Document:

exv10w03

 

Exhibit 10.03

SECURITY AGREEMENT

(Guarantor)

     This SECURITY AGREEMENT, dated as of July 5, 2007, is entered into between MATRIXX ORAL CARE,
LLC, a Delaware limited liability company (“Guarantor”), and COMERICA BANK, a Michigan
banking corporation (“Bank”), with reference to the following facts:

R E C I T A L S

     A. Matrixx Initiatives, Inc., a Delaware corporation (“Parent”), and Zicam, LLC, an
Arizona limited liability company (“Zicam”) (Parent and Zicam are sometimes collectively
referred to herein as “Borrowers” and individually as a “Borrower”), and Comerica
Bank, a Michigan banking corporation (“Bank”), have previously entered into that certain Amended
and Restated Credit Agreement, dated as of September 27, 2005, that certain Amendment Number One to
Amended and Restated Credit Agreement and Waiver, dated as of March 6, 2006, and that certain
Amendment Number Two to Amended and Restated Credit Agreement, dated as of June 27, 2007 (as the
same may be further amended, restated, supplemented or otherwise modified from time to time, the
“Loan Agreement”);

     B. Guarantor has executed that certain Continuing Guaranty, dated as of even date herewith (as
the same may be amended, restated, supplemented or otherwise modified from time to time, the
“Guaranty”), pursuant to which Guarantor guarantees the full payment and performance of all
obligations owing to Bank by Borrowers under the Loan Agreement and the Loan Documents, as defined
in the Loan Agreement; and

     C. Guarantor acknowledges that pursuant to the terms of the Loan Agreement, in order to induce
Bank to make Loans to Borrower, Guarantor is required to enter into this Security Agreement
granting to Bank a first priority security interest in the Collateral to secure prompt payment and
performance of the Guarantor’s obligations owing to Bank under the Guaranty and the other Secured
Obligations.

A G R E E M E N T

     NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions,
representations, and warranties hereinafter set forth, and for other good and valuable
consideration, the parties hereto agree as follows:

     1. Definitions. All initially capitalized terms used but not defined herein shall
have the meanings ascribed thereto in the Loan Agreement. In addition, as used herein, the
following terms shall have the following meanings:

          “Account Debtor” means any Person who is or who may become obligated with respect to,
or on account of, an Account, Chattel Paper or General Intangible.

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          “Accounts” means any and all of Guarantor’s presently existing and hereafter arising
accounts (including health-care-insurance receivables, contract rights, and all other forms
of monetary obligations owing to Guarantor, and all credit insurance, guaranties, or security
therefor), irrespective of whether earned by performance.

          “Bank Expenses” has the meaning of “Expenses” under the Loan Agreement and also means
any and all costs or expenses required to be paid by Guarantor under this Security Agreement which
are paid or advanced by Bank; all costs and expenses of Bank, including its attorneys’ fees and
expenses (including attorneys’ fees incurred pursuant to proceedings arising under the Bankruptcy
Code), incurred or expended to correct any default or enforce any provision of this Security
Agreement, or in gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, irrespective of whether a sale
is consummated; and all costs and expenses of suit incurred or expended by Bank, including its
attorneys’ fees and expenses (including attorneys’ fees incurred pursuant to proceedings arising
under the Bankruptcy Code) in enforcing or defending this Security Agreement, irrespective of
whether suit is brought.

          “Chattel Paper” means all of Guarantor’s presently existing and hereafter acquired or
created chattel paper (including tangible chattel paper and intangible chattel paper).

          “Code” means the Arizona Uniform Commercial Code, as amended or supplemented from time
to time. Any and all terms used in this Security Agreement which are defined in the Code shall be
construed and defined in accordance with the meaning and definition ascribed to such terms under
the Code, unless otherwise defined herein.

          “Collateral” means the following, collectively: any and all of the Accounts, Chattel
Paper, Commercial Tort Claims, Deposit Accounts, Documents, Equipment, Instruments, Inventory,
Investment Property, General Intangibles, Letter of Credit Rights, Negotiable Collateral,
Supporting Obligations, and Guarantor’s Books, in each case whether now existing or hereafter
acquired or created, any money or other assets of Guarantor that now or hereafter come into the
possession, custody, or control of Bank and any Proceeds or products of any of the foregoing, or
any portion thereof.

          “Collateral Access Agreement” means a landlord waiver, mortgagee waiver, bailee
letter, or acknowledgement agreement of any warehouseman, processor, lessor, consignee, or other
Person in possession of, having a Lien upon, or having rights or interests in the Equipment or
Inventory, in each case, in form and substance satisfactory to Bank.

          “Commercial Tort Claims” means all of Guarantor’s presently existing and hereafter
acquired commercial tort claims.

          “Deposit Account” means any demand, time, savings, passbook or similar account now or
hereafter maintained by or for the benefit of Guarantor with an organization that is engaged in the
business of banking including a bank, savings bank, savings and loan association, credit union and
trust companies, and all funds and amounts therein, whether or not restricted or designated for a
particular purpose.

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          “Documents” means any and all documents and documents of title (as such terms are
defined in the Code), including documents of title, bills of lading, dock warrants, dock receipts,
warehouse receipts and other documents of Guarantor, whether or not negotiable, and
includes all other documents which purport to be issued by a bailee or agent and purport to
cover goods in any bailee’s or agent’s possession which are either identified or are fungible
portions of an identified mass, including such documents of title made available to Guarantor for
the purpose of ultimate sale or exchange of goods or for the purpose of loading, unloading,
storing, shipping, transshipping, manufacturing, processing or otherwise dealing with goods in a
manner preliminary to their sale or exchange, in each case whether now existing or hereafter
acquired.

          “Equipment” means any and all of Guarantor’s presently existing and hereafter acquired
equipment, wherever located, including machinery, furniture, furnishings, fixtures, computer and
other electronic data processing equipment and other office equipment and supplies, computer
programs and related data processing software, spare parts, tools, motors, automobiles, trucks,
tractors and other motor vehicles, rolling stock, jigs, and other goods (other than Inventory, farm
products, and consumer goods), including software embedded in such goods, together with any and all
parts, improvements, additions, attachments, replacements, accessories, and substitutions thereto
or therefor, and all other rights of Guarantor relating thereto, whether in the possession and
control of Guarantor, or in the possession and control of a third party for the account of
Guarantor.

          “FEIN” means Federal Employer Identification Number.

          “General Intangibles” means any and all of Guarantor’s presently existing and
hereafter acquired or arising general intangibles and any other intangible personal property of
every kind and description, including:

          (a) contracts and contract rights, noncompetition covenants, licensing and distribution
agreements, indemnity agreements, guaranties, insurance policies, franchise agreements and lease
agreements;

          (b) uncertificated certificates of deposit, and interests in any joint ventures, partnerships
or limited liability companies;

          (c) choses in action and causes of action (whether legal or equitable, whether in contract or
tort or otherwise, and however arising);

          (d) licenses, approvals, permits or any other authorizations issued by any Governmental
Authority;

          (e) Intellectual Property Collateral;

          (f) computer software, magnetic media, electronic data processing files, systems and programs;

          (g) rights of stoppage in transit, replevin and reclamation, rebates or credits of every kind
and nature to which Guarantor may be entitled;

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          (h) purchase orders, customer lists, subscriber lists and goodwill;

          (i) monies due or recoverable from pension funds, refunds and claims for tax or other refunds
against any Governmental Authority;

          (j) payment intangibles; and

          (k) other contractual, equitable and legal rights of whatever kind and nature.

          “Guarantor” has the meaning set forth in the preamble to this Security Agreement.

          “Guarantor’s Books” means any and all presently existing and hereafter acquired or
created books and records of Guarantor, including all records (including maintenance and warranty
records), ledgers, computer programs, disc or tape files, printouts, runs, and other computer
prepared information indicating, summarizing, or evidencing the Collateral.

          “Guaranty” has the meaning set forth in recital B hereto.

          “Instruments” means any and all negotiable instruments, and every other writing which
evidences a right to the payment of a monetary obligation, in each case whether now existing or
hereafter acquired.

          “Intellectual Property Collateral” means the following Assets owned or held by
Guarantor or in which Guarantor otherwise has any interest, now existing or hereafter acquired or
arising:

          (a) all patents and patent applications, domestic or foreign, all licenses relating to any of
the foregoing and all income and royalties with respect to any licenses, all rights to sue for
past, present or future infringement thereof, all rights arising therefrom and pertaining thereto
and all reissues, divisions, continuations, renewals, extensions and continuations in-part thereof;

          (b) all copyrights and applications for copyright, domestic or foreign, together with the
underlying works of authorship (including titles), whether or not the underlying works of
authorship have been published and whether said copyrights are statutory or arise under the common
law, and all other rights and works of authorship, all rights, claims and demands in any way
relating to any such copyrights or works, including royalties and rights to sue for past, present
or future infringement, and all rights of renewal and extension of copyright;

          (c) all state (including common law), federal and foreign trademarks, service marks and trade
names, and applications for registration of such trademarks, service marks and trade names, all
licenses relating to any of the foregoing and all income and royalties with respect to any
licenses, whether registered or unregistered and wherever registered, all rights to sue for past,
present or future infringement or unconsented use thereof, all rights arising therefrom and
pertaining thereto and all reissues, extensions and renewals thereof;

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          (d) all trade secrets, confidential information, customer lists, license rights, advertising
materials, operating manuals, methods, processes, know-how, sales literature, sales and operating
plans, drawings, specifications, blue prints, descriptions, inventions, name plates and catalogs;
and

          (e) the entire goodwill of or associated with the businesses now or hereafter conducted by
Guarantor connected with and symbolized by any of the aforementioned properties and assets; and

          (f) Intellectual Property Collateral shall include, without limitation, rights and interests
pursuant to licensing or other contracts in favor of Guarantor pertaining to patents, trademarks,
copyrights and other intellectual property presently or in the future owned or used by third
Persons.

          “Inventory” means any and all of Guarantor’s presently existing and hereafter acquired
goods (including software embedded in such goods) of every kind and description (including goods in
transit) which are held for sale or lease, or to be furnished under a contract of service or which
have been so leased or furnished, or other disposition, wherever located, including those held for
display or demonstration or out on lease or consignment or are raw materials, work in process,
finished materials, or materials used or consumed, or to be used or consumed, in Guarantor’s
business, and the resulting product or mass, and all repossessed, returned, rejected, reclaimed and
replevied goods, together with all materials, parts, supplies, packing and shipping materials used
or usable in connection with the manufacture, packing, shipping, advertising, selling or furnishing
of such goods; and all other items hereafter acquired by Guarantor by way of substitution,
replacement, return, repossession or otherwise, and all additions and accessions thereto, and any
Document representing or relating to any of the foregoing at any time.

          “Investment Property” means any and all of Guarantor’s presently existing and
hereafter acquired investment property.

          “Letter of Credit Rights” means any and all of Guarantor’s presently existing and
hereafter acquired letter of credit rights.

          “Negotiable Collateral” means any and all of Guarantor’s presently existing and
hereafter acquired or arising letters of credit, letter of credit rights, advises of credit,
certificates of deposit, notes, drafts, money, Instruments, Documents and tangible Chattel Paper.

          “Proceeds” means whatever is receivable or received from or upon the sale, lease,
license, collection, use, exchange or other disposition, whether voluntary or involuntary, of any
Collateral, including “proceeds” as defined in the Code, any and all proceeds of any insurance,
indemnity, warranty or guaranty payable to or for the account of Guarantor from time to time with
respect to any of the Collateral, any and all payments (in any form whatsoever) made or due and
payable to Guarantor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any Person acting under color of Governmental Authority), any and all other

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amounts
from time to time paid or payable under or in connection with any of the Collateral or for or on
account of any damage or injury to or conversion of any Collateral by any Person, any and all other
tangible or intangible property received upon the sale or disposition of Collateral, and all
proceeds of proceeds.

          “Rights to Payment” means all Accounts and any and all rights and claims to the
payment or receipt of money or other forms of consideration of any kind in, to and under all
electronic Chattel Paper, General Intangibles, Letter of Credit Rights, Negotiable Collateral and
Proceeds thereof.

          “Secured Obligations” shall have the meaning of “Guaranteed Obligations” under the
Guaranty and shall also mean any and all debts, liabilities, obligations, or undertakings owing by
Guarantor to Bank arising under, advanced pursuant to, or evidenced by this Security Agreement,
whether direct or indirect, absolute or contingent, matured or unmatured, due or to become due,
voluntary or involuntary, whether now existing or hereafter arising, and including all interest not
paid when due and all Expenses which Guarantors are required to pay or reimburse pursuant to this
Security Agreement, the Guaranty, the other Loan Documents or by law.

          “Security Agreement” shall mean this Security Agreement, as amended or restated from
time to time.

          “Supporting Obligations” has the meaning given to such term in the Code.

     2. Construction. Unless the context of this Security Agreement clearly requires
otherwise, references to the plural include the singular, references to the singular include the
plural, the part includes the whole, “including” is not limiting, and “or” has the inclusive
meaning represented by the phrase “and/or.” References in this Security Agreement to
“determination” by Bank include reasonable estimates (absent manifest error) by Bank, as applicable
(in the case of quantitative determinations) and reasonable beliefs (absent manifest error) by
Bank, as applicable (in the case of qualitative determinations). The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Security Agreement refer to this Security
Agreement as a whole and not to any particular provision of this Security Agreement. Article,
section, subsection, exhibit, and schedule references are to this Security Agreement unless
otherwise specified.

     3. Creation of Security Interest. Guarantor hereby grants to Bank a continuing
security interest in all presently existing and hereafter acquired or arising Collateral in order
to secure the prompt payment and performance of all of the Secured Obligations. Guarantor
acknowledges and affirms that such security interest in the Collateral has attached to all
Collateral without further act on the part of Bank, Lenders or Guarantor.

     4. Further Assurances.

          4.1 Guarantor shall execute and deliver to Bank concurrently with Guarantor’s execution of
this Security Agreement, and from time to time at the request of Bank, and Guarantor hereby
authorizes Bank to file, all financing statements, continuation financing

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statements, fixture
filings, security agreements, chattel mortgages, assignments, and all other documents that Bank may
request, in form satisfactory to Bank, to perfect and maintain perfected Bank’s security interests
in the Collateral, and in order to consummate fully all of the transactions contemplated by this
Security Agreement, Guaranty and the Loan Agreement. Guarantor hereby irrevocably makes,
constitutes, and appoints Bank (and Bank’s officers,
employees, or agents) as Guarantor’s true and lawful attorney with power to sign the name of
Guarantor on any of the above-described documents or on any other similar documents which need to
be executed, recorded, or filed, and to do any and all things necessary in the name and on behalf
of Guarantor in order to perfect, or continue the perfection of, Bank’s security interests in the
Collateral. Guarantor agrees that neither Bank, nor any of its designees or attorneys-in-fact,
will be liable for any act of commission or omission, or for any error of judgment or mistake of
fact or law with respect to the exercise of the power of attorney granted under this Section 4.1,
other than as a result of its or their gross negligence or wilful misconduct. THE POWER OF
ATTORNEY GRANTED UNDER THIS SECTION 4.1 IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL
ALL OF THE SECURED OBLIGATIONS HAVE BEEN INDEFEASIBLY PAID IN FULL, THE GUARANTY TERMINATED, AND
ALL GUARANTOR’S DUTIES HEREUNDER AND THEREUNDER HAVE BEEN DISCHARGED IN FULL.

          4.2 Without limiting the generality of the foregoing Section 4.1 or any of the provisions of
the Loan Agreement, Guarantor will: (i) at the request of Bank, mark conspicuously all of its
records pertaining to the Collateral with a legend, in form and substance satisfactory to Bank,
indicating that the Collateral is subject to the security interest granted hereby; (ii) immediately
mark all Chattel Paper with a conspicuous legend indicating Bank’s security interest therein and
otherwise in form and substance satisfactory to Bank; and (iii) upon demand of Bank, allow
inspection of Collateral by Bank or Persons designated by Bank at any time during normal business
hours.

          4.3 With respect to the Negotiable Collateral (other than drafts received in the ordinary
course of business so long as no Event of Default is continuing), Guarantor shall, immediately upon
request by Bank, endorse (where appropriate) and assign the Negotiable Collateral over to Bank, and
deliver to Bank actual physical possession of the Negotiable Collateral to Bank together with any
instruments of transfer or assignment, all in form and substance satisfactory to Bank, in order to
fully perfect the security interest therein of Bank.

          4.4 In the event that any Collateral is in the possession of a third party, Guarantor shall
join with Bank in notifying such third party of Bank’s security interest and obtaining an
acknowledgement from such third party that it is holding such Collateral for the benefit of Bank.

          4.5 Guarantor shall use its commercially reasonable efforts in obtaining a control agreement
in form and substance satisfactory to Bank with respect to all Deposit Accounts, electronic Chattel
Paper, Investment Property, and Letter of Credit Rights.

          4.6 Guarantor shall promptly notify Bank of any Commercial Tort Claims it may bring against
any Person, including the name and address of each defendant, a summary of

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the facts, an estimate
of Guarantor’s damages, copies of any complaint or demand letter submitted by Guarantor, and such
other information as Bank may request, and in connection therewith, at Bank’s request, Guarantor
and Bank shall enter into an amendment to this Security Agreement granting a security interest to
Bank in each such Commercial Tort Claim to secure the Secured Obligations.

     5. Representations and Warranties. In order to induce Bank to enter into the Loan
Agreement and/or to make Loans to Borrowers or issue any Letters of Credit, in addition to the
representations and warranties of Guarantor set forth in the Guaranty which are incorporated herein
by this reference, Guarantor represents and warrants to Bank that on the Closing Date and
thereafter on the date of each and every Borrowing or issuance of a Letter of Credit:

          5.1 Legal Name; State of Organization; Location of Chief Executive Office and Collateral;
FEIN. Guarantor’s exact legal name, state of incorporation, FEIN and charter or organizational
identification number is accurately set forth in Schedule 1. Guarantor’s chief executive
office is located at the address set forth in Schedule 1, and all other locations where
Guarantor conducts business or Collateral is kept are set forth in Schedule 1.

          5.2 Locations of Guarantor’s Books. All locations where Guarantor’s Books are kept,
including all equipment necessary for accessing Guarantor’s Books and the names and addresses of
all service bureaus, computer or data processing companies and other Persons keeping Guarantor’s
Books or collecting Rights to Payment for Guarantor, are set forth in Schedule 1.

          5.3 Trade Names and Trade Styles. All trade names and trade styles under which
Guarantor presently conducts its business operations are set forth in Schedule 1, and,
except as set forth in Schedule 1, Guarantor has not, at any time during the preceding five
years: (i) been known as or used any other corporate, trade or fictitious name; (ii) changed its
name; (iii) been the surviving or resulting corporation in a merger or consolidation; or (iv)
acquired through asset purchase or otherwise any business of any Person.

          5.4 Ownership of Collateral. Guarantor has rights in power to transfer the
Collateral, and Guarantor’s title to the Collateral is free from all Liens and restrictions other
than Permitted Liens.

          5.5 Enforceability; Priority of Security Interest. (i) This Security Agreement
creates a security interest which is enforceable against the Collateral in which Guarantor now has
rights and will create a security interest which is enforceable against the Collateral in which
Guarantor hereafter acquires rights at the time Guarantor acquires any such rights, and (ii) Bank
has a perfected security interest (to the fullest extent perfection can be obtained by filing,
notification to third parties, possession or control) and a first priority security interest in the
Collateral in which Guarantor now has rights (subject only to Permitted Liens), and will have a
perfected and first priority security interest (to the fullest extent perfection can be obtained by
filing, notification to third parties, possession or control) in the Collateral in which Guarantor
hereafter acquires rights at the time Guarantor acquires any such rights (subject only to Permitted
Liens), in each case securing the payment and performance of the Guaranteed Obligations.

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          5.6 Other Financing Statements. Other than financing statements in favor of Bank and
financing statements filed in connection with Permitted Liens, no effective financing statement
naming Guarantor as debtor, assignor, grantor, mortgagor, pledgor or the like and covering all or
any part of the Collateral is on file in any filing or recording office in any jurisdiction.

          5.7 Rights to Payment.

               (a) the Rights to Payment represent valid, binding and enforceable obligations of the Account
Debtors or other Persons obligated thereon, representing undisputed, bona fide transactions
completed in accordance with the terms and provisions contained in any documents related thereto,
and are and will be genuine, free from Liens, adverse claims, counterclaims, setoffs, defaults,
disputes, defenses, retainages, holdbacks and conditions precedent of any kind of character, except
to the extent reflected by Guarantor’s reserves for uncollectible Rights to Payment;

               (b) to Guarantor’s knowledge, all Account Debtors and other obligors on the Rights to Payment
are Solvent and generally paying their debts as they come due;

               (c) all Rights to Payment comply with all applicable laws concerning form, content and manner
of preparation and execution, including where applicable any federal and state consumer credit
laws;

               (d) Guarantor has not assigned any of its rights under the Rights to Payment other than to
Bank pursuant to this Security Agreement;

               (e) all statements made, all unpaid balances and all other information in Guarantor’s Books
and other documentation relating to the Rights to Payment are true and correct and in all respects
what they purport to be; and

               (f) Guarantor has no knowledge of any fact or circumstance which would impair the validity or
collectibility of any of the Rights to Payment.

          5.8 Inventory. No Inventory is stored with any bailee, warehouseman or similar Person
or on any premises leased to Guarantor, nor has any Inventory been consigned to Guarantor or
consigned by Guarantor to any Person or is held by Guarantor for any Person under any “bill and
hold” or other arrangement.

          5.9 Intellectual Property.

               (a) except as set forth in Schedule 1, Guarantor (directly or through any Subsidiary)
does not own, possess or use under any licensing arrangement any patents, copyrights, trademarks,
service marks or trade names, nor is there currently pending before any Governmental Authority any
application for registration of any patent, copyright, trademark, service mark or trade name;

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               (b) all patents, copyrights, trademarks, service marks and trade names are subsisting and have
not been adjudged invalid or unenforceable in whole or in part;

               (c) all maintenance fees required to be paid on account of any patents have been timely paid
for maintaining such patents in force, and, to the best of Guarantor’s knowledge, each of the
patents is valid and enforceable and Guarantor has notified Bank in writing of all prior art
(including public uses and sales) of which it is aware;

               (d) to the best of Guarantor’s knowledge after due inquiry, no infringement or unauthorized
use presently is being made of any Intellectual Property Collateral by any Person;

               (e) Guarantor is the sole and exclusive owner of the Intellectual Property Collateral and the
past, present and contemplated future use of such Intellectual Property Collateral by Guarantor has
not, does not and will not infringe or violate any right, privilege or license agreement of or with
any other Person; and

               (f) Guarantor owns, has material rights under, is a party to, or an assignee of a party to all
material licenses, patents, patent applications, copyrights, service marks, trademarks, trademark
applications, trade names and all other intellectual property Collateral necessary to continue to
conduct its business as heretofore conducted.

          5.10 Equipment.

               (a) none of the Equipment or other Collateral is affixed to real property, except Collateral
with respect to which Guarantor has supplied Bank with all information and documentation necessary
to make all fixture filings required to perfect and protect the priority of Bank’s security
interest in all such Collateral which may be fixtures, as against all Persons having an interest in
the premises to which such property may be affixed; and

               (b) none of the Equipment is leased from or to any Person, except as set forth in Schedule
1.

          5.11 Deposit Accounts. The names and addresses of all financial institutions at which
Guarantor maintains its Deposit Accounts, and the account numbers and account names of such Deposit
Accounts, are set forth in Schedule 1.

          5.12 Investment Property. All Investment Property is set forth and described in
Schedule 1, and all financial institutions or financial intermediaries holding or in
possession of such Investment Property are set forth in Schedule 1.

          5.13 Commercial Tort Claims. All of Guarantor’s Commercial Tort Claims that it has
brought against any Person, including the name and address of each defendant, a summary of the
facts, and an estimate of such Guarantor’s damages, are set forth in Schedule 1.

     6. Covenants. In addition to the covenants of Guarantor set forth in the Guaranty
which are incorporated herein by this reference, Guarantor agrees that from the Closing Date and

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thereafter until the payment, performance and satisfaction in full of the Guaranteed Obligations,
and all of Bank’s and Lenders’ obligations under the Loan Agreement to Borrowers have been
terminated and no Letters of Credit are outstanding:

          6.1 Defense of Collateral. Guarantor shall appear in and defend any action, suit or
proceeding which may affect its title to or right or interest in, or Bank’s or Lenders’ right or
interest in, the Collateral.

          6.2 Preservation of Collateral. Guarantor shall do and perform all commercially
reasonable acts that may be necessary and appropriate to maintain, preserve and protect the
Collateral.

          6.3 Compliance with Laws, Etc. Guarantor shall comply with all laws, regulations and
ordinances, and all policies of insurance, relating to the possession, operation, maintenance and
control of the Collateral.

          6.4 Location of Guarantor’s Books and Chief Executive Office. Guarantor shall: (i)
keep all Guarantor’s Books at the locations set forth in Schedule 1; and (ii) maintain the
location of Guarantor’s chief executive office or principal place of business at the location set
forth in Schedule 1; provided, however, that Guarantor may amend Schedule 1 so long
as (i) such amendment occurs by written notice to Bank not less than 30 days prior to the date on
which the location of Guarantor’s Books or Guarantor’s chief executive office or principal place of
business is changed, and (ii) at the time of such written notification, Guarantor executes and
delivers any financing statement amendments or fixture filing amendments necessary to perfect or
continue perfected Bank’s security interests in the Collateral and also obtains for Bank such duly
executed Collateral Access Agreement as Bank shall require with respect to such new location.

          6.5 Location of Collateral. Guarantor shall keep the Inventory and Equipment only at
the locations identified on Schedule 1; provided, however, that Guarantor may amend
Schedule 1 so long as (i) such amendment occurs by written notice to Bank not less than 30 days
prior to the date on which the Inventory or Equipment is moved to such new location, (ii) such new
location is within the continental United States, and (iii) at the time of such written
notification, Guarantor executes and delivers any financing statements or fixture filings necessary
to perfect and continue perfected Bank’s security interests in such Assets and also obtains for
Bank such duly executed Collateral Access Agreement as Bank shall require with respect to such new
location.

          6.6 Change in Name, Trade Name, Trade Style or FEIN. Guarantor shall not change its
name, trade names, trade styles or FEIN, or add any new trade names or trade styles from those
listed on Schedule 1; provided, however, that Guarantor may amend Schedule 1 so
long as (i) such amendment occurs by written notice to Bank not less than 30 days prior to the date
on which such new name, trade name, trade style or FEIN becomes effective, and (ii) at the time of
such written notification, Guarantor executes and delivers any financing statement amendments or
fixture filing amendments necessary to continue perfected Bank’s security interests in the
Collateral.

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          6.7 Sate of Incorporation or Formation. Guarantor shall not change the state of its
incorporation or formation.

          6.8 Maintenance of Records. Guarantor shall keep separate, accurate and complete
Guarantor’s Books, disclosing Bank’s security interest hereunder.

          6.9 Disposition of Collateral. Guarantor shall not surrender or lose possession of
(other than to Bank), sell, lease, rent, or otherwise dispose of or transfer any of the Collateral
or any right or interest therein other than the sale of Inventory in the ordinary course of
business.

          6.10 Liens. Guarantor shall keep the Collateral free of all Liens except Permitted
Liens.

          6.11 Leased Premises. At Bank’s request, Guarantor shall obtain from each Person from
whom Guarantor leases any premises at which any Collateral is at any time present, such Collateral
Access Agreements as Bank may require.

          6.12 Rights to Payment. Guarantor shall:

               (a) perform and observe all terms and provisions of the Rights to Payment and all obligations
to be performed or observed by it in connection therewith and maintain the Rights to Payment in
full force and effect;

               (b) enforce all Rights to Payment strictly in accordance with their terms, and take all such
action to such end as may be from time to time reasonably requested by Bank;

               (c) if, to the knowledge of Guarantor, any dispute, setoff, claim, counterclaim or defense
shall exist or shall be asserted or threatened with respect to a Right to Payment (whether with or
against Guarantor or otherwise), disclose such fact fully to Bank in Guarantor’s Books relating to
such Account or other Right to Payment and in connection with any report furnished by Guarantor to
Bank relating to such Right to Payment;

               (d) furnish to Bank such information and reports regarding the Rights to Payment as Bank may
request, and upon request of Bank make such demands and requests for information and reports as
Guarantor is entitled to make in respect of the Rights to Payment; and

               (e) upon the occurrence of any Event of Default, establish such lockbox or similar
arrangements for the payment of the Rights to Payment as Bank shall require.

          6.13 Inventory. Guarantor shall:

               (a) at such times as Bank shall request, prepare and deliver to Bank periodic reports
pertaining to the Inventory, in form and substance satisfactory to Bank;

               (b) upon the request of Bank, take a physical listing of the Inventory and promptly deliver a
copy of such physical listing to Bank; provided that unless an Event of

12

 

Default exists, Bank shall
not request such a physical listing of the Inventory more frequently than once per calendar year;

               (c) not store any Inventory with a bailee, warehouseman or similar Person or on premises
leased to Guarantor without obtaining for Bank such Collateral Access Agreements as Bank shall
require; and

               (d) not dispose of any Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment or similar basis, nor acquire any Inventory from any Person on any such
basis, without in each case giving Bank prior written notice thereof.

          6.14 Equipment. Guarantor shall, upon Bank’s request, deliver to Bank a report of
each item of Equipment, in form and substance satisfactory to Bank.

          6.15 Intellectual Property Collateral. Guarantor shall:

               (a) not enter into any agreement (including any license or royalty agreement) pertaining to
any Intellectual Property Collateral without in each case giving Bank prior notice thereof;

               (b) not allow or suffer any Intellectual Property Collateral to become abandoned, nor any
registration thereof to be terminated, forfeited, expired or dedicated to the public;

               (c) promptly give Bank notice of any rights Guarantor may obtain to any new patentable
inventions, trademarks, servicemarks, copyrightable works or other new Intellectual Property
Collateral, prior to the filing of any application for registration thereof; and

               (d) diligently prosecute all applications for patents, copyrights and trademarks, and file and
prosecute any and all continuations, continuations-in-part, applications for reissue, applications
for certificate of correction and like matters as shall be reasonable and appropriate in accordance
with prudent business practice, and promptly and timely pay any and all maintenance, license,
registration and other fees, taxes and expenses incurred in connection with any Intellectual
Property Collateral.

     7. Collection of Rights to Payment. Bank shall have the right at any time (i) to
notify the Account Debtors to make payments directly to Bank or a lockbox account as set forth in
clause (iii) of this Section 7, (ii) to enforce the Guarantor’s rights against the Account Debtors,
and (iii) to require that all payments made by Account Debtors be deposited directly into a lockbox
account as Bank may specify, pursuant to a lockbox agreement in form and substance satisfactory to
Bank, with a lockbox servicing Bank acceptable to Bank.

     8. Events of Default. The occurrence of any Event of Default under the Loan Agreement
shall constitute an event of default (“Event of Default”) under this Security Agreement.

13

 

     9. Rights and Remedies.

          9.1 During the continuance of an Event of Default, Bank, without notice or demand, may do any
one or more of the following, all of which are authorized by Guarantor:

               (a) Settle or adjust disputes and claims directly with Account Debtors for amounts and upon
terms which Bank considers advisable, and in such cases, Bank will credit the Secured Obligations
with only the net amounts received by Bank in payment of such
disputed Accounts after deducting all Bank Expenses incurred or expended in connection
therewith;

               (b) Cause Guarantor to hold all returned Inventory in trust for Bank segregate all returned
Inventory from all other property of Guarantor or in Guarantor’s possession and conspicuously label
said returned Inventory as the property of Bank;

               (c) Without notice to or demand upon Guarantor, Borrowers or any other guarantor, make such
payments and do such acts as Bank considers necessary or reasonable to protect its security
interests in the Collateral. Guarantor agrees to assemble the Collateral if Bank so requires, and
to make the Collateral available to Bank as Bank may designate. Guarantor authorizes Bank to enter
the premises where the Collateral is located, to take and maintain possession of the Collateral, or
any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or Lien that
in Bank’s determination appears to conflict with its security interests and to pay all expenses
incurred in connection therewith. With respect to any of Guarantor’s owned or leased premises,
Guarantor hereby grants Bank a license to enter into possession of such premises and to occupy the
same, without charge, for up to 120 days in order to exercise any of Bank’s rights or remedies
provided herein, at law, in equity, or otherwise;

               (d) Without notice to Guarantor (such notice being expressly waived), and without constituting
a retention of any collateral in satisfaction of an obligation (within the meaning of Section
47-9505 of the Code), set off and apply to the Secured Obligations any and all (i) balances and
Deposit Accounts of Guarantor held by Bank, or (ii) indebtedness at any time owing to or for the
credit or the account of Guarantor held by Bank;

               (e) Hold, as cash collateral, any and all balances and Deposit Accounts of Guarantor held by
Bank, to secure the full and final repayment of all of the Secured Obligations;

               (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a
license or other right to use, without charge, Guarantor’s labels, patents, copyrights, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or
any property of a similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and Guarantor’s rights under all licenses and all
franchise agreements shall inure to Bank’s benefit;

14

 

               (g) Sell the Collateral at either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner and at such places (including
Guarantor’s premises) as Bank determines is commercially reasonable. Bank shall have no obligation
to clean-up or otherwise prepare the Collateral for sale. It is not necessary that the Collateral
be present at any such sale;

               (h) Bank shall give notice of the disposition of the Collateral as follows:

               (i) Bank shall give Guarantor and each holder of a security interest in the Collateral who has
filed with Bank a written request for notice, a notice in writing of the time and place of public
sale, or, if the sale is a private sale or some other disposition other than a public sale is to be
made of the Collateral, then the time on or after which the private sale or other disposition is to
be made;

                    (i) The notice shall be personally delivered or mailed, postage prepaid, to Guarantor as
provided in Section 15 of the Guaranty, at least ten (10) days before the date fixed for
the sale, or at least ten (10) days before the date on or after which the private sale or other
disposition is to be made; no notice needs to be given prior to the disposition of any portion of
the Collateral that is perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market. Notice to Persons other than Guarantor claiming an
interest in the Collateral shall be sent to such addresses as they have furnished to Bank;

                    (ii) If the sale is to be a public sale, Bank also shall give notice of the time and place by
publishing a notice one time at least ten (10) days before the date of the sale in a newspaper of
general circulation in the county in which the sale is to be held;

                    (iii) Bank may credit bid and purchase at any public sale; and

               (j) Any deficiency that exists after disposition of the Collateral as provided above will be
paid immediately by Guarantor. Any excess will be returned, without interest and subject to the
rights of third Persons, by Bank to Guarantor.

          9.2 Bank shall have no obligation to attempt to satisfy the Secured Obligations by collecting
them from any third Person which may be liable for them or any portion thereof, and Bank may
release, modify or waive any collateral provided by any other Person as security for the Secured
Obligations or any portion thereof, all without affecting Bank’s rights against Guarantor.
Guarantor waives any right it may have to require Bank to pursue any third Person for any of the
Secured Obligations.

          9.3 Bank may comply with any applicable state or federal law requirements in connection with a
disposition of the Collateral, and Bank’s compliance therewith will not be considered to adversely
affect the commercial reasonableness of any sale of the Collateral.

          9.4 Bank may sell the Collateral without giving any warranties as to the Collateral. Bank may
specifically disclaim any warranties of title or the like. This procedure will

15

 

not be considered
to adversely affect the commercial reasonableness of any sale of the Collateral.

          9.5 If Bank sells any of the Collateral upon credit, Guarantor will be credited only with
payments actually made by the purchaser, received by Bank and applied to the indebtedness of the
purchaser. In the event that the purchaser fails to pay for the Collateral, Bank may resell the
Collateral and Guarantor will be credited with the proceeds of such sale.

          9.6 Bank shall be under no obligation to marshal any assets in favor of Guarantors, or against
or in payment of the Secured Obligations or any other obligation owed to Secured Party by Debtor or
any other Person.

          9.7 Upon the exercise by Bank of any power, right, privilege, or remedy pursuant to this
Security Agreement which requires any consent, approval, registration, qualification, or
authorization of any Governmental Authority, Guarantor agrees to execute and deliver, or will cause
the execution and delivery of, all applications, certificates, instruments, assignments, and other
documents and papers that Bank or any purchaser of the Collateral may be required to obtain for
such governmental consent, approval, registration, qualification, or authorization.

          9.8 Guarantor and each Borrower each hereby irrevocably stipulate and agree that Bank has the
right under this Security Agreement, upon the occurrence of an Event of Default, to seek the
appointment of a receiver, trustee, or similar official over Guarantor to effect the transactions
contemplated by this Security Agreement, including without limitation, to seek from the appropriate
licensing authority an involuntary transfer of the Licenses (as defined in the Loan Agreement) in
connection with Bank’s foreclosure or enforcement proceedings, and that Bank is entitled to seek
such relief. Guarantor and each Borrower each hereby irrevocably agree not to object to such
appointment on any grounds.

          9.9 The rights and remedies of Bank under this Security Agreement, the Guaranty and the other
Loan Documents, and all other agreements contemplated hereby and thereby shall be cumulative. Bank
shall have all other rights and remedies not inconsistent herewith as provided under the Code, by
law, or in equity. No exercise by Bank of any one right or remedy shall be deemed an election of
remedies, and no waiver by Bank of any default on Guarantor’s part shall be deemed a continuing
waiver of any further defaults. No delay by Bank shall constitute a waiver, election or
acquiescence with respect to any right or remedy.

     10. Bank Not Liable. So long as Bank complies with the obligations, if any, imposed
by the Code, Bank shall not otherwise be liable or responsible in any way or manner for: (a) the
safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or
fashion or from any cause; (c) any diminution in the value thereof; or (d) any act or default of
any carrier, warehouseman, bailee, forwarding agency, or other person whomsoever, Guarantor bears
the risk of loss or damage of the Collateral.

     11. Indefeasible Payment. The Secured Obligations shall not be considered
indefeasibly paid for purposes of this Security Agreement unless and until all payments to Bank

16

 

are
no longer subject to any right on the part of any Person, including Guarantor, Guarantor as a
debtor in possession, or any trustee (whether appointed under the Bankruptcy Code or otherwise) of
Guarantor or Guarantor’s Assets to invalidate or set aside such payments or to seek to recoup the
amount of such payments or any portion thereof, or to declare same to be fraudulent or
preferential. In the event that, for any reason, any portion of such payments to Bank is set aside
or restored, whether voluntarily or involuntarily, after the making thereof, then the obligation
intended to be satisfied thereby shall be revived and continued in full force and effect as if said
payment or payments had not been made.

     12. Notices. All notices or demands by any party hereto to the other party and
relating to this Security Agreement shall be made in the manner and to the addresses set forth in
Section 15 of the Guaranty.

     13. General Provisions.

          13.1 Successors and Assigns. This Security Agreement shall bind and inure to the
benefit of the respective successors and assigns of Guarantor and Bank; provided, however, that
Guarantor may not assign this Security Agreement nor delegate any of its duties hereunder without
Bank’s prior written consent and any prohibited assignment or delegation shall be absolutely void.
No consent by Bank to an assignment by Guarantor shall release Guarantor from the Secured
Obligations. Bank reserves its right to sell, assign, transfer, negotiate, or grant participations
in all or any part of, or any interest in, the rights and benefits hereunder pursuant to and in
accordance with the provisions of the Loan Agreement. In connection therewith, Bank may disclose
all documents and information which Bank now or hereafter may have relating to Guarantor,
Guarantor’s business, or the Collateral to any such prospective or actual Transferee, subject to
the terms of Section 10.5(e) of the Loan Agreement.

          13.2 Exhibits and Schedules. All of the exhibits and schedules attached hereto shall
be deemed incorporated by reference.

          13.3 No Presumption Against Any Party. Neither this Security Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against Bank, Lenders or Guarantor,
whether under any rule of construction or otherwise. On the contrary, this Security Agreement has
been reviewed by each of the parties and their counsel and shall be construed and interpreted
according to the ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.

          13.4 Amendments and Waivers. Any provision of this Security Agreement, the Guaranty
or any of the Loan Documents to which Guarantor is a party may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the party asserted to be bound thereby,
and then such amendment or waiver shall be effective only in the specific instance and specific
purpose for which given.

          13.5 Counterparts; Integration; Effectiveness. This Security Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Security Agreement

17

 

constitutes
the entire agreement and understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter hereof. This
Security Agreement shall become effective when executed by each of the parties hereto and delivered
to Bank.

          13.6 Severability. The provisions of this Security Agreement are severable. The
invalidity, in whole or in part, of any provision of this Security Agreement shall not affect the
validity or enforceability of any other of its provisions. If one or more provisions hereof shall
be declared invalid or unenforceable, the remaining provisions shall remain in full force and
effect and shall be construed in the broadest possible manner to effectuate the purposes hereof.

     14. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

          (a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO
THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND
THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO
SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF ARIZONA, WITHOUT REGARD FOR PRINCIPLES OF CONFLICTS OF LAWS.

          (b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF MARICOPA, STATE OF ARIZONA, PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT BANK’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE BANK ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. EACH GUARANTOR AND BANK WAIVE, TO THE EXTENT PERMITTED UNDER
APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 14.

          (c) EACH GUARANTOR AND BANK HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH GUARANTOR AND BANK REPRESENT
THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF

18

 

LITIGATION, A COPY OF THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

[remainder of this page intentionally left blank]

19

 

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

	 	 	 	 	 	 	 
	Guarantor:	 	MATRIXX ORAL CARE, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

William Hemelt
	 	 
	 

	 	Title:
	 	Manager	 	 
	 
	 	 	 	 	 	 
	Bank:	 	COMERICA BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	William J. Kirschner	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	Borrowers For Purposes of
Section 9.8 Only:	 	MATRIXX INITIATIVES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	William Hemelt	 	 
	 

	 	Title:
	 	Executive Vice President and CFO	 	 
	 
	 	 	 	 	 	 
	 	 	ZICAM, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	William Hemelt	 	 
	 

	 	Title:
	 	Manager	 	 

Security Agreement (Guarantor)

S-1

 

SCHEDULE 1

	 	 	 
	Section 5.1

	 	Legal Name, State of Organization FEIN and Charter Identification Number
	 
	 	 
	Section 5.1

	 	Location of Chief Executive Office and Collateral
	 
	 	 
	Section 5.2

	 	Locations of Guarantor’s Books
	 
	 	 
	Section 5.3

	 	Trade Names or Trade Styles
	 
	 	 
	Section 5.9

	 	Intellectual Property
	 
	 	 
	Section 5.10

	 	Equipment Leases
	 
	 	 
	Section 5.11

	 	Deposit Accounts
	 
	 	 
	Section 5.12

	 	Investment Property
	 
	 	 
	Section 5.13

	 	Commercial Tort Claims

Schedule 1exv10w04

 

Exhibit 10.4

AMENDMENT NUMBER ONE TO AMENDED AND RESTATED

CREDIT AGREEMENT AND WAIVER

     This AMENDMENT NUMBER ONE TO AMENDED AND RESTATED CREDIT AGREEMENT AND WAIVER (this “Amendment”),
dated as of March 9, 2006, is entered into among Matrixx Initiatives, Inc., a Delaware corporation
(“Parent”), Zicam, LLC, an Arizona limited liability
company (“Zicam”) (Parent and Zicam are
sometimes individually referred to herein as a “Borrower” and collectively referred to herein as
“Borrowers”), on the one hand, and Comerica Bank, a Michigan banking corporation (“Bank”), on the
other hand, with reference to the following facts:

     A. Parent and Zicam, on the one hand, and Bank, on the other hand, previously entered into that
certain Amended and Restated Credit Agreement, dated as of September 27, 2005 (the “Agreement”);

     B. Borrowers have violated the Leverage Ratio covenant set forth in Section 7.15(b) of the
Agreement and the Quick Ratio covenant set forth in Section 7.15(c) of the Agreement for the
fiscal quarter ended December 31, 2005 (collectively, the “Subject Defaults”); and

     C. Borrowers have requested that Bank waive the Subject Defaults and make certain other amendments
to the Agreement, and Bank has agreed with such requests in accordance with the terms and
conditions of this Amendment.

     NOW, THEREFORE, in consideration of the foregoing, the parties hereto hereby agree as follows:

     1. Defined Terms. All initially capitalized terms used but not defined herein shall have the
meanings assigned to such terms in the Agreement.

     2. Amendment to Section 7.15(c). Section 7.15(c) of the Agreement is hereby amended in its
entirety as follows:

(c) the Quick Ratio, tested as at the end of the fiscal quarters of Parent ending March 31, 2006
and June 30, 2006, at any time to be less than 1.0:1.0, and tested as at the end of each fiscal
quarter of Parent thereafter, at any time to be less than 1.25:1.0.

     3. Waiver of Subject Defaults. Bank hereby waives the Subject Defaults. This waiver shall be
effective only in this specific instance and for the specific purpose for which it is given, and
this waiver shall not entitle Borrowers to any other or further waiver in any similar or other
circumstances. The waiver set forth hereinabove shall be limited precisely as written and shall
not be deemed to (a) be a waiver or modification of any other term or condition of the Agreement
or any other Loan Document, or (b) prejudice any right or remedy which Bank may now have or may
have in the future (except to the extent such right or remedy which Bank may now have or may have
in the future is based upon the Subject Defaults) under or in connection with the Agreement or any
Loan Document.

1

 

     4. Representations
and Warranties. In order to induce Bank to enter into this Amendment, Borrowers hereby represent and warrant to Bank that:

          (a) After giving effect to this Amendment, no Event of Default or Unmatured Event of Default is
continuing;

          (b) After giving effect to this Amendment, all of the representations and warranties set forth in
the Agreement and the Loan Documents are true, complete and accurate in all respects (except for
representations and warranties which are expressly stated to be true and correct as of the Closing
Date); and

          (c) This Amendment has been duly executed and delivered by the Borrowers, and after giving effect
to this Amendment, the Agreement and the Loan Documents continue to constitute the legal, valid
and binding agreements and obligations of the Borrowers, enforceable in accordance with their
terms, except as enforceability may be limited by bankruptcy, insolvency, and similar laws and
equitable principles affecting the enforcement of creditors’ rights generally.

     5. Conditions Precedent to Effectiveness of Amendment. The effectiveness of this Amendment is
subject to and contingent upon the fulfillment of each and every one of the following conditions:

          (a) Bank shall have received this Amendment, duly executed by the Borrowers;

          (b) Borrowers shall have paid to Bank a covenant waiver fee in the amount of $2,500.00.

          (c) After giving effect to this Amendment, no Event of Default, Unmatured Event of Default or
Material Adverse Effect shall have occurred and be continuing; and

          (d) After giving effect to this Amendment, all of the representations and warranties set forth
herein, in the Loan Documents and in the Agreement shall be true, complete and accurate in all
respects as of the date hereof (except for representations and warranties which are expressly
stated to be true and correct as of the Closing Date).

     6. Counterparts; Telefacsimile Execution. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which, when executed and
delivered, shall be deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Amendment. Delivery of an executed counterpart of this Amendment
by telefacsimile shall be equally as effective as delivery of a manually executed counterpart of
this Amendment. Any party delivering an executed counterpart of this Amendment by telefacsimile
shall also deliver a manually executed counterpart of this Amendment but the failure to deliver a
manually executed counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment.

2

 

     7. Integration. The Agreement as amended by this Amendment constitutes the entire agreement and
understanding between the parties hereto with respect to the subject matter hereof and thereof,
and supersedes any and all prior agreements and understandings, oral or written, relating to the
subject matter hereof and thereof.

     8. Reqffirmation of the Agreement. The Agreement as amended hereby and the other Loan Documents remain in full force and effect.

[remainder of page intentionally left blank; signatures to follow]

3

 

     IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Amendment as of the
date first hereinabove written.

	 	 	 	 	 
	 	MATRIXX INITIATIVES, INC., a Delaware
corporation
 	 
	 	By:  	/s/ William J. Hemelt 	 
	 	Name:  	William J. Hemelt 	 
	 	Title:  	CFO/EVP 	 
	 
	 	ZICAM, LLC, an Arizona limited liability company
 	 
	 	By:  	/s/ William J. Hemelt 	 
	 	Name:  	William J. Hemelt 	 
	 	Title:  	MGR/CFO 	 
	 
	 	COMERICA BANK
 	 
	 	By:  	/s/ William J. Kirschner 	 
	 	Name:  	William J. Kirschner 	 
	 	Title:  	Vice President 	 
	 

S-1

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