Exhibit 10.5
AMENDED AND RESTATED INTELLECTUAL PROPERTY SECURITY
AGREEMENT
     This Amended and Restated Intellectual Property Security Agreement (the
“Agreement”) is made as of September 27, 2005, by and between MATRIXX
INITIATIVES, INC., a Delaware corporation (“Matrixx” or “Grantor”), and COMERICA
BANK (“Secured Party”).
RECITALS
     A. Gum Tech International, Inc., a Utah corporation (“Gum Tech”), and Gel
Tech, L.L.C., an Arizona limited liability company (“Gel Tech”), and Comerica
Bank–California, a California banking corporation (“CBC”), previously entered
into that certain Credit Agreement, dated as of May 29, 2002 (as amended to
date, the “Prior Credit Agreement”).
     B. In order to secure the obligations owing to CBC under the Prior Credit
Agreement, Gum Tech and CBC entered into that certain Intellectual Property
Security Agreement dated as of May 29, 2002 (the “Prior Gum Tech IP Security
Agreement”) and Matrixx and CBC entered into that certain Intellectual Property
Security Agreement dated as of July 10, 2002 (the “Prior Matrixx IP Security
Agreement”) (the Prior Gum Tech IP Security Agreement and the Prior Matrixx IP
Security Agreement, each as amended to date, are collectively hereinafter known
as the “Prior IP Security Agreements”).
     C. Gum Tech has merged with and into Matrixx and Matrixx is the surviving
entity, and Gel Tech has changed its name to Zicam, LLC (“Zicam”).
     D. CBC has merged with and into Secured Party and Secured Party is the
surviving entity.
     E. Grantor and Zicam, on the one hand, and Secured Party, on the other
hand, are contemporaneously herewith entering into that certain Amended and
Restated Credit Agreement, dated as of even date herewith (as may be at any time
hereafter supplemented, modified, amended or restated, the “Loan Agreement”),
which shall amend and restate the Prior Credit Agreement in its entirety.
     F. In order to induce Secured Party to enter into the Loan Agreement, and
in consideration thereof, Grantor has agreed to amend and restate the Prior IP
Security Agreements in their entirety in accordance with the terms and
conditions of this Agreement.
     NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
     1. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance of all of Grantor’s present or future
indebtedness, obligations and liabilities to Secured Party, Grantor hereby
grants a security interest and mortgage to Secured Party, as security, in and to
Grantor’s entire right, title and interest in, to and under the following (all
of which shall collectively be called the “Collateral”):

1

--------------------------------------------------------------------------------

 

          (a) Any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret, now or hereafter existing, created, acquired or
held, including without limitation those set forth on Exhibit A attached hereto
(collectively, the “Copyrights”);
          (b) Any and all trade secrets, and any and all intellectual property
rights in computer software and computer software products now or hereafter
existing, created, acquired or held;
          (c) Any and all design rights which may be available to Grantor now or
hereafter existing, created, acquired or held;
          (d) All patents, patent applications and like protections including,
without limitation, improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same, including without limitation
the patents and patent applications set forth on Exhibit B attached hereto
(collectively, the “Patents”);
          (e) Any trademark and servicemark rights, whether registered or not,
applications to register and registrations of the same and like protections, and
the entire goodwill of the business of Grantor connected with and symbolized by
such trademarks, including without limitation those set forth on Exhibit C
attached hereto (collectively, the “Trademarks”);
          (f) Any and all claims for damages by way of past, present and future
infringement of any of the rights included above, with the right, but not the
obligation, to sue for and collect such damages for said use or infringement of
the intellectual property rights identified above;
          (g) All licenses or other rights to use any of the Copyrights, Patents
or Trademarks, and all license fees and royalties arising from such use to the
extent permitted by such license or rights; and
          (h) All amendments, extensions, renewals and extensions of any of the
Copyrights, Trademarks or Patents; and
          (i) All proceeds and products of the foregoing, including without
limitation all payments under insurance or any indemnity or warranty payable in
respect of any of the foregoing.
     2. Authorization and Request. Grantor authorizes and requests that the
Register of Copyrights and the Commissioner of Patents and Trademarks record
this Agreement.
     3. Covenants and Warranties. Grantor represents, warrants, covenants and
agrees as follows:
          (a) Grantor is now the sole owner of the Collateral, except for
non-exclusive licenses granted by Grantor in the ordinary course of business;

2

--------------------------------------------------------------------------------

 

          (b) Performance of this Agreement does not conflict with or result in
a breach of any agreement to which Grantor is party or by which Grantor is
bound, except to the extent that certain intellectual property agreements
prohibit the assignment of the rights thereunder to a third party without the
licensor’s or other party’s consent and this Agreement constitutes an
assignment;
          (c) During the term of this Agreement, Grantor will not transfer or
otherwise encumber any interest in the Collateral, except for non-exclusive
licenses granted by Grantor in the ordinary course of business, or as set forth
in this Agreement;
          (d) To the knowledge of Grantor, each of the Patents is valid and
enforceable, and no part of the Collateral has been judged invalid or
unenforceable, in whole or in part, and no claim has been made that any part of
the Collateral violates the rights of any third party;
          (e) Grantor shall deliver to Secured Party within thirty (30) days of
the last day of each fiscal quarter, a report signed by Grantor, in form
reasonably acceptable to Secured Party, listing any applications or
registrations that Grantor has made or filed in respect of any patents,
copyrights or trademarks and the status of any outstanding applications or
registrations. Grantor shall promptly advise Secured Party of any material
change in the composition of the Collateral, including but not limited to any
subsequent ownership right of the Grantor in or to any Trademark, Patent or
Copyright not specified in this Agreement;
          (f) Grantor shall (i) protect, defend and maintain the validity and
enforceability of the Trademarks, Patents and Copyrights, to the extent
commercially reasonable, (ii) use its commercially reasonable efforts to detect
infringements of the Trademarks, Patents and Copyrights and promptly advise
Secured Party in writing of material infringements detected and (iii) not allow
any Trademarks, Patents or Copyrights to be abandoned, forfeited or dedicated to
the public without the written consent of Secured Party, which shall not be
unreasonably withheld, unless Grantor determines that reasonable business
practices suggest that abandonment is appropriate;
          (g) Grantor shall register or cause to be registered (to the extent
not already registered) with the United States Patent and Trademark Office or
the United States Copyright Office, as applicable, those intellectual property
rights listed on Exhibits A, B, and C hereto, within thirty (30) days of the
date of this Agreement. Grantor shall register or cause to be registered with
the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, those additional intellectual property rights developed
or acquired by Grantor from time to time in connection with any product prior to
the sale or licensing of such product to any third party (including without
limitation revisions or additions to the intellectual property rights listed on
such Exhibits A, B, and C). Grantor shall, from time to time, execute and file
such other instruments, and take such further actions as Secured Party may
reasonably request from time to time to perfect or continue the perfection of
Secured Party’s interest in the Collateral;
          (h) This Agreement creates, and in the case of after acquired
Collateral, this Agreement will create at the time Grantor first has rights in
such after acquired Collateral, in

3

--------------------------------------------------------------------------------

 

favor of Secured Party a valid and perfected first priority security interest in
the Collateral in the United States securing the payment and performance of the
obligations evidenced by the Loan Agreement and the Loan Documents (as such term
is defined in the Loan Agreement) upon making the filings referred to in clause
(i) below;
          (i) Except for, and upon, the filing with the United States Patent and
Trademark office with respect to the Patents and Trademarks and the Register of
Copyrights with respect to the Copyrights necessary to perfect the security
interests created hereunder, and, except as has been already made or obtained,
no authorization, approval or other action by, and no notice to or filing with,
any U.S. governmental authority or U.S. regulatory body is required either
(i) for the grant by Grantor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by Grantor in the U.S. or
(ii) for the perfection in the United States or the exercise by Secured Party of
its rights and remedies hereunder;
          (j) All information heretofore, herein or hereafter supplied to
Secured Party by or on behalf of Grantor with respect to the Collateral is
accurate and complete in all material respects.
          (k) Grantor shall not enter into any agreement that would materially
impair or conflict with Grantor’s obligations hereunder without Secured Party’s
prior written consent, which consent shall not be unreasonably withheld. Grantor
shall not permit the inclusion in any material contract to which it becomes a
party of any provisions that could or might in any way prevent the creation of a
security interest in Grantor’s rights and interests in any property included
within the definition of the Collateral acquired under such contracts, except
that certain contracts may contain anti-assignment provisions that could in
effect prohibit the creation of a security interest in such contracts if Grantor
is required, in its commercially reasonable judgment to accept such provisions;
and
          (l) Upon any executive officer of Grantor obtaining knowledge thereof,
Grantor will promptly notify Secured Party in writing of any event that
materially adversely affects the value of any of the Collateral, the ability of
Grantor to dispose of any Collateral or the rights and remedies of Secured Party
in relation thereto, including the levy of any legal process against any of the
Collateral.
          4. Secured Party’s Rights. Secured Party shall have the right, but not
the obligation, to take, at Grantor’s sole expense, any actions that Grantor is
required under this Agreement to take but which Grantor fails to take, after
fifteen (15) days’ notice to Grantor. Grantor shall reimburse and indemnify
Secured Party for all reasonable costs and expenses incurred in the reasonable
exercise of its rights under this Section 4.
          5. Inspection Rights. Grantor hereby grants to Secured Party and its
employees, representatives and agents the right to visit, during reasonable
hours upon prior reasonable written notice to Grantor, and subject to reasonably
adapted procedures related to safety and security, any of Grantor’s plants and
facilities that manufacture, install or store products (or that have done so
during the prior six-month period) that are sold utilizing any of the
Collateral, and

4

--------------------------------------------------------------------------------

 

to inspect the products and quality control records relating thereto upon
reasonable notice to Grantor and as often as may be reasonably requested.
     6. Further Assurances; Attorney in Fact.
          (a) On a continuing basis, Grantor will make, execute, acknowledge and
deliver, and file and record in the proper filing and recording places in the
United States, all such instruments, including, appropriate financing and
continuation statements and collateral agreements and filings with the United
States Patent and Trademark Office and the Register of Copyrights, and take all
such action as may reasonably be deemed necessary or advisable, or as requested
by Secured Party, to perfect Secured Party’s security interest in all
Copyrights, Patents and Trademarks and otherwise to carry out the intent and
purposes of this Agreement, or for assuring and confirming to Secured Party the
grant or perfection of a security interest in all Collateral.
          (b) Grantor hereby irrevocably appoints Secured Party as Grantor’s
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, from time to time in Secured Party’s discretion, to take
any action and to execute any instrument which Secured Party may deem necessary
or advisable to accomplish the purposes of this Agreement, including:
               (i) To modify, in its sole discretion, this Agreement without
first obtaining Grantor’s approval of or signature to such modification by
amending Exhibit A, Exhibit B, and Exhibit C, hereof, as appropriate, to include
reference to any right, title or interest in any Copyrights, Patents or
Trademarks acquired by Grantor after the execution hereof or to delete any
reference to any right, title or interest in any Copyrights, Patents or
Trademarks in which Grantor no longer has or claims any right, title or
interest;
               (ii) To file, in its sole discretion, one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of Grantor where permitted by law; and
               (iii) After the occurrence of an Event of Default, to transfer
the Collateral into the name of Secured Party or a third party to the extent
permitted under the Arizona Uniform Commercial Code.
     7. Events of Default. The occurrence of any Event of Default under the Loan
Agreement shall constitute an Event of Default under this Agreement.
     8. Remedies. Upon the occurrence of an Event of Default, Secured Party
shall have the right to exercise all the remedies of a secured party under the
Arizona Uniform Commercial Code, including without limitation the right to
require Grantor to assemble the Collateral and any tangible property in which
Secured Party has a security interest and to make it available to Secured Party
at a place designated by Secured Party. Secured Party shall have a nonexclusive,
royalty free license to use the Copyrights, Patents and Trademarks to the extent
reasonably necessary to permit Secured Party to exercise its rights and remedies
upon the occurrence of an Event of Default. Grantor will pay any reasonable
expenses (including reasonable attorneys’

5

--------------------------------------------------------------------------------

 

fees) incurred by Secured Party in connection with the exercise of any of
Secured Party’s rights hereunder, including without limitation any reasonable
expense incurred in disposing of the Collateral. All of Secured Party’s rights
and remedies with respect to the Collateral shall be cumulative.
     9. Indemnity. Grantor agrees to defend, indemnify and hold harmless Secured
Party and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities claimed or asserted by any other party in
connection with the transactions contemplated by this Agreement, and (b) all
losses or expenses in any way suffered, incurred, or paid by Secured Party as a
result of or in any way arising out of, following or consequential to
transactions between Secured Party and Grantor, whether under this Agreement or
otherwise (including without limitation attorneys fees and expenses), except to
the extent that it is finally judicially determined that such obligations,
demands, claims, liabilities, expenses or losses arise from or out of Secured
Party’s gross negligence or willful misconduct.
     10. Course of Dealing. No course of dealing, nor any failure to exercise,
nor any delay in exercising any right, power or privilege hereunder shall
operate as a waiver thereof.
     11. Attorneys Fees. If any action relating to this Agreement is brought by
either party hereto against the other party, the prevailing party shall be
entitled to recover reasonable attorneys fees, costs and disbursements.
     12. Amendments. This Agreement may be amended only by a written instrument
signed by both parties hereto.
     13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute the same instrument.
     14. Arizona Law and Jurisdiction; Jury Waiver. This Agreement shall be
governed by the laws of the State of Arizona, without regard for choice of law
provisions. Grantor and Secured Party consent to the exclusive jurisdiction of
any state or federal court located in Maricopa County, Arizona. GRANTOR AND
SECURED PARTY EACH WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE LOAN DOCUMENTS, THIS AGREEMENT,
OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
     15. No Novation. Grantor and Secured Party hereby agree that, effective
upon the satisfaction or waiver in writing by Secured Party of all conditions
precedent set forth in Section 4.1 of the Loan Agreement, this Agreement shall
amend, restate and supersede in its entirety the Prior IP Security Agreements.
Nothing herein contained shall be construed as a substitution or novation of the
obligations of Grantor outstanding under the Prior IP Security Agreements, which
obligations shall remain in full force and effect, except to the extent that the
terms thereof are modified hereby or by instruments executed concurrently
herewith. Nothing expressed or

6

--------------------------------------------------------------------------------

 

implied in this Agreement shall be construed as a release or other discharge of
Grantor or any guarantor from any of its obligations or liabilities under the
Prior IP Security Agreements or any of the other original Loan Documents except
to the extent that the terms thereof are modified hereby or by instruments
executed concurrently herewith.
[remainder of this page intentionally left blank]

7

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

        Address of Grantor: GRANTOR:  
 
     
4742 N. 24th Street, Suite 455
MATRIXX INITIATIVES, INC., a Delaware  
Phoenix, Arizona 85016
corporation  
 
     
 
By:  /s/ William Hemelt  
 
     
 
Name: William Hemelt  
 
Its: Executive Vice President, CFO, Treasurer  
 
     
Address of Secured Party:
SECURED PARTY:  
 
     
 
COMERICA BANK, a Michigan Banking  
 
corporation  
 
     
Phelps Dodge Tower
     
1 North Central Avenue, Suite 1000
By:  /s/ William J. Kirschner  
 
     
Phoenix, Arizona 85004-4469
  Name: William J. Kirschner  
 
  Title: Assistant Vice President  

S-1

Amended and Restated Intellectual Property Security Agreement