in
order to evidence such termination.
6. If at any
time before the termination of this Agreement in accordance with Section 5, the
Grantor shall obtain or acquire rights to any new Trademark or Trademark
License, the B-3 provisions of Section 2 shall automatically apply thereto and
the Grantor shall comply with the terms of the Security Agreement with respect
to such new Trademark or Trademark License. The Grantor authorizes
the to modify this Agreement by amending Schedule I to include
any future Trademarks and Trademark Licenses covered by Section 2 or by this
Section 6.
7. The
Grantor further agrees that (a) the Secured Parties shall not have any
obligation
or responsibility to protect, defend, file, prosecute, obtain or maintain the
Property and the Grantor shall, at its own expense, protect, defend, file,
prosecute, obtain and maintain the same in accordance with the terms and
conditions set forth in the Security Agreement and in accordance with its
prudent business judgment, (b) the Grantor shall forthwith advise the Secured
Parties promptly in writing upon detection of infringements if any of
the Property being used in the Grantor's businesses and (c) if the Grantor fails
to (i) comply with the requirements of the preceding clause (a) with regard to
the maintenance of any registered Property or, (ii) with regard to infringements
of or actions against any Property, commence efforts to comply with the
requirements of the preceding clause (a) within thirty days after the Grantor
gives notice of such infringement or action to the Secured Parties
(or such shorter time determined by the Secured Parties if waiting thirty days
would diminish the Secured Parties's security interest in or other rights in and
to the Property), the Secured Parties may do so in the Grantor's name or in its
own name, but in any case at the Grantor's expense, and the Grantor hereby
agrees to reimburse the Secured Parties for all reasonable expenses, including
attorneys' fees incurred by the Secured Parties in protecting, defending and
maintaining the Property; For the purpose of permitting the Secured Parties to
fulfill its obligations set forth above, the Grantor hereby appoints Secured
Parties as its agent for the purpose of filing, prosecuting, obtaining, and
maintaining, at its own expense, any new trademark (including any trademark
application), and appointing attorneys and/or agents to appear before the U.S.
Patent & Trademark Office and before corresponding foreign trademark
offices, to file, prosecute, obtain, and maintain Trademarks (including any
Trademark applications) on behalf of the Grantor and the Secured Parties, and
the Secured Parties, to the extent necessary under the Security Agreement, on
behalf of the Grantor.
8. This
Agreement may be executed by the parties hereto in
several counterparts, each of which shall be deemed to be an original
and all of which shall constitute together but one and the same
agreement.
9. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF, AND THE RIGHTS OF THE
PARTIES
HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUED
IN ACCORDANCE WITH THE LAWS (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF DELAWARE, EXCEPT TO
THE EXTENT THAT PERFECTION (AND THE EFFECT OF PERFECTION AND
NONPERFECTION) AND CERTAIN REMEDIES MAY BE GOVERNED BY THE LAWS OF ANY
JURISDICTION OTHER THAN DELAWARE.
[Signatures
on Following Page]
IN
WITNESS WHEREOF, the Grantor has caused this Trademark Security Agreement to be
duly executed under seal and delivered by its duly authorized officer as of the
date first above written.
By:
Name:
Title:
Signed,
sealed and delivered
this day
of ___, 2009
Notary
Public
My
Commission expires:
Witness
Witness
[Signature
Page to Trademark Security Agreement]
Schedule
I
Trademarks
|
Country
|
Trademark
|
Registration/Application Number
|
Filing
Date
|
Registration Date
|
|
USA
|
ZTRIM®
|
3,069709
|
12/08/2003
|
3/21/2006
|
|
USA
|
LIVE
LIFE BETTER®
|
3,350,203
|
5/15/2006
|
12/04/2007
|
