Exhibit 10.11
 
AMENDED AND RESTATED SECURITY AGREEMENT
 
This AMENDED AND RESTATED SECURITY AGREEMENT, dated as of June 27, 2012, is by
and among Integrated BioPharma, Inc., a Delaware corporation (the “Company”),
each of the Subsidiaries of the Company party hereto from time to time, whether
as an original signatory hereto or as an Additional Debtor (as defined in
Section 4.5 below) (such Subsidiaries, the “Subsidiary Debtors” and,
collectively with the Company, the “Debtors”), and CD Financial, LLC, a Florida
limited liability company, in its capacity as collateral agent (in such
capacity, together with its successors in such capacity, the “Collateral
Agent”), for the benefit of the Secured Parties (as defined in the Securities
Purchase Agreement referred to below).
 
W I T N E S S E T H:
 
WHEREAS, reference is made to the Amended and Restated Securities Purchase
Agreement, dated as of the date hereof (as amended, restated, modified or
supplemented from time to time, the “Securities Purchase Agreement”), by and
between the Company and CD Financial, LLC, a Florida limited liability company
(the “Investor”), which amended and restated the Securities Purchase Agreement,
dated as of February 21, 2008, by and between the Company and Investor in its
entirety (as amended, supplemented or otherwise modified from time to time to
but excluding the date hereof, the “Original SPA”);
 
WHEREAS, reference is made to the Security Agreement, dated as of February 21,
2008 (as amended, supplemented or otherwise modified from time to time to but
excluding the date hereof, the “Original Security Agreement”), by and among the
Company, certain Subsidiaries of the Company party thereto, and the Collateral
Agent;
 
WHEREAS, the Debtors and the Collateral Agent have agreed to amend and restate
the Original Security Agreement in its entirety as set forth herein;
 
WHEREAS, reference is made to Sections 17.9 and 17.10 below; and
 
WHEREAS, the Company and each Debtor that is a Subsidiary of the Company will
directly or indirectly benefit from the extension of credit to the Company
represented by the issuance of the Notes and the other transactions contemplated
by the Securities Purchase Agreement.
 
NOW, THEREFORE, in consideration of the agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
 
1.  
DEFINITIONS.

 
(a) Terms Defined in the Uniform Commercial Code.  Terms used herein that are
defined in Article 9 of the UCC but not otherwise defined in this Agreement
(such as “account”, “chattel paper”, “commercial tort claim”, “deposit account”,
“document”, “equipment”, “fixtures”, “general intangibles”, “goods”,
“instruments”, “inventory”, “investment property”, “letter-of-credit rights”,
“payment intangibles”, “proceeds” and “supporting obligations”) shall have the
respective meanings given such terms in Article 9 of the UCC. It is the intent
of the parties that defined terms in the UCC should be construed in their
broadest sense so that the term “Collateral” will be construed in its broadest
sense.  Accordingly if there are, from time to time, changes to the defined
terms in the UCC that broaden the definitions, they are incorporated herein and
if existing definitions in the UCC are broader than the amended definitions, the
existing ones will be controlling.
 
 
 
 

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(b) Defined Terms.  The following terms shall apply to this Agreement:
 
“Agreement” means this Amended and Restated Security Agreement, dated as of the
date hereof, as the same may be amended, amended and restated, supplemented or
otherwise modified from time to time.
 
“CD Financial, LLC” means CD Financial, LLC, a Florida limited liability
company.
 
“Collateral” means, with respect to each Debtor, all present and after-acquired
personal property of such Debtor, including the following personal property
presently owned or hereafter acquired by such Debtor, wherever situated, and all
additions and accessions thereto and all substitutions and replacements thereof,
and all proceeds, products and accounts thereof, including, without limitation,
all proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and all
dividends, interest, cash, notes, securities, equity interest or other property
at any time and from time to time acquired, receivable or otherwise distributed
in respect of, or in exchange for, any or all of the Pledged Securities:
 
(i) All goods, including, without limitation, (A) all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances, furniture,
special and general tools, fixtures, test and quality control devices and other
equipment of every kind and nature and wherever situated, together with all
documents of title and documents representing the same, all additions and
accessions thereto, replacements therefore, all parts therefore, and all
substitutes for any of the foregoing and all other items used and useful in
connection with such Debtor’s businesses and all improvements thereto; and (B)
all inventory;
 
(ii) All contract rights and other general intangibles, including, without
limitation, all partnership interests, membership interests, stock or other
securities, rights under any of the Organizational Documents of such Debtor,
agreements related to the Pledged Securities, licenses, distribution and other
agreements, computer software (whether “off-the-shelf”, licensed from any third
party or developed by such Debtor), computer software development rights,
leases, franchises, customer lists, quality control procedures, grants and
rights, goodwill, trademarks, service marks, trade styles, trade names, patents,
patent applications, copyrights, Intellectual Property and income tax refunds;
 
(iii) All accounts, together with all instruments, all documents of title
representing any of the foregoing, all rights in any merchandising, goods,
equipment, motor vehicles and trucks which any of the same may represent, and
all right, title, security and guaranties with respect to each account,
including any right of stoppage in transit;
 
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(iv) All documents, letter-of-credit rights, instruments and chattel paper;
 
(v) All commercial tort claims;
 
(vi) All deposit accounts and all cash (whether or not deposited in such deposit
accounts);
 
(vii) All investment property;
 
(viii) All supporting obligations;
 
(ix) All files, records, books of account, business papers, and computer
programs; and
 
(x) All products and proceeds of all of the foregoing Collateral set forth in
clauses (i)-(ix) above.
 
Notwithstanding anything to the contrary contained above in this definition of
“Collateral”, the term “Collateral” shall not include any Excluded Property
 
“Company” has the meaning set forth in the introductory paragraph hereto.
 
“Collateral Agent Parties” has the meaning set forth in Section 15.3.
 
“Excluded Property” means:
 
(a) all rights, title and interest of each Debtor in, to and under any of the
agreements identified in Schedule I hereto; and
 
(b) any Equity Interests of a Foreign Subsidiary; provided that this clause (b)
shall not apply to voting stock of any Foreign Subsidiary representing 65% of
the total voting power of all outstanding voting stock of such Foreign
Subsidiary;
 
provided, however, that Excluded Property shall not include any Proceeds,
substitutions or replacements of any Excluded Property referred to in clause (a)
or (b) (unless such Proceeds, substitutions or replacements would constitute
Excluded Property referred to in clause (a) or (b)).
 
“Foreign Subsidiary” of any Person, shall mean any Subsidiary of such Person
that is not organized or incorporated in the United States of America or any
state, the District of Columbia or any territory thereof.
 
“Indemnitees” has the meaning set forth in Section 16.
 
“Intellectual Property” means, with respect to each Debtor, the collective
reference to all existing rights, priorities and privileges relating to
intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any political
subdivision thereof, whether registered or unregistered and whether published or
unpublished, all registrations and recordings thereof, and all applications in
connection therewith; (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof; (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether 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, or otherwise, and all common law
rights related thereto; (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof; (v) all
rights to obtain any reissues, renewals or extensions of the foregoing; (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
 
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“Original Security Agreement” has the meaning set forth in the Recitals hereto.
 
“Pledged Securities” means, with respect to each Debtor, all investment property
and general intangibles respecting ownership and/or other equity interests in
each Subsidiary of such Debtor, including, without limitation, the shares of
capital stock and the other equity interests in any Person, and any other shares
of capital stock and/or other equity interests of any other Subsidiary of any
Debtor obtained in the future, in each case, all certificates representing such
shares and/or equity interests and, in each case, all rights, options, warrants,
stock, other securities and/or equity interests that may hereafter be received,
receivable or distributed in respect of, or exchanged for, any of the foregoing,
and all rights arising under or in connection with the foregoing, including, but
not limited to, all dividends, interest and cash.
 
 “Securities Purchase Agreement” has the meaning set forth in the Recitals.
 
“Security Interest” has the meaning set forth in Section 2.
 
“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York; provided, however, that, at any time, if by reason of
mandatory provisions of law, any or all of the perfection or priority of the
Collateral Agent’s security interest in any item or portion of the Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect, at such time, in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or priority and for purposes of
definitions relating to such provisions.
 
(c) Terms Defined in the Securities Purchase Agreement.  Any capitalized term
used but not defined herein has the meaning specified in the Securities Purchase
Agreement.
 
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(d) Usage.  Section 1.2 of the Securities Purchase Agreement shall apply herein,
and is incorporated herein by reference, mutatis mutandis, as if a part hereof.
 
2.  
GRANT OF SECURITY INTEREST.

 
As an inducement for the Secured Parties to enter into the transactions
contemplated by the Securities Purchase Agreement and to secure the complete and
timely payment, performance and discharge in full, as the case may be, of all of
the Obligations, each Debtor hereby unconditionally and (subject to Section 12)
irrevocably pledges, grants and hypothecates to the Collateral Agent, for the
benefit of each Secured Party pari passu with each of the other Secured Parties,
a continuing security interest in and to, a lien upon and a right of set off
against all of its respective right, title and interest of whatsoever kind and
nature in and to, the Collateral (the “Security Interest”).
 
Notwithstanding the foregoing, nothing herein shall be deemed to constitute a
pledge, grant, hypothecation or assignment of any asset which, in the event of a
pledge, grant, hypothecation or assignment, becomes void by operation of
applicable law or a pledge, grant, hypothecation or assignment of which is
otherwise prohibited by applicable law (in each case to the extent that such
applicable law is not overridden by Sections 9-406, 9-407 and/or 9-408 of the
UCC or other similar applicable law); provided, however, that to the extent
permitted by applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable law, this
Agreement shall create a valid security interest in the proceeds of such asset.
 
3.  
DELIVERY OF CERTAIN COLLATERAL.

 
Subject to Section 17.11, each Debtor shall deliver or cause to be delivered to
the Collateral Agent, for the benefit of the Secured Parties (a) any and all
certificates and other instruments representing or evidencing the Pledged
Securities; and (b) any and all certificates and other instruments or documents
representing any of the other Collateral, in each case, together with all
necessary endorsements.  The Debtors are, contemporaneously with the execution
hereof, delivering to the Collateral Agent a true and correct copy of each
Organizational Document governing of each Debtor and their respective
Subsidiaries.
 
4.  
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE DEBTORS.

 
A. Each Debtor represents and warrants to, and covenants and agrees with, the
Collateral Agent, for the benefit of the Secured Parties, as follows:
 
4.1. Debtor Information.  As of the Effective Date, all of the information set
forth on Schedule II is true, correct and complete in all respects.  No Debtor
shall change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate
structure, or identity, or add any new fictitious name unless it provides at
least thirty (30) days’ prior written notice to the Collateral Agent of such
change and, at the time of such written notification, such Debtor provides any
financing statements necessary to perfect and continue perfected the perfected
Security Interest granted and evidenced by this Agreement.
 
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4.2. Validity, Perfection and Maintenance of Security Interests.
 
(a) This Agreement creates in favor of the Collateral Agent for the benefit of
the Secured Parties a valid security interest in the Collateral, securing the
payment and performance of the Obligations.  Upon filing of UCC-1 financing
statements with the secretary of state’s office of the state in which such
Debtor is organized, and payment of the applicable filing fees, all security
interests created hereunder in any Collateral owned by such Debtor which may be
perfected by filing UCC-1 financing statements shall have been duly perfected.
 
(b) Each Debtor hereby authorizes the Secured Parties, or any of them, to file
UCC financing statements and any other financing statements or other similar
filings under the UCC with respect to the Security Interest with the proper
filing and recording agencies in any jurisdiction deemed proper by them.  The
Debtors shall, at the Debtors’ sole cost and expense, promptly execute and/or
deliver to the Collateral Agent such further deeds, mortgages, assignments,
security agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the Collateral Agent
may from time to time reasonably request and may in its reasonable discretion
deem necessary to perfect, protect or enforce its security interest in the
Collateral including, without limitation, if applicable, the execution and
delivery of a separate security agreement and assignment with respect to the
Debtors’ Intellectual Property in which the Collateral Agent for the benefit of
the Secured Parties have been granted a security interest hereunder,
substantially in a form reasonably acceptable to the Collateral Agent.
 
(c) The Debtors shall at all times maintain the Security Interest provided for
hereunder as valid and perfected security interests in the Collateral in favor
of the Collateral Agent for the benefit of the Secured Parties until this
Agreement and the Security Interest hereunder shall be terminated pursuant to
Section 12.  The Debtors hereby agree to defend the same against the claims of
any and all Persons.  The Debtors shall obtain and furnish to the Secured
Parties from time to time, upon reasonable demand, such releases and/or
subordinations of claims and Liens which may be required to maintain the
priority of the Security Interest hereunder.
 
4.3. Collateral.
 
(a) Each Debtor is the sole owner of the Collateral owned by it (except for
non-exclusive licenses granted by any Debtor in the ordinary course of
business), free and clear of any Liens (other than Permitted Liens), and is
fully authorized to grant the Security Interest.
 
(b) The Debtors shall keep and preserve their equipment, inventory and other
tangible Collateral in good condition, repair and order, ordinary wear and tear
excepted, and except where failure to do so, individually or in the aggregate,
does not and could not reasonably be expected to result in a Material Adverse
Effect.  Each Debtor shall take all steps reasonably necessary to diligently
pursue and seek to preserve, enforce and collect any rights, claims, causes of
action and accounts receivable in respect of the Collateral consistent with past
practices.
 
(c) The Debtors shall not operate or locate any such Collateral (or cause to be
operated or located) in any area excluded from insurance coverage.
 
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(d) The Debtors shall not transfer, pledge, hypothecate, encumber, license, sell
or otherwise dispose of any of the Collateral except as otherwise permitted or
required under the Securities Purchase Agreement or any other Transaction
Document.
 
(e) So long as this Agreement shall be in effect, the Debtors shall not execute
and shall not knowingly permit to be on file in any applicable governmental
filing or recording office or agency any UCC financing statement or other
similar document or instrument (except (i) to the extent filed or recorded in
favor of the Collateral Agent for the benefit of the Secured Parties pursuant to
the terms of this Agreement, (ii) to the extent filed or recorded in favor of
the Senior Agent or any Senior Lenders pursuant to or in connection with the
Senior Loan Documents, and (iii) filed in respect of any Permitted Liens).
 
(f) As of the Effective Date, the capital stock and other equity interests
listed on Schedule III represent all of the capital stock and other equity
interests of the Company Subsidiaries, and represent all capital stock and other
equity interests owned, directly or indirectly, by the applicable Debtor.  All
of the Pledged Securities are validly issued, fully paid and nonassessable, and
each Debtor is the legal and beneficial owner of the Pledged Securities owned by
it, free and clear of any Lien except for Permitted Liens.  The ownership and
other equity interests in partnerships and limited liability companies (if any)
included in the Pledged Securities by their express terms do not provide that
they are securities governed by Article 8 of the UCC and are not held in a
securities account or by any financial intermediary.  Each Debtor shall vote the
Pledged Securities owned by it to comply with the applicable covenants and
agreements set forth herein and the other Transaction Documents applicable to
it.
 
(g) Such Debtor shall, within ten (10) days of obtaining knowledge thereof,
advise the Secured Parties promptly, in sufficient detail, of any substantial
and material change in the Collateral, and of the occurrence of any event which
would have a material adverse effect on the value of the Collateral or on the
Collateral Agent’s Security Interest therein.  Upon not less than five (5)
Business Days’ prior notice, each Debtor shall permit the Secured Parties and
their representatives and agents to inspect the Collateral at any time during
normal business hours, and to make copies of records pertaining to the
Collateral as may be requested by a Secured Party from time to time, all at the
expense of the Collateral Agent and the Secured Parties.
 
4.4. Insurance.
 
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(a) The assets and properties of each Debtor at all times shall be maintained in
accordance with the requirements of all insurance carriers which provide
insurance with respect to the assets and properties of such Debtor so that such
insurance shall remain in full force and effect.  Each Debtor shall bear the
full risk of any loss of any nature whatsoever with respect to the
Collateral.  At each Borrower’s own cost and expense in amounts and with
carriers reasonably acceptable to the Collateral Agent, each Debtor shall (a)
keep all its insurable properties and properties in which such Debtor has an
interest insured against the hazards of fire, flood, sprinkler leakage, those
hazards covered by extended coverage insurance and such other hazards, and
maintain business interruption insurance, and for such amounts, in each case as
is customary maintained by companies engaged in businesses similar to such
Debtor’s operating in the same or similar locations including business
interruption insurance; (b) maintain a bond in such amounts as is customary in
the case of companies engaged in businesses similar to such Debtor insuring
against larceny, embezzlement or other criminal misappropriation of insured’s
officers and employees who may either singly or jointly with others at any time
have access to the assets or funds of such Debtor either directly or through
authority to draw upon such funds or to direct generally the disposition of such
assets, as is customarily maintained by companies engaged in businesses similar
to the Debtors operating in the same or similar locations including business
interruption insurance; (c) maintain public and product liability insurance
against claims for personal injury, death or property damage suffered by others,
as is customarily maintained by companies engaged in businesses similar to the
Debtors operating in the same or similar locations including business
interruption insurance; (d) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which such Debtor is engaged in business, as is customarily maintained by
companies engaged in businesses similar to Debtor s operating in the same or
similar locations including business interruption insurance; (e) furnish the
Collateral Agent with (i) copies of all policies and evidence of the maintenance
of such policies by the renewal thereof at least thirty (30) days before any
expiration date, and (ii) appropriate loss payable endorsements in form and
substance reasonably satisfactory to the Collateral Agent, naming the Collateral
Agent as an additional insured, mortgagee and lender loss payee as its interests
may appear with respect to all insurance coverage referred to in clauses (a) and
(c) above, and providing (A) that all proceeds thereunder shall be payable to
the Collateral Agent, (B) no such insurance shall be affected by any act or
neglect of the insured or owner of the property described in such policy, and
(C) that such policy and loss payable clauses may not be cancelled, amended or
terminated unless at least thirty (30) days’ prior written notice is given to
the Collateral Agent.  In the event of any loss thereunder, the carriers named
therein hereby are directed by the Collateral Agent and the applicable Debtor to
make payment for such loss to the Collateral Agent and not to such Debtor and
the Collateral Agent jointly.  If any insurance losses are paid by check, draft
or other instrument payable to any Debtor and the Collateral Agent jointly, the
Collateral Agent may endorse such Debtor’s name thereon and do such other things
as the Collateral Agent may deem advisable to reduce the same to cash.  All loss
recoveries received by the Collateral Agent upon any such insurance may be
applied to the Obligations, in such order as the Collateral Agent in its sole
discretion shall determine.  Any surplus shall be paid by the Collateral Agent
to the Debtors or applied as may be otherwise required by law.  Any deficiency
thereon shall be paid by the Debtors to the Collateral Agent, on demand.
 
(b) Anything hereinabove in Section 4.4(a) to the contrary notwithstanding and
subject to the fulfillment of the conditions set forth below, the Collateral
Agent shall remit to the Company insurance proceeds received by the Collateral
Agent during any calendar year under insurance policies procured and maintained
by the Debtors which insure the Debtors’ insurable properties to the extent such
insurance proceeds do not exceed $250,000 in the aggregate during such calendar
year or $100,000 per occurrence.  In the event the amount of insurance proceeds
received by the Collateral Agent for any occurrence exceeds $100,000, then the
Collateral Agent shall not be obligated to remit the insurance proceeds to the
Company unless the Company shall provide the Collateral Agent with evidence
reasonably satisfactory to the Collateral Agent that the insurance proceeds will
be used by the Debtors to repair, replace or restore the insured property which
was the subject of the insurable loss.  In the event the Debtors has previously
received (or, after giving effect to any remittance by the Collateral Agent to
Borrowing Agent would receive) insurance proceeds which equal or exceed $250,000
in the aggregate during the calendar year in question, then the Collateral Agent
may, in its sole discretion, either remit the insurance proceeds to Borrowing
Agent upon Borrowing Agent providing the Collateral Agent with evidence
reasonably satisfactory to the Collateral Agent that the insurance proceeds will
be used by the Debtors to repair, replace or restore the insured property which
was the subject of the insurable loss, or apply the proceeds to the Obligations,
as aforesaid.  The agreement of the Collateral Agent to remit insurance proceeds
in the manner above provided shall be subject in each instance to satisfaction
of each of the following conditions: (x) no Event of Default shall then have
occurred, and (y) the Debtors shall use such insurance proceeds to repair,
replace or restore the insurable property which was the subject of the insurable
loss and for no other purpose.
 
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(c) The parties hereto agree and acknowledge that all of Section 4.4(b) shall
only apply at any time after the Senior Discharge Date.
 
4.5. Additional Debtors.  From time to time subsequent to the date hereof,
pursuant to Section 5.3(h) of the Securities Purchase Agreement, each Subsidiary
of the Company may become a party hereto as an additional Debtor (each, an
“Additional Debtor,” and collectively, the “Additional Debtors”), by executing a
joinder agreement substantially in the form of Exhibit A attached hereto (each,
a “Joinder Agreement”).  Upon delivery of a Joinder Agreement to the Collateral
Agent, notice of which is hereby waived by the Debtors, each Additional Debtor
shall be a Debtor hereunder and shall be as fully a party hereto as if such
Additional Debtor were an original signatory hereto.
 
4.6. Existence.  Such Debtor will do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence and the
rights, qualifications, franchises, governmental authorizations, licenses and
permits material to the conduct of its business, and maintain all requisite
authority to conduct its business in each jurisdiction in which its business is
conducted, except where the failure to do so, individually or in the aggregate,
does not, and could not reasonably be expected to result in a Material Adverse
Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under the Securities
Purchase Agreement.
 
B.           Each Debtor represents and warrants to the Collateral Agent, for
the benefit of the Secured Parties, as follows
 
4.7. Good Standing; Due Authorization, Enforceability.
 
(a) Such Debtor is duly organized, validly existing and in good standing in the
jurisdiction of its formation and has the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted.  Such Debtor is duly qualified to do business and is in good standing
as a foreign corporation or limited liability company in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, have
a Material Adverse Effect.
 
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(b) Such Debtor has the requisite corporate, partnership, limited liability
company or other power and authority to enter into and consummate the
transactions required to be consummated by it as contemplated by this Agreement,
and otherwise to carry out its obligations hereunder.  The execution, delivery
and performance by such Debtor of this Agreement and the consummation by it of
the transactions required to be consummated by it as contemplated hereby have
been duly authorized by all necessary organizational action on the part of such
Debtor and no further action, consent or authorization of such Debtor, or its
board of directors (or Persons performing similar functions), shareholders or
members, or to its knowledge, any Governmental Authority, or by any other Person
or entity is required in connection therewith, except (i) such as have been
obtained or made and are in full force and effect and (ii) filings and
registrations and entering into of control agreements necessary to perfect the
Liens created hereunder.
 
(c) This Agreement has been duly executed and delivered by such Debtor.  This
Agreement constitutes a legal, valid and binding obligation of such Debtor,
enforceable against such Debtor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and similar laws of general application
relating to or affecting the rights and remedies of creditors and by general
principles of equity.
 
4.8. Approvals.  The execution and delivery by such Debtor of this Agreement and
each other Transaction Documents to which it is a party, and the performance by
such Guarantor of its obligations hereunder and thereunder do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority or any other Person, except (i) such as have been
obtained or made and are in full force and effect and (ii) filings and
registrations and the entering into of control agreements necessary to perfect
the Liens created under the applicable Transaction Documents.
 
4.9. No Conflicts.  The execution, delivery and performance of this Agreement by
such Debtor and the performance by such Debtor of its obligations hereunder do
not and will not: (i) violate or conflict with any of the provisions of any
Organizational Documents of such Debtor; (ii) result in a violation of any law,
rule, regulation, order, judgment, injunction, decree, award, or other
restriction of any court, governmental body or arbitrator or any law, rule or
regulation applicable to or binding upon such Debtor (including Federal and
state securities laws and regulations), or to which such Debtor or any of such
Debtor’s property is subject, except to the extent such violation does not, or
would not reasonably be expected, individually or in the aggregate, to result in
a Material Adverse Effect; or (iii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, adverse amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any agreement, indenture, credit facility, debt instrument or other instrument
to which such Debtor is a party or by which any property or asset of such Debtor
is bound or affected, except to the extent such conflict, default or termination
does not, or would not reasonably be expected, individually or in the aggregate,
result in a Material Adverse Effect.
 
4.10. Disclosure.  The representations, warranties and written statements made
by the Debtors contained in this Agreement and the other Transaction Documents
and in the certificates, exhibits and schedules delivered by the Debtors to the
Secured Parties pursuant to this Agreement and the other Transaction Documents,
taken as a whole, do not contain, when furnished, any untrue statement of a
material fact, and do not, when taken as a whole, omit to state a material fact
required to be stated therein or necessary in order to make such
representations, warranties or statements not misleading in light of the
circumstances under which they were made; and, to the extent that any such
information constitutes projections, budgets, estimates or other forward looking
statements, such projections, budgets, estimates or other forward looking
statements were prepared in good faith on the basis of assumptions believed by
the Company to be reasonable at the time such projections, budgets, estimates or
other forward looking statements were furnished (it being understood that
projections, budgets, estimates or other forward looking statements by their
nature are inherently uncertain, that no assurances can be given that
projections, budgets, estimates or other forward looking statements will be
realized, and that actual results in fact may differ materially from any
projections, budgets, estimates or other forward looking statements provided to
the Secured Parties).
 
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5.  
DUTY TO HOLD IN TRUST.

 
5.1. Cash and Payment Obligations.  Upon the occurrence and during the
continuation of an Event of Default, if requested to do so by the Collateral
Agent in writing, each Debtor shall, upon receipt of any revenue, income,
dividend, interest or other sums subject to the Security Interest, whether
payable pursuant to any Note or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for and on behalf of and for the benefit of the Secured
Parties, and shall forthwith endorse and transfer any such sums or instruments,
or both (to the extent permitted by law), to the Collateral Agent for
distribution to the Secured Parties on a pro rata basis for application to the
satisfaction of the Obligations.
 
5.2. Securities and Other Assets.  If a Debtor shall become entitled to receive
or shall receive any securities,  certificates or instruments (including,
without limitation, shares of Pledged Securities or instruments representing
Pledged Securities acquired after the date hereof, or any options, warrants, or
other similar property or certificates representing a dividend or any
distribution in connection with any recapitalization, reclassification or
increase or reduction of capital, or issued in connection with any
reorganization of any of its Subsidiaries) in respect of the Pledged Securities
(whether as an addition to, in substitution of, or in exchange for, such Pledged
Securities or otherwise), such Debtor agrees to (i) accept the same as the agent
of the Secured Parties; (ii) hold the same in trust on behalf of and for the
benefit of the Secured Parties; and (iii) deliver any and all certificates or
instruments evidencing the same to the Collateral Agent, for the benefit of the
Secured Parties, on or before the close of business on the fifth (5th) Business
Day following the receipt thereof by such Debtor, in the exact form received
together with all requisite necessary endorsements, to be held by the Collateral
Agent subject to the terms of this Agreement as Collateral.
 
6.  
RIGHTS AND REMEDIES UPON DEFAULT.

 
6.1. Scope of Rights and Remedies.  Upon the occurrence and during the
continuation of any Event of Default, the Collateral Agent, for the benefit of
the Secured Parties, acting through any agent appointed by it for such purpose,
shall have the right to exercise all of the remedies conferred hereunder and
under the other Transaction Documents, and the Collateral Agent, for the benefit
of the Secured Parties, shall have all the rights and remedies of a secured
party under the UCC.  Without limiting any of the foregoing, upon the occurrence
and during the continuance of any Event of Default, the Collateral Agent shall
have the following rights and powers:
 
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(a) The Collateral Agent shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and assistance of any
Person, any premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Debtors shall assemble the Collateral and
make it available to the Collateral Agent at places which the Collateral Agent
shall reasonably select, whether at the Debtors’ premises or elsewhere, and make
available to the Collateral Agent, without rent, all of the Debtors’ premises
and facilities for the purpose of the Collateral Agent taking possession of,
removing or putting the Collateral in saleable or disposable form.
 
(b) Upon reasonable notice to the Debtors by the Collateral Agent, all rights of
the Debtors to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise and all rights of the Debtors to receive the
dividends and interest which it would otherwise be authorized to receive and
retain, shall cease.  Upon such reasonable notice, the Collateral Agent shall
have the right to receive any interest, cash dividends or other payments on the
Collateral and, at the option of the Collateral Agent, to exercise in the
Collateral Agent’s discretion all voting rights pertaining thereto.  Without
limiting the generality of the foregoing, the Collateral Agent shall have the
right (but not the obligation) to exercise all rights with respect to the
Collateral as if it were the sole and absolute owner thereof, including, without
limitation, to vote and/or to exchange, at its sole discretion, any or all of
the Collateral in connection with a merger, reorganization, consolidation,
recapitalization or other readjustment concerning or involving the Collateral or
a Debtor or any of its Subsidiaries.
 
(c) The Collateral Agent shall have the right to operate the business of the
Debtors using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public or
private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Collateral Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Debtors or right of
redemption of the Debtors, which are hereby expressly waived.  Upon each such
sale, lease, assignment or other transfer of Collateral, the Collateral Agent
may, unless prohibited by applicable law which cannot be waived, purchase all or
any part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of any Debtor, which are hereby waived
and released.
 
(d) The Collateral Agent shall have the right (but not the obligation) to notify
any account debtors and any obligors under instruments or accounts to make
payments directly to the Collateral Agent and to enforce the Debtors’ rights
against such account debtors and obligors.
 
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(e) The Collateral Agent may (but is not obligated to) direct any financial
intermediary or any other Person holding any investment property to transfer the
same to the Collateral Agent or its designee.
 
(f) The Collateral Agent may (but is not obligated to) transfer any or all
Intellectual Property registered in the name of any Debtor at the United States
Patent and Trademark Office and/or Copyright Office into the name of the
Collateral Agent or any designee or any purchaser of any Collateral.
 
6.2. Disposition of Collateral.  The Collateral Agent may comply with any
applicable law in connection with a disposition of Collateral and such
compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.  The Collateral Agent may sell the
Collateral without giving any warranties and may specifically disclaim such
warranties.  If the Collateral Agent sells any of the Collateral on credit, the
Debtors will only be credited with payments actually made by the purchaser.  In
addition, each Debtor waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Collateral Agent’s rights
and remedies hereunder, including, without limitation, its right following and
during the continuation of an Event of Default to take immediate possession of
the Collateral and to exercise its rights and remedies with respect thereto.
 
6.3. License to Use Intellectual Property.  For the purpose of enabling the
Collateral Agent to further exercise rights and remedies under this Section 6 or
elsewhere provided by agreement or applicable law, each Debtor hereby grants to
the Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to such Debtor) to use, license or
sublicense following and during the continuation of  an Event of Default, any
Intellectual Property now owned or hereafter acquired by such Debtor, and
wherever the same may be located, and including in such license access to all
media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof.
 
7.  
APPLICATIONS OF PROCEEDS.

 
The proceeds of any such sale, lease or other disposition of the Collateral
resulting from the exercise of rights and remedies pursuant to Section 6 shall
be applied first, to the expenses of retaking, holding, storing, processing and
preparing for sale, selling and the like (including, without limitation, any
taxes, fees and other costs incurred in connection therewith) of the Collateral,
to the reasonable attorneys’ fees and expenses incurred by the Collateral Agent
and Secured Parties in enforcing their rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction of
the Obligations pro rata among the Secured Parties, and to the payment of any
other amounts required by applicable law, after which the Secured Parties shall
pay to the Debtors any surplus proceeds.  If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at an interest rate
equal to the Default Interest Rate, and the reasonable fees of any attorneys
employed by the Collateral Agent and the Secured Parties to collect such
deficiency.  To the extent permitted by applicable law, each Debtor waives all
claims, damages and demands against the Collateral Agent and the Secured Parties
arising out of the repossession, removal, retention or sale of the Collateral,
unless due solely to the gross negligence or willful misconduct of the
Collateral Agent or the Secured Parties as determined by a final judgment (not
subject to further appeal) of a court of competent jurisdiction.
 
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8.  
SECURITIES LAW PROVISION.

 
Each Debtor recognizes that the Collateral Agent may be limited in its ability
to effect a sale to the public of all or part of the Pledged Securities by
reason of certain prohibitions in the Securities Act or other federal or state
securities laws (collectively, the “Securities Laws”), and may be compelled to
resort to one or more sales to a restricted group of purchasers who may be
required to agree to acquire the Pledged Securities for their own account, for
investment and not with a view to the distribution or resale thereof.  Each
Debtor agrees that sales so made may be at prices and on terms less favorable
than if the Pledged Securities were sold to the public, and that the Secured
Parties have no obligation to delay the sale of any Pledged Securities for the
period of time necessary to register the Pledged Securities for sale to the
public under the Securities Laws.  Each Debtor shall cooperate with the
Collateral Agent in its attempt to satisfy any requirements under the Securities
Laws (including, without limitation, registration thereunder if requested by the
Collateral Agent) applicable to the sale of the Pledged Securities by the
Collateral Agent at any time after the occurrence and during the continuance of
an Event of Default.
 
9.  
COSTS AND EXPENSES.

 
Each Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including, without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Secured Parties.  The
Debtors will also, upon demand, pay to the Collateral Agent, for the benefit of
the Secured Parties, the amount of any and all reasonable expenses, including
the reasonable fees and expenses of its counsel and of any experts and agents,
which the Collateral Agent may incur in connection with (i) the enforcement of
this Agreement or any other Transaction Document; or (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of the Collateral.  Until so paid, any fees payable hereunder shall be added to
the amount payable under the Notes and shall bear interest at the Default
Interest Rate.  The Debtors shall also pay all other claims and charges which
might prejudice, imperil or otherwise affect the Collateral or the Security
Interest therein, except for claims and/or charges that are being contested in
food faith or with respect to which the failure to make payment does not have a
Material Adverse Effect.
 
10.  
RESPONSIBILITY FOR COLLATERAL.

 
The Debtors assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason.  The Collateral Agent agrees to act in accordance
with commercially reasonable standards and the UCC.  Without limiting the
generality of the foregoing, (a) no Secured Party (i) has any duty (either
before or after an Event of Default) to collect any amounts in respect of the
Collateral or to preserve any rights relating to the Collateral, or (ii) has any
obligation to clean-up or otherwise prepare the Collateral for sale; and (b)
each Debtor shall remain obligated and liable under each contract or agreement
included in the Collateral to be observed or performed by such Debtor
thereunder. No Secured Party shall have any obligation or liability under any
such contract or agreement by reason of or arising out of this Agreement or the
receipt by any Secured Party of any payment relating to any of the Collateral,
nor shall any Secured Party be obligated in any manner to perform any of the
obligations of any Debtor under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by any
Secured Party 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 any Secured Party or to
which it may be entitled at any time or times.
 
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11.  
SECURITY INTEREST ABSOLUTE.

 
All rights of the Secured Parties and all obligations of the Debtors hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of any of the Transaction Documents; (b) any change in the
time, manner or place of payment or performance of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of any of the
Transaction Documents (other than any agreement signed by the Collateral Agent
for the benefit of the Secured Parties specifically releasing such obligations);
(c) any exchange, release or nonperfection of any of the Collateral, or any
release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by any of the Secured Parties to obtain, adjust,
settle and cancel in its sole discretion any insurance claims or matters made or
arising in connection with the Collateral; or (e) any other circumstance which
might otherwise constitute any legal or equitable defense available to a Debtor,
or a discharge of all or any part of the Security Interest granted hereby (other
than payment in full of the Obligations).  Until the Obligations shall have been
paid and performed in full, the rights of the Secured Parties shall continue
even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or bankruptcy.  Each
Debtor expressly waives presentment, protest, notice of protest, demand, notice
of nonpayment and demand for performance.  In the event that at any time any
transfer of any Collateral or any payment received by the Collateral Agent for
the benefit of any Secured Party hereunder shall be deemed by final order of a
court of competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States, or
shall be deemed to be otherwise due to any party other than the Secured Parties,
then, in any such event, each Debtor’s obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement, but shall remain a
valid and binding obligation enforceable in accordance with the terms and
provisions hereof.  Each Debtor waives all right to require any Secured Party to
proceed against any other Person or to apply any Collateral which the Collateral
Agent or any Secured Parties may hold at any time, or to marshal assets, or to
pursue any other remedy.  Each Debtor waives any defense arising by reason of
the application of the statute of limitations to any obligation secured hereby.
 
12.  
TERM OF AGREEMENT.

 
This Agreement and the Security Interest shall terminate on the date on which
all Obligations have been indefeasibly paid or satisfied in full; provided,
however, that all indemnities of the Debtors contained in Section 16 shall
survive and remain operative and in full force and effect regardless of the
termination of this Agreement.
 
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13.  
POWER OF ATTORNEY.

 
Each Debtor authorizes the Collateral Agent, and does hereby make, constitute
and appoint the Collateral Agent and its officers, agents, successors or assigns
with full power of substitution, as such Debtor’s true and lawful
attorney-in-fact, with power, in the name of the Collateral Agent or such
Debtor, to, after the occurrence and during the continuance of an Event of
Default, (i) endorse any note, checks, drafts, money orders or other instruments
of payment (including payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into possession of the
Secured Parties; (ii) sign and endorse any financing statement pursuant to the
UCC or any invoice, freight or express bill, bill of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications and
notices in connection with accounts, and other documents relating to the
Collateral; (iii) pay or discharge taxes, Liens (other than Permitted Liens), or
other encumbrances at any time levied or placed on or threatened against the
Collateral; (iv) demand, collect, receipt for, compromise, settle and sue for
monies due in respect of the Collateral; (v) transfer any Intellectual Property
or provide licenses respecting any Intellectual Property; and (vi) generally, at
the option of the Collateral Agent, and at the expense of the Debtors, at any
time, or from time to time, execute and deliver any and all documents and
instruments and do all acts and things which the Collateral Agent deems
necessary to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Agreement and the
other Transaction Documents all as fully and effectually as the Debtors might or
could do.  Each Debtor hereby ratifies all that said attorney shall lawfully do
or cause to be done by virtue of the foregoing sentence.  This power of attorney
is coupled with an interest and shall be irrevocable for the term of this
Agreement and thereafter as long as any of the Obligations shall be
outstanding.  Without limiting the generality of the foregoing, after the
occurrence and during the continuance of an Event of Default, the Collateral
Agent is specifically authorized to execute and file any applications for or
instruments of transfer and assignment of any patents, trademarks, copyrights or
other Intellectual Property with the United States Patent and Trademark Office
and the United States Copyright Office. This power of attorney is coupled with
an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall remain unpaid in full.
 
14.  
OTHER SECURITY.

 
To the extent that the Obligations are now or hereafter secured by property of
Debtor other than the Collateral or by the guarantee, endorsement or property of
any other Person (other than any Loan Party), then the Collateral Agent shall
have the right, in its sole discretion, to pursue, relinquish, subordinate,
modify or take any other action with respect thereto, without in any way
modifying or affecting any of the Secured Parties’ rights and remedies
hereunder. Notwithstanding the foregoing in this Section 14 to the contrary, in
no event shall the Collateral Agent or any Secured Party be entitled to a
mortgage or deed of trust on any real or leasehold property of any Debtor.
 
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15.  
COLLATERAL AGENT.

 
15.1. Appointment, Resignation and Removal.  The Secured Parties hereby appoint
CD Financial, LLC, as  to act as the Collateral Agent for purposes of exercising
any and all rights and remedies of the Secured Parties hereunder and under any
other Transaction Document to which the Collateral Agent is a party. Any Person
serving as the Collateral Agent may resign as Collateral Agent hereunder and
thereunder at any time by giving written notice thereof to each Holder and the
Debtors, and such resignation shall become effective upon the effectiveness of
the appointment of a successor agent in accordance with Section 15.2.  Any
Person serving as Collateral Agent may be removed at any time or from time to
time by the affirmative vote of the Holders holding a majority of the
outstanding principal of the Notes, and such removal shall become effective upon
the effectiveness of the appointment of a successor agent in accordance with
Section 15.2.
 
15.2. Successor Agent.  Upon the resignation or removal of a Collateral Agent, a
successor agent may (or, in the case of removal, shall) be appointed by the
Holders holding a majority of the outstanding principal of the Notes, and such
appointment shall become effective upon (x) such successor agent accepting such
appointment in writing and (y) the Debtors reasonably approving such appointment
(which approval shall not be unreasonably withheld or delayed).  If no successor
agent shall have been so appointed by the Holders within thirty (30) days after
receipt of a resignation notice from the Collateral Agent, then the Collateral
Agent shall have the right to appoint a successor agent in its sole and absolute
discretion, and any successor agent to be so appointed must be approved by the
Debtors (which approval shall not be unreasonably withheld or delayed), and such
successor agent shall commence serving as the Collateral Agent hereunder and
under any other Transaction Document to which the Collateral Agent is a
party,  upon (x) such successor agent’s acceptance of such appointment in
writing and (y) the Debtors’ approval.
 
15.3. Exculpation; Limitation and Delegation of Duties.  Neither the Collateral
Agent nor any of its directors, officers, partners, agents, representatives,
advisors or employees (collectively, the “Collateral Agent Parties”) shall be
liable to any Holder for any action taken or omitted to be taken by any of them
hereunder and under any other Transaction Document to which the Collateral Agent
is a party, except for their own gross negligence or willful misconduct.  None
of Collateral Agent Parties shall be responsible for, or have any duty to
ascertain the veracity, performance or satisfaction of, any representation,
warranty, covenant, agreement or condition made or contained in this Agreement
or any other Transaction Document.  The Collateral Agent may undertake any of
its duties as Collateral Agent hereunder and under any other Transaction
Document to which the Collateral Agent is a party by or through employees,
agents and attorneys-in-fact and shall not be liable to any Holder for the
negligence or misconduct of any such agents or attorneys-in-fact selected in
good faith by the Collateral Agent.
 
15.4. Indemnification by Holders.  The Holders hereby indemnify each of the
Collateral Agent Parties for any losses, obligations, damages, penalties,
actions, judgments, suits, costs, expenses, disbursements and other liabilities
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Collateral Agent in any way relating to or arising out of
the Collateral Agent’s performance of its obligations under this Agreement or
under any other Transaction Document to which the Collateral Agent is a party,
except for (i) those costs that are actually reimbursed by the Debtors under
this Agreement or any other applicable Transaction Document; and (ii)
liabilities directly attributable to the gross negligence or willful misconduct
of any Collateral Agent Party.  The payment of any indemnification obligation
hereunder shall be made by each Holder on a pro rata basis, based on the
principal amount of the Note(s) then owned by such Holder as compared to the
aggregate principal amount of the Notes then outstanding.
 
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16.  
INDEMNIFICATION.

 
The Debtors shall jointly and severally indemnify, reimburse and hold harmless
the  Secured Parties and their respective partners, members, shareholders,
officers, directors, employees and agents (collectively, “Indemnitees”) from and
against any and all losses, claims, liabilities, damages, penalties, suits,
costs and expenses, of any kind or nature, (including fees relating to the cost
of investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of such Indemnitee as determined
by a final, nonappealable decision of a court of competent jurisdiction.  This
indemnification provision is in addition to, and not in limitation of, any other
indemnification provision in the other Transaction Documents.
 
17.  
MISCELLANEOUS.

 
17.1. Severability.  In the event that any provision of this Agreement becomes
or is declared by a court of competent jurisdiction to be illegal, unenforceable
or void, this Agreement shall continue in full force and effect without said
provision; provided, however, that in such case the parties hereto shall
negotiate in good faith to replace such provision with a new provision which is
not illegal, unenforceable or void, as long as such new provision does not
materially change the economic benefits of this Agreement to the parties hereto.
 
17.2. Successors and Assigns.  The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
permitted assigns of the parties hereto.  Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.  A Holder may assign its rights hereunder
in connection with any private sale or transfer of its Note(s) in accordance
with, and subject to the terms of, the Securities Purchase Agreement, as long
as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this
Agreement, in which case the term “Secured Party” shall be deemed to refer to
such transferee as though such transferee were an original signatory hereto. No
Debtor may assign its rights or obligations under this Agreement.
 
17.3. Injunctive Relief.  Each Debtor acknowledges and agrees that a breach by
it of its obligations hereunder will cause irreparable harm to each Secured
Party and that the remedy or remedies at law for any such breach will be
inadequate and agrees, in the event of any such breach, in addition to all other
available remedies, such Secured Party shall be entitled to an injunction
restraining any breach and requiring immediate and specific performance of such
obligations without the necessity of showing economic loss or the posting of any
bond.
 
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17.4. Governing Law; Jurisdiction.  This Agreement shall be governed by and
construed under the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York.  Each party hereto
hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City and County of New York for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby and hereby irrevocably waives, to the extent permitted by
applicable law, and agrees, to the extent permitted by applicable law,  not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper.  Each party hereby irrevocably waives, to the
extent permitted by applicable law, personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof.  Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
 
17.5. Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.  Any executed signature
page delivered by facsimile or e-mail transmission shall be binding to the same
extent as an original executed signature page, with regard to any agreement
subject to the terms hereof or any amendment thereto.
 
17.6. Headings.  The headings used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.
 
17.7. Notices.  Any notice, demand or request required or permitted to be given
by any Debtor, Collateral Agent or a Holder pursuant to the terms of this
Agreement shall be in writing and shall be deemed delivered (i) when delivered
personally or by verifiable facsimile transmission, unless such delivery is made
on a day that is not a Business Day, in which case such delivery will be deemed
to be made on the next succeeding Business Day; (ii) on the next Business Day
after timely delivery to an overnight courier; and (iii) on the Business Day
actually received if deposited in the U.S. mail (certified or registered mail,
return receipt requested, postage prepaid), addressed as follows:
 

 
If to any Debtor:
     
Integrated BioPharma, Inc.
225 Long Avenue
Hillside, New Jersey 07205
Attn: Chief Executive Officer and Chief Financial Officer
Tel: 973-926-0816
Fax: 973-926-1735
     
With a copy (which shall not constitute notice) to:
     
Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attn: Eric A. Stabler, Esq.
Tel:  212-592-5982
Fax: 212-545-3317
     
If to the Collateral Agent or any Secured Party:
     
CD Financial, LLC
3299 NW Second Avenue
Boca Raton, Florida 33431
Attn:  William H. Milmoe, Manager
Tel:  561-278-1169
Fax:  561-278-6930
     
With a copy (which shall not constitute notice) to:
       
Muller & Lebensburger
7385 Galloway Road
Suite 200
Miami, Florida  33173
Attention:  Charles E. Muller II, Esq.
Tel. No.:  305-670-6770
Fax No.:  305-670-6769

 
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or as shall otherwise be designated by such party in writing to the other
parties hereto in accordance with this Section 17.7.
 
17.8. Entire Agreement; Amendments.  This Agreement and the other Transaction
Documents constitute the entire agreement between the parties hereto with regard
to the subject matter hereof and thereof, superseding all prior agreements or
understandings, whether written or oral, between or among the parties
hereto.  No (i) amendment to this Agreement or (ii) waiver of any agreement or
other obligation of a Debtor under this Agreement may be made or given except
pursuant to a written instrument executed by the Debtors, the Collateral Agent
and the Holders holding a majority of the outstanding principal of the
Notes.  Any waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
 
17.9. Acknowledgement and Reaffirmation; Amendment and Restatement.
 
(a) Each Debtor hereby acknowledges and confirms that pursuant to the Original
Security Agreement it granted to the Collateral Agent for the benefit of the
Secured Parties (as defined in the Original Security Agreement) a lien on and
security interest in the “Collateral” (as defined in the Original Security
Agreement) to secure the “Obligations” (as defined in the Original Security
Agreement) (herein referred to as the “Original Obligations”), and hereby
reaffirms such grant of a lien on and security interest in such Collateral to
the Collateral Agent for the benefit of the Secured Parties.
 
(b) This Agreement shall amend and restate the Original Security Agreement;
provided, however, that the execution and delivery of this Agreement shall not
in any circumstance be deemed to have terminated, extinguished or discharged the
grant of the security interest to the Collateral Agent for the benefit of the
Secured Parties by the Debtors (other than the Released Debtors) in respect of
the Original Obligations (defined above in Section 17.9(a)) under the Original
Security Agreement.
 
17.10. Subordination Agreement.  The parties hereto acknowledge and agree that
(i) the Liens and security interest granted to the Collateral Agent pursuant
hereto and (ii) the Security Interest and the terms of this Agreement in each
case are subject to the terms of the Subordination Agreement.   In the event of
any conflict between the terms of the Subordination Agreement and the terms of
this Agreement, the terms of the Subordination Agreement shall govern.
 
20
 
 
 

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17.11. Second Priority Nature of Liens
 
.  Notwithstanding anything herein to the contrary, prior to the Discharge of
Senior Obligations, (i) the requirements of this Agreement to endorse, sign or
deliver Collateral to the Collateral Agent shall be deemed satisfied by
endorsement, assignment or delivery of such Collateral to the Senior Agent and
(ii) any endorsement, assignment or delivery to the Senior Agent shall be deemed
an endorsement, assignment or delivery to the Collateral Agent for all purposes
hereunder.
 
[SIGNATURE PAGES FOLLOW]
 
 
21
 
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
 

  DEBTORS:    
 
INTEGRATED BIOPHARMA.INC.
         
By:
 /s/ E. Gerald Kay    
Name:  E. Gerald Kay
 
Title:  President

 
 

 
AGROLABS, INC.
   
 
   
By:
 /s/ Christina Kay    
Name:  Christina Kay
 
Title:  President

 
 

 
IHT HEALTH PRODUCTS, INC.
         
By:
 /s/ Christina Kay    
Name:  Christina Kay
 
Title:  President

 
 
 
IHT PROPERTIES CORP.
         
By:
 /s/ Riva Sheppard    
Name: Riva Sheppard   
 
Title:  President

 
 

  INB:MANHATTAN DRUG COMPANY, INC.    
 
   
By:
 /s/ Riva Sheppard    
Name:  Riva Sheppard   
 
Title:  President

 
 
VITAMIN FACTORY, INC.  
         
By:
 /s/ E. Gerald Kay    
Name:  E. Gerald Kay
 
Title:  President

 

[Signature Page to Amended and Restated Security Agreement]
 
 
 
 
 

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  COLLATERAL AGENT:    
 
CD FINANCIAL, LLC
         
By:
 /s/ William H. Milmoe    
Name:  William H. Milmoe
 
Title:  Manager

 
 

AGREED TO AND ACCEPTED   as of the date above first written by:  
 
  HOLDER:       CD FINANCIAL, LLC        
 
    By:  /s/ William H. Milmoe            Name:  William H. Milmoe          
 Title: Manager          
 
 
 

 

[Signature Page to Amended and Restated Security Agreement]
 
 
 
 
 
 

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SCHEDULE I

EXCLUDED PROPERTY
 
1.  
Any development and/or supply agreement or similar agreement by and between any
Debtor and any Herbalife Entity (defined below).

 
“Herbalife Entity” means any of the following: (i) Herbalife International of
America, Inc.; (ii) Herbalife International (Thailand), Inc.; (iii) Herbalife
International Luxembourg S.ar.1.; (iv) Herbalife International South Africa Ltd;
(v) Herbalife Korea Co. Ltd.; and (vi) any affiliates of any of the foregoing.
 
 
 
 
 
 

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SCHEDULE II

CERTAIN INFORMATION FOR EACH DEBTOR
 
 
Legal Name of Debtor and any fictitious names
Type of organization
Jurisdiction of organization
Organizational Identification Number
Integrated BioPharma, Inc.
corporation
Delaware
2538924
AgroLabs, Inc.
corporation
New Jersey
0100529400
IHT Health Products, Inc.
corporation
Delaware
3275322
IHT Properties Corp.
corporation
Delaware
3289320
Vitamin Factory, Inc.
corporation
Delaware
0945245
InB:Manhattan Drug Company, Inc.
corporation
New York
n/a

 
 
 
 
 

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SCHEDULE III

CAPITAL STOCK OF THE COMPANY SUBSIDIARIES AND OTHER EQUITY INTERESTS
 
 
InB:Manhattan Drug Company, Inc.
 
1,000 Common Shares
AgroLabs, Inc.
 
100 Common Shares
IHT Health Products, Inc.
 
100 Common Shares
Vitamin Factory, Inc.
 
100 Common Shares
IHT Properties Corp.
 
100 Common Shares
The Organic Beverage Company
 
100 Common Shares
Gero Industries, Inc.
 
100 Common Shares
Scientific Sports Nutrition, Inc.
 
100 Common Shares
InB:Paxis Pharmaceuticals, Inc.
 
1,500 Common Shares
Designer Nutrition Laboratories, Inc.
 
50 Common Shares
Connaught Press, Inc.
 
100 Common Shares

 
 
 

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Annex A
 
FORM OF JOINDER AGREEMENT
 
[Name and address of Additional Debtor]
 
[Date]
 
CD Financial, LLC, as Collateral Agent
      under the Security Agreement referred to below
3299 NW Second Avenue
Boca Raton, Florida 33431
Attn:  William H. Milmoe, Manager

Ladies and Gentlemen:

Reference is made to Amended and Restated Security Agreement, dated as of June
27, 2012 (as amended, restated, supplemented or otherwise modified from time to
time, the “Security Agreement;” capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Security
Agreement), by and among Integrated BioPharma, Inc., a Delaware corporation (the
“Company”), certain Subsidiaries of the Company party thereto, and CD Financial,
LLC, a Florida limited liability company, in its capacity as collateral agent
for the benefit of the Secured Parties (in such capacity, the “Collateral
Agent”).
 
The Security Agreement was executed and delivered in connection with that
certain Amended and Restated Securities Purchase Agreement, dated as of June 27,
2012 (as amended, restated, supplemented or otherwise modified from time to
time), by and between the Company and CD Financial, LLC, a Florida limited
liability company, as the initial Investor (as defined therein).
 
This Joinder Agreement supplements the Security Agreement and is delivered by
the undersigned, [________________] (the “Additional Debtor”), pursuant to
Section 4.5 of the Security Agreement.  The Additional Debtor hereby agrees to
be bound as a Debtor party to the Security Agreement by all of the terms,
covenants and conditions set forth in the Security Agreement to the same extent
that it would have been bound if it had been a signatory to the Security
Agreement on the date of the Security Agreement.  Without limiting the
generality of the foregoing, the Additional Debtor hereby grants and pledges to
the Collateral Agent on behalf of the Secured Parties, as collateral security
for the full and prompt payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, a Lien on and
security interest in, all of its right, title and interest in, to and under the
Collateral and expressly assumes all obligations and liabilities of a Debtor
thereunder.  The Additional Debtor hereby makes each of the representations and
warranties and agrees to each of the covenants applicable to the Debtors
contained in the Security Agreement.
 
Annexed hereto as Annex I are supplements to each of the schedules to the
Security Agreement with respect to the Additional Debtor.  Such supplements
shall be deemed to be part of the Security Agreement.
 
 
 
 

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This Joinder Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts together shall
constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page of this Joinder Agreement or any amendments, waivers, consents or
supplements hereto by facsimile or telefax shall be effective as delivery of a
manually executed counterpart thereof.
 
THIS JOINDER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES THEREOF, OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW.
 
[Remainder of page intentionally left blank.  Signature pages follow.]
 
 
 
 

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IN WITNESS WHEREOF, the Additional Debtor has caused this Joinder Agreement to
be executed and delivered by its duly authorized officer as of the date first
above written.
 

  ADDITIONAL DEBTOR:    
 
[INSERT NAME OF ADDITIONAL DEBTOR]
         
By:
     
Name:  
 
Title:  

 

AGREED TO AND ACCEPTED   as of the date above first written by:  
 
  COLLATERAL AGENT:       CD FINANCIAL, LLC        
 
    By:              Name:            Title:          

[Annex I to be attached]