EXHIBIT 10.12
INTELLECTUAL PROPERTY
SECURITY AGREEMENT
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT ("Security Agreement"),
is made as of November 14, 2001, from GALAXY NUTRITIONAL FOODS, INC., a Delaware
corporation (the "Grantor") f/k/a Galaxy Foods Company, in favor of FINOVA
CAPITAL CORPORATION, a Delaware corporation (the "Lender").
RECITALS:
WHEREAS, pursuant to that certain Security Agreement (Accounts
Receivable, Inventory and Equipment) dated November 1, 1996 (as amended,
extended, modified, restructured or renewed from time to time, the "Loan
Agreement") by and between Grantor and Lender, Lender has agreed to make
revolving credit loans to Grantor from time to time in an aggregate principal
amount not to exceed $13,000,000 at any one time (the "Loan") to Grantor;
WHEREAS, Grantor owns certain Intellectual Property listed on Schedule
A hereto;
WHEREAS, Grantor desires to mortgage, pledge and grant to Lender, for
the benefit of Lender, a security interest in all of its right, title and
interest in, to and under the Collateral, including without limitation, the
property listed on the attached Schedule A, together with any renewal or
extension thereof, and all Proceeds (as hereinafter defined) thereof, to secure
the payment of the Obligations (as defined in the Loan Agreement); and
WHEREAS, it is a condition precedent to the obligation of the Lender to
make any further revolving credit loans available to Grantor under the Loan
Agreement, that Grantor execute this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and to induce Lender
to continue making revolving credit loans available to Grantor under the Loan
Agreement, Grantor hereby agrees with Lender, as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meaning ascribed thereto in the Loan Agreement,
and the following terms shall have the following meanings:
"Collateral" has the meaning assigned to it in the Loan Agreement and,
in addition, includes the Intellectual Property and the Other Proprietary
Property, whether now owned or hereafter acquired by Grantor or in which Grantor
now has or at any time in the future may acquire any right, title or interest.
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"Copyrights" means all types of protective rights (or applications
therefor) for any work that constitutes copyrightable subject matter, including
without limitation, literary works, musical works, dramatic works, pictorial,
graphic and sculptural works, motion pictures and other audiovisual works, sound
recordings, architectural works, in any country of the world and including,
without limitation, any works referred to in Schedule A hereto.
"Copyright License" means any written agreement material to the
operation of Grantor's businesses, providing for the grant by or to Grantor of
any right to reproduce a copyrighted work, to prepare derivative works based on
a copyrighted work, to distribute copies of a copyrighted work, to perform a
copyrighted work or to display a copyrighted work, or to engage in any other
legally protected activity with respect to a copyrighted work including, without
limitation, any thereof referred to in Schedule A hereto.
"Intellectual Property" means all Patent Applications, Patents, Patent
Licenses, Trademark Applications, Trademarks, Trademark Licenses, Copyrights,
Copyright Licenses, Trade Secrets, Inventions and other proprietary property or
technology, and agreements relating thereto, including, without limitation, any
and all improvements and future developments material to the operation of
Grantor's businesses, as defined herein and/or referred to in Schedule A hereto.
"Invention" means any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof that is
material to the operation of Grantor's businesses and developed by Grantor, its
employees or agents, whether or not the subject of Patent(s) or Patent
Application(s).
"Other Proprietary Property" means all types of protectable intangible
property rights other than Patents, Trademarks and Copyrights, including without
limitation, Trade Secrets, computer software and the like, including, without
limitation, all such rights referred to in Schedule B hereto.
"Patents" means all types of exclusionary or protective rights granted
(or applications therefor) for inventions in any country of the world
(including, without limitation, letters patent, plant patents, utility models,
breeders' right certificates, inventor's certificates and the like), and all
reissues and extensions thereof and all provisionals, divisions, continuations
and continuations-in-part thereof, including, without limitation, all such
rights referred to in Schedule A hereto.
"Patent License" means any agreement material to the operation of
Grantor's business, whether written or oral, providing for the grant by or to
Grantor of any right to manufacture, use or sell any Invention covered by a
Patent, including, without limitation, any thereof referred to in Schedule A
hereto.
"Proceeds" means "proceeds," as such term is defined in Section
9-102(a) of the UCC and, to the extent not included in such definition, shall
include, without limitation, (a) any and all proceeds of any insurance,
indemnity, warranty, guaranty or letter of credit payable to Grantor, from time
to time with respect to any of the Collateral, (b) all payments (in any form
whatsoever) paid or payable to Grantor from time to time in connection with any
taking of all or any part of the Collateral
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by any governmental authority or any Person acting under color of governmental
authority), (c) all judgments in favor of Grantor in respect of the Collateral
and (d) all other amounts from time to time paid or payable or received or
receivable under or in connection with any of the Collateral.
"Security Agreement" means this Intellectual Property Security
Agreement, as amended, supplemented or otherwise modified from time to time.
"Trade Secret" means any of Grantor's scientific or technical
information, design, processes, patterns, procedures, formulas, recipes or
improvement which is secret and of value.
"Trademarks" means (a) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other sources of business identifiers used in any country in
the world, whether registered or unregistered, and the goodwill associated
therewith, now existing and material to the businesses of Grantor or hereafter
acquired, and (b) all registrations, recordings and renewals thereof, and all
applications in connection therewith, issued by or filed in a national, state or
local governmental authority of any country, including, without limitation, all
such rights referred to in Schedule A hereto.
"Trademark License" means any agreement, material to the businesses of
Grantor, written or oral, providing for the grant by or to Grantor of any right
to use any Trademark, including, without limitation, any thereof referred to in
Schedule A hereto.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the State of Arizona.
2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations, Grantor hereby
assigns and grants to Lender for the benefit of Lender a continuing first
priority security interest in all of Grantor's right, title and interest in and
to the Collateral, including all Proceeds and products thereof, whether or not
included in Schedule A or Schedule B.
3. Representations and Warranties Concerning the Intellectual
Property. Grantor represents and warrants that:
(a) Schedule A and Schedule B hereto include all
Intellectual Property and Other Proprietary Property owned by Grantor
in its own name or as to which Grantor has any colorable claim of
ownership that are material to the business of Grantor as of the date
hereof.
(b) To Grantor's best knowledge, Grantor is the sole
legal and beneficial owner of the entire right, title and interest in
and to the Intellectual Property and the Other Proprietary Property,
and/or has the right to use all such Intellectual Property and Other
Proprietary Property pursuant to a valid license or other agreement.
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(c) To Grantor's best knowledge, Grantor's rights in and
to the Intellectual Property are valid, subsisting, unexpired,
enforceable and have not been abandoned.
(d) All licenses, franchise agreements and other
agreements conveying rights in and to the Intellectual Property and
Other Proprietary Property are identified on Schedule A and Schedule B
hereto and are in full force and effect. To the best knowledge of
Grantor, Grantor is not in default under any such agreement, and no
event has occurred which might constitute a default by Grantor under
any such agreement.
(e) Except as set forth in Schedule A, all of the
Intellectual Property is free and clear of any and all liens, security
interests, options, licenses, pledges, assignments, encumbrances and/or
agreements of any kind, and Grantor has not granted any release,
covenant not to sue, or non-assertion assurance to any third party with
respect to any of the Intellectual Property.
(f) To Grantor's knowledge, all prior transfers and
assignments of the interests of any and all predecessors in the
Intellectual Property of Grantor were duly and validly authorized,
executed, delivered, recorded and filed as required to vest Grantor
with complete, unrestricted ownership rights therein.
(g) Grantor has not, within the three (3) months prior to
the date of execution of this Agreement, executed and/or delivered any
assignment, transfer or conveyance of any of the Intellectual Property,
recorded or unrecorded.
(h) No proceedings have been instituted or are pending
or, to Grantor's knowledge, threatened that challenge Grantor's rights
to use the Intellectual Property or Other Proprietary Property, or to
register or maintain the registration of the Intellectual Property. No
holding, decision or judgment has been rendered by any governmental
authority which would limit, cancel or question the validity of any of
the Intellectual Property. No action or proceeding is pending (i)
seeking to limit, cancel or question the validity of any of the
Intellectual Property or Grantor's ownership thereof or (ii) which, if
adversely determined, would reasonably be likely to have a material
adverse effect on the value of any of the Intellectual Property.
(i) To the best of Grantor's knowledge, the current
conduct of Grantor's business and Grantor's rights in and to all of the
Intellectual Property and Other Proprietary Property do not conflict
with or infringe any proprietary right of any third party in any way
which materially adversely affects the business or financial condition
of Grantor. Further, except as set forth in Schedule A and Schedule B,
Grantor is not aware of any claim by any third party that such conduct
or such rights conflict with or infringe any valid proprietary right of
any third party in any way which affects the business or financial
condition of Grantor. To Grantor's best knowledge, Grantor is not
making and has not made use of any confidential information of any
third party except pursuant to express agreement of such third party.
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(j) Grantor is unaware of any infringement by any other
party upon its Intellectual Property rights. Grantor affirmatively
covenants that it will exert commercially reasonable efforts to prevent
any infringement by third parties of Grantor's Intellectual Property
rights or any theft of Grantor's Other Proprietary Property at
Grantor's sole cost; provided, that the foregoing shall not require
that Grantor apply for or effect any registration of its Intellectual
Property.
4. Covenants. Grantor covenants and agrees with Lender that, from
and after the date of this Security Agreement until the Obligations are paid in
full:
(a) From time to time, upon the written request of
Lender, and at the sole expense of Grantor, Grantor will promptly and
duly execute and deliver such further instruments and documents and
take such further action as Lender may reasonably request for the
purpose of obtaining or preserving 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 UCC in effect in any jurisdiction with respect to
the liens created hereby. Grantor also hereby authorizes Lender to file
any such financing or continuation statement without the signature of
Grantor to the extent permitted by applicable law. A carbon,
photographic or other reproduction of this Security Agreement shall be
sufficient as a financing statement for filing in any jurisdiction;
provided, however, that Lender agrees that it shall not file this
Security Agreement or a carbon, photographic or reproduction hereof in
the State of Florida; unless the filing of this Security Agreement (as
opposed to a UCC Financing Statement or other document) is the only
means by which Lender can perfect its security interest granted under
this Security Agreement.
(b) Grantor will not create, incur or permit to exist,
will take all commercially reasonable actions to defend the Collateral
against, and will take such other commercially reasonable action as is
necessary to remove, any lien or claim on or to the Collateral, other
than the liens created hereby, as permitted pursuant to the Loan
Agreement, and licenses and similar rights (but not security interests)
granted by Grantor to third parties and will take all commercially
reasonable actions to defend the right, title and interest of Lender in
and to any of the Collateral against the claims and demands of all
persons whomsoever.
(c) Grantor will not sell, transfer or otherwise dispose
of any of the Collateral, or attempt, offer or contract to so do,
except as required by any applicable agreement, license or sub-license
currently in effect, except that Grantor may grant to third parties
such licenses and sub-licenses as Grantor may deem desirable or
appropriate in the conduct of Grantor's business.
(d) Grantor will advise Lender promptly, in reasonable
detail, at its address set forth in the Loan Agreement, (i) of any lien
(other than liens created hereby or permitted
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under the Loan Agreement) on, or claim asserted against, Collateral and
(ii) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of
the Collateral or on the liens created hereunder.
(e) (i) Grantor (either itself or through licensees)
will, except with respect to any Trademark that Grantor shall
reasonably determine is of immaterial economic value to it or
otherwise if Grantor reasonably determines not to so do, (A)
continue to use each Trademark on each and every trademark
class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to
maintain such Trademark in full force free from any claim of
abandonment for non-use, (B) maintain as in the past the
quality of products and services offered under such Trademark,
(C) use reasonable efforts to employ such Trademark with the
appropriate notice of registration, (D) not adopt or use any
mark which is confusingly similar or a colorable imitation of
such Trademark unless within thirty (30) days after such use
or adoption Lender, for its benefit, shall obtain a perfected
security interest in such mark pursuant to this Security
Agreement, and (E) not to (and not permit any licensee or
sublicensee thereof to) knowingly do any act or omit to do any
act whereby any Trademark may become invalidated.
(ii) Grantor will not, except with respect to any
Patent that Grantor shall reasonably determine is of
immaterial economic value to it or otherwise if Grantor
reasonably determine so to do, do any act, or omit to do any
act, whereby any Patent may become abandoned or dedicated.
Without the prior written consent of Lender, which consent
shall not be unreasonably withheld, Grantor shall not abandon
any right to file a patent application, or abandon any pending
patent application or patent if such abandonment would have a
material adverse effect on the business of Grantor.
(iii) Grantor will promptly notify Lender if it
knows, or has reason to know, that any application relating to
any Patent, Trademark or Copyright may become abandoned or
dedicated, or of any adverse determination or material
development (including, without limitation, the institution
of, or any such determination or development in, any
proceeding in the United States Patent and Trademark office or
any court or tribunal in any country) regarding Grantor's
ownership of any Patent, Trademark or Copyright, or its right
to register the same or to keep and maintain the same.
(iv) Whenever Grantor, either by itself or
through any agent, employee, licensee or designee, shall file
an application for any Patent or for the registration of any
Trademark or Copyright with the United States Patent and
Trademark Office, the United States Copyright Office, or any
similar office or agency in any other country or any political
subdivision thereof, Grantor shall report such filing to
Lender within five (5) business days after the last day of the
fiscal quarter in which such filing occurs. Upon request of
Lender, Grantor shall execute and deliver any and all
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reasonably necessary agreements, instruments, documents, and
papers as Lender may reasonably request to evidence Lender's
security interest in any newly filed Patent, Copyright or
Trademark and the goodwill and general intangibles of Grantor
relating thereto or represented thereby, and Grantor hereby
constitutes Lender its attorney-in-fact to execute and file
all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power being
coupled with an interest is irrevocable until the Obligations
are paid in full.
(v) Grantor, except with respect to any Patent,
Trademark or Copyright Grantor shall reasonably determine is
of immaterial economic value to it or otherwise if Grantor
reasonably determines not to so do, will take all reasonable
and necessary steps, including, without limitation, in any
proceedings before any tribunal, office or agency in any other
country or any political subdivision thereof, to maintain and
pursue each application (and to obtain the relevant
registration or Patent) and to maintain each Patent and each
registration of Trademarks and Copyrights, including, without
limitation, filing of applications, applications for reissue,
renewal or extensions, the payment of maintenance fees,
participation in reexamination, opposition and infringement
proceedings, and the filing of renewal applications,
affidavits of use and affidavits of incontestability, when
appropriate. Any expenses incurred in connection with such
activities shall be paid by Grantor.
(vi) In the event Grantor knows or has reason to
know that any Patent, Trademark or Copyright included in the
Collateral is infringed, misappropriated or diluted by a third
party, Grantor shall promptly notify Lender after it learns
thereof and shall, unless Grantor shall reasonably determine
that such Patent, Trademark or Copyright is of immaterial
economic value to Grantor which determination Grantor shall
promptly report to Lender, promptly sue for infringement,
misappropriation or dilution, or take such other actions as
Grantor shall reasonably deem appropriate under the
circumstances to protect such Patent, Trademark or Copyright.
(vii) Grantor will furnish to Lender each year, on
the anniversary date of the execution of this Agreement,
statements, schedules and an inventory identifying and
describing the Collateral, including without limitation, all
Intellectual Property acquired subsequent to the date of this
agreement and not identified on Schedule A and Schedule B, all
transfers, assignments, licenses or sub-licenses of the
Collateral by Grantor, and such other information in
connection with the Collateral as Lender may reasonably
request, all in reasonable detail. Any such Intellectual
Property shall automatically become part of the Collateral.
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5. Lender's Appointment as Attorney-in-Fact.
(a) Grantor hereby irrevocably constitutes and appoints
Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Grantor and
in the name of Grantor or in its own name, from time to time after the
occurrence, and during the continuation of, an Event of Default in
Lender's reasonable discretion, for the 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,
Grantor hereby grants Lender the power and right, on behalf of Grantor
without notice to or assent by Grantor, to do the following:
(i) at any time when any Event of Default shall
have occurred and is continuing in the name of Grantor or its
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, or with
respect to, any Collateral 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 Lender for the purpose of
collecting any and all such moneys due with respect to such
Collateral whenever payable;
(ii) to pay or discharge taxes and liens levied
or placed on or threatened against the Collateral, to effect
any repairs or any insurance called for by the terms of this
Security Agreement and to pay all or part of the premiums
therefor and the costs thereof; and
(iii) (A) to direct any party liable for any
payment under any of the Collateral to make payment of any and
all moneys due or to become due thereunder directly to Lender
or as Lender shall direct, (B) to ask or demand for, collect,
receive payment of and receipt for, any and all moneys, claims
and other amounts due or to become due at any time in respect
of or arising out of any Collateral, (C) to sign and endorse
any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in
connection with any of the 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 portion thereof and to enforce any other
right in respect of any Collateral, (E) to defend any suit,
action or proceeding brought against Grantor with respect to
any Collateral, (F) to settle, compromise or adjust any suit,
action or proceeding described in the preceding clause and, in
connection therewith, to give such discharges or releases as
Lender may deem appropriate, (G) to assign any Trademark or
Copyright (along with goodwill of the business to which such
Trademark or Copyright pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as
Lender shall in its sole discretion
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determine, and (H) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though Lender
were the absolute owner thereof for all purposes, and to do,
at Lender's option and Grantor's expense, at any time, or from
time to time, all acts and things which Lender deems necessary
to protect, preserve or realize upon the Collateral and the
liens of Lender thereon and to effect the intent of this
Security Agreement, all as fully and effectively as Grantor
might do. Grantor hereby ratifies 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.
(b) Grantor also authorizes Lender, at any time and from
time to time, to execute, in connection with the sale provided for in
Section 8 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) The powers conferred on Lender hereunder are solely
to protect the interests of Lender in the Collateral and shall not
impose any duty upon Lender to exercise any such powers. Lender shall
be accountable only for amounts that it actually receives as a result
of the exercise of such powers, and neither it nor any of its partners,
officers, directors, employees or agents shall be responsible to
Grantor for any act or failure to act hereunder, except for their own
negligence or willful misconduct or failure to comply with mandatory
provisions of applicable law.
6. Performance by Lender of Grantor's Obligations. If Grantor
fails to perform or comply with any of its agreements contained herein and
Lender, as provided for by the terms of this Security Agreement, and after
simultaneous written notice to Grantor, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement, then the
expenses of Lender incurred in connection with such performance or compliance,
together with interest thereon at the highest default rate provided in the Note,
shall be payable by Grantor to Lender on demand and shall constitute Obligations
secured hereby.
7. Proceeds. It is agreed that if an Event of Default shall occur
and be continuing, then (a) all Proceeds received by Grantor consisting of cash,
checks and other cash equivalents shall be held by Grantor in trust for Lender,
segregated from other funds of Grantor, and shall, forthwith upon receipt by
Grantor, be turned over to Lender in the exact form received by Grantor (duly
endorsed by Grantor to Lender, if required), and (b) any and all such Proceeds
received by Lender (whether from Grantor or otherwise) shall promptly be applied
by Lender against, the Obligations (whether matured or unmatured), such
application to be in such order as set forth in the Loan Agreement.
8. Remedies Upon Default. Upon an Event of Default under and as
defined in the Loan Agreement, Lender may pursue any or all of the following
remedies, without any notice to Grantor except as required below:
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(a) Lender may give written notice of default to Grantor,
following which Grantor shall not dispose of, conceal, transfer, sell
or encumber any of the Collateral (including, but not limited to, cash
proceeds) without Lender's prior written consent, even if such
disposition is otherwise permitted hereunder in the ordinary course of
business. Any such disposition, concealment, transfer or sale after the
giving of such notice shall constitute a wrongful conversion of the
Collateral. Lender may obtain a temporary restraining order or other
equitable relief to enforce Grantor's obligation to refrain from so
impairing Lender's Collateral.
(b) Lender may take possession of any or all of the
Collateral. Grantor hereby consents to Lender's entry into any of
Grantor's premises to repossess Collateral, and specifically consents
to Lender's forcible entry thereto as long as Lender causes no
significant damage to the premises in the process of entry (drilling of
locks, cutting of chains and the like do not in themselves cause
"significant" damage for the purposes hereof) and provided that Lender
accomplishes such entry without a breach of the peace.
(c) Lender may dispose of the Collateral at private or
public sale. Any required notice of sale shall be deemed commercially
reasonable if given at least five (5) days prior to sale. Lender may
adjourn any public or private sale to a different time or place without
notice or publication of such adjournment, and may adjourn any sale
either before or after offers are received. The Collateral may be sold
in such lots as Lender may elect, in its sole discretion. Lender may
take such action as it may deem necessary to repair, protect, or
maintain the Collateral pending its disposition.
(d) Lender may exercise its lien upon and right of setoff
against any monies, items, credits, deposits or instruments that Lender
may have in its possession and that belong to Grantor or to any other
person or entity liable for the payment of any or all of the
Obligations.
(e) Lender may exercise any right that it may have under
any other document evidencing or securing the Obligations or otherwise
available to Lender at law or equity.
9. Limitation on Duties Regarding Preservation of Collateral.
Lender's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under the UCC or otherwise,
shall be to deal with it in the same manner as Lender would deal with similar
property for its own account. Neither Lender nor any of its partners, directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of Grantor or otherwise.
10. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.
11. 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
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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.
12. Section Headings. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
13. No Waiver: Cumulative Remedies. Lender shall not by any act
(except by a written instrument pursuant to Section 14 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by Lender of any right or remedy hereunder on any occasion shall not be
construed as a bar to any right or remedy which Lender would otherwise have on
any future occasion. The rights and remedies herein provided are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.
14. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Security Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
Grantor and Lender, provided that any provision of this Security Agreement may
be waived by Lender in a written letter or agreement executed by Lender or by
facsimile transmission from Lender. This Security Agreement shall be binding
upon the successors and assigns of Grantor and shall inure to the benefit of
Lender and its successors and assigns.
15. Notices. Any and all notices, elections or demands permitted
or required to be made under this Security Agreement shall be in writing, signed
by the party giving such notice, election or demand and shall be delivered
personally, telecopied, or sent by certified mail or overnight via nationally
recognized courier service (such as Federal Express), to the other party at the
address set forth below, or at such other address as may be supplied in writing
and of which receipt has been acknowledged in writing. The date of personal
delivery or telecopy or three (3) business days after the date of mailing (or
the next business day after delivery to such courier service), as the case may
be, shall be the date of such notice, election or demand. For the purposes of
this Security Agreement:
The Address of Lender is: FINOVA Capital Corporation
1000 First Avenue
King of Prussia, PA 19406
Attention: Michael McCauley
Telecopy No.: 610/491-8444
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with a copy to: FINOVA Capital Corporation
355 S. Grand Avenue
Suite 2500
Los Angeles, CA 90071
Attention: Michael Rosner, Esq.
Telecopy No.: 213/253-1582
The Address of Grantor is: Galaxy Nutritional Foods, Inc.
2441 Viscount Row
Orlando, FL 32809
Attention: Angelo Morini
Telecopy No.: 407/855-1099
with a copy to: Baker & Hostetler
200 S. Orange Avenue
Suite 2300
Attention: Jeff Decker
Telecopy No.: 407/841-0168
16. Governing Law. This Security Agreement shall be governed by,
and construed and interpreted in accordance with, the laws of the State of
Arizona applicable to contracts to be wholly performed in such State, or to the
extent required, by federal law.
17. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
18. Consent to Jurisdiction; Exclusive Venue. Grantor hereby
irrevocably consents to the Jurisdiction of the Arizona state courts or the
United States District Court sitting in Maricopa County, Arizona for the purpose
of any litigation to which Lender may be a party and which concerns this
Security Agreement or the Obligations. It is further agreed that venue for any
such action shall lie exclusively with courts sitting in Maricopa County,
Arizona unless Lender agrees to the contrary in writing.
19. Waiver of Trial by Jury. LENDER AND GRANTOR HEREBY KNOWINGLY
AND VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS,
PROCEEDINGS, CLAIMS OR COUNTER-CLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE,
AT LAW OR IN EQUITY, ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT OR
THE LOAN DOCUMENTS.
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IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
GRANTOR:
GALAXY NUTRITIONAL FOODS, INC.,
a Delaware corporation
By: /s/ Angelo S. Morini
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Title: Chairman, President & CEO
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LENDER:
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By: /s/ Michael J. McCauley
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Title: Vice President
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SCHEDULE A
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SCHEDULE B
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