SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of March 3, 2005 (as it may be amended,
supplemented or otherwise modified from time to time, this "Agreement"), is made
by LRM Industries LLC, a Delaware limited liability company (the "Debtor"),
having its chief executive office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, #▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
in favor of Envirokare Composite Corp., a Delaware corporation (the "Secured
Party").
R E C I T A L S:
A. Pursuant to a Plan and Agreement of Merger, dated as of March 3, 2005 (the
"Merger Agreement"), by and between the Secured Party, Thermoplastic Composite
Designs, Inc., a Florida corporation ("TCD"), ▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇,
▇▇., and Envirokare --- Tech, Inc., a Nevada corporation ("Parent"), TCD merged
with and into Secured Party. ------
B. The Debtor and the Secured Party entered into an Asset Purchase Agreement (as
herein defined) pursuant to which the Secured Party sold the LRM Assets (as
hereafter defined) to Debtor. Pursuant to the Asset Purchase Agreement, the
Debtor is required to make the Required Payments (as hereafter defined) to the
Secured Party;
C. The Secured Party is willing to enter into the Asset Purchase Agreement and
sell the LRM Assets to Debtor only upon the condition, among others, that the
Debtor shall have executed and delivered to the Secured Party this Agreement,
and granted to the Secured Party a security interest in the Collateral to secure
the Obligations as herein provided, and the Debtor has agreed to do so.
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein but which are not defined in
this Agreement, the Asset Purchase Agreement or the Merger Agreement shall have
the respective meanings provided therefor in the Florida UCC (except that the
term "Instruments" shall have the meaning specified in Article 9 of the Florida
UCC). The following terms shall have the following meanings:
"After-Acquired Intellectual Property" shall mean Intellectual Property in
which the Debtor acquires an ownership interest after the date hereof.
"Asset Purchase Agreement" shall mean the Asset Purchase Agreement, by and
between Secured Party, and the Debtor dated as of even date herewith.
"Collateral" shall mean all Equipment and Intellectual Property of the
Debtor now owned or at any time hereafter acquired by the Debtor or in which the
Debtor now has or at any time in the future may acquire any right, title or
interest, in each case wheresoever located, and, to the extent not otherwise
included, all Proceeds and products of any of the foregoing.
"Equipment" shall have the meaning provided therefor in the Florida UCC,
which meaning shall be deemed to include the equipment listed on Schedule A
hereto and all of the Debtor's interest in all leasehold improvements and any
and all additions, accessions and appurtenances thereto, substitutions therefor
and replacements thereof, together with all attachments, components, parts and
accessories installed thereon or affixed thereto.
"Event of Default" shall mean the occurrence of one or more of the
following events:
(i) a default by the Debtor (or any of its members, to the extent
applicable), to make any of the Required Payments or to pay any other amount
required to be paid by it to Secured Party when due, (except as provided by the
last sentence of the definition of "Obligations" below), unless any such default
or failure is cured within the applicable cure period, if any, provided therefor
in the document evidencing the same;
(ii) the failure of the Debtor to keep, observe or perform any term or
condition of the Asset Purchase Agreement or this Security Agreement required
thereunder or hereunder to be kept, observed or performed by the Debtor, to the
extent such failure is materially adverse to Secured Party and such failure is
not cured upon ten (10) days' notice;
(iii) the bankruptcy or similar event affecting the Debtor;
(iv) the occurrence of any other default under the Asset Purchase Agreement
or this Security Agreement, including the failure of Debtor to comply with any
of the other terms and conditions of any such agreement or instrument, or any of
the other documents and instruments governing, securing, guaranteeing or
otherwise relating thereto, which in each such case set forth in this paragraph
is materially adverse to Secured Party and is not cured within ten (10) business
days of written notice thereof to Debtor;
(v) the failure of the Debtor to commence operations by April 30, 2005 as
set forth in Section 4.2 of the LLC Agreement unless any member of the Debtor
which has the right to demand the return of its capital contribution due to such
fact waives such right.
"GAAP" means generally accepted accounting principles in the United States
of America.
"Intellectual Property" shall mean (subject to the limitation at the end of
this definition):
(a) All intellectual property, whether now owned or hereafter acquired, or
in which the Debtor now has or shall hereafter acquire any right, title or
interest whatsoever (whether by ▇▇▇▇ of sale, lease, conditional sales contract
or other title retention document), including, but not limited to, all United
States, international and foreign patents, patent applications and statutory
invention registrations, including, without limitation, the patents and patent
applications set forth in Schedule B hereto (as such Schedule B may be
supplemented from time to time by supplements to this Agreement, each such
supplement being in substantially the form of Exhibit 1 hereto (an "IP Security
Agreement Supplement"), executed and delivered by the Debtor to the Secured
Party from time to time in accordance herewith), together with all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations
thereof, all inventions therein (including the inventions described and
contained in the patents and patent applications set forth on Schedule B hereto,
or otherwise owned by the Debtor), all rights therein provided by international
treaties or conventions and all improvements thereto, together with all rights
corresponding thereto throughout the world and all other rights of any kind
whatsoever of the Debtor accruing thereunder or pertaining thereto (the
"Patents");
(b) all United States, international and foreign trademarks (including,
without limitation, service marks), certification marks, collective marks, trade
dress, logos, domain names, product configurations, trade names, business names,
corporate names and other source identifiers, whether or not registered, whether
currently in use or not, including, without limitation, all common law rights
and registrations and applications for registration thereof, including, without
limitation, the tradename "Thermoplastic Composite Designs", "Thermoplastic Flow
Forming" and the trademark "TPF" and the trademark registrations and trademark
applications set forth in Schedule B hereto (as such Schedule B may be
supplemented from time to time by IP Security Agreement Supplements executed and
delivered by the Debtor to the Secured Party from time to time in accordance
herewith), and all other marks registered in the U.S. Patent and Trademark
Office or in any office or agency of any State of the United States or any
foreign country (but excluding any United States intent-to-use trademark
application to the extent that, and solely during the period in which, the grant
of a security interest therein impairs the validity or enforceability of such
intent-to-use trademark applications under applicable federal law), and all
rights therein provided by international treaties or conventions, all reissues,
extensions and renewals of any of the foregoing, together in each case with the
goodwill of the business connected therewith and symbolized thereby, and all
rights corresponding thereto throughout the world and all other rights of any
kind whatsoever of the Debtor accruing thereunder or pertaining thereto (the
"Trademarks");
(c) all United States, international and foreign copyrights, copyright
applications, copyright registrations and like protections in each work of
authorship, whether statutory or common law, whether published or unpublished,
any renewals or extensions thereof, all copyrights of works based on,
incorporated in, derived from, or relating to works covered by such copyrights,
including, without limitation, the copyright registrations and copyright
applications set forth in Schedule B hereto (as such Schedule B may be
supplemented from time to time by IP Security Agreement Supplements executed and
delivered by the Debtor to the Secured Party from time to time in accordance
herewith), together with all rights corresponding thereto throughout the world
and all other rights of any kind whatsoever of the Debtor accruing thereunder or
pertaining thereto (the "Copyrights");
(d) all confidential and proprietary information, including without
limitation, know-how, trade secrets, manufacturing and production processes and
techniques, inventions, research and development information, technical data,
financial, marketing and business data, pricing and cost information, business
and marketing plans, and customer and supplier lists and information, including
all information useful in the exploitation of any and all Patents, Trademarks,
Copyrights, trade secrets or Computer Software which is not entitled to
statutory or common law protection (the "Trade Secrets");
(e) all computer software programs and databases (including without
limitation, source code, object code and all related applications and data
files), firmware, and documentation and materials relating thereto, and all
rights with respect to the foregoing, together with any and all options,
warranties, service contracts, program services, test rights, maintenance
rights, improvement rights, renewal rights and indemnifications and any
substitutions, replacements, additions or model conversions of any of the
foregoing (the "Computer Software");
(f) all agreements, permits, authorizations and franchises, whether with
respect to the Patents, Trademarks, Copyrights, Trade Secrets or Computer
Software, or with respect to the patents, trademarks, copyrights, trade secrets,
computer software or other proprietary right of any other Person, in which the
Debtor is a party or a beneficiary, including without limitation, the license
agreements set forth in Schedule C hereto (as such Schedule C may be
supplemented from time to time by IP Security Agreement Supplements executed and
delivered by the Debtor to the Secured Party from time to time), and all income,
royalties and other payments now or hereafter due and/or payable with respect
thereto, subject, in each case, to the terms of such license agreements,
permits, authorizations and franchises (the "Licenses"); and
(g) all other rights and goodwill relating to the Patents, Trademarks,
Copyrights, Trade Secrets, Computer Software and/or Licenses, whether existing
now or in the future and wherever located, including all related engineering and
shop drawings and other intangible property rights, whether patented or
trademarked, relating to or arising out of or utilized in connection therewith
or the application thereof, specifically including, but not limited to, the
"Thermoplastic Molding System" and all related or other intangibles (including
intellectual property) included therewith or a part thereof, as more
particularly described in Schedule D hereto, whether now owned or hereafter
acquired, together with all rights of the Debtor in and to all income, profits,
royalties, damages, licenses or other rights related thereto, including any and
all claims for damages and injunctive relief for past, present and future
infringement, dilution, misappropriation, misuse or breach with respect to the
Patents, Trademarks, Copyrights, Trade Secrets, Computer Software or Licenses,
with the right, but not the obligation, to ▇▇▇ for and collect, or otherwise
recover, such damages, whether existing now or in the future and wherever
located (including any commercial tort claims (as defined in the Florida UCC)).
Notwithstanding the foregoing, Intellectual Property shall not include anything
which was not (i) acquired from TCD in connection with the Merger (including
rights described in subparagraph (g) above with respect thereto), or (ii)
developed by Debtor thereafter and derivative of, or integrally related to, or
an improvement upon any of the Intellectual Property acquired from TCD in
connection with the Merger.
"Intellectual Property Collateral" shall mean Collateral consisting of
Intellectual Property.
"Intellectual Property Security Agreement" means an agreement in
substantially the form set forth in Exhibit 2 hereto.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset, and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LLC Agreement" shall mean the limited liability company agreement of the
Debtor, dated as of February 18, 2005.
"LRM Assets" shall mean the "Acquired Assets" under and as defined in the
Asset Purchase Agreement, excluding any real property included therein.
"Merger Agreement" shall have the meaning ascribed thereto in Paragraph A
of the Recitals to this Agreement.
"Obligations" shall mean all present or future indebtedness, obligations
and/or liabilities of every kind, nature and description of the Debtor from time
to time owing to the Secured Party, whether now existing or hereafter incurred
or created, arising under or in connection with the Asset Purchase Agreement,
the LLC Agreement, this Agreement, or any of documents executed in connection
therewith or herewith, including without limitation the Required Payments and
any other payments required to be delivered by the Debtor directly to the TCD
Shareholders pursuant to the LLC Agreement. Notwithstanding anything herein to
the contrary, the Obligations shall not include, and the security interest
granted hereunder shall not secure, the contingent portion of the "Merger
Consideration" (as defined in the Merger Agreement) payable pursuant to Section
2.02 of the Merger Agreement, and any amounts payable under Section 2.04 of the
Merger Agreement.
"Parent" means Envirokare Tech, Inc., a Nevada corporation.
"Required Payments" shall have the meaning provided for such term in the
LLC Agreement.
"TCD Security Agreement" shall mean the Security Agreement of even date
herewith by the Debtor in favor of the TCD Shareholders.
"TCD Shareholders" shall mean ▇▇▇▇ ▇▇▇▇, ▇▇. and ▇▇▇▇ ▇▇▇▇, ▇▇.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time
in any applicable jurisdiction.
2. Grant of Security Interest. As collateral security for the prompt and
complete payment and performance when due of all present and future Obligations,
the Debtor hereby grants, assigns, conveys, mortgages, pledges, hypothecates and
transfers to the Secured Party, a continuing lien on, and first priority
perfected security interest in, all of the Debtor's right, title and interest
in, to and under the Collateral.
3. Representations, Warranties and Covenants. The Debtor hereby represents
and warrants to and covenants and agrees with the
Secured Party, from and after the date of this Agreement and until the
Obligations are indefeasibly satisfied in full in cash, that:
(a) Good Title, Etc. Except for the security interest granted to the
Secured Party pursuant to this Agreement and the security interest granted or to
be granted the TCD Shareholders pursuant to the TCD Security Agreement, the
Debtor is the sole owner of each item of Collateral in which it purports to
grant a security interest hereunder, having good title thereto, free and clear
of any and all Liens or rights of others.
(b) No Other Lien. Except for the security interest granted to the TCD
Shareholders pursuant to the TCD Security Agreement, no security agreement,
financing statement, initial financing statement, continuation statement, bailee
acknowledgment agreement or equivalent security or lien instrument covering all
or any part of the Collateral exists or is on file or of record in any public
office or will hereafter be created or filed or recorded in any public office,
except in favor of the Secured Party as secured party. Except as expressly
provided in the preceding provisions of Section 3(b) above, the Debtor has not
previously granted a security interest in any of its property or assets of the
type constituting Collateral hereunder to any Person, and will not hereafter
grant a security interest in any of its property or assets of the types
constituting Collateral, except in favor of the Secured Party.
(c) Perfection. This Agreement creates a valid and continuing lien on, and
security interest in, all of the Collateral. Upon appropriate financing
statements having been filed in the offices listed on Schedule E hereto, this
Agreement creates a duly perfected, valid and continuing lien on and security
interest in all of the Collateral with respect to which a security interest may
be perfected solely by filing pursuant to the UCC in favor of the Secured Party,
prior to all other Liens and rights of others except for the lien granted to the
TCD Shareholders pursuant to the TCD Security Agreement, and is enforceable as
such as against creditors of and, subject to the provisions of Section 9-320 of
the UCC in effect in any applicable jurisdiction or any similar law generally
affecting the rights of creditors and buyers of goods in the ordinary course of
business, purchasers from the Debtor and as against any owner, lessor, licensee
or mortgagee of real property where any of the Equipment is located and any
purchaser of such real property. All action necessary or desirable to protect
and perfect such security interest in such Collateral has been duly taken.
(d) No Sale, Assignment or Other Disposition. Until all of the Obligations
are satisfied in full, the Debtor shall not sell, assign or otherwise dispose of
the Collateral or offer to do so without the prior written consent of the
Secured Party (which consent may be given or withheld in the Secured Party's
sole discretion); provided that no sale, assignment or disposition will be
deemed to have occurred and no such consent shall be required for (i) the grant
of a security interest in the Collateral to the TCD Shareholders pursuant to the
TCD Security Agreement, or (ii) the entering into by the Debtor of any licensing
or similar arrangement with a third party (which shall be defined as any person
or entity except one in which Debtor, or any of its members, or the Parent,
individually or collectively, own a majority of the equity or voting power).
(e) Name(s) of Debtor; Chief Executive Office, Etc. The exact full legal
name jurisdiction with formation of principal place of business and chief
executive office of the Debtor as it appears in its is as set forth in the
preamble hereto. The Debtor has had no other name since its organization, and
the Debtor has not changed its identity or structure. Neither the Debtor nor any
of its divisions or business units has used any other names (including trade
names, assumed names, or similar appellations) at any time during the past five
(5) years. The federal tax identification number and any organizational
identification number assigned by the state of incorporation or organization of
the Debtor is as set forth next to its signature hereto. The Debtor will not
change such chief executive office or remove such records, except, in each case,
to a location within the continental United States of America, provided that the
Debtor shall have given at least sixty (60) days' prior written notice to the
Secured Party thereof and shall have taken such action, at the Debtor's expense,
as the Secured Party may deem necessary or desirable to maintain the security
interest of the Secured Party in the Collateral at all times fully perfected and
in full force and effect. The Debtor will not change its name, identity or
structure in any manner which might make any financing statement filed in favor
of the Secured Party, as secured party, misleading or otherwise ineffective
unless the Debtor shall have given the Secured Party at least sixty (60) days'
prior written notice thereof and shall have taken such action, at the Debtor's
expense, as the Secured Party may deem necessary or desirable to maintain the
security interest of the Secured Party in the Collateral at all times fully
perfected and in full force and effect. The Debtor will not reincorporate or
reorganize itself under the laws of any jurisdiction other than the jurisdiction
in which it is incorporated or organized as of the date hereof as set forth on
Schedule G hereto unless the Debtor provides written notice to the Secured Party
at least sixty (60) days prior to such reincorporation or reorganization and
delivers to the Secured Party appropriate lien searches and financing statements
in that new jurisdiction sufficient to confirm to the Secured Party's reasonable
satisfaction its continuing perfected security interest in the Collateral as to
which a security interest may be perfected by the filing of a financing
statement.
(f) Further Documentation. At any time and from time to time, upon the
written request of the Secured Party, and at the sole cost and expense of the
Debtor, the Debtor will promptly and duly execute, acknowledge and/or deliver
any and all such further agreements, applications, certificates, documents and
other papers and take such further actions as may be necessary or as the Secured
Party may reasonably deem desirable in obtaining the full benefits of this
Agreement, and of the rights and powers herein granted, including, without
limitation, the filing of any financing statement, any initial financing
statement or continuation statements under the UCC in effect in any United
States jurisdiction or any Recordation Form Cover Sheet (including Form PTO-1594
and Form PTO-1595) or Document Cover Sheet for Recordation of Documents in the
U.S. Copyright Office with respect to the liens and security interests granted
hereby and using its best efforts to obtain any requested waivers and
disclaimers from landlords and mortgagees. The Debtor also hereby irrevocably
authorizes the Secured Party, at any time and from time to time, to file in any
filing office in any UCC jurisdiction or any federal or state trademark or
copyright office or similar registry, any initial financing statements and
amendments thereto, and any such financing statement or amendment may: (i)
indicate the Collateral; and (ii) provide any other information required by Part
5 of Article 9 of the UCC, for the sufficiency or filing office acceptance of
any financing statement or amendment, including, without limitation, (A) whether
the Debtor is an organization, the type of organization and any organizational
identification number issued to the Debtor and (B) in the case of a financing
statement filed as a fixture filing, a sufficient description of real property
to which the Collateral relates. The Debtor agrees to furnish any such
information to the Secured Party promptly upon the Secured Party's request.
(g) Equipment. The Debtor will not permit or suffer any of the Equipment to
be located at any place other than the address stated in the preamble unless
such place is within the continental United States of America, the Secured Party
shall have received sixty (60) days' prior written notice thereof and the Debtor
shall have taken such actions, at the Debtor's expense, as the Secured Party may
deem necessary or desirable to maintain its security interest in such Equipment
at all times following such change of location fully perfected, and in full
force and effect. The Debtor will keep and maintain each item of Equipment in
good operating condition, ordinary wear and tear excepted, and the Debtor will
provide all maintenance and service and all repairs necessary for such purpose.
The Debtor shall not permit any Equipment to be or become affixed to real
property in such a manner that such Equipment becomes a fixture under any
applicable law.
(h) Payment of Obligations. The Debtor will pay promptly, when due, all
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including claims for labor, materials and supplies);
provided, however, that the Debtor may in good faith diligently contest any tax,
assessment, charge or levy in any reasonable manner that shall not adversely
affect the Secured Party's rights or the priority of its security interest in
the Collateral if the Debtor shall maintain on its books and records proper
reserves with respect thereto in accordance with GAAP.
(i) Limitation on Liens on and Dispositions of Collateral. The Debtor will
not create, permit or suffer to exist, and the Debtor will defend the Collateral
against and take such other action as is necessary to remove, any Lien, claim or
right in or to the Collateral other than those of the Secured Party granted
hereunder and the security interest therein expressly allowed to be granted to
the TCD Shareholders pursuant to the TCD Security Agreement hereunder, and the
Debtor will defend the right, title and interest of the Secured Party in and to
the Collateral, including the Proceeds thereof, against the claims and demands
of all Persons whomsoever.
(j) Maintenance of Insurance. The Debtor will maintain with financially
sound and reputable companies, insurance policies: (i) insuring its Equipment
against loss by fire, explosion, theft and such other casualties as are usually
insured against by companies engaged in the same or similar businesses; and (ii)
insuring the Debtor against liability for personal injury and property damage,
such policies to be in such form and in such amounts and coverages as may be
satisfactory to the Secured Party, with losses payable to the Secured Party as
loss payee under standard non-contributory "mortgagee", "lender" or "secured
party" clauses. The Debtor shall deliver to the Secured Party, as often as the
Secured Party may reasonably request, a report of a reputable insurance Secured
Party with respect to the insurance.
(k) Information True. All information with respect to the Collateral set
forth in any schedule, certificate, report or other writing at any time
heretofore or hereafter furnished by the Debtor to the Secured Party, and all
other written information heretofore or hereafter furnished by the Debtor to the
Secured Party, is and will be true and correct in all material respects as of
the date furnished.
4. Additional Agreements Regarding Intellectual Property Collateral.
(a) With respect to each item of the Intellectual Property Collateral, the
Debtor agrees to take, at its expense, all necessary steps, including, without
limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other Governmental Unit, (i) to maintain the validity and enforceability
of each such item of Intellectual Property Collateral and maintain each such
item of Intellectual Property Collateral in full force and effect; and (ii) to
pursue the registration and maintenance of each patent, trademark, or copyright
registration or application, now or hereafter included in the Intellectual
Property Collateral of the Debtor, including, without limitation, the payment of
required fees and taxes, the filing of responses to office actions issued by the
U.S. Patent and Trademark Office, the U.S. Copyright Office or other
Governmental Units, the filing of applications for renewal or extension, the
filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the
filing of divisional, continuation, continuation-in-part, reissue and renewal
applications or extensions, the payment of maintenance fees and the
participation in interference, reexamination, opposition, cancellation,
infringement and misappropriation proceedings. The Debtor shall not, without the
written consent of the Secured Party upon or after an Event of Default,
discontinue use of or otherwise abandon any Intellectual Property Collateral, or
abandon any right to file an application for letters patent, trademark, or
copyright. In the case of any material Intellectual Property Collateral, the
Debtor will give prompt notice of any such abandonment to the Secured Party.
(b) The Debtor agrees promptly to notify the Secured Party if the Debtor
learns: (i) that any item of the Intellectual Property Collateral may have
become abandoned, placed in the public domain, invalid or unenforceable, or of
any adverse determination or development regarding the Debtor's ownership of any
of the Intellectual Property Collateral or its right to register the same or to
keep and maintain and enforce the same; or (ii) of any adverse determination or
the institution of any proceeding (including, without limitation, the
institution of any proceeding in the U.S. Patent and Trademark Office or any
court) regarding any item of the Intellectual Property Collateral, if in any
such case, such development would be reasonably likely to have a material
adverse effect.
(c) In the event that the Debtor becomes aware that any item of the
Intellectual Property Collateral is being infringed, diluted, misappropriated or
otherwise violated by a third party, the Debtor shall promptly notify the
Secured Party and shall take such actions, at its expense, as the Debtor or the
Secured Party deems reasonable and appropriate under the circumstances to
protect such Intellectual Property Collateral, including, without limitation,
suing for infringement, dilution or misappropriation and for an injunction
against such infringement, dilution, misappropriation or violation.
(d) The Debtor shall take all steps which it or the Secured Party by notice
to the Debtor deems reasonable and appropriate under the circumstances to
preserve and protect each item of its Intellectual Property Collateral,
including, without limitation, maintaining the quality of any and all products
or services used or provided in connection with any of the Trademarks,
consistent with the quality of the products and services as of the date hereof,
and taking all steps necessary to ensure that all licensed users of any of the
Trademarks use such consistent standards of quality. The Debtor shall establish,
maintain and adhere to a program to protect all Trade Secrets of the Debtor,
including, without limitation, limiting access to such Trade Secrets to those
employees or other representatives of the Debtor who have a specific need to
have access thereto for the purpose of performing services for the Debtor,
obtaining appropriate confidentiality agreements from all employees and others
who are or may in the course of their employment have access to such Trade
Secrets, and enforcing the rights of the Debtor as against any Person who in
contravention of such program obtains access to or otherwise seeks to use such
Trade Secrets. The Debtor shall, at the request of the Secured Party, at any
time and from time to time, establish to the satisfaction of the Secured Party
that the Debtor has created and is then maintaining in force and adhering to, a
program to assure protection of such Trade Secrets, in compliance with this
paragraph.
(e) With respect to the Intellectual Property Collateral, the Debtor agrees
to execute an Intellectual Property Security Agreement, for recording the
security interest granted hereunder to the Secured Party in such Intellectual
Property Collateral with the U.S. Patent and Trademark Office, the U.S.
Copyright Office and any other Governmental Unit necessary to perfect the
security interest hereunder in such Intellectual Property Collateral.
(f) With respect to After-Acquired Intellectual Property, the Debtor agrees
that: (i) the provisions of Section 2 hereof shall automatically apply thereto;
(ii) any such After-Acquired Intellectual Property and, in the case of
Trademarks, the goodwill of the business connected therewith or symbolized
thereby, shall automatically become part of the Intellectual Property Collateral
subject to the terms and conditions of this Agreement with respect thereto;
(iii) the Debtor shall give prompt written notice thereof to the Secured Party
in accordance herewith, and (iv) the Debtor shall execute and deliver to the
Secured Party an IP Security Agreement Supplement covering such After-Acquired
Intellectual Property as "Additional Collateral" thereunder and as defined
therein, and shall record such IP Security Agreement Supplement with the U.S.
Patent and Trademark Office, the U.S. Copyright Office and any other
Governmental Unit necessary to perfect the security interest hereunder in such
After-Acquired Intellectual Property.
5. The Secured Party's Appointment as Attorney-In-Fact.
(a) The Debtor hereby irrevocably constitutes and appoints the Secured Party (or
either of the Secured Party) and any officer or agent of the Secured Party
(including a receiver), 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 the Debtor and in the name of the Debtor or in its own name, for the
purpose of carrying out the terms of this 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 Agreement and,
without limiting the generality of the foregoing, hereby gives the Secured Party
the power and right, on behalf of the Debtor, without notice to or assent by the
Debtor, to do any of the following:
(i) to pay or discharge taxes or Liens levied or placed on or threatened
against the Collateral, to effect any repairs or any insurance called for by the
terms of this Agreement and to pay all or any part of the premiums therefor and
the costs thereof; and
(ii) to execute, acknowledge, deliver and record or file all documents or
instruments which may be necessary or desirable to preserve and perfect the
Secured Party's security interest in the Collateral (or any portion thereof),
including any financing statement or amendment to or continuation thereof, and
any amendment to the Schedules attached hereto and the Schedules attached to the
IP Security Agreement and any IP Security Agreement Supplement.
The Debtor 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) The powers conferred on the Secured Party hereunder are solely to protect
its interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. The Secured Party 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 officers, directors, employees or agents shall be
responsible to the Debtor for any act or failure to act.
(c) The Debtor also authorizes the Secured Party, at any time and from time to
time, to execute, in connection with any sale or sales provided for in Section
7(b) of this Agreement, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
6. Performance by the Secured Party of Debtor's Obligations. If the Debtor
fails to perform or comply with any of its agreements contained herein and the
Secured Party, as provided for by the terms of this Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, or if the Secured Party shall take action pursuant to Section 5 of
this Agreement, the costs and expenses of the Secured Party incurred in
connection therewith, together with interest thereon at the maximum interest
rate allowed by law, shall be payable by the Debtor to the Secured Party on
demand and shall constitute Obligations of the Debtor secured hereby.
7. Certain Remedies; Rights Upon Default. Subject to Section 18 below:
(a) If an Event of Default shall occur and be continuing, upon the request of
the Secured Party, the Debtor shall deposit with the Secured Party, promptly
when collected, all Proceeds, whether consisting of checks, notes, drafts, bills
of exchange, money orders or other items, received in payment of any Collateral
or on account of any Collateral (or portion thereof) and in precisely the form
received, except for the Debtor's endorsement when required, in a special bank
account maintained by the Secured Party, subject to withdrawal only by the
Secured Party as hereinafter provided, and until so turned over, such Proceeds
shall be deemed to be held in trust by the Debtor for and as the Secured Party's
property and shall not be commingled with the Debtor's other funds. Such
Proceeds, when deposited, shall continue to be collateral security for all of
the Obligations and shall not constitute payment thereof until applied as
hereinafter provided. In no event shall any checks, drafts or other items which
are deposited into such special account pursuant hereto constitute final payment
unless and until such items have been collected. Any and all such monies or
other amounts so received by the Secured Party (whether from the Debtor or
otherwise) shall be applied in whole or in part by the Secured Party against all
or any part of the Obligations, in such order as the Secured Party may in its
sole discretion elect. Any balance of such Proceeds held by the Secured Party
and remaining after payment in full of all of the Obligations shall be paid over
to whomsoever may be lawfully entitled to receive the same.
(b) If an Event of Default shall occur and be continuing, then, in addition to
all other remedies granted to it in this Agreement or in any other instrument or
agreement securing, evidencing or relating to the Obligations, the Secured Party
may exercise all rights and remedies of a secured party under the UCC and under
any other applicable law. Without limiting the generality of the foregoing, the
Debtor expressly agrees that in any such event the Secured Party, without demand
of performance or other demand, advertisement or notice of any kind (except the
notice specified below of the time and place of a public sale or the time after
a private sale) to or upon the Debtor or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the
fullest extent permitted by applicable law), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase or sell or
otherwise dispose of and deliver such Collateral (or contract to do so), or any
part thereof, in one or more parcels at public or private sale or sales, at any
exchange or broker's board or at any of the Secured Party's offices or elsewhere
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Secured Party shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any
such private sale or sales to purchase the whole or any part of such Collateral
so sold, free of any right or equity of redemption in the Debtor which right or
equity of redemption is hereby waived and released to the maximum extent
permitted by applicable law. In connection with any sale or other disposition of
all or any part of the Collateral, the Secured Party may comply with any
applicable state or federal law requirements and/or disclaim warranties of
title, possession, quiet enjoyment or the like without affecting the commercial
reasonableness of such sale or other disposition. The Debtor further agrees, at
the Secured Party's request, to assemble the Collateral and to make it available
to the Secured Party at such places as the Secured Party shall reasonably
select, whether at the Debtor's premises or elsewhere. The Secured Party shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all costs and expenses of every kind
incurred in connection with the foregoing or incidental to the care, safekeeping
or otherwise of any or all of the Collateral or in any way relating to the
rights of the Secured Party hereunder, including reasonable attorneys' fees and
legal expenses, to the payment in whole or in part of the Debtor's Obligations,
in such order as the Secured Party may in its sole discretion elect, the Debtor
remaining liable for any deficiency remaining unpaid after such application, and
only after so applying such net proceeds and after the payment by the Secured
Party of any other amount required by any provision of law, including Section
9-615(a)(3) of the UCC, need the Secured Party account for the surplus, if any,
to the Debtor. To the extent permitted by applicable law, the Debtor waives all
claims, damages and demands against the Secured Party arising out of the
repossession, retention or sale of the Collateral and the Secured Party shall
not under any circumstances be liable for any punitive, consequential, or other
special damages. The Secured Party shall have, with respect to the Collateral,
in addition to any other rights and remedies that may be available to it at law
or in equity or pursuant to this Agreement, all rights and remedies of a secured
party under any applicable law, and it is expressly agreed that if the Secured
Party should proceed to dispose of or utilize the Collateral, or any part
thereof, in accordance with the provisions of said law, ten (10) days' prior
written notice by the Secured Party to the Debtor shall be deemed to be
reasonable notice under any such provision requiring such notice (provided that
no prior notice shall be required for Collateral that threatens to decline
rapidly in value or that is of a type customarily sold on a recognized market).
(c) The Debtor also agrees to pay all costs and expenses of the Secured Party,
including reasonable attorneys' fees and disbursements, incurred with respect to
the collection of any of the Obligations and the enforcement of any of its
rights hereunder.
(d) Except as otherwise specifically provided herein, the Debtor hereby waives
presentment, demand, protest or any notice (to the extent permitted by
applicable law) of any kind in connection with this Agreement or any Collateral.
(e) The Secured Party shall not be required to marshal any present or future
collateral security (including but not limited to the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such
collateral security or other assurances of payment in any particular order, and
all of its rights and remedies hereunder and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights and remedies, however existing or arising. To the extent that
it lawfully may, the Debtor hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of the Secured Party's rights and remedies under this Agreement
or under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Debtor hereby irrevocably waives the benefits
of all such laws.
8. Limitation on the Secured Party's Duty in Respect of Collateral. Beyond the
safe custody thereof, the Secured Party shall have no duty as to any Collateral
in its possession or control or in the possession or control of any Secured
Party or nominee of it or any income thereon or as to the preservation of rights
against prior parties or any other rights pertaining thereto. The Debtor shall
indemnify, reimburse and save and hold harmless the Secured Party and its
respective officers, directors, shareholders, agents, successors and assigns
from and against any and all claims, demands, causes of action, suits or
judgments, whether or not the Secured Party or is named as a party, and any and
all costs and expenses in connection with any thereof (including fees and
expenses of legal counsel), for or on account of injury to or death of any
person (including employees and agents of the Debtor), loss of or damage to
property (including the Collateral and any other liability (including liability
for patent, copyright and trademark infringement) which may result from or arise
in any manner out of this Agreement or the ownership, control, management, use
or operation of the Collateral, including any breach by the Debtor of any
representation, warranty, covenant or agreement contained herein or any act done
by the Secured Party in reliance upon any of the foregoing or in connection with
any such action or proceeding relating to any Collateral, except where any such
liability arises solely out of or as the result of the actual possession or
control of the relevant Collateral by the Secured Party or its agents or assigns
and except where any such liability arises out of the Secured Party's willful
misconduct. The indemnity contained in this Section 8 shall continue in full
force and effect notwithstanding the full payment of the Obligations.
9. Security Interest Absolute. The pledges and security interest created hereby
shall be absolute and unconditional irrespective of (a) any lack of validity or
enforceability, any agreement with respect to any of the Obligations or any
other agreement or instrument relating to any of the foregoing, (b) any change
in the time, manner or place of payment of, or in any other term of, all or any
of the Obligations, or any other amendment or waiver of any agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from any guarantee, securing or guaranteeing all or any of the
Obligations, or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, the Debtor in respect of the
Obligations or this Agreement.
10. No Offset. No offset or claim that the Debtor now has or may have in the
future against the Secured Party shall relieve the Debtor from paying any
amounts due hereunder or under the Asset Purchase Agreement or the LLC Agreement
or from performing any other obligations contained herein (or therein).
11. Notices. All notices, demands, requests and other communications provided
for or permitted under this Agreement shall be in writing and shall be deemed to
have been given: (i) in the case of personal delivery, when delivered to the
address set forth below; (ii) in the case of mailing, on the third business day
after said document has been deposited in the United States Mails, and sent by
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective parties as shown below; and (iii) in all other
cases, when the notice or document has been actually received by the other
party. The addresses of the respective parties are as follows:
If to the Debtor:
LRM Industries LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, #▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Moses & Singer LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
If to the Secured Party:
Envirokare Composite Corp.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Moses & Singer LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Any party hereto may change their respective addresses for the purpose of giving
notice by providing written notice to the other party in the manner specified in
this Section 11.
12. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability, without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Furthermore, in lieu of such prohibited or unenforceable
provision, there shall be added automatically to this Agreement, without the
need for any action by the Secured Party, the Debtor or any other person, a
provision as similar in terms as possible to such prohibited or unenforceable
provisions which would be legal, valid and enforceable.
13. No Waiver; Cumulative Remedies. The Secured Party shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Secured Party, and then only to the extent therein set forth. A waiver by
the Secured Party of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Secured Party would
otherwise have had on any future occasion. No failure to exercise nor any delay
in exercising, on the part of the Secured Party, any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or future
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided are cumulative and may be exercised singly
or concurrently, and are not exclusive of any rights and remedies provided by
law. In no event shall prior recourse to the Collateral be a prerequisite to the
Secured Party's right to demand and obtain payment of any Obligation in
accordance with the terms thereof. None of the provisions of this Agreement may
be changed or terminated, or otherwise, except by an instrument in writing, duly
executed by the Secured Party. This Agreement shall continue to be effective or
shall be reinstated, as the case may be, if at any time payment of all or any
part of the Obligations is rescinded or must otherwise be restored or returned
by the Secured Party upon the insolvency, bankruptcy or reorganization of the
Debtor or any other Person, as though such payment had not been made. If this
Agreement is terminated, in whole or in part, by operation of law, the Debtor
shall indemnify and save and hold harmless the Secured Party and their
respective successors and assigns from and against any loss which might be
suffered or incurred by any of them as a result of the transactions contemplated
hereby prior to the receipt by them of a notice in writing from or on behalf of
the Debtor of such termination.
14. Successors and Assigns. This Agreement and all obligations of the Debtor
hereunder shall be binding upon the successors and assigns of the Debtor and
shall, together with the rights and remedies of the Secured Party hereunder,
inure to the benefit of the Secured Party and its respective successors and
assigns; provided that the Debtor may not transfer or assign its rights and
obligations hereunder (and any such assignment on transfer shall be void)
without the prior written consent of the Secured Party (which consent may be
given or withheld in the sole discretion of the Secured Party).
15. Indemnification. The Debtor shall indemnify and hold harmless the Secured
Party for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursement of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the
Secured Party in any way relating to or arising out of this Agreement or the
transactions contemplated hereby or the enforcement of any of the terms hereof;
provided that the Debtor shall not be liable for any of the foregoing to the
extent they are determined by a court having competent jurisdiction to have
arisen from the gross negligence or willful misconduct of the Secured Party. The
agreements in this Section shall survive the termination of this Agreement. The
Debtor further agrees to pay, and to indemnify, save and hold harmless the
Secured Party and its successors and assigns from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Collateral or in connection with any of the transactions contemplated by
this Agreement.
16. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Florida.
17. Jurisdiction; Waiver of Right to Jury Trial; Other Waivers.
(a) The Debtor hereby consents and submits to the nonexclusive jurisdiction of
any court of record of the State of Florida or any federal court located in
Orange County, Florida. In the event that the Secured Party brings any action,
suit or proceeding in any court of record of the State of Florida or of the
United States to enforce any or all of the provisions hereof, service of process
may be made upon the Debtor by mailing a copy of the summons to the Debtor, by
certified or registered mail at the address set forth for the Debtor herein or
at the last address of the Debtor appearing in the Secured Party's records.
Nothing in this Agreement shall affect the right of the Secured Party to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Debtor in any other jurisdiction. Any action, suit
or proceeding against the Secured Party in respect of this Agreement shall be
brought only in a court of record of the State of Florida, located in Brevard
County, Florida or any federal court located in Orange County, Florida which
shall have exclusive jurisdiction for such purpose. The Debtor agrees that a
final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law and consents to the granting of such legal or equitable
relief as is deemed appropriate by any court.
(b) THE DEBTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES: (I) THE RIGHT OF TRIAL BY
JURY IN THE EVENT OF ANY LITIGATION BETWEEN THE PARTIES HERETO IN RESPECT OF ANY
MATTERS ARISING UNDER THIS AGREEMENT, WHETHER OR NOT SUCH LITIGATION HAS BEEN
COMMENCED IN RESPECT OF THIS AGREEMENT AND WHETHER OR NOT OTHER PERSONS ARE ALSO
PARTIES THERETO; AND (II) ANY CLAIM THAT ANY COURT OF RECORD REFERRED TO IN
SECTION 17(A) IS AN INCONVENIENT FORUM AND AGREES THAT, SHOULD THE SECURED PARTY
BRING ANY ACTION, SUIT OR PROCEEDING IN RELATION TO ANY SUCH MATTER, THE DEBTOR
WILL NOT INTERPOSE ANY CROSS-CLAIM, COUNTERCLAIM, SETOFF OR DEFENSE OF ANY
NATURE. ACCEPTANCE OF THIS AGREEMENT BY THE SECURED PARTY SHALL BE DEEMED TO
CONSTITUTE A WAIVER BY THE SECURED PARTY OF THE RIGHT TO TRIAL BY JURY IN THE
EVENT OF ANY LITIGATION IN RESPECT OF WHICH THE DEBTOR HAS WAIVED THE RIGHT TO
TRIAL BY JURY HEREUNDER.
18. Subordination/Standstill Agreement. The lien of this Security Agreement and
the security interest in and to the Collateral granted the Secured Party
hereunder is junior, inferior and subordinate to the lien and security interest
in and to the Collateral given by the Debtor to the TCD Shareholders pursuant to
the TCD Security Agreement. In furtherance thereof, the Secured Party hereby
acknowledges such subordination and agrees that until the obligations secured by
the TCD Security Agreement are paid or satisfied, in full, without the prior
written consent of the TCD Shareholders:
(i) Secured Party shall take no action to enforce any claims which it has
or may have against the Debtor and to take no action against the Collateral (or
any portion thereof) hereunder; and
(ii) Secured Party agrees that the TCD Shareholders, in their sole
discretion, may take any action without affecting the covenants and agreements
of Secured Party set forth in this Section 18, including, but not limited to,
the following: (1) modify the terms of any of the obligations secured by the TCD
Security Agreement; (2) grant an extension or renewal of any of such
obligations; (3) defer payments or enter into a work-out agreement for or with
respect to such obligations (or any portion thereof); (4) release or substitute
any collateral securing such obligations; (5) forbear from collecting on
existing collateral or require additional collateral, declare a default or Event
of Default on the Obligations; and/or (6) agree to release, compromise or enter
into any settlement of or with respect to any of such obligations owing to the
TCD Shareholders.
(iii) Secured Party will, from and after the date hereof, execute any
documentation reasonably required by the TCD Shareholders, to confirm the
subordinations provisions set forth in this Section 18.
Secured Party agrees that the above-described covenants and agreements of
Secured Party set forth in this Section 18 shall apply to any successor to it
hereunder (or in and to any of the obligations owed to Secured Party and which
are secured hereby), including any bankruptcy trustee or receiver or guarantors
or sureties of such obligations owing to Secured Party.
19. Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. Delivery of an executed counterpart of a
signature page of this Agreement by facsimile shall be equally as effective as
delivery of a manually executed counterpart.
20. Time of the Essence. Time is of the essence under this Security Agreement.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the Debtor has caused this Security Agreement to be
duly executed and delivered as of the day and year first above written.
LRM INDUSTRIES LLC
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CEO
EIN: ▇▇-▇▇▇▇▇▇▇
ACCEPTED AND AGREED:
ENVIROKARE COMPOSITE CORP.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Schedule B to Security Agreement
dated as of March 3, 2005
made by Debtor in favor of Secured Party
------------------------------------------------------------------------------------------------------------------------
1. Patents and Applications Therefor:
------------------------------------------------------------------------------------------------------------------------
Country Title of Patent Application or Patent Number Issue or Application Date Expiration Date
------- --------------- ---------------------------- ------------------------- ---------------
----------------- --------------------- ------------------------------- -------------------------------- ---------------
----------------- --------------------- ------------------------------- -------------------------------- ---------------
------------------------------------------------------------------------------------------------------------------------
2. Copyrights and Applications Therefor:
------------------------------------------------------------------------------------------------------------------------
Country Work Registration Number Registration Date
-------------------- ------------------------- ------------------------------------- -----------------------------------
-------------------- ------------------------- ------------------------------------- -----------------------------------
-------------------- ------------------------- ------------------------------------- -----------------------------------
-------------------- ------------------------- ------------------------------------- -----------------------------------
------------------------------------------------------------------------------------------------------------------------
3. Trademarks and Applications Therefor:
------------------------------------------------------------------------------------------------------------------------
Country ▇▇▇▇ (Serial Number)* Registration Number (Application Date) Registration
------- ---- ------------------- -------------
Date
-------------------- ------------------------ -------------------------------------- -----------------------------------
-------------------- ------------------------ -------------------------------------- -----------------------------------
-------------------- ------------------------ -------------------------------------- -----------------------------------
NOTE: Trademarks should be listed in numerical order with registration numbers and application numbers separated.
Schedule E to Security Agreement
dated as of March 3, 2005
made by Debtor in favor of Secured Party
1. Offices and Jurisdictions for Filing of Financing Statements/Security Agreement:
Jurisdiction of Organization Filing Office
---------------------------- -------------
US Patent Office, Delaware
2. Locations of Equipment:
City County State
---- ------ -----
Exhibit 1 to Security Agreement
dated as of March 3, 2005
made by Debtor in favor of Secured Party
[FORM OF]
INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this "IP Security
Agreement Supplement") dated as of ________ ___, 20__, is made by LRM Industries
LLC, a Delaware limited liability company (the "Debtor"), having its chief
executive office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, #▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, in favor of
Envirokare Composite Corp., a Delaware corporation (the "Secured Party").
WHEREAS, the Debtor has executed and delivered a Security Agreement, dated
as of March 3, 2005 made by the Debtor in favor of the Secured Party (as
amended, supplemented or otherwise modified from time to time, the "Security
Agreement"). To create a short form version of the Security Agreement covering
certain intellectual property of the Debtor for recording with the U.S. Patent
and Trademark Office, the United States Copyright Office and other Governmental
Units, the Debtor has executed and delivered the Intellectual Property Security
Agreement made by the Debtor in favor of the Secured Party dated as of March 3,
2005 (as amended, supplemented or otherwise modified from time to time, the "IP
Security Agreement"). Terms used and defined terms herein and not otherwise
defined herein shall have meaning provided in the Security Agreement.
WHEREAS, under the terms of the Security Agreement and the IP Security
Agreement, the Debtor has granted to the Secured Party a security interest in
the Additional Collateral (as defined in Section 1 below) of the Debtor and has
agreed as a condition thereof to execute this IP Security Agreement Supplement
for recording with the U.S. Patent and Trademark Office, the United States
Copyright Office and other Governmental Units.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Debtor agrees as follows:
SECTION 1. Confirmation of Grant of Security. The Debtor hereby
acknowledges and confirms the grant of a security interest to the Secured Party
under the Security Agreement and the IP Security Agreement in and to all of the
Debtor's right, title and interest in and to the following (the "Additional
Collateral"):
(i) all United States, international and foreign patents, patent applications,
and patent licenses set forth in Schedule A hereto, together with all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations
thereof, and all rights therein provided by international treaties or
conventions (the "Patents");
(ii) all United States, international and foreign trademarks, service ▇▇▇▇
registrations, applications, and licenses set forth in Schedule B hereto (but
excluding any United States intent-to-use trademark application to the extent
that, and solely during the period in which, the grant of a security interest
therein impairs the validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby and renewals and extensions of the foregoing, and all rights
therein provided by international treaties or conventions (the "Trademarks");
(iii) all United States, international and foreign copyrights, whether
registered or unregistered, including, without limitation, the United States and
foreign copyright registrations and applications and copyright licenses set
forth in Schedule C hereto (the "Copyrights");
(iv) any and all claims for damages for past, present and future infringement,
misappropriation, violation, misuse or breach with respect to any of the
foregoing, with the right, but not the obligation, to ▇▇▇ for and collect, or
otherwise recover, such damages; and
(v) any and all Proceeds and products of any of the foregoing.
SECTION 2. Supplement to Security Agreement and IP Security Agreement.
Schedule B to the Security Agreement and Schedules A, B and C to the IP Security
Agreement are each, effective as of the date hereof, hereby supplemented to add
to such Schedules the Additional Collateral.
SECTION 3. Recordation. The Debtor authorizes and requests the Register of
Copyrights, the Commissioner of Patents and Trademarks and any other applicable
government officer to record this IP Security Agreement Supplement.
SECTION 4. Governing Law. This IP Security Agreement Supplement shall be
governed by, and construed in accordance
with, the laws of the State of Florida.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Debtor has caused this Intellectual
Property Security Agreement Supplement to be duly executed and delivered as of
the date first above written.
LRM INDUSTRIES LLC
By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CEO
Address for Notices:
LRM Industries LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, #▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ACCEPTED AND AGREED:
ENVIROKARE COMPOSITE CORP.
By: _____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: CEO
Exhibit 2 to Security Agreement
dated as of March 3, 2005
made by Debtor in favor of Secured Party
[FORM OF]
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, supplemented, or
otherwise modified from time to time, the "IP Security Agreement") dated as of
March 3, 2005, is made by LRM Industries LLC, a Delaware limited liability
company (the "Debtor"), having its chief executive office at at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
#▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, in favor of Envirokare Composite Corp., a Delaware
corporation (the "Secured Party").
WHEREAS, the Debtor has executed and delivered the Security Agreement dated
as of March 3, 2005 made by the Debtor in favor of the Secured Party (as
amended, supplemented, or otherwise modified from time to time, the "Security
Agreement"). Terms used as defined terms herein and not otherwise defined herein
shall have the meaning provided in the Security Agreement.
WHEREAS, under the terms of the Security Agreement, the Debtor has granted
to the Secured Party a security interest in, among other property, certain
intellectual property of the Debtor and has agreed as a condition thereof to
execute this IP Security Agreement covering such intellectual property for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other Governmental Units.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Debtor agrees as follows:
SECTION 1. Grant of Security. The Debtor hereby grants to the Secured Party
a security interest in and to all of the Debtor's right, title and interest in
and to the following (the "Collateral"):
(vi) all United States, international and foreign patents, patent applications
and patent licenses set forth in Schedule A hereto (as such Schedule A may be
supplemented from time to time by supplements to the Security Agreement and this
IP Security Agreement, each such supplement being in substantially the form of
Exhibit 1 to the Security Agreement (an "IP Security Agreement Supplement")
executed and delivered by the Debtor to the Secured Party from time to time),
together with all reissues, divisions, continuations, continuations-in-part,
extensions and reexaminations thereof, and all rights therein provided by
international treaties or conventions (the "Patents");
(vii) all United States, international and foreign trademarks and service ▇▇▇▇
registrations, applications, and licenses set forth in Schedule B hereto (but
excluding any United States intent-to-use trademark application to the extent
that, and solely during the period in which, the grant of a security interest
therein impairs the validity or enforceability of such intent-to-use trademark
applications under applicable federal law), together with the goodwill
symbolized thereby and renewals and extensions of the foregoing, and all rights
therein provided by international treaties or conventions (as such Schedule B
may be supplemented from time to time by IP Security Agreement Supplements
executed and delivered by the Debtor to the Secured Party from time to time)
(the "Trademarks");
(viii) all United States, international and foreign copyrights, whether
registered or unregistered, including, without limitation, the United States and
foreign copyright registrations and applications and copyright licenses set
forth in Schedule C hereto (as such Schedule C may be supplemented from time to
time by IP Security Agreement Supplements executed and delivered by the Debtor
to the Secured Party from time to time) (the "Copyrights");
(ix) any and all claims for damages for past, present and future infringement,
misappropriation, violation, misuse or breach with respect to any of the
foregoing, with the right, but not the obligation, to ▇▇▇ for and collect, or
otherwise recover, such damages; and
(x) any and all Proceeds and products of any of the foregoing.
SECTION 2. Security for Obligations. The pledge and assignment of, and the
grant of a security interest in, the Collateral by the Debtor under this IP
Security Agreement secures the payment of all Obligations of the Debtor now or
hereafter existing, whether direct or indirect, absolute or contingent, and
whether for principal, reimbursement obligations, interest, premiums, penalties,
fees, indemnifications, contract causes of action, costs, expenses or otherwise.
Without limiting the generality of the foregoing, this IP Security Agreement
secures, as to the Debtor, the payment of all amounts that constitute part of
the Obligations and that would be owed by the Debtor to the Secured Party but
for the fact that such Obligations are unenforceable or not allowable due to the
existence of a bankruptcy, reorganization or similar proceeding involving the
Debtor.
SECTION 3. Recordation. The Debtor authorizes and requests that the
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.
SECTION 4. Execution in Counterparts. This Agreement may be executed in any
number of 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.
SECTION 5. Grants, Rights and Remedies. This IP Security Agreement has been
entered into in conjunction with the provisions of the Security Agreement. The
Debtor does hereby acknowledge and confirm that the grant of the security
interest hereunder to, and the rights and remedies of, the Secured Party with
respect to the Collateral are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated herein by reference as if
fully set forth herein.
SECTION 6. Governing Law. This IP Security Agreement shall be governed by,
and construed in accordance with, the laws of the State of Florida.
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IN WITNESS WHEREOF, the Debtor has caused this Intellectual
Property Security Agreement to be duly executed and delivered as of the date
first above written.
LRM INDUSTRIES LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CEO
Address for Notices:
LRM Industries LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, #▇▇,
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
ACCEPTED AND AGREED:
ENVIROKARE COMPOSITE CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: CEO