Exhibit 10.03
SECURITY AGREEMENT
(Guarantor)
     This SECURITY AGREEMENT, dated as of July 5, 2007, is entered into between
MATRIXX ORAL CARE, LLC, a Delaware limited liability company (“Guarantor”), and
COMERICA BANK, a Michigan banking corporation (“Bank”), with reference to the
following facts:
R E C I T A L S
     A. Matrixx Initiatives, Inc., a Delaware corporation (“Parent”), and Zicam,
LLC, an Arizona limited liability company (“Zicam”) (Parent and Zicam are
sometimes collectively referred to herein as “Borrowers” and individually as a
“Borrower”), and Comerica Bank, a Michigan banking corporation (“Bank”), have
previously entered into that certain Amended and Restated Credit Agreement,
dated as of September 27, 2005, that certain Amendment Number One to Amended and
Restated Credit Agreement and Waiver, dated as of March 6, 2006, and that
certain Amendment Number Two to Amended and Restated Credit Agreement, dated as
of June 27, 2007 (as the same may be further amended, restated, supplemented or
otherwise modified from time to time, the “Loan Agreement”);
     B. Guarantor has executed that certain Continuing Guaranty, dated as of
even date herewith (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Guaranty”), pursuant to which
Guarantor guarantees the full payment and performance of all obligations owing
to Bank by Borrowers under the Loan Agreement and the Loan Documents, as defined
in the Loan Agreement; and
     C. Guarantor acknowledges that pursuant to the terms of the Loan Agreement,
in order to induce Bank to make Loans to Borrower, Guarantor is required to
enter into this Security Agreement granting to Bank a first priority security
interest in the Collateral to secure prompt payment and performance of the
Guarantor’s obligations owing to Bank under the Guaranty and the other Secured
Obligations.
A G R E E M E N T
     NOW, THEREFORE, in consideration of the mutual promises, covenants,
conditions, representations, and warranties hereinafter set forth, and for other
good and valuable consideration, the parties hereto agree as follows:
     1. Definitions. All initially capitalized terms used but not defined herein
shall have the meanings ascribed thereto in the Loan Agreement. In addition, as
used herein, the following terms shall have the following meanings:
          “Account Debtor” means any Person who is or who may become obligated
with respect to, or on account of, an Account, Chattel Paper or General
Intangible.

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          “Accounts” means any and all of Guarantor’s presently existing and
hereafter arising accounts (including health-care-insurance receivables,
contract rights, and all other forms of monetary obligations owing to Guarantor,
and all credit insurance, guaranties, or security therefor), irrespective of
whether earned by performance.
          “Bank Expenses” has the meaning of “Expenses” under the Loan Agreement
and also means any and all costs or expenses required to be paid by Guarantor
under this Security Agreement which are paid or advanced by Bank; all costs and
expenses of Bank, including its attorneys’ fees and expenses (including
attorneys’ fees incurred pursuant to proceedings arising under the Bankruptcy
Code), incurred or expended to correct any default or enforce any provision of
this Security Agreement, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, irrespective of whether a sale is consummated; and all
costs and expenses of suit incurred or expended by Bank, including its
attorneys’ fees and expenses (including attorneys’ fees incurred pursuant to
proceedings arising under the Bankruptcy Code) in enforcing or defending this
Security Agreement, irrespective of whether suit is brought.
          “Chattel Paper” means all of Guarantor’s presently existing and
hereafter acquired or created chattel paper (including tangible chattel paper
and intangible chattel paper).
          “Code” means the Arizona Uniform Commercial Code, as amended or
supplemented from time to time. Any and all terms used in this Security
Agreement which are defined in the Code shall be construed and defined in
accordance with the meaning and definition ascribed to such terms under the
Code, unless otherwise defined herein.
          “Collateral” means the following, collectively: any and all of the
Accounts, Chattel Paper, Commercial Tort Claims, Deposit Accounts, Documents,
Equipment, Instruments, Inventory, Investment Property, General Intangibles,
Letter of Credit Rights, Negotiable Collateral, Supporting Obligations, and
Guarantor’s Books, in each case whether now existing or hereafter acquired or
created, any money or other assets of Guarantor that now or hereafter come into
the possession, custody, or control of Bank and any Proceeds or products of any
of the foregoing, or any portion thereof.
          “Collateral Access Agreement” means a landlord waiver, mortgagee
waiver, bailee letter, or acknowledgement agreement of any warehouseman,
processor, lessor, consignee, or other Person in possession of, having a Lien
upon, or having rights or interests in the Equipment or Inventory, in each case,
in form and substance satisfactory to Bank.
          “Commercial Tort Claims” means all of Guarantor’s presently existing
and hereafter acquired commercial tort claims.
          “Deposit Account” means any demand, time, savings, passbook or similar
account now or hereafter maintained by or for the benefit of Guarantor with an
organization that is engaged in the business of banking including a bank,
savings bank, savings and loan association, credit union and trust companies,
and all funds and amounts therein, whether or not restricted or designated for a
particular purpose.

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          “Documents” means any and all documents and documents of title (as
such terms are defined in the Code), including documents of title, bills of
lading, dock warrants, dock receipts, warehouse receipts and other documents of
Guarantor, whether or not negotiable, and includes all other documents which
purport to be issued by a bailee or agent and purport to cover goods in any
bailee’s or agent’s possession which are either identified or are fungible
portions of an identified mass, including such documents of title made available
to Guarantor for the purpose of ultimate sale or exchange of goods or for the
purpose of loading, unloading, storing, shipping, transshipping, manufacturing,
processing or otherwise dealing with goods in a manner preliminary to their sale
or exchange, in each case whether now existing or hereafter acquired.
          “Equipment” means any and all of Guarantor’s presently existing and
hereafter acquired equipment, wherever located, including machinery, furniture,
furnishings, fixtures, computer and other electronic data processing equipment
and other office equipment and supplies, computer programs and related data
processing software, spare parts, tools, motors, automobiles, trucks, tractors
and other motor vehicles, rolling stock, jigs, and other goods (other than
Inventory, farm products, and consumer goods), including software embedded in
such goods, together with any and all parts, improvements, additions,
attachments, replacements, accessories, and substitutions thereto or therefor,
and all other rights of Guarantor relating thereto, whether in the possession
and control of Guarantor, or in the possession and control of a third party for
the account of Guarantor.
          “FEIN” means Federal Employer Identification Number.
          “General Intangibles” means any and all of Guarantor’s presently
existing and hereafter acquired or arising general intangibles and any other
intangible personal property of every kind and description, including:
          (a) contracts and contract rights, noncompetition covenants, licensing
and distribution agreements, indemnity agreements, guaranties, insurance
policies, franchise agreements and lease agreements;
          (b) uncertificated certificates of deposit, and interests in any joint
ventures, partnerships or limited liability companies;
          (c) choses in action and causes of action (whether legal or equitable,
whether in contract or tort or otherwise, and however arising);
          (d) licenses, approvals, permits or any other authorizations issued by
any Governmental Authority;
          (e) Intellectual Property Collateral;
          (f) computer software, magnetic media, electronic data processing
files, systems and programs;
          (g) rights of stoppage in transit, replevin and reclamation, rebates
or credits of every kind and nature to which Guarantor may be entitled;

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          (h) purchase orders, customer lists, subscriber lists and goodwill;
          (i) monies due or recoverable from pension funds, refunds and claims
for tax or other refunds against any Governmental Authority;
          (j) payment intangibles; and
          (k) other contractual, equitable and legal rights of whatever kind and
nature.
          “Guarantor” has the meaning set forth in the preamble to this Security
Agreement.
          “Guarantor’s Books” means any and all presently existing and hereafter
acquired or created books and records of Guarantor, including all records
(including maintenance and warranty records), ledgers, computer programs, disc
or tape files, printouts, runs, and other computer prepared information
indicating, summarizing, or evidencing the Collateral.
          “Guaranty” has the meaning set forth in recital B hereto.
          “Instruments” means any and all negotiable instruments, and every
other writing which evidences a right to the payment of a monetary obligation,
in each case whether now existing or hereafter acquired.
          “Intellectual Property Collateral” means the following Assets owned or
held by Guarantor or in which Guarantor otherwise has any interest, now existing
or hereafter acquired or arising:
          (a) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties with
respect to any licenses, all rights to sue for past, present or future
infringement thereof, all rights arising therefrom and pertaining thereto and
all reissues, divisions, continuations, renewals, extensions and continuations
in-part thereof;
          (b) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship, all rights, claims and demands in any way
relating to any such copyrights or works, including royalties and rights to sue
for past, present or future infringement, and all rights of renewal and
extension of copyright;
          (c) all state (including common law), federal and foreign trademarks,
service marks and trade names, and applications for registration of such
trademarks, service marks and trade names, all licenses relating to any of the
foregoing and all income and royalties with respect to any licenses, whether
registered or unregistered and wherever registered, all rights to sue for past,
present or future infringement or unconsented use thereof, all rights arising
therefrom and pertaining thereto and all reissues, extensions and renewals
thereof;

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          (d) all trade secrets, confidential information, customer lists,
license rights, advertising materials, operating manuals, methods, processes,
know-how, sales literature, sales and operating plans, drawings, specifications,
blue prints, descriptions, inventions, name plates and catalogs; and
          (e) the entire goodwill of or associated with the businesses now or
hereafter conducted by Guarantor connected with and symbolized by any of the
aforementioned properties and assets; and
          (f) Intellectual Property Collateral shall include, without
limitation, rights and interests pursuant to licensing or other contracts in
favor of Guarantor pertaining to patents, trademarks, copyrights and other
intellectual property presently or in the future owned or used by third Persons.
          “Inventory” means any and all of Guarantor’s presently existing and
hereafter acquired goods (including software embedded in such goods) of every
kind and description (including goods in transit) which are held for sale or
lease, or to be furnished under a contract of service or which have been so
leased or furnished, or other disposition, wherever located, including those
held for display or demonstration or out on lease or consignment or are raw
materials, work in process, finished materials, or materials used or consumed,
or to be used or consumed, in Guarantor’s business, and the resulting product or
mass, and all repossessed, returned, rejected, reclaimed and replevied goods,
together with all materials, parts, supplies, packing and shipping materials
used or usable in connection with the manufacture, packing, shipping,
advertising, selling or furnishing of such goods; and all other items hereafter
acquired by Guarantor by way of substitution, replacement, return, repossession
or otherwise, and all additions and accessions thereto, and any Document
representing or relating to any of the foregoing at any time.
          “Investment Property” means any and all of Guarantor’s presently
existing and hereafter acquired investment property.
          “Letter of Credit Rights” means any and all of Guarantor’s presently
existing and hereafter acquired letter of credit rights.
          “Negotiable Collateral” means any and all of Guarantor’s presently
existing and hereafter acquired or arising letters of credit, letter of credit
rights, advises of credit, certificates of deposit, notes, drafts, money,
Instruments, Documents and tangible Chattel Paper.
          “Proceeds” means whatever is receivable or received from or upon the
sale, lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Collateral, including “proceeds” as defined in
the Code, any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to or for the account of Guarantor from time to time with respect to any
of the Collateral, any and all payments (in any form whatsoever) made or due and
payable to Guarantor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
Governmental Authority), any and all other

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amounts from time to time paid or payable under or in connection with any of the
Collateral or for or on account of any damage or injury to or conversion of any
Collateral by any Person, any and all other tangible or intangible property
received upon the sale or disposition of Collateral, and all proceeds of
proceeds.
          “Rights to Payment” means all Accounts and any and all rights and
claims to the payment or receipt of money or other forms of consideration of any
kind in, to and under all electronic Chattel Paper, General Intangibles, Letter
of Credit Rights, Negotiable Collateral and Proceeds thereof.
          “Secured Obligations” shall have the meaning of “Guaranteed
Obligations” under the Guaranty and shall also mean any and all debts,
liabilities, obligations, or undertakings owing by Guarantor to Bank arising
under, advanced pursuant to, or evidenced by this Security Agreement, whether
direct or indirect, absolute or contingent, matured or unmatured, due or to
become due, voluntary or involuntary, whether now existing or hereafter arising,
and including all interest not paid when due and all Expenses which Guarantors
are required to pay or reimburse pursuant to this Security Agreement, the
Guaranty, the other Loan Documents or by law.
          “Security Agreement” shall mean this Security Agreement, as amended or
restated from time to time.
          “Supporting Obligations” has the meaning given to such term in the
Code.
     2. Construction. Unless the context of this Security Agreement clearly
requires otherwise, references to the plural include the singular, references to
the singular include the plural, the part includes the whole, “including” is not
limiting, and “or” has the inclusive meaning represented by the phrase “and/or.”
References in this Security Agreement to “determination” by Bank include
reasonable estimates (absent manifest error) by Bank, as applicable (in the case
of quantitative determinations) and reasonable beliefs (absent manifest error)
by Bank, as applicable (in the case of qualitative determinations). The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Security
Agreement refer to this Security Agreement as a whole and not to any particular
provision of this Security Agreement. Article, section, subsection, exhibit, and
schedule references are to this Security Agreement unless otherwise specified.
     3. Creation of Security Interest. Guarantor hereby grants to Bank a
continuing security interest in all presently existing and hereafter acquired or
arising Collateral in order to secure the prompt payment and performance of all
of the Secured Obligations. Guarantor acknowledges and affirms that such
security interest in the Collateral has attached to all Collateral without
further act on the part of Bank, Lenders or Guarantor.
     4. Further Assurances.
          4.1 Guarantor shall execute and deliver to Bank concurrently with
Guarantor’s execution of this Security Agreement, and from time to time at the
request of Bank, and Guarantor hereby authorizes Bank to file, all financing
statements, continuation financing

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statements, fixture filings, security agreements, chattel mortgages,
assignments, and all other documents that Bank may request, in form satisfactory
to Bank, to perfect and maintain perfected Bank’s security interests in the
Collateral, and in order to consummate fully all of the transactions
contemplated by this Security Agreement, Guaranty and the Loan Agreement.
Guarantor hereby irrevocably makes, constitutes, and appoints Bank (and Bank’s
officers, employees, or agents) as Guarantor’s true and lawful attorney with
power to sign the name of Guarantor on any of the above-described documents or
on any other similar documents which need to be executed, recorded, or filed,
and to do any and all things necessary in the name and on behalf of Guarantor in
order to perfect, or continue the perfection of, Bank’s security interests in
the Collateral. Guarantor agrees that neither Bank, nor any of its designees or
attorneys-in-fact, will be liable for any act of commission or omission, or for
any error of judgment or mistake of fact or law with respect to the exercise of
the power of attorney granted under this Section 4.1, other than as a result of
its or their gross negligence or wilful misconduct. THE POWER OF ATTORNEY
GRANTED UNDER THIS SECTION 4.1 IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE UNTIL ALL OF THE SECURED OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN
FULL, THE GUARANTY TERMINATED, AND ALL GUARANTOR’S DUTIES HEREUNDER AND
THEREUNDER HAVE BEEN DISCHARGED IN FULL.
          4.2 Without limiting the generality of the foregoing Section 4.1 or
any of the provisions of the Loan Agreement, Guarantor will: (i) at the request
of Bank, mark conspicuously all of its records pertaining to the Collateral with
a legend, in form and substance satisfactory to Bank, indicating that the
Collateral is subject to the security interest granted hereby; (ii) immediately
mark all Chattel Paper with a conspicuous legend indicating Bank’s security
interest therein and otherwise in form and substance satisfactory to Bank; and
(iii) upon demand of Bank, allow inspection of Collateral by Bank or Persons
designated by Bank at any time during normal business hours.
          4.3 With respect to the Negotiable Collateral (other than drafts
received in the ordinary course of business so long as no Event of Default is
continuing), Guarantor shall, immediately upon request by Bank, endorse (where
appropriate) and assign the Negotiable Collateral over to Bank, and deliver to
Bank actual physical possession of the Negotiable Collateral to Bank together
with any instruments of transfer or assignment, all in form and substance
satisfactory to Bank, in order to fully perfect the security interest therein of
Bank.
          4.4 In the event that any Collateral is in the possession of a third
party, Guarantor shall join with Bank in notifying such third party of Bank’s
security interest and obtaining an acknowledgement from such third party that it
is holding such Collateral for the benefit of Bank.
          4.5 Guarantor shall use its commercially reasonable efforts in
obtaining a control agreement in form and substance satisfactory to Bank with
respect to all Deposit Accounts, electronic Chattel Paper, Investment Property,
and Letter of Credit Rights.
          4.6 Guarantor shall promptly notify Bank of any Commercial Tort Claims
it may bring against any Person, including the name and address of each
defendant, a summary of

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the facts, an estimate of Guarantor’s damages, copies of any complaint or demand
letter submitted by Guarantor, and such other information as Bank may request,
and in connection therewith, at Bank’s request, Guarantor and Bank shall enter
into an amendment to this Security Agreement granting a security interest to
Bank in each such Commercial Tort Claim to secure the Secured Obligations.
     5. Representations and Warranties. In order to induce Bank to enter into
the Loan Agreement and/or to make Loans to Borrowers or issue any Letters of
Credit, in addition to the representations and warranties of Guarantor set forth
in the Guaranty which are incorporated herein by this reference, Guarantor
represents and warrants to Bank that on the Closing Date and thereafter on the
date of each and every Borrowing or issuance of a Letter of Credit:
          5.1 Legal Name; State of Organization; Location of Chief Executive
Office and Collateral; FEIN. Guarantor’s exact legal name, state of
incorporation, FEIN and charter or organizational identification number is
accurately set forth in Schedule 1. Guarantor’s chief executive office is
located at the address set forth in Schedule 1, and all other locations where
Guarantor conducts business or Collateral is kept are set forth in Schedule 1.
          5.2 Locations of Guarantor’s Books. All locations where Guarantor’s
Books are kept, including all equipment necessary for accessing Guarantor’s
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping Guarantor’s Books or collecting
Rights to Payment for Guarantor, are set forth in Schedule 1.
          5.3 Trade Names and Trade Styles. All trade names and trade styles
under which Guarantor presently conducts its business operations are set forth
in Schedule 1, and, except as set forth in Schedule 1, Guarantor has not, at any
time during the preceding five years: (i) been known as or used any other
corporate, trade or fictitious name; (ii) changed its name; (iii) been the
surviving or resulting corporation in a merger or consolidation; or (iv)
acquired through asset purchase or otherwise any business of any Person.
          5.4 Ownership of Collateral. Guarantor has rights in power to transfer
the Collateral, and Guarantor’s title to the Collateral is free from all Liens
and restrictions other than Permitted Liens.
          5.5 Enforceability; Priority of Security Interest. (i) This Security
Agreement creates a security interest which is enforceable against the
Collateral in which Guarantor now has rights and will create a security interest
which is enforceable against the Collateral in which Guarantor hereafter
acquires rights at the time Guarantor acquires any such rights, and (ii) Bank
has a perfected security interest (to the fullest extent perfection can be
obtained by filing, notification to third parties, possession or control) and a
first priority security interest in the Collateral in which Guarantor now has
rights (subject only to Permitted Liens), and will have a perfected and first
priority security interest (to the fullest extent perfection can be obtained by
filing, notification to third parties, possession or control) in the Collateral
in which Guarantor hereafter acquires rights at the time Guarantor acquires any
such rights (subject only to Permitted Liens), in each case securing the payment
and performance of the Guaranteed Obligations.

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          5.6 Other Financing Statements. Other than financing statements in
favor of Bank and financing statements filed in connection with Permitted Liens,
no effective financing statement naming Guarantor as debtor, assignor, grantor,
mortgagor, pledgor or the like and covering all or any part of the Collateral is
on file in any filing or recording office in any jurisdiction.
          5.7 Rights to Payment.
               (a) the Rights to Payment represent valid, binding and
enforceable obligations of the Account Debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in accordance
with the terms and provisions contained in any documents related thereto, and
are and will be genuine, free from Liens, adverse claims, counterclaims,
setoffs, defaults, disputes, defenses, retainages, holdbacks and conditions
precedent of any kind of character, except to the extent reflected by
Guarantor’s reserves for uncollectible Rights to Payment;
               (b) to Guarantor’s knowledge, all Account Debtors and other
obligors on the Rights to Payment are Solvent and generally paying their debts
as they come due;
               (c) all Rights to Payment comply with all applicable laws
concerning form, content and manner of preparation and execution, including
where applicable any federal and state consumer credit laws;
               (d) Guarantor has not assigned any of its rights under the Rights
to Payment other than to Bank pursuant to this Security Agreement;
               (e) all statements made, all unpaid balances and all other
information in Guarantor’s Books and other documentation relating to the Rights
to Payment are true and correct and in all respects what they purport to be; and
               (f) Guarantor has no knowledge of any fact or circumstance which
would impair the validity or collectibility of any of the Rights to Payment.
          5.8 Inventory. No Inventory is stored with any bailee, warehouseman or
similar Person or on any premises leased to Guarantor, nor has any Inventory
been consigned to Guarantor or consigned by Guarantor to any Person or is held
by Guarantor for any Person under any “bill and hold” or other arrangement.
          5.9 Intellectual Property.
               (a) except as set forth in Schedule 1, Guarantor (directly or
through any Subsidiary) does not own, possess or use under any licensing
arrangement any patents, copyrights, trademarks, service marks or trade names,
nor is there currently pending before any Governmental Authority any application
for registration of any patent, copyright, trademark, service mark or trade
name;

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               (b) all patents, copyrights, trademarks, service marks and trade
names are subsisting and have not been adjudged invalid or unenforceable in
whole or in part;
               (c) all maintenance fees required to be paid on account of any
patents have been timely paid for maintaining such patents in force, and, to the
best of Guarantor’s knowledge, each of the patents is valid and enforceable and
Guarantor has notified Bank in writing of all prior art (including public uses
and sales) of which it is aware;
               (d) to the best of Guarantor’s knowledge after due inquiry, no
infringement or unauthorized use presently is being made of any Intellectual
Property Collateral by any Person;
               (e) Guarantor is the sole and exclusive owner of the Intellectual
Property Collateral and the past, present and contemplated future use of such
Intellectual Property Collateral by Guarantor has not, does not and will not
infringe or violate any right, privilege or license agreement of or with any
other Person; and
               (f) Guarantor owns, has material rights under, is a party to, or
an assignee of a party to all material licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, trade names and
all other intellectual property Collateral necessary to continue to conduct its
business as heretofore conducted.
          5.10 Equipment.
               (a) none of the Equipment or other Collateral is affixed to real
property, except Collateral with respect to which Guarantor has supplied Bank
with all information and documentation necessary to make all fixture filings
required to perfect and protect the priority of Bank’s security interest in all
such Collateral which may be fixtures, as against all Persons having an interest
in the premises to which such property may be affixed; and
               (b) none of the Equipment is leased from or to any Person, except
as set forth in Schedule 1.
          5.11 Deposit Accounts. The names and addresses of all financial
institutions at which Guarantor maintains its Deposit Accounts, and the account
numbers and account names of such Deposit Accounts, are set forth in Schedule 1.
          5.12 Investment Property. All Investment Property is set forth and
described in Schedule 1, and all financial institutions or financial
intermediaries holding or in possession of such Investment Property are set
forth in Schedule 1.
          5.13 Commercial Tort Claims. All of Guarantor’s Commercial Tort Claims
that it has brought against any Person, including the name and address of each
defendant, a summary of the facts, and an estimate of such Guarantor’s damages,
are set forth in Schedule 1.
     6. Covenants. In addition to the covenants of Guarantor set forth in the
Guaranty which are incorporated herein by this reference, Guarantor agrees that
from the Closing Date and

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thereafter until the payment, performance and satisfaction in full of the
Guaranteed Obligations, and all of Bank’s and Lenders’ obligations under the
Loan Agreement to Borrowers have been terminated and no Letters of Credit are
outstanding:
          6.1 Defense of Collateral. Guarantor shall appear in and defend any
action, suit or proceeding which may affect its title to or right or interest
in, or Bank’s or Lenders’ right or interest in, the Collateral.
          6.2 Preservation of Collateral. Guarantor shall do and perform all
commercially reasonable acts that may be necessary and appropriate to maintain,
preserve and protect the Collateral.
          6.3 Compliance with Laws, Etc. Guarantor shall comply with all laws,
regulations and ordinances, and all policies of insurance, relating to the
possession, operation, maintenance and control of the Collateral.
          6.4 Location of Guarantor’s Books and Chief Executive Office.
Guarantor shall: (i) keep all Guarantor’s Books at the locations set forth in
Schedule 1; and (ii) maintain the location of Guarantor’s chief executive office
or principal place of business at the location set forth in Schedule 1;
provided, however, that Guarantor may amend Schedule 1 so long as (i) such
amendment occurs by written notice to Bank not less than 30 days prior to the
date on which the location of Guarantor’s Books or Guarantor’s chief executive
office or principal place of business is changed, and (ii) at the time of such
written notification, Guarantor executes and delivers any financing statement
amendments or fixture filing amendments necessary to perfect or continue
perfected Bank’s security interests in the Collateral and also obtains for Bank
such duly executed Collateral Access Agreement as Bank shall require with
respect to such new location.
          6.5 Location of Collateral. Guarantor shall keep the Inventory and
Equipment only at the locations identified on Schedule 1; provided, however,
that Guarantor may amend Schedule 1 so long as (i) such amendment occurs by
written notice to Bank not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, (ii) such new location is
within the continental United States, and (iii) at the time of such written
notification, Guarantor executes and delivers any financing statements or
fixture filings necessary to perfect and continue perfected Bank’s security
interests in such Assets and also obtains for Bank such duly executed Collateral
Access Agreement as Bank shall require with respect to such new location.
          6.6 Change in Name, Trade Name, Trade Style or FEIN. Guarantor shall
not change its name, trade names, trade styles or FEIN, or add any new trade
names or trade styles from those listed on Schedule 1; provided, however, that
Guarantor may amend Schedule 1 so long as (i) such amendment occurs by written
notice to Bank not less than 30 days prior to the date on which such new name,
trade name, trade style or FEIN becomes effective, and (ii) at the time of such
written notification, Guarantor executes and delivers any financing statement
amendments or fixture filing amendments necessary to continue perfected Bank’s
security interests in the Collateral.

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          6.7 Sate of Incorporation or Formation. Guarantor shall not change the
state of its incorporation or formation.
          6.8 Maintenance of Records. Guarantor shall keep separate, accurate
and complete Guarantor’s Books, disclosing Bank’s security interest hereunder.
          6.9 Disposition of Collateral. Guarantor shall not surrender or lose
possession of (other than to Bank), sell, lease, rent, or otherwise dispose of
or transfer any of the Collateral or any right or interest therein other than
the sale of Inventory in the ordinary course of business.
          6.10 Liens. Guarantor shall keep the Collateral free of all Liens
except Permitted Liens.
          6.11 Leased Premises. At Bank’s request, Guarantor shall obtain from
each Person from whom Guarantor leases any premises at which any Collateral is
at any time present, such Collateral Access Agreements as Bank may require.
          6.12 Rights to Payment. Guarantor shall:
               (a) perform and observe all terms and provisions of the Rights to
Payment and all obligations to be performed or observed by it in connection
therewith and maintain the Rights to Payment in full force and effect;
               (b) enforce all Rights to Payment strictly in accordance with
their terms, and take all such action to such end as may be from time to time
reasonably requested by Bank;
               (c) if, to the knowledge of Guarantor, any dispute, setoff,
claim, counterclaim or defense shall exist or shall be asserted or threatened
with respect to a Right to Payment (whether with or against Guarantor or
otherwise), disclose such fact fully to Bank in Guarantor’s Books relating to
such Account or other Right to Payment and in connection with any report
furnished by Guarantor to Bank relating to such Right to Payment;
               (d) furnish to Bank such information and reports regarding the
Rights to Payment as Bank may request, and upon request of Bank make such
demands and requests for information and reports as Guarantor is entitled to
make in respect of the Rights to Payment; and
               (e) upon the occurrence of any Event of Default, establish such
lockbox or similar arrangements for the payment of the Rights to Payment as Bank
shall require.
          6.13 Inventory. Guarantor shall:
               (a) at such times as Bank shall request, prepare and deliver to
Bank periodic reports pertaining to the Inventory, in form and substance
satisfactory to Bank;
               (b) upon the request of Bank, take a physical listing of the
Inventory and promptly deliver a copy of such physical listing to Bank; provided
that unless an Event of

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Default exists, Bank shall not request such a physical listing of the Inventory
more frequently than once per calendar year;
               (c) not store any Inventory with a bailee, warehouseman or
similar Person or on premises leased to Guarantor without obtaining for Bank
such Collateral Access Agreements as Bank shall require; and
               (d) not dispose of any Inventory on a bill-and-hold, guaranteed
sale, sale and return, sale on approval, consignment or similar basis, nor
acquire any Inventory from any Person on any such basis, without in each case
giving Bank prior written notice thereof.
          6.14 Equipment. Guarantor shall, upon Bank’s request, deliver to Bank
a report of each item of Equipment, in form and substance satisfactory to Bank.
          6.15 Intellectual Property Collateral. Guarantor shall:
               (a) not enter into any agreement (including any license or
royalty agreement) pertaining to any Intellectual Property Collateral without in
each case giving Bank prior notice thereof;
               (b) not allow or suffer any Intellectual Property Collateral to
become abandoned, nor any registration thereof to be terminated, forfeited,
expired or dedicated to the public;
               (c) promptly give Bank notice of any rights Guarantor may obtain
to any new patentable inventions, trademarks, servicemarks, copyrightable works
or other new Intellectual Property Collateral, prior to the filing of any
application for registration thereof; and
               (d) diligently prosecute all applications for patents, copyrights
and trademarks, and file and prosecute any and all continuations,
continuations-in-part, applications for reissue, applications for certificate of
correction and like matters as shall be reasonable and appropriate in accordance
with prudent business practice, and promptly and timely pay any and all
maintenance, license, registration and other fees, taxes and expenses incurred
in connection with any Intellectual Property Collateral.
     7. Collection of Rights to Payment. Bank shall have the right at any time
(i) to notify the Account Debtors to make payments directly to Bank or a lockbox
account as set forth in clause (iii) of this Section 7, (ii) to enforce the
Guarantor’s rights against the Account Debtors, and (iii) to require that all
payments made by Account Debtors be deposited directly into a lockbox account as
Bank may specify, pursuant to a lockbox agreement in form and substance
satisfactory to Bank, with a lockbox servicing Bank acceptable to Bank.
     8. Events of Default. The occurrence of any Event of Default under the Loan
Agreement shall constitute an event of default (“Event of Default”) under this
Security Agreement.

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     9. Rights and Remedies.
          9.1 During the continuance of an Event of Default, Bank, without
notice or demand, may do any one or more of the following, all of which are
authorized by Guarantor:
               (a) Settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which Bank considers advisable, and in such
cases, Bank will credit the Secured Obligations with only the net amounts
received by Bank in payment of such disputed Accounts after deducting all Bank
Expenses incurred or expended in connection therewith;
               (b) Cause Guarantor to hold all returned Inventory in trust for
Bank segregate all returned Inventory from all other property of Guarantor or in
Guarantor’s possession and conspicuously label said returned Inventory as the
property of Bank;
               (c) Without notice to or demand upon Guarantor, Borrowers or any
other guarantor, make such payments and do such acts as Bank considers necessary
or reasonable to protect its security interests in the Collateral. Guarantor
agrees to assemble the Collateral if Bank so requires, and to make the
Collateral available to Bank as Bank may designate. Guarantor authorizes Bank to
enter the premises where the Collateral is located, to take and maintain
possession of the Collateral, or any part of it, and to pay, purchase, contest,
or compromise any encumbrance, charge, or Lien that in Bank’s determination
appears to conflict with its security interests and to pay all expenses incurred
in connection therewith. With respect to any of Guarantor’s owned or leased
premises, Guarantor hereby grants Bank a license to enter into possession of
such premises and to occupy the same, without charge, for up to 120 days in
order to exercise any of Bank’s rights or remedies provided herein, at law, in
equity, or otherwise;
               (d) Without notice to Guarantor (such notice being expressly
waived), and without constituting a retention of any collateral in satisfaction
of an obligation (within the meaning of Section 47-9505 of the Code), set off
and apply to the Secured Obligations any and all (i) balances and Deposit
Accounts of Guarantor held by Bank, or (ii) indebtedness at any time owing to or
for the credit or the account of Guarantor held by Bank;
               (e) Hold, as cash collateral, any and all balances and Deposit
Accounts of Guarantor held by Bank, to secure the full and final repayment of
all of the Secured Obligations;
               (f) Ship, reclaim, recover, store, finish, maintain, repair,
prepare for sale, advertise for sale, and sell (in the manner provided for
herein) the Collateral. Bank is hereby granted a license or other right to use,
without charge, Guarantor’s labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks, service marks, and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
and Guarantor’s rights under all licenses and all franchise agreements shall
inure to Bank’s benefit;

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               (g) Sell the Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including Guarantor’s premises) as Bank
determines is commercially reasonable. Bank shall have no obligation to clean-up
or otherwise prepare the Collateral for sale. It is not necessary that the
Collateral be present at any such sale;
               (h) Bank shall give notice of the disposition of the Collateral
as follows:
               (i) Bank shall give Guarantor and each holder of a security
interest in the Collateral who has filed with Bank a written request for notice,
a notice in writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to be made of
the Collateral, then the time on or after which the private sale or other
disposition is to be made;
                    (i) The notice shall be personally delivered or mailed,
postage prepaid, to Guarantor as provided in Section 15 of the Guaranty, at
least ten (10) days before the date fixed for the sale, or at least ten
(10) days before the date on or after which the private sale or other
disposition is to be made; no notice needs to be given prior to the disposition
of any portion of the Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a recognized market.
Notice to Persons other than Guarantor claiming an interest in the Collateral
shall be sent to such addresses as they have furnished to Bank;
                    (ii) If the sale is to be a public sale, Bank also shall
give notice of the time and place by publishing a notice one time at least ten
(10) days before the date of the sale in a newspaper of general circulation in
the county in which the sale is to be held;
                    (iii) Bank may credit bid and purchase at any public sale;
and
               (j) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Guarantor. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Bank to Guarantor.
          9.2 Bank shall have no obligation to attempt to satisfy the Secured
Obligations by collecting them from any third Person which may be liable for
them or any portion thereof, and Bank may release, modify or waive any
collateral provided by any other Person as security for the Secured Obligations
or any portion thereof, all without affecting Bank’s rights against Guarantor.
Guarantor waives any right it may have to require Bank to pursue any third
Person for any of the Secured Obligations.
          9.3 Bank may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral, and Bank’s
compliance therewith will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
          9.4 Bank may sell the Collateral without giving any warranties as to
the Collateral. Bank may specifically disclaim any warranties of title or the
like. This procedure will

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not be considered to adversely affect the commercial reasonableness of any sale
of the Collateral.
          9.5 If Bank sells any of the Collateral upon credit, Guarantor will be
credited only with payments actually made by the purchaser, received by Bank and
applied to the indebtedness of the purchaser. In the event that the purchaser
fails to pay for the Collateral, Bank may resell the Collateral and Guarantor
will be credited with the proceeds of such sale.
          9.6 Bank shall be under no obligation to marshal any assets in favor
of Guarantors, or against or in payment of the Secured Obligations or any other
obligation owed to Secured Party by Debtor or any other Person.
          9.7 Upon the exercise by Bank of any power, right, privilege, or
remedy pursuant to this Security Agreement which requires any consent, approval,
registration, qualification, or authorization of any Governmental Authority,
Guarantor agrees to execute and deliver, or will cause the execution and
delivery of, all applications, certificates, instruments, assignments, and other
documents and papers that Bank or any purchaser of the Collateral may be
required to obtain for such governmental consent, approval, registration,
qualification, or authorization.
          9.8 Guarantor and each Borrower each hereby irrevocably stipulate and
agree that Bank has the right under this Security Agreement, upon the occurrence
of an Event of Default, to seek the appointment of a receiver, trustee, or
similar official over Guarantor to effect the transactions contemplated by this
Security Agreement, including without limitation, to seek from the appropriate
licensing authority an involuntary transfer of the Licenses (as defined in the
Loan Agreement) in connection with Bank’s foreclosure or enforcement
proceedings, and that Bank is entitled to seek such relief. Guarantor and each
Borrower each hereby irrevocably agree not to object to such appointment on any
grounds.
          9.9 The rights and remedies of Bank under this Security Agreement, the
Guaranty and the other Loan Documents, and all other agreements contemplated
hereby and thereby shall be cumulative. Bank shall have all other rights and
remedies not inconsistent herewith as provided under the Code, by law, or in
equity. No exercise by Bank of any one right or remedy shall be deemed an
election of remedies, and no waiver by Bank of any default on Guarantor’s part
shall be deemed a continuing waiver of any further defaults. No delay by Bank
shall constitute a waiver, election or acquiescence with respect to any right or
remedy.
     10. Bank Not Liable. So long as Bank complies with the obligations, if any,
imposed by the Code, Bank shall not otherwise be liable or responsible in any
way or manner for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion or from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever, Guarantor
bears the risk of loss or damage of the Collateral.
     11. Indefeasible Payment. The Secured Obligations shall not be considered
indefeasibly paid for purposes of this Security Agreement unless and until all
payments to Bank

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are no longer subject to any right on the part of any Person, including
Guarantor, Guarantor as a debtor in possession, or any trustee (whether
appointed under the Bankruptcy Code or otherwise) of Guarantor or Guarantor’s
Assets to invalidate or set aside such payments or to seek to recoup the amount
of such payments or any portion thereof, or to declare same to be fraudulent or
preferential. In the event that, for any reason, any portion of such payments to
Bank is set aside or restored, whether voluntarily or involuntarily, after the
making thereof, then the obligation intended to be satisfied thereby shall be
revived and continued in full force and effect as if said payment or payments
had not been made.
     12. Notices. All notices or demands by any party hereto to the other party
and relating to this Security Agreement shall be made in the manner and to the
addresses set forth in Section 15 of the Guaranty.
     13. General Provisions.
          13.1 Successors and Assigns. This Security Agreement shall bind and
inure to the benefit of the respective successors and assigns of Guarantor and
Bank; provided, however, that Guarantor may not assign this Security Agreement
nor delegate any of its duties hereunder without Bank’s prior written consent
and any prohibited assignment or delegation shall be absolutely void. No consent
by Bank to an assignment by Guarantor shall release Guarantor from the Secured
Obligations. Bank reserves its right to sell, assign, transfer, negotiate, or
grant participations in all or any part of, or any interest in, the rights and
benefits hereunder pursuant to and in accordance with the provisions of the Loan
Agreement. In connection therewith, Bank may disclose all documents and
information which Bank now or hereafter may have relating to Guarantor,
Guarantor’s business, or the Collateral to any such prospective or actual
Transferee, subject to the terms of Section 10.5(e) of the Loan Agreement.
          13.2 Exhibits and Schedules. All of the exhibits and schedules
attached hereto shall be deemed incorporated by reference.
          13.3 No Presumption Against Any Party. Neither this Security Agreement
nor any uncertainty or ambiguity herein shall be construed or resolved against
Bank, Lenders or Guarantor, whether under any rule of construction or otherwise.
On the contrary, this Security Agreement has been reviewed by each of the
parties and their counsel and shall be construed and interpreted according to
the ordinary meaning of the words used so as to accomplish fairly the purposes
and intentions of all parties hereto.
          13.4 Amendments and Waivers. Any provision of this Security Agreement,
the Guaranty or any of the Loan Documents to which Guarantor is a party may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the party asserted to be bound thereby, and then such amendment or
waiver shall be effective only in the specific instance and specific purpose for
which given.
          13.5 Counterparts; Integration; Effectiveness. This Security Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Security Agreement

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constitutes the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof. This Security Agreement shall become
effective when executed by each of the parties hereto and delivered to Bank.
          13.6 Severability. The provisions of this Security Agreement are
severable. The invalidity, in whole or in part, of any provision of this
Security Agreement shall not affect the validity or enforceability of any other
of its provisions. If one or more provisions hereof shall be declared invalid or
unenforceable, the remaining provisions shall remain in full force and effect
and shall be construed in the broadest possible manner to effectuate the
purposes hereof.
     14. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF ARIZONA, WITHOUT REGARD FOR PRINCIPLES OF
CONFLICTS OF LAWS.
          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF
MARICOPA, STATE OF ARIZONA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT BANK’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE BANK ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. EACH GUARANTOR AND BANK WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT
THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 14.
          (c) EACH GUARANTOR AND BANK HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GUARANTOR AND BANK
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF

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LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
[remainder of this page intentionally left blank]

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     IN WITNESS WHEREOF, the parties have executed this Security Agreement as of
the date first set forth above.

              Guarantor:   MATRIXX ORAL CARE, LLC    
 
           
 
  By:        
 
  Name:  
 
William Hemelt    
 
  Title:   Manager    
 
            Bank:   COMERICA BANK    
 
           
 
  By:        
 
           
 
  Name:   William J. Kirschner    
 
  Title:   Vice President    
 
            Borrowers For Purposes of Section 9.8 Only:   MATRIXX INITIATIVES,
INC.    
 
           
 
  By:        
 
           
 
  Name:   William Hemelt    
 
  Title:   Executive Vice President and CFO    
 
                ZICAM, LLC    
 
           
 
  By:        
 
           
 
  Name:   William Hemelt    
 
  Title:   Manager    

Security Agreement (Guarantor)

S-1

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SCHEDULE 1

     
Section 5.1
  Legal Name, State of Organization FEIN and Charter Identification Number
 
   
Section 5.1
  Location of Chief Executive Office and Collateral
 
   
Section 5.2
  Locations of Guarantor’s Books
 
   
Section 5.3
  Trade Names or Trade Styles
 
   
Section 5.9
  Intellectual Property
 
   
Section 5.10
  Equipment Leases
 
   
Section 5.11
  Deposit Accounts
 
   
Section 5.12
  Investment Property
 
   
Section 5.13
  Commercial Tort Claims

Schedule 1