Document:

zmtp_ex102.htm

EXHIBIT 10.2

 

ROSENTHAL & ROSENTHAL, INC.

1370 BROADWAY

NEW YORK, NY 10018

 

December 18, 2012

Zoom Telephonics, Inc.

207 South Street, 5th Floor

Boston, MA 02111

Re:  Intellectual Property Security Agreement

We have entered into a Financing Agreement dated on or about the date hereof (the Financing Agreement, as amended and supplemented, shall be referred to hereinafter as the “Financing Agreement”) among Rosenthal & Rosenthal, Inc., as Lender (hereinafter referred to as “us”, “we”, “our” and like terms), and Zoom Telephonics, Inc., as Borrower (hereinafter referred to as “you”) pursuant to which you have incurred Obligations (as defined in the Financing Agreement).

As part of the inducement for us to enter into the Financing Agreement and in consideration of the loans we may make to you thereunder, you have agreed to execute this Intellectual Property Security Agreement covering the Trademarks and Domain Names listed on Schedule A, the Patents listed on Schedule B, the Copyrights listed on Schedule C, the license agreements listed on Schedule D (the “Licenses”) and any future intellectual property registrations, applications, licenses you may enter into authorizing third parties to use your intellectual property and all Proceeds (as hereinafter defined) of such Licenses and any other intellectual property rights you now have or may obtain in the future whether as licensor or licensee.

1.            DEFINED TERMS

As used in this Security Agreement, terms defined in the Financing Agreement and not otherwise defined herein shall have their defined meanings and the following terms shall have the following meanings, unless the context otherwise requires:

“Code” shall mean the Uniform Commercial Code as the same may from time to time be in effect in the State of New York.

“Collateral” shall have the meaning assigned to it in Section 2 of this Security Agreement.

 

  

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“Copyrights” shall mean all copyrights in published and unpublished works, now or hereafter existing, all right, title and interest therein anywhere in the world, and all applications, registrations and recordings relating thereto filed in the United States Copyright Office or in any other government office or agency anywhere in the world, all whether now owned or hereafter created or acquired by you.  “Copyrights” as used herein includes, without limitation, the right to print, reprint, publish, reproduce, sell, distribute, perform, display and make derivative works based on works presently or hereafter owned by or licensed to you, in whole or in part, and all other rights which you presently have or hereafter acquire pursuant to any contract that enables you to conduct its business anywhere in the world, including, without limitation, copyright assignments, exclusive and non-exclusive licenses; publishing agreements; printing agreements; distribution agreements; and agreements relating to translation rights, first and second serial rights, book club, paperback and secondary publishing rights, and stage, motion picture, television, home video, phonograph record, merchandising and all other entertainment or communication-related rights.  “Copyrights” as used herein also includes, without limitation, all of your right, title and interest in all physical materials embodying works with respect to which you own any Copyrights, including, without limitation, plates, films, color separations, mechanical art, and original art and manuscripts.

“Default” shall mean, for purposes of this Security Agreement, any Default as defined in the Financing Agreement.

“General Intangibles” shall have the meaning assigned to it under Section 9-102 of the Code.

“Intellectual Property Security Agreement” shall mean this Security Agreement, as the same may from time to time be amended or supplemented.

“Obligations” shall have the meaning assigned to that term in the Financing Agreement.  The term “Obligations” shall also include any and all attorney’s fees, costs and other expenses incurred by us or on our behalf in the collection or enforcement of any of the Obligations and the perfection, presentation and enforcement of our rights and remedies hereunder and our security interest in the Collateral.

“Patents” shall mean any patents, including without limitation any registered patents or patent applications listed on Schedule B annexed hereto, all other Patents, Patent applications, foreign patents, foreign patent applications (including utility models) and international (PCT) patent applications owned by you, all parents, divisions, continuations, continuations-in-part, substitutions and changes of applications of any of the foregoing U.S., foreign or international patents or patent applications, whether related thereto directly or through one or more intervening U.S., foreign or international applications, all U.S. and foreign patents and patent applications (including utility models) corresponding to or claiming priority from the aforesaid patents and patent applications, including all patents of addition, issuing on or registered from any of the foregoing applications, and all reissues, reexaminations, renewals and extensions of any of the foregoing U.S. and foreign patents, all whether now owned or hereafter acquired by you, including, but not limited to, those described in Schedule B annexed hereto.

“Proceeds” shall include, but not be limited to, (i) any and all proceeds of any insurance, indemnity, warranty or guarantee payable to you from time to time with respect to any of the Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable to you 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 body, authority, bureau or agency (or any person acting under color of governmental authority), and (iii) any and all other amounts from time to time paid or payable under or in connection with any of the Collateral.

 

  

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“Trademarks” shall mean any trademarks, including without limitation, any registered trademarks or trademark applications and associated good will or domain names listed on Schedule A annexed hereto, all other trademarks, and any foreign patents and patent applications, prints and labels on which said trademarks have appeared or appear, and all designs and general intangibles of like nature, now owned or hereafter adopted or acquired, all right title and interest therein and thereto, and all registrations and recordings thereof, including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or with any domain name registrar or in any Patent and Trademark Office in any country or in the European Union or in any similar office or agency of the United States or any other country, any State thereof, or any political subdivision thereof, all whether now owned or hereafter adopted or acquired by you, including, but not limited to, those described in Schedule A annexed hereto.

2.            GRANT OF SECURITY INTEREST

As collateral security for your prompt and complete payment and performance of all Obligations under the Financing Agreement, you hereby pledge and hypothecate in favor of us, and grant to us a security interest in all of your right, title and interest (a) in and to the Trademarks and the good will of the business symbolized by the Trademarks, including, without limitation, all of your licenses and customer lists and other business records and that of your subsidiaries and affiliates relating to the Trademarks on Schedule A; your domain names; the registrations described in Schedule A; and any and all proceeds of the foregoing, including, without limitation, any claims by you against third parties for infringement of the Trademarks; (b) in and to the Patents and the good will of the business symbolized by the Patents, including, without limitation, all of your licenses and other business records and that of your subsidiaries and affiliates relating to the Patents; the patents and patent applications listed in Schedule B and all other patents and patent applications owned by you; and any and all proceeds of the foregoing, including, without limitation, any claims by you against third parties for infringement of the Patents; (c) in and to the Copyrights and the good will of the business symbolized by the Copyrights including without limitation all of your licenses and other business records and that of your subsidiaries and affiliates relating to the Copyrights, the copyrights and copyright applications listed in Schedule C and all other copyrights and copyright applications owned by you; and any and all proceeds of the foregoing, including, without limitation, any claims by you against third parties for infringement of the Copyrights and (d) all of your right, title and interest in, to and under the following:

(i)            all Licenses which Borrower has rights, title and interest in;

(ii)           all Accounts, General Intangibles and contract rights arising under or relating to each and every License (including, without limitation, (A) all monies due and to become due under any License, (B) any damages arising out of or for breach or default in respect of any such License, (C) all other amounts from time to time paid or payable under or in connection with any such License, and (D) your right to terminate any such License or to perform and to exercise all remedies thereunder);

(iii)          to the extent not otherwise included, all Proceeds and products of any or all of the foregoing.  All of the property referred to in this paragraph 2 is hereinafter collectively called the “Collateral.”

 

  

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3.            OUR RIGHTS; LIMITATIONS ON OUR OBLIGATIONS

(a)           It is expressly agreed by you that, anything herein to the contrary notwithstanding, you shall remain liable under each License to observe and perform all the conditions and obligations to be observed and performed by you thereunder, all in accordance with and pursuant to the terms and provisions of each such License. We shall not have any obligation or liability under any License by reason of or arising out of this Security Agreement or its assignment to us or the receipt by us of any payment relating to any License, pursuant thereto, nor shall we be required or obligated in any manner to perform or fulfill any of your obligations under or pursuant to any License, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by us or the sufficiency of any performance by any party under any License, or to present or file any claim, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to us or to which we may be entitled at any time or times.

(b)           We may in our own name or in the name of others communicate with parties to the Licenses in order to verify with them to our satisfaction the existence, amount and terms of any Licenses.

(c)           Upon Default, we may at any time notify parties to the Licenses that we have a security interest in one or more of the Licenses and notify said parties that payments shall be made directly to us thereafter.  Upon our request at any time after a Default, you will so notify such parties to the Licenses.

4.           REPRESENTATIONS AND WARRANTIES

(a)           Schedule A to this Security Agreement contains a schedule of all of your Trademarks.  To your knowledge, in the use of the Trademarks, domain names or otherwise, you and your affiliates and subsidiaries have not infringed, and are not now infringing on any trade name, trademark, service mark, copyright, patent, right of privacy or publicity, and are not competing unfairly with, or otherwise violating the rights of any other party.  Except as set forth in Schedule D, you are not a party to any trademark license agreement or arrangement, whether as licensor or licensee or otherwise, with respect to any trademarks, service marks, trade names, or copyrights, trade secrets, know-how, or confidential information which are used in connection with the goods and services recited in the Trademarks.

(b)           Schedule B to this Security Agreement contains a schedule of all of our Patents.  Other than as disclosed on Schedule 6.3 of the Financing Agreement, to your knowledge, you and your affiliates and subsidiaries have not infringed, and are not now infringing on any patent or otherwise violating the patent rights of any other party, and have not misappropriated, and are not now misappropriating on any trade secret or otherwise violating the trade secrets rights of any other party.  Except as set forth in Schedule D, you are not a party to any patent or trade secret license, agreement or arrangement, whether as licensor or licensee or otherwise.

(c)           Schedule C to this Security Agreement contains a schedule of all of our Copyrights.  To your knowledge, you and your affiliates and subsidiaries have not infringed, and are not now infringing on any copyright or otherwise violating the copyright rights of any other party.  Except as set forth in Schedule D, you are not a party to any copyright license, agreement or arrangement, whether as licensor, licensee or otherwise.

(d)           You own or have rights of use in all the Trademarks, Patents and Copyrights listed on Schedules A, B and C for your business as now conducted by you and to your knowledge such use does not and will not, conflict with, infringe on, or otherwise violate any rights of others and the Trademarks, Patents and Copyrights are valid and enforceable.

 

  

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(e)           You are the owner of or have rights of use in all the Trademarks, Patents and Copyrights listed on Schedules A, B and C for the goods and descriptions set forth on said Schedules throughout the United States, and no persons, other than the licensees and licensors identified in Schedule D have any rights in and to the Trademarks, Patents or Copyrights in the United States.

(f)           Other than as specifically noted on the Schedules, none of the Trademarks, Patents or Copyrights listed on Schedules A, B and C have been abandoned.

(g)          Each License referred to in Schedule D is a bona fide, valid and legally enforceable obligation by you and the licensees or licensors thereto, as applicable.  To the best of your knowledge, all consents, approvals or authorizations required to be obtained, effected or given in connection with the execution, delivery and performance of each License by each party thereto and you have been duly obtained, effected or given, are in full force and effect and do not subject the scope of such license to any adverse limitation, either specific or general in nature.  The rights and obligations of you as licensor or licensee, shall also be for the benefit of us, as a secured lender, to you and to any subsequent purchaser of such Licenses from us.  No Licensee under any of the licenses is a licensee in the ordinary course of business pursuant to Article 9 of the Uniform Commercial Code.

(h)          With respect to each License referred to in Schedule D, neither you nor any other party to such License is in default, nor, to your knowledge, is likely to become in default in the performance or observance of any of the terms thereof.  You have fully performed all of your obligations under each License and your right, title and interest in any License is not subject to any defense, offset, counterclaim or claim, nor have any of the foregoing been asserted or alleged against you or your predecessor(s) as to any License.

(i)           The Collateral now owned by you is valid and subsisting and in full force and effect and you have the sole, full and clear title thereto.  You have the right and power to grant the security interest herein granted and the Collateral is not subject to any liens, claims, mortgages, assignments, licenses (other than licenses set forth on Schedule D hereto) or security interests, other than the Permitted Encumbrances (as defined in the Financing Agreement).

(j)           No security agreement, financing statement, equivalent security or lien instrument or continuation statement covering all or any part of the Collateral is on file or of record in any public office, except such as may have been filed by you in favor of us pursuant to this Security Agreement to the Financing Agreement.

(k)           This Security Agreement constitutes a valid and continuing lien on and security interest in the Collateral in our favor, prior to all other liens, encumbrances, security interests and rights of others, other than the Permitted Encumbrance, and is enforceable as such as against your creditors and customers, subject to applicable bankruptcy and insolvency laws and general equitable principles.

(l)           Your principal place of business and the place where your records concerning the Collateral are kept is the address set forth above and you will not change such principal place of business or remove such records without thirty (30) days prior written notice to us.

(m)          The description of the Licenses set forth in Schedule D to this Security Agreement is true and correct.  You will promptly notify us of all license agreements covering the Trademarks, Patents and Copyrights executed after the date of this Security Agreement.

(n)           Except as set forth in Schedule D, you are not a party to any license, agreement or arrangement with respect to the Trademarks, Patents or Copyrights.

 

  

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5.            COVENANTS

You covenant and agree with us that from and after the date of this Security Agreement and until the Obligations are fully satisfied:

(a)           Further Documentation; Pledge of Instruments.  At any time and from time to time, upon our written request, and at your sole expense, you will promptly and duly execute and deliver any and all such further instruments and documents and take such further action as we may deem desirable in obtaining the full benefits of this Security Agreement and of the rights and powers herein granted, including, without limitation, the filing of any financing or continuation statements under the Uniform Commercial Code in effect in any jurisdiction with respect to the liens and security interest granted thereby.  You also hereby authorize us to file any such financing or continuation statement pertaining to the Collateral without your signature to the extent permitted by applicable law.  If any amount payable under or in connection with any of the Collateral shall be or become evidenced by any promissory note or other instrument, such note or instrument shall be immediately pledged to us hereunder, duly endorsed in a manner satisfactory to us.

(b)           Maintenance of Records.  You will keep and maintain at your own cost and expense satisfactory and complete records of the Collateral including, without limitation, a record of all payments received and all credits granted with respect to the Collateral and all other dealings with the Collateral.  You will mark your books and records pertaining to the Collateral to evidence this Security Agreement and the security interests granted hereby.  For our further security, you agree that we shall have an interest in all of your books and records pertaining to the Collateral and you shall deliver and turn over copies of any such books and records to us or to our representatives at any time on our demand, along with a certificate from a duly authorized officer that the copies accurately reflect the originals.

(c)           Maintenance of Trademarks, Patents and Copyrights.  You will not do any act, or omit to do any act, whereby the Trademarks, Patents or Copyrights or the respective applications or registrations thereof may become abandoned, invalidated, unenforceable, expired or will otherwise diminish the value of the Trademarks, Patents or Copyrights and you shall notify us immediately if you know of any reason or have reason to know of any ground under which this result may occur.  For the sake of clarity you shall not fail to make any appropriate filings with the United States Patent and Trademark Office to evidence the correct ownership of the Collateral. Without in any way limiting the foregoing, you shall take appropriate action, if any action is required, at your expense to halt the infringement of the Trademarks, Patents and Copyrights and shall properly exercise your duty to control the nature and quality of the goods and/or services offered by Licensees in connection with the Trademarks, Patents and Copyrights listed on Schedules A, B and C as required or needed for the business.

(d)           Indemnification.

(A)          You assume all responsibility and liability arising from your use of the Trademarks, Patents and Copyrights, and you hereby agree to indemnify and hold us harmless from and against any claim, suit, loss, damage or expense (including attorneys’ fees and expenses) arising therefrom.

 

  

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(B)           Upon Default, in any suit, proceedings or action brought by us under any License for any sum owing thereunder, or to enforce any provisions of such License you will indemnify and keep us harmless from and against all expense, loss or damage suffered by reason of any defense, set off, counterclaim, recoupment or reduction or liability whatsoever of the obligee thereunder, arising out of a breach by you of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligee or its successors from you, and all of your such obligations shall be and remain enforceable against and only against you and shall not be enforceable against us.

(e)           Compliance with Laws, etc.  You will comply with all acts, rules, regulations, orders, decrees, and directions of any governmental authority applicable to the Collateral or any part thereof applicable to the operation of your business.

(f)           Payment of Obligations.  You will pay when due all taxes, assessments and governmental charges or levies imposed upon the Collateral or in respect of its income or profits therefrom, as well as all claims of any kind (including claims for labor, materials and supplies), except that no such charge need be paid if (i) the validity thereof is being contested in good faith by appropriate proceedings, (ii) such proceedings do not involve any danger of the sale, forfeiture or loss of any of the Collateral or any interest therein and (iii) such charge is adequately reserved against in accordance with generally accepted accounting principles.

(g)           Compliance with Terms of Licenses, etc.  You will perform and comply with all obligations under the Licenses and all other agreements to which you are a party or by which you are bound relating to the Collateral.

(h)           Limitation on Further Uses of Trademarks, Patents and Copyrights.  You will not assign, sell, mortgage, lease, transfer, pledge, hypothecate, grant a security interest in or lien upon, encumber, grant an exclusive or non-exclusive license, or otherwise dispose of any of the Collateral, without our prior written consent, and nothing in this Agreement shall be deemed a consent by us to any such action.  You shall advise us in writing if you enter into any license (whether as licensee or licensor) after the date hereof for the use of any Trademark, Patent or Copyright, including, without limitation, furnishing us with a copy of any such license.

(i)           Limitation of Liens on Collateral.  You will not create, permit or suffer to exist, and will defend the Collateral against and take such other action as is necessary to remove, any lien, security interest, encumbrance, claim or right, in or to the Collateral, except for Permitted Encumbrances and will defend our right, title and interest in and to any of your rights under the Licenses and to the Proceeds thereof against the claims and demands of all persons whomsoever; provided however, that you shall advise us promptly, in writing and in detail satisfactory to us, (i) of any lien, or claim made or asserted against any of the Collateral, (ii) of any change in the composition of the Collateral, and (iii) of the occurrence of any other event which would have an adverse effect on the aggregate value of the Collateral or on the security interest created hereunder.

(j)           Limitations on Modifications of Licenses.  You will not (i) amend, modify, terminate or waive any provision of any License in any manner which could be expected to adversely affect the value of such License as Collateral without our prior written consent, (ii) fail to exercise promptly and diligently each and every right which you may have under each License (other than any right of termination) or (iii) fail to deliver to us a copy of each demand, notice or document sent or received by you relating in any way to any License.

 

  

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(k)           Further Identification of Collateral.  You will furnish to us such reports in connection with the Collateral as we may request, all in detail satisfactory to us.

(l)           Right of Inspection.  Subject to the limitations of Section 5 of the Financing Agreement, we shall at all times have full and free access during normal business hours to all of your books, correspondence and records, relating to the Collateral.

(m)           Additional Trademarks, Patents and Copyrights and Future Trademark, Patent and Copyright Applications.  If you file an application for the registration of any Trademark, Patent or Copyrights or register or file an application for the registration of any Trademark, Patent or Copyright with the United States Patent and Trademark Office or Copyright Office or any other country’s Patent, Trademark or Copyright Office or any similar office or agency, you must promptly inform us in writing thereof, and, upon our request, you will execute and deliver any and all agreements, instruments, documents and papers as we may request to evidence our interest in your Trademarks, Patents and Copyrights and the goodwill and general intangibles relating thereto or represented thereby.  In any event, you shall update Schedules A, B, C and D hereof on an annual basis within forty-five (45) days of January 1st of each year.

6.            OUR APPOINTMENT AS ATTORNEY-IN-FACT

(a)           You hereby irrevocably constitute and appoint us and any of our officers or agents, with full power of substitution, as your true and lawful attorney-in-fact with full irrevocable power and authority in your place and stead and in your name or in our own name, from time to time in our discretion, for the sole purpose of carrying out the terms of this Security Agreement, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Security Agreement and, without limiting the generality of the foregoing, hereby give us the power and right, on your behalf, without notice to or assent by you to do the following:

(i)            Upon a Default, to ask, demand, collect, receive and give acquittance and receipts for any and all moneys due and to become due under any Licenses and, in your name or our own name or otherwise, to take possession of and endorse and collect any checks, drafts, notes, acceptances or other instruments for the payment of moneys due under any Licenses and to file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by us for the purpose of collecting any and all such moneys due under any Licenses whenever payable;

(ii)           To pay or discharge taxes, liens, security interests or other encumbrances levied or placed on or threatened against the Collateral; and

 

  

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(iii)          Upon the occurrence and during the continuance of a Default, (A) to direct any party liable for any payment under any of the Licenses to make payment of any and all moneys due and to become due thereunder directly to us or as we shall direct; (B) to make payment and/or render performance on your behalf, as licensee under any License; (C) to receive payment of and receipt for any and all moneys, claims and other amounts due and to become due at any time in respect of or arising out of any Collateral; (D) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral; (E) to defend any suit, action or proceeding brought against you with respect to any Collateral; (F) to settle, compromise, or adjust any suit, action or proceeding described above and, in connection therewith, to give such discharges or release as we may deem appropriate; (G) to cause your corporate names and those of your affiliates and subsidiaries to be changed to names that do not include the Trademarks or any term similar thereto, and neither you nor any of your affiliates or subsidiaries shall thereafter make use of any of the Trademarks or any mark similar thereto for any purpose; and (H) generally to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though we were the absolute owner thereof for all purposes, and to do, at our option and your expense, at any time, or from time to time, all acts and things which we deem necessary to protect, preserve or realize upon the Collateral and our security interest therein, in order to effect the intent of this Security Agreement, all as fully and effectively as you might do.

You hereby ratify all that said attorneys shall lawfully do or cause to be done by virtue hereof.  This power of attorney is a power coupled with an interest and shall be irrevocable.  Notwithstanding the foregoing, you further agree to execute any additional documents which we may require in order to confirm this power of attorney, or which we may deem necessary to enforce any of our rights contained in this Security Agreement.

(b)           The powers conferred on us hereunder are solely to protect our interests in the Collateral and shall not impose any duty upon us to exercise any such powers.  We shall be accountable only for amounts that we actually receive as a result of the exercise of such powers and neither we nor any of our officers, directors, employees or agents shall be responsible to you for any act or failure to act.

(c)           You also authorize us, at any time and from time to time to execute, in connection with any sale provided for in this Section 6 or in Section 9, any endorsements, assignments or other instruments of conveyance or transfer with respect to the Collateral.

7.            EXECUTION OF POWER OF ATTORNEY

Concurrently with the execution and delivery hereof, you are executing and delivering to us, in the form of Schedule E hereto, five (5) originals of a Power of Attorney for the implementation of the assignment, sale or other disposal of the Trademarks, Patents and Copyrights pursuant to paragraph 6 hereof.

8.            PERFORMANCE BY US OF YOUR OBLIGATIONS

If you fail to perform or comply with any of your agreements contained herein and we, as provided for by the terms of this Security Agreement, shall ourselves perform or comply, or otherwise cause performance or compliance, with such agreement, our expenses incurred in connection with such performance or compliance shall be payable by you to us on demand and shall constitute Obligations secured hereby.

9.            REMEDIES, RIGHTS UPON DEFAULT

(a)           If a Default shall occur and be continuing:

(i)            All payments received by you under or in connection with any of the Collateral shall be held by you in trust for us, shall be segregated from other funds of yours, and shall forthwith upon receipt by you, be turned over to us, in the same form as received by you (duly indorsed by you to us, if required); and

 

  

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(ii)           any and all such payments so received by us (whether from you or otherwise) may, in our sole discretion, be held by us as collateral security for, and/or then or at any time thereafter applied in whole or in part by us against all or any part of the Obligations in such order as we shall elect.  Any balance of such payments held by us and remaining after payment in full of all the Obligations shall be paid over to you or to whomsoever may be lawfully entitled to receive the same.

(b)           If any Default shall occur, you agree and consent that we may succeed to the position of either Licensee or Licensor under the Licenses, subject to the rights and interests of the holders of the Permitted Encumbrance, and receive all rights and benefits of such party under the Licenses, including, without limitation, the right to enforce the Licenses and the right to sublicense the Trademarks, Patents and Copyrights.

(c)           Upon a Default, we may exercise in addition to all other rights and remedies granted to us in this Security Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations, all rights and remedies of a secured party under the Uniform Commercial Code.  You shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to which we are entitled, and you will be liable for the fees and expenses of any attorneys employed by us to collect such deficiency.

(d)           You also agree to pay all of our costs, including attorneys’ fees and expenses, incurred with respect to the collection of any of the Obligations and the enforcement of any of our rights hereunder.

(e)           You hereby waive presentment, demand, protest or any notice (to the extent permitted by applicable law and except as set forth in the Loan Agreement) of any kind in connection with this Security Agreement or any Collateral.

10.           LIMITATION ON OUR DUTY IN RESPECT OF COLLATERAL

Beyond the safe custody thereof, we shall not have any duty as to any Collateral in our possession or control or in the possession or control of any of our agents or nominees or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

11.           NOTICES

Any notice to either party hereunder shall be given in accordance with Section 10.1 of the Financing Agreement.

12.           SEVERABILITY

Any provision of this Security Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

  

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13.           NO WAIVER; CUMULATIVE REMEDIES

We shall not by any act, delay, omission or otherwise be deemed to have waived any of our rights or remedies hereunder and no waiver shall be valid unless in writing, signed by us, and then only to the extent therein set forth.  A waiver by us of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which we would otherwise have had on any future occasion.  No failure to exercise nor any delay in exercising on our part, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law.  None of the terms or provisions of this Security Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by the party against whom enforcement is sought.

14.           SUCCESSORS AND ASSIGNS; GOVERNING LAW

This Security Agreement and all of your obligations hereunder shall be binding upon your successors and assigns, and shall, together with our rights and remedies hereunder, inure to our benefit and our successors and assigns.  However, none of your rights or obligations under this Security Agreement may be assigned without our prior written permission.  This Security Agreement shall be governed by, and be construed and interpreted in accordance with the laws of the State of New York.

15.           WAIVER OF TRIAL BY JURY; EXCLUSIVE JURISDICTION; SUBMISSION TO JURISDICTION; ANSWER TO SUMMONS

YOU HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY IN THE EVENT OF ANY LITIGATION WITH RESPECT TO ANY MATTER CONNECTED WITH THIS AGREEMENT, THE OBLIGATIONS, THE COLLATERAL, OR ANY OTHER TRANSACTION BETWEEN THE PARTIES AND YOU HEREBY IRREVOCABLY CONSENT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL COURT LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE OBLIGATIONS.  IN ANY SUCH LITIGATION YOU WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS AND AGREE THAT SERVICE THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO YOU AT YOUR PLACE OF BUSINESS SET FORTH ABOVE. WITHIN 30 DAYS AFTER SUCH MAILING, YOU SHALL APPEAR OR ANSWER TO SUCH SUMMONS, COMPLAINT OR OTHER PROCESS, FAILING WHICH YOU SHALL BE DEEMED IN DEFAULT AND JUDGMENT MAY BE ENTERED BY US AGAINST YOU FOR THE AMOUNT OF THE CLAIM AND OTHER RELIEF REQUESTED THEREIN.

16.           FURTHER INDEMNIFICATION

You agree to pay, and to save us harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other taxes which may be payable or determined to be payable with respect to any of the Collateral or in connection with any of the transactions contemplated by this Security Agreement.

 

  

11

  

17.           CONSTRUCTION WITH RESPECT TO MULTIPLE PARTIES

In construing this Agreement, references to “you” or “your” in this Agreement shall mean each of you singly, both of you jointly and either of you in the disjunctive, and shall be interpreted in each instance most favorably to us.

IN WITNESS WHEREOF, you have caused this Security Agreement to be executed by one of your duly authorized officers on the date first set forth above.

 

	 	ROSENTHAL & ROSENTHAL, INC.	 
	 	 	 	 
	
 

	
By: 

	 /s/Robert Martucci 	 
	 	 	Robert Martucci, Senior Vice President	 

The foregoing is acknowledged,

accepted and agreed to:

 

	ZOOM TELEPHONICS, INC.	 
	 	 	 
	
By: 

	/s/Frank Manning 	 
	 	 (Title)	 

 

  

12

  

 

 

	State of Massachusetts	)	 
	 	)	ss.:
	County of Middlesex	)	 

 

On the 18th day of December, 2012 before me, the undersigned, personally came sworn, did depose and say that he resides at __________________________________, that he is the President of ZOOM TELEPHONICS, INC., which executed the foregoing instrument; that he executed the same in such capacity and that he had authority to execute such instrument and that by his signature on the instrument, the corporation duly executed the instrument.

	 	
By: 

	/s/Sheila Morabito 	 
	 	 	Notary Public	 

                                                     

  

13

  

SCHEDULE A

 

TRADEMARKS

 

	
US Trademark Registration

	  	 	  	 	  	 	  
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number/Date

	
Zoom

	 	
1,892,967

	 	
May 9, 1995

	 	
74/399,844

	
Model American

	 	
N/A

	 	
N/A

	 	
74/594,005/ November 2, 1994

	
Demon Dialer

	 	
1,187,443

	 	
January 26, 1982

	 	
73/239,507

	
Zoom

	 	
2,159,438

	 	
May 19, 1998

	 	
75/099,664

	
Zoom

	 	
2,675,838

	 	
January 21, 2003

	 	
75/684,799

	
Zoom

	 	
2,784,568

	 	
November 18, 2003

	 	
75/982,358

	
Zoom

	 	
2,891,467

	 	
October 5, 2004

	 	
75/687,137

	
Hayes

	 	
1,300,248

	 	
October 16, 1984

	 	
73/409,401

	
Accura

	 	
1,778,792

	 	
June 29, 1993

	 	
74/326,462

	
Hayes & H Logo

	 	
1,197,778

	 	
June 15, 1982

	 	
73/319,703

	
Optima

	 	
2,047,187

	 	
March 25, 1997

	 	
74/723,921

	
Smartcom

	 	
1,972,187

	 	
May 7, 1996

	 	
74/506,005

	
Global Village

	 	
1,954,505

	 	
February 6, 1996

	 	
74/586,183

	
Zoomit

	 	
2,950,221

	 	
May 10, 2005

	 	
78/296,182

	
Global Village

	 	
2,985,990

	 	
August 16, 2005

	 	
76/585,753

	
Zoom (Expanded)

	 	
3,373,929

	 	
January 22, 2008

	 	
78/678,525

	
iHiFi

	 	
3,357,733

	 	
December 18, 2007

	 	
78/859,042

	
Zoom (Internet Services)

	 	
3,931,890

	 	
March 15, 2011

	 	
77/800,462

	
ZDTV (keyboards)

	 	
3,910,672

	 	
January 25, 2011

	 	
85/047,894

	
We3G

	 	
N/A

	 	
N/A

	 	
85/137,719/September 24, 2010

	
Zoom (Stylized)

	 	
N/A

	 	
N/A

	 	
85/432,158/September 26, 2011

	
Zoomguard

	 	
N/A

	 	
N/A

	 	
85/518,145/January 17, 2012

	
Australia Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Global Village

	 	663921	 	
June 14, 2005

	 	663921
	
Global Village

	 	847607	 	
February 27, 2006

	 	1055723

	
Benelux Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Zoom

	 	544969	 	
December 8, 1993

	 	807660

 

  

14

  

 

	
Canada Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Hayes

	 	309,698	 	
December 27, 1985

	 	503,195
	
H Logo

	 	289,338	 	
March 30, 1984

	 	503,194
	
Faxworks

	 	508007	 	
February 12, 1999

	 	
(None listed)

	
Boca Research

	 	1,038,788	 	
December 7, 1999

	 	
(None listed)

	
Global Village

	 	
TMA664,024

	 	
May 11, 2006

	 	1233032

	
China (People’s Republic) Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
H Logo & Hayes

	 	264789	 	
October 10, 1996

	 	
(None listed)

	
Zoom (Chinese Characters)

	 	1,777,799	 	
May 27, 2002

	 	2000098504
	
Zoom (Chinese Characters)

	 	1749269	 	
April 14, 2002

	 	2000098505
	
Global Village

	 	847607	 	
October 7, 2004

	 	847607

	
Columbia Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
H Logo & Hayes

	 	126800	 	
December 14, 1989

	 	92239312

	
European Community Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Zoom

	 	001174929	 	
June 26, 2001

	 	001174929
	
H Logo & Hayes

	 	1213859	 	
June 14, 1999

	 	1213859
	
Global Village

	 	004057361	 	
October 7, 2004

	 	004057361
	
Zoom (Expanded)

	 	006694129	 	
January 23, 2006

	 	006694129

	
Finland Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Smartcom

	 	96034	 	
September 5, 1986

	 	2609/84

 

  

15

  

 

	
Germany Trademark Registration

	  	 	 	 	  	 	  
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Zoom

	 	2,911,941	 	
December 31, 1993

	 	
Z116209WZ

 

	
Hong Kong Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Zoom

	 	2007B00096	 	
July 25, 2007

	 	199908332
	
Zoom

	 	2000B13533	 	
October 11, 2000

	 	8334/1999
	
H Logo & Hayes

	 	2160B1988	 	
June 13, 1986

	 	21231986

	
Israel Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Zoom

	 	183180	 	
August 24, 2005

	 	183180
	
Global Village

	 	186564	 	
November 11, 2007

	 	186564

	
Japan Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
H Logo & Hayes

	 	1949940	 	
April 30, 1987

	 	S59-065964
	
Global Village

	 	847607	 	
October 7, 2004

	 	847607

	
Mexico Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Global Village

	 	944122	 	
October 8, 2004

	 	681321

	
Norway Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Global Village

	 	847607	 	
October 7, 2004

	 	847607

	
Russian Federation Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Global Village

	 	847607	 	
October 7, 2004

	 	847607

 

  

16

  

 

	
Saudi Arabia Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Hayes

	 	135/40	 	
February 19, 2005

	 	00

	
Singapore Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
H Logo & Hayes

	 	T93/07421G	 	
September 22, 1993

	 	T93/07421G

 

	
South Africa Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
H Logo & Hayes

	 	B84/3597	 	
April 18, 1984

	 	B84-3597

	
Taiwan Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Hayes

	 	732277	 	
June 30, 1993

	 	
(None Listed)

	
Global Village

	 	01167628	 	
August 1, 2005

	 	93046167

	
Turkey Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Global Village

	 	847607	 	
October 7, 2004

	 	847607
	
Zoom (Expanded)

	 	200602257	 	
January 26, 2006

	 	2006/02257
	
Zoom

	 	200961933	 	
November 19, 2009

	 	200961933

	
United Kingdom Trademark Registration

	  	 	 	 	  	 	 
	
Trademark

	 	
Registration Number

	 	
Issued

	 	
Application Number

	
Zoom

	 	1540732	 	
June 8, 1993

	 	1540732
	
U.K. Design 2,062,047

	 	2,062,047	 	
July 1, 1994

	 	00
	
U.K. Design

	 	2,065,846	 	
November 18, 1991

	 	00

 

  

17

  

 

SCHEDULE B

PATENTS

 

	
Description/Title

	 	
Patent Number

	 	
Issue Date

	 	
Application Number

	 	
Filing Date

	
U.S. Patents

	 	 	 	  	 	 	 	  
	
Parallel-Connected Dialing Signal Transmission - Inhibiting Device for Data Transfer Over a Telephone Link

	 	 	5,898,756	 	
4/27/1999

	 	 	08/542,661	 	
10/13/1995

	
Parallel-Connected Dialing Signal Transmission - Inhibiting Device for Data Transfer Over a Telephone Link

	 	 	6,711,238	 	
3/23/2004

	 	 	09/235,529	 	
1/22/1999

	
Memory Architecture for Telephone Dialer

	 	 	6,963,640	 	
11/8/2005

	 	 	09/557,570	 	
4/25/2000

	
Data Flow Control Unit

	 	 	6,944,774	 	
9/13/2005

	 	 	09/753,071	 	
1/2/2001

	
Distinctive Dial Tone for a VOIP Call

	 	 	7,593,389	 	
9/22/2009

	 	 	10/934,787	 	
9/3/2004

	
Method and Apparatus for User Authentification

	 	 	8,194,651	 	
6/5/2012

	 	 	10/934,350	 	
9/3/2004

	  	 	 	 	 	  	 	 	 	 	  
	
U.S. Patent Applications

	 	 	 	 	  	 	 	 	 	  
	
Method and Apparatus for Ensuring Accessibility to Emergency Service Via VOIP or VIA PSTN

	 	 	N/A	 	
N/A

	 	 	11/582,870	 	
10/18/2006

 

  

18

  

 

SCHEDULE C

 

(Copyrights)

NONE

 

 

 

 

 

 

 

  

19

  

SCHEDULE D

 

License Agreement Dated:  October 18, 2010 BY AND BETWEEN  ZOOM TELEPHONICS, INC. AND JIANGSU LEIMONE ELECTRONICS CO., LTD.

 

License Back Agreement in the People’s Republic of China Dated:  October 18, 2010 BY AND BETWEEN JIANGSU LEIMONE ELECTRONICS CO., LTD. AND ZOOM TELEPHONICS, INC.

 

 

 

 

 

 

 

  

20

  

 

SCHEDULE E

 

SPECIAL POWER OF ATTORNEY

 

 

	STATE OF _________ 	)	 
	 	)	ss.:
	COUNTY OF _________ 	)	 

 

KNOW ALL MEN BY THESE PRESENTS, that ZOOM TELEPHONICS, INC. (“Borrower”), having an address at 207 South Street, 5th Floor, Boston, MA 02111, hereby appoints and constitutes, severally, Rosenthal & Rosenthal, Inc. (“Lender”), its true and lawful attorney, with full power of substitution and with full power and authority to perform the following acts on behalf of Borrower:

1.           Execution and delivery of any and all agreements, documents, instrument of assignment, or other papers which Lender, in its discretion, deems necessary or advisable for the purpose of assigning, selling, or otherwise disposing of all right, title, and interest of Borrower in and to any trademarks, patents and copyrights, and all registrations, recordings, reissues, extensions, and renewals thereof, or for the purpose of recording, registering and filing of, or accomplishing any other formality with respect to the foregoing.

2.           Execution and delivery of any and all documents, statements, certificates or other papers which Lender, in its discretion, deems necessary or advisable to further the purposes described in the Agreement, including, without limitation, making any filings with the Untied States Patent and Trademark office for the purpose of maintenance, renewal, correction of ownership or title or any other matter deemed necessary by Lender to protect and preserve the Collateral (as defined in the Security Agreement).

 

[SIGNATURES CONTINUED ON THE NEXT PAGE]

  

21

  

 

This Power of Attorney, being a power coupled with an interest, is made pursuant to an Intellectual Property Security Agreement between Borrower and Lender, of even date herewith (the “Security Agreement”) and may not be revoked until indefeasible payment in full of all Obligations (as defined in the Security Agreement), and is subject to the terms and provisions thereof.

	 	ZOOM TELEPHONICS, INC.	 
	 	 	 	 
	
December ___, 2012

	
By: 

	/s/ 	 
	 	 	(Title)	 

 

 

  

22

  

 

	STATE OF _________ 	)	 
	 	)	ss.:
	COUNTY OF _________ 	)	 

 

 

On the ____ day of December, 2012  before me, the undersigned, personally appeared ______________________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her capacity, and that by his/her signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

 

 

	
 

	 	 
	 	
Notary Public

	 

 

2310.62 - RPMG Agreement

Confidential Treatment Requested. Confidential portions of this document have been redacted and have been separately filed with the Commission. 

MEMBER AMENDED AND RESTATED
ETHANOL MARKETING AGREEMENT

THIS AGREEMENT, entered into as of this 27th day of August, 2012,  and effective as of October 1, 2012 ("Effective Date") by and between RPMG, Inc., a Minnesota corporation ("RPMG"); and Red Trail Energy, LLC, a North Dakota limited liability company ("Member").

WITNESSETH:

WHEREAS, RPMG is a Minnesota corporation engaged in the business of marketing ethanol for the members of Renewable Products Marketing Group, LLC ("LLC") and others; and

WHEREAS, Member is the operator of a plant in Richardton, North Dakota for the production of ethanol (the "Facility") and is a member of LLC; and

WHEREAS, as a condition to its membership in LLC, Member has agreed to market all of the ethanol intended for fuel use produced by Member at the Facility ("Ethanol") through RPMG and RPMG has agreed to market such Ethanol production; and

WHEREAS, the parties desire to enter into this Agreement, for purposes of setting out the terms and conditions of the marketing arrangement;

NOW THEREFORE, in consideration of the mutual covenants and promises herein contained, the parties hereto agree as follows:

1.    Exclusive Marketing Representative. RPMG shall, subject to the terms and conditions of this Agreement, be the sole marketing representative for the entire Ethanol production of Member at the Facility during the term of this Agreement other than limited sales of E85 or other blendstock locally.

2.    Ethanol Specifications. All of the Ethanol produced by Member at the Facility for marketing by RPMG will, when delivered to a common carrier by Member, conform to the specifications described in the bill of lading, which may be A.S.T.M. D-4806 or such other specifications that may be, from time to time, promulgated by the industry for Ethanol.

3.    Purchaser/Seller. Except as otherwise provided in Section 1, Member shall sell to RPMG and RPMG shall purchase and market all Ethanol produced by Member at the Facility during the term of this Agreement. Delivery by Member to RPMG of all such Ethanol shall be made at the time the Ethanol crosses the loading flange at the Facility to either a railcar and/or tank truck; provided, however, if the annual production capacity at the Facility is in excess of 80 million gallons then delivery by Member to RPMG for Ethanol shipped by unit train ("Large Facility Unit Train") shall be made when RPMG receives the shipping documentation for the Large Facility Unit Train. Title to the Ethanol shall pass to RPMG when delivered as provided in this Section 3. The Ethanol will be marketed by RPMG as described in Section 7 below.

4.    Risk of Loss. RPMG shall be responsible for and shall bear the risk of loss of (subject to the terms of this Agreement) the Ethanol marketed for Member by RPMG from the time the product crosses the loading flange at the Facility in either a railcar or tank truck, provided that for Large Facility Unit Trains RPMG shall be responsible for and shall bear the risk of loss for Ethanol shipped by Large Facility Unit Train from the time that RPMG receives the shipping documentation for the Large Facility Unit Train.

1

5.    Specific Marketing Tasks. RPMG shall be responsible for and shall have complete discretion in the marketing, sale and delivery of all Ethanol produced by the Facility during the term of this Agreement, including, but not limited to:

		
	•
	Scheduling sufficient railcar, tank trucks and other transport;

		
	•
	Negotiating the rates and tariffs to be charged for delivery of production to the customer;

		
	•
	Promoting and advertising the sale of Ethanol;

		
	•
	Tracking delivery;

		
	•
	Negotiation of all purchase agreements with customers and any complaints in connection therewith;

		
	•
	Accounting for all sales and related expenses and collection of accounts, including any legal collection procedures as may be necessary; and

		
	•
	Hedging long and short Ethanol positions for the benefit of all Member participants and non-member participants in the Corridor Marketing Model.

6.    Negotiation of Ethanol Price. RPMG will use commercially reasonable efforts to obtain the best price for all Ethanol sold by it subject to the terms of this Agreement. RPMG shall have complete discretion to fix the price, terms and conditions of the sale of Member's Ethanol production that is sold and marketed as Indexed Gallons. RPMG shall obtain Member's prior approval of all sales of Ethanol from the Facility on a fixed price.

7.    Ethanol Marketing. A Member may elect in accordance with RPMG's fixed price program prior to the delivery of Ethanol to have RPMG market and purchase Ethanol from Member on a fixed price ("Fixed Price Gallons"), or, if no such election is made with respect to any Ethanol, RPMG shall market and purchase the Ethanol production of Member as Indexed Gallons. All Ethanol other than Fixed Price Gallons shall be deemed "Indexed Gallons,"

(a)     Fixed Price Gallons. For the Fixed Price Gallons, RPMG shall purchase Fixed Price Gallons of Ethanol from the Member at a price per net gallon as agreed upon by RPMG and Member. Member's confirmation of the sale terms of Fixed Price Gallons shall be provided by SharePoint, e-mail or other written communication means (the "Confirmation"). RPMG shall pay Member for Fixed Price Gallons in an amount equal to the FOB fixed price multiplied by the number of Fixed Price Gallons of Ethanol delivered by Member to RPMG for the period less any applicable costs allocated to the Fixed Price Gallons calculated in the same manner as determined under the then applicable Corridor Netback Model (the "Net Fixed Price"). In addition to any other rights or remedies set forth herein, if Member fails to deliver any or all of the Fixed Price Gallons on the terms set forth on a Confirmation, RPMG shall be entitled to all remedies available at law or in equity, including damages, specific performances and/or attorneys' fees and costs, and RPMG shall be under a duty to mitigate damages.

(b)    Indexed Gallons. RPMG will market the aggregate production of the Indexed Gallons of contracting producers participating in the Corridor Netback Model based on the estimated production levels of all participants in the model by corridor. Determination of a producer's share of net revenue, allocation of expenses and payment shall be made by RPMG according to the Corridor Netback Model (the "Corridor Netback Model"). The Corridor Netback Model shall be used in calculating netback payments to Member and other LLC members and non-member participants in the Corridor Netback Model for all Ethanol sold by RPMG on behalf of Member, all other LLC member participants and non-member participants in the Corridor Netback Model (the "Netback Price"). Management of RPMG may make changes to the Corridor Netback Model to reflect changing economic circumstances on a monthly basis. Except as provided below, any changes shall be final 

2

and binding on all contracting producers participating in the Corridor Netback Model. In the event of a material loss of budgeted production due to shutdowns or slowdowns of participants in the Corridor Netback Model, management of RPMG may propose to the Corridor Committee alternative costs allocations in the Corridor Netback Model that reflect allocation of costs based on Production (as defined in Section 14 below), rather than actual production.

(c)    Payment of the Advance Rate. Each calendar month, RPMG shall estimate for Member (in good faith) the Netback Price per gallon of all Ethanol that RPMG has committed to sell to its customers through operation of the Corridor Netback Model and the Net Fixed Price per gallon of all Ethanol that RPMG has sold to its customers on a fixed price (the "Advance Rate"). For Ethanol shipped by truck, single manifest railcars, or unit trains (other than Large Facility Unit Trains), RPMG, on a weekly basis, will pay Member on an average net 10-day basis (e.g. payment on Wednesday shall be for Ethanol delivered during the seven-day period ending on the previous Wednesday) an amount equal to the Advance Rate multiplied by the number of Fixed Price Gallons or Indexed Gallons delivered by Member to RPMG for the period. For Ethanol shipped by Large Facility Unit Train, RPMG shall pay Member within two (2) business days from the time that RPMG receives the shipping documentation for the Large Facility Unit Train.

(d)    Reconciliation to the Actual Netback Price or Net Fixed Price. At the end of each calendar month, promptly after the information necessary to calculate the Netback Price becomes available, RPMG will calculate the actual Netback Price for the preceding month under the Corridor Netback Model to reflect the actual selling price for all Indexed Gallons sold during the month and the actual expenses incurred during the period (the "Actual Netback Price") and RPMG will calculate the actual Net Fixed Price. Within ten (10) business days after the end of each month, RPMG shall furnish to Member a reconciliation of the Advance Rate to the Actual Netback Price or Net Fixed Price for the preceding month. If the Advance Rate paid to Member exceeded the applicable Actual Netback Price or Net Fixed Price, Member will refund to RPMG the overpayment within ten (10) days after receipt of the reconciliation. On the other hand, if the Advance Rate paid was less than the applicable Actual Netback Price or Net Fixed Price owed to Member, then RPMG will pay Member the additional amount owed to Member within ten (10) days after the completion of the reconciliation. In lieu of Member directly refunding any amounts to RPMG by separate payment, and RPMG directly refunding any amounts to Member by separate payment, under this Section 7 the parties by mutual agreement may offset or apply such amounts to subsequent payments to be made within RPMG's standard billing and payment cycle.

(e)    ***

(f)    Other Adjustments. For Indexed Gallons, Member shall be charged monthly directly through a reduction in the Netback Price for any demurrage charges incurred by RPMG for railcars and other direct distribution expenses that result from actions taken by Member and that are not reflected in the Corridor Netback Model. For Fixed Price Gallons, Member shall be charged monthly directly through a reduction in payments from RPMG for any demurrage charges incurred by RPMG for railcars and other direct distribution expenses that result from actions taken by Member.

(g)    The Corridor Committee. If Member disagrees with a decision of RPMG management, the Advance Rate, or the Netback Price as generated by the Corridor Netback Model, it may within ten (10) business days after the decision of RPMG management, or the distribution date of the Advance Rate or Netback Price, as applicable, appeal by written notice the decision to the Corridor Committee who shall approve or modify the decision of RPMG management or approve or modify the Advance 

*** Confidential material redacted and filed separately with the Commission.
3

Rate or Netback Price by a majority vote of all the members of the Corridor Committee. The Corridor Committee shall deliver such determination in a written response to Member within ten (10) business days of the written notice of appeal. Any modification in the Advance Rate or Netback Price approved by the Corridor Committee shall be promptly presented to all contracting producers participating in the Corridor Netback Model. The Corridor Committee shall consist of at least one representative from each of the primary corridor markets (as determined based on delivery destination in the Corridor Netback Model) in which there are more than two members in such corridor market and one representative who shall collectively represent all members who are in corridor markets in which there are two or few members. The members of LLC, voting by corridor market group, shall elect Corridor Committee representatives annually, provided that if a Corridor Committee representative is no longer a member of the primary corridor market that he or she was elected to represent he or she shall no longer serve as a Corridor Committee representative and the members of such corridor market shall elect a new Corridor Committee representative.

(h)    Appeal. If Member disagrees with a decision of the Corridor Committee, it may within ten (10) business days after the decision of the Corridor Committee, appeal the decision by written notice to LLC's Board of Governors, which shall approve or modify the decision of the Corridor Committee by a majority vote of all the governors of the Board that represent LLC members participating in the Corridor Netback Model. The decision of the Board of Governors shall be final and binding.

(i)    Audit. Within ninety (90) days following the end of RPMG's fiscal year end, Member shall have the right to inspect the books and records of RPMG for the purpose of auditing calculations of the aggregate netback paid to member participants and non-member participants in the Corridor Netback Model for the preceding year. Member shall give written notice to RPMG of its desire to conduct an audit and RPMG shall provide reasonable access to all financial information necessary to complete such audit and shall allow Member to meet with RPMG's auditors to review such information. The audit shall be completed within forty-five (45) days after the completion of RPMG's annual audit, but no later than one hundred fifty (150) days following the end of RPMG's fiscal year. The cost of the audit shall be the responsibility of Member unless the auditor determines that RPMG underpaid Member by more than *** for the period audited, in which case RPMG shall pay the cost of the audit. If the auditor determines that RPMG underpaid Member, RPMG shall promptly pay such underpayment to Member and if the auditor determines that RPMG overpaid Member, Member shall promptly pay the overpayment to RPMG. The determination of the auditor shall be final and binding on both parties. If Member fails to exercise its right to audit as provided in this Section 7 for any year, it shall be deemed to have waived any claim to dispute the Actual Netback Price paid for such year, unless Member has provided notice to RPMG of a claim to dispute the Actual Netback Price paid for such year.

8.    Marketing Fee. Member shall pay to RPMG a Marketing Fee equal to ***. The Marketing Fee shall be paid on a monthly basis. In lieu of Member directly paying any amounts to RPMG by separate payment, the parties may offset or apply such amounts to subsequent payments to be made within RPMG's standard billing and payment cycle.

9.    Committed Sales. ***, Member has the right to declare, in writing, the volume of its eligible gallons of Ethanol projection to produce and sell during the calendar quarter. If Member does not notify RPMG in writing, the volume of Member's eligible gallons of Ethanol for sale each month in the calendar quarter will be deemed to be an amount equal to Member's last twelve month sales divided by twelve. *** Member acknowledges that from time to time RPMG may enter into forward contracts to sell Ethanol beyond 

*** Confidential material redacted and filed separately with the Commission.
4

the current calendar quarter. Member acknowledges that such commitments are in the best interest of all members and non-member participants. Nothing set forth in this Section 9 shall relieve or modify a Member's obligation to deliver any or all of the Ethanol set forth on a Confirmation for the sale of Fixed Price Gallons.

10.    Ethanol Shortage/Open Market Purchase. If (i) Member fails to deliver any or all of the Ethanol set forth on a Confirmation for the sale of Fixed Price Gallons; (ii)***, RPMG may purchase Ethanol in the marketplace at such reasonable price and in such reasonable quantity as is required to meet its delivery obligations; provided, however, that prior to making such purchases RPMG shall communicate the terms and conditions of such purchases to Member and Member shall have the right to meet such terms and conditions or fulfill its original commitment. If Member is unable or unwilling to deliver the required Ethanol on such terms and conditions, RPMG may complete the purchase. If RPMG does so, and as a result thereof incurs a financial loss, including incidental costs, Member will reimburse RPMG for any such loss or RPMG may elect to set off such financial loss against future payments to Member over a period not to exceed twenty four (24) months. In addition to the foregoing, if Member fails to deliver any or all of the Ethanol set forth on a Confirmation for the sale of Fixed Price Gallons, RPMG shall be entitled to all remedies available at law or in equity, including damages, specific performances and/or attorneys fees and costs, and RPMG shall be under a duty to mitigate damages.

11.    Obligation to Deliver after Termination. Notwithstanding termination of this Agreement under Sections 13(a) through 13(d), Member shall be obligated to deliver to RPMG for marketing by RPMG in accordance with this Agreement, for the *** following termination of this Agreement, all of the Ethanol produced by Member.  Notwithstanding termination of this Agreement, Member shall be obligated to deliver to RPMG Ethanol to cover Member's percentage of any committed production of Indexed Gallons as set forth in Sections 9 and 10 during the *** following termination of this Agreement and any fixed price contracts for which a Member has delivered a Commitment.

12.    Term. The term of this Agreement shall commence on the Effective Date and shall continue until terminated as provided in Section 13.

13.    Termination. This Agreement may be terminated under the circumstances set out below.

(a)    Termination of Membership. This Agreement shall automatically terminate when Member ceases to be a member of LLC.

(b)    Termination for Intentional Misconduct. If either party engages in intentional misconduct reasonably likely to result in significant adverse consequences to the other party, the party harmed or likely to be harmed by the intentional misconduct may terminate this Agreement immediately, upon written notice to the party engaging in the intentional misconduct.

(c)    Termination for Uncured Breach. If one of the parties breaches the terms of this Agreement, the other party may give the breaching party a notice in writing which specifically sets out the nature and extent of the breach, and the steps that must be taken to cure the breach. After receiving the written notice, the breaching party will then have thirty (30) days to cure the breach, if the breach does not involve a failure to market and distribute Ethanol as required by this Agreement. If the breach involves a failure to market and distribute Ethanol as required by this Agreement, then the breaching party will have five (5) days after receiving the written notice to cure the breach. If the breaching party does not cure any breach within the applicable cure period, then the non-breaching party will have the right to terminate this Agreement immediately.

*** Confidential material redacted and filed separately with the Commission.
5

(d)    Member Insolvency, etc. RPMG may terminate this Agreement if Member becomes insolvent, has a receiver appointed over its business or assets and such receiver is not discharged within thirty (30) days, files a petition in bankruptcy or has a petition in bankruptcy filed against it which, in either case, is not dismissed within thirty (30) days, or ceases to produce Ethanol for thirty (30) days or more.

(e)    Termination by Mutual Written Agreement. This Agreement may also be terminated upon any terms and under any conditions which are mutually agreed upon in writing by the parties.

(f)    Termination by Member. Member may terminate this Agreement for any
reason upon at least *** advance notice to RPMG.

14.    Effect of Termination. The termination of this Agreement shall constitute a Triggering Event (as defined in LLC's Member Control Agreement) requiring LLC to redeem all of Member's Interest (as defined LLC's Member Control Agreement) in RPMG on the terms set forth in the Member Control Agreement. In addition, upon the conclusion of Member's delivery obligations to RPMG under Section 11, Member shall accept assignment from RPMG of the lease or leases for the number of 28,800 gallon capacity railcars (or such equivalent number of gallons of larger capacity railcars) determined as follows:

***

*** Under all circumstance from and after termination of this Agreement, Member shall hold RPMG harmless for any direct or indirect damage, claim or loss with respect to the assignment or subletting of railcars to Member.

15.    Licenses and Permits; Records. Member at all times shall have and maintain all of the licenses and permits necessary to operate the Facility. Member shall comply with all laws, regulations, rules and requirements of governmental authorities, including but not limited to the Renewable Fuels Standard of RINS reporting. In addition, Member shall establish record keeping and reporting systems compatible with RPMG's load out reporting system, currently ETS and AccuLoad III.

16.    Good and Marketable Title. Member represents that it will have good and marketable title to all of the Ethanol marketed for it by RPMG and that all Ethanol delivered will be free and clear of all liens and encumbrances.

17.    Subordination. In order to satisfy the payment obligations in Section 7 of this Agreement, RPMG may be required to obtain working capital from financing resources. Member agrees and acknowledges that the payment terms in this Agreement are a benefit to Member and agrees that it will subordinate its right to payment hereunder to the rights of any lender providing working capital to RPMG, provided that all members of LLC are required to agree to such subordination. Member shall execute such subordination agreement and other documents as may be necessary to evidence this undertaking.

18.    Independent Contractor. Nothing contained in this Agreement will make RPMG the agent of Member for any purpose whatsoever. RPMG and its employees shall be deemed to be independent contractors with full control over the manner and method of performance of the services they will be providing on behalf of Member under this Agreement.

19.    Samples. Member will take and retain for a minimum of 60 days at least 2 samples of product per day at the point of delivery. At the request of RPMG, Member agrees to provide RPMG with samples of 

*** Confidential material redacted and filed separately with the Commission.
6

its Ethanol produced at the Facility so that it may be tested for product quality on a regular basis.

20.    Insurance. During the entire term of this Agreement, Member will maintain insurance coverage with insurance companies having at least an AM Best Company rating of A -7. At a minimum, Member's insurance coverage must include:

(a)    Commercial general product and public liability insurance, with liability limits of at least $5 million in the aggregate or umbrella insurance with at least $5 million in the aggregate;

(b)    Workers' compensation/employers liability and auto liability insurance to the extent required by law; and

(c)    RPMG, Inc. and Renewable Products Marketing Group, LLC shall be added as an additional insured with primary and non-contributory status under the commercial general product and public liability insurance policy, automobile liability insurance policy and umbrella policy, as applicable. Member also agrees to waive and will require its Commercial General Liability, Automobile Liability, Umbrella Liability and Workers' Compensation insurers to waive all rights of subrogation under such policies as against RPMG, Renewable Products Marketing Group, LLC and their directors, officers, and employees as it relates to this Agreement.

Member will not change its insurance coverage during the term of this Agreement if such change results in a failure to maintain the minimums set out above, and the policies shall provide that they may not be cancelled, nonrenewed or terminated without at least 30 days prior written notice to RPMG.

21.    Indemnification and Hold Harmless - Member. If a third party makes a claim against RPMG or any person or organization related to it as the result of the actions or omissions of Member or any person or organization related to Member including, but not limited to, claims relating to the quality of Ethanol produced by Member or the performance of its obligations under this Agreement, Member shall indemnify RPMG and its related persons and organizations and hold them harmless from any liabilities, damages, costs and/or expenses, including costs of litigation and reasonable attorneys fees which they incur as a result of any such claims.

22.    Indemnification and Hold Harmless - RPMG. The indemnification obligations of the parties under this Agreement will be mutual and RPMG, therefore, makes the same commitment to indemnify Member and its related persons or organizations to the extent any claim is made against Member or its related person arising out of any action or omission of RPMG.

23.    Survival of Terms/Dispute Resolution. All representations, warranties and agreements made in connection with this Agreement will survive the termination of this Agreement. The parties will, therefore, be able to pursue claims related to those representations, warranties and agreements after the termination of this Agreement, unless those claims are barred by the applicable statute of limitations. Similarly, any claims that the parties have against each other that arise out of actions or omissions that take place while this Agreement is in effect will survive the termination of this Agreement. This means that the parties may pursue those claims even after the termination of this Agreement, unless applicable statutes of limitation bar those claims. The parties agree that should a dispute between them arise in connection with this Agreement, the parties will, in good faith, attempt to mediate the dispute prior to the filing of any action in any court. Such mediation session shall occur at a place that is mutually agreeable, and shall be conducted by a mediator to be selected by mutual agreement of the parties.

7

24.    Choice of Law. This Agreement shall be governed by, interpreted under and enforced in accordance with Minnesota law, without regard to conflicts of law principles.

25.    Assignment. Member may not assign its rights or obligations under this Agreement, whether by way of a sale of all or substantially all of its assets, merger, sale of equity interests, a change of control or as a matter of law, without the prior written consent of RPMG, which consent may be withheld in the sole discretion of RPMG. Member shall be entitled to collaterally assign its rights under this Agreement solely for financing purposes, and RPMG shall agree to such collateral assignment provided that the lender accepts the terms of this Agreement or other mutually agreeable terms.

26.    Entire Agreement. This Agreement constitutes the entire agreement between the parties covering everything agreed upon or understood in the transaction and supersedes any other preexisting agreement between the parties with respect to the same subject matter. There are no oral promises, conditions, representations, understandings, interpretations, or terms of any kind as conditions or inducements to the execution hereof or in effect between the parties, except as expressed in this Agreement. No change or addition shall be made to this Agreement except by a written document signed by both parties hereto.

27.    Execution of Counterparts. This Agreement may be executed by the parties on any number of separate counterparts, and by each party on separate counterparts, each of such counterparts being deemed by the parties to be an original instrument; and all of such counterparts, taken together, shall be deemed to constitute one and the same instrument.

28.    Duplicate Counterpart Includes Facsimile. The parties specifically agree and acknowledge that a duplicate hereof shall include, but not be limited to, a counterpart produced by virtue of a facsimile ("fax") machine or a .pdf copy.

29.    Binding Effect. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective heirs, personal representatives, successors and assigns.

30.    Confidential Information. The parties acknowledge that they will be exchanging information about their businesses under this Agreement which is confidential and proprietary, and the parties agree to handle that confidential and proprietary information in the manner described in this Section 30.

(a)    Definition of Confidential Information. For purposes of this Agreement, the term "Confidential Information" will mean information related to the business operations of Member or RPMG that meets all of the following criteria:

(i)    The information must not be generally known to the public and
must not be a part of the public domain;

(ii)    The information must belong to the party claiming it is confidential
and must be in that party's possession;

(iii)    The information must have been protected and safeguarded by the party claiming it is confidential by measures that were reasonable under the circumstances before the information was disclosed to the other party;

(iv)    Written information must be clearly designated in writing as "Confidential Information" by the party claiming it is confidential before it is disclosed to the other party, except that all information about costs and prices will always be considered Confidential Information under this Agreement without the need for specifically designating it as such; 

8

and

(v)    Verbal Confidential Information which is disclosed to the other party must be summarized in writing, designated in writing as "Confidential Information" and transmitted to the other party within ten (10) days of the verbal disclosure.

(b)    Limitations on the Use of Confidential Information. Each party agrees that it will not use any Confidential Information that it obtains about the other party for any purpose other than to perform its obligations under this Agreement.

(c)    The Duty not to Disclose Confidential Information. The parties agree that they will not disclose any Confidential Information about each other to any person or organization, other than their respective legal counsel and accountants, without first getting written consent to do so from the other party. Notwithstanding the foregoing, if a party or anyone to whom such party transmits Confidential Information in accordance with this Agreement is requested or required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoenas, civil investigative demand or similar process, SEC filings or administrative proceedings) in connection with any proceeding, to disclose any Confidential Information, such party will give the disclosing party prompt written notice of such request or requirement so that the disclosing party may seek an appropriate protective order or other remedy and/or waive compliance with the provisions of this Agreement, and the receiving party will cooperate with the disclosing party to obtain such protective order. The fees and costs of obtaining such protective order, including payment of reasonable attorney's fees, shall be paid for by the disclosing party. If such protective order or other remedy is not obtained or the disclosing party waives compliance with the relevant provisions of this Agreement, the receiving party (or such other persons to whom such request is directed) will furnish only that portion of the Confidential Information which, in the opinion of legal counsel, is legally required to be disclosed, and upon the disclosing party's request, use commercially reasonable efforts to obtain assurances that the confidential treatment will be accorded to such information. This will be the case both while this Agreement is in effect and for a period of five (5) years after it has been terminated.

(d)    The Duty to Notify the Other Party in Cases of Improper Use or Disclosure. Each party agrees to immediately notify the other party if either party becomes aware of any improper use of or any improper disclosure of the Confidential Information of the other party at any time while this Agreement is in effect, and for a period of five (5) years after it has been terminated.

(e)    Protection of the Confidential Information. Each party agrees to develop effective procedures for protecting the Confidential Information that it obtains from the other party, and to implement those procedures with the same degree of care that it uses in protecting its own Confidential Information.

(f)    Return of the Confidential Information. Immediately upon the termination of this Agreement, each party agrees to return to the other party all of the other party's Confidential Information that is in its possession or under its control.

31.    Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be considered delivered in all respects when it has been delivered by hand or mailed by first class mail postage prepaid, addressed as follows:

TO:    RPMG, Inc.
1157 Valley Park Drive South, Suite 100 

9

Shakopee, MN 55379

With a copy to: 

TO:    Member

With a copy to: 
    
[Intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have set their hands the day and year first written above.

	
		
	 
	RPMG, INC.

	 
	 

	 
	By: /s/ Douglas E. Punke

	 
	Its: CEO

	 
	 

	 
	MEMBER:

	 
	 

	 
	Red Trail Energy, LLC

	 
	 

	 
	By: /s/ Gerald Bachmeier

	 
	Its: CEO

10

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