[FIRST UNION LOGO]
SECURITY AGREEMENT
September 11, 2001
Q-Med, Inc.
000 Xxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
(Individually and collectively "Debtor")
First Union National Bank
000 Xxxxx Xxxx
Xxxxxx, Xxx Xxxxxx 00000
(Hereinafter referred to as "Bank")
For value received and to secure payment and performance of the Promissory Note
executed by Debtor (also referred to herein as "Borrower") dated September 11,
2001, in the original principal amount of $1,000,000.00, payable to Bank, and
any extensions, renewals, modifications or novations thereof (the "Note"), this
Security Agreement and the other Loan Documents, and any other obligations of
Debtor to Bank however created, arising or evidenced, whether direct or
indirect, absolute or contingent, now existing or hereafter arising or acquired,
and whether or not evidenced by a Loan Document, including swap agreements (as
defined in 11 U.S.C. ss.101), future advances, and all costs and expenses
incurred by Bank to obtain, preserve, perfect and enforce the security interest
granted herein and to maintain, preserve and collect the property subject to the
security interest (collectively, "Obligations"), Debtor hereby grants to Bank a
continuing security interest in and lien upon the following described property,
whether now owned or hereafter acquired, and any additions, replacements,
accessions, or substitutions thereof and all cash and non-cash proceeds and
products thereof (collectively, "Collateral"):
All of the investment property, financial assets, cash, equity interests,
instruments, and/or general intangibles, which are held in or credited to an
account with First Union Securities, Inc., who is a Securities Intermediary (as
defined herein) of the Debtor (the "Account"), and the Account itself, described
as follows: Account No. 6850-0152; and all rights to which Debtor now or
hereafter becomes entitled by reason of its interest in any of the previously
described Collateral.
Debtor hereby represents and agrees that:
OWNERSHIP. Debtor owns the Collateral. The Collateral is free and clear of all
liens, security interests, and claims except those previously reported in
writing to and approved by Bank, and Debtor will keep the Collateral free and
clear from all liens, security interests and claims, other than those granted to
or approved by Bank. All securities and security entitlements pledged as
Collateral are fully paid and non-assessable. All income, dividends, earnings
and profits with respect to the Collateral shall be reported for state and
federal income tax purposes as attributable to the Debtor and not Bank and Third
Party (as defined herein), and Bank or any other person authorized to report
income distributions, is authorized to issue IRS Forms 1099 indicating Debtor as
the recipient of such income, earnings and profits.
NAME AND OFFICES; JURISDICTION OF ORGANIZATION. The name and address of Debtor
appearing at the beginning of this Agreement are Debtor's exact legal name and
the address of its chief executive office. There has been no change in the name
of Debtor, or the name under which Debtor conducts business, within the five
years preceding the date hereof except as previously reported in writing to
Bank. Debtor has not moved its chief executive office within the five years
preceding the date hereof except as previously reported in writing to Bank.
Debtor is organized under the laws of the State of Delaware and has not changed
the jurisdiction of its organization within the five years preceding the date
hereof except as previously reported in writing to Bank.
TITLE/TAXES. Debtor has good and marketable title to Collateral and will warrant
and defend same against all claims. Debtor will not transfer, sell, or lease
Collateral (except as permitted herein). Debtor agrees to pay promptly all taxes
and assessments upon or for the use of Collateral and on this Security
Agreement. At its option, Bank may discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on Collateral. Debtor agrees to
reimburse Bank, on demand, for any such payment made by Bank. Any amounts so
paid shall be added to the Obligations.
WAIVERS. Debtor agrees not to assert against Bank as a defense (legal or
equitable), as a set-off, as a counterclaim, or otherwise, any claims Debtor may
have against any seller or lessor that provided personal property or services
relating to any part of the Collateral. Debtor waives all exemptions and
homestead rights with regard to the Collateral. Debtor waives any and all rights
to any bond or security which might be required by applicable law prior to the
exercise of any of Bank's remedies against any Collateral. All rights of Bank
and security interests hereunder, and all obligations of Debtor hereunder, shall
be absolute and unconditional, not discharged or impaired irrespective of (and
regardless of whether Debtor receives any notice of): (i) any lack of validity
or enforceability of any Loan Document; (ii) any change in the time, manner or
place of payment or performance, or in any term, of all e any of the Obligations
or the Loan Documents or any other amendment or waiver of or any consent to any
departure from any Loan Document; (iii) any exchange, release or non-perfection
of any collateral, or any release of or modifications of the obligations of any
guarantor or other obligor; (iv) any amendment or waiver of or consent to
departure from any Loan Document or other agreement. To the extent permitted by
law, Debtor hereby waives any rights under any valuation, stay, appraisement,
extension or redemption laws now existing or which may hereafter exist and
which, but for this provision, might be applicable to any sale or disposition of
the Collateral by Bank; and any other circumstance which might otherwise
constitute a defense available to, or a discharge of any party with respect to
the Obligations.
NOTIFICATIONS; LOCATION OF COLLATERAL. Debtor will notify Bank in writing at
least 30 days prior to any change in: (i) Debtor's chief place of business
and/or residence; (ii) Debtor's name or identity; (iii) Debtor's
corporate/organizational structure; or (iv) the jurisdiction in which Debtor is
organized. In addition, Debtor shall promptly notify Bank of any claims or
alleged claims of any other person or entity to the Collateral or the
institution of any litigation, arbitration, governmental investigation or
administrative proceedings against or affecting the Collateral. Debtor will keep
Collateral at the location(s) previously provided to Bank until such time as
Bank provides written advance consent to a change of location. Debtor will bear
the cost of preparing and filing any documents necessary to protect Bank's
liens.
FINANCING STATEMENTS, POWER OF ATTORNEY. No financing statement (other than any
filed or approved by Bank) covering any Collateral is on file in any public
filing office. On request of Bank, Debtor will execute one or more financing
statements in form satisfactory to Bank and will pay all costs and expenses of
filing the same or of filing this Security Agreement in all public fling
offices, where filing is deemed by Bank to be desirable. Bank is authorized to
file financing statements relating to Collateral without Debtor's signature
where authorized by law. Debtor hereby constitutes and appoints Bank the true
and lawful attorney of Debtor with full power of substitution to take any and
all appropriate action and to execute any and all documents or instruments that
may be necessary or desirable to accomplish the purpose and carry out the terms
of this Security Agreement, including, without limitation, to complete, execute,
and deliver Control Agreement(s) by Bank, Debtor and Third Party(ies) required
in connection herewith (individually and collectively the "Control Agreement"),
instructions to Third Party(ies) regarding, among other things, control and
disposition of any Collateral, and endorsements desirable for transfer or
delivery of any Collateral, registration of any Collateral under applicable
laws, retitling any Collateral, receipt, endorsement and/or collection of all
checks and other orders for payment of money payable to Debtor with respect to
Collateral. The foregoing power of attorney is coupled with an interest and
shall be irrevocable until all of the Obligations have been paid in full.
Neither Bank nor anyone acting on its behalf shall be liable for acts,
omissions, errors in judgment, or mistakes in fact in such capacity as
attorney-in-fact. Debtor ratifies all acts of Bank as attorney-in-fact. Debtor
agrees to take such other actions, at Debtor's expense, as might be requested
for the perfection, continuation and assignment, in whole or in part, of the
security interests granted herein and to assure Bank's intended priority
position. If certificates, passbooks, or other documentation or evidence is/are
issued or outstanding as to any of the Collateral, Debtor will cause the
security interests of Bank to be properly protected, including perfection by
notation
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thereon or delivery thereof to Bank. Upon Bank's request, Debtor will, at its
own expense: (i) do all things determined by Bank to be desirable to register
such Collateral or qualify for an exemption from registration, under the
provisions of all applicable securities laws, and (ii) otherwise do or cause to
be done all other acts and things as may be necessary to make the sale of the
Collateral valid, binding and in compliance with applicable law.
STOCK, DIVIDENDS. If, with respect to any securities pledged hereunder, a stock
dividend is declared, any stock split made or right to subscribe is issued, all
the certificates for the shares representing such stock dividend, stock split or
right to subscribe will be immediately delivered, duly endorsed, to the Bank as
additional Collateral, and any cash or non-cash proceeds and products thereof,
including investment property and security entitlements will be immediately
delivered to Bank. Debtor acknowledges that such grant includes all investment
property and security entitlements, now existing or hereafter arising, relating
to such securities. In addition, Debtor agrees to execute such notices and
instructions to securities intermediaries as Bank may reasonably request.
VALUE REQUIREMENT. The outstanding balance of the Obligations shall not exceed
at any time the aggregate Adjusted Fair Market Value of the Collateral. If at
any time the outstanding balance of the Obligations exceeds the aggregate
Adjusted Fair Market Value of the Collateral, Debtor shall, within 3 business
days, either pledge and deliver additional securities or reduce the outstanding
balance of the Obligations so that the outstanding balance of the Obligations
does not exceed the aggregate Adjusted Fair Market Value of the Collateral as of
the close of business on the day immediately preceding such delivery or
reduction. The Bank shall be under no obligation to permit advances during any
period of time that the outstanding balance of the Obligations exceeds (or would
exceed should a requested advance be made) the aggregate Adjusted Fair Market
Value of the Collateral.
"Fair Market Value" means the dollar value that results by multiplying the
closing price per unit of Collateral (other than cash), as quoted or reported in
The Wall Street Journal or, if not available, other customary publication of
such information, by the number of units of like Collateral. If Fair Market
Value cannot be determined by the foregoing procedure, Fair Market Value shall
be determined by the Bank by reference to such public information as may be
available.
"Adjusted Fair Market Value" means the dollar value that results by multiplying
the Fair Market Value of an asset constituting a part of the Collateral by the
applicable percentage set forth below. The aggregate Adjusted Fair Market Value
is the sum of those products.
Collateral Type Eligible % of Fair Market Value
--------------- -------------------------------
US Government Obligations (maturity two
years or less) 95%
Municipal Bonds (rating Aaa-Baa3; maturity
five years or less) 85%
Corporate Bonds (rating Aaa-Baa3, non-convertible,
NYSE; maturity two years or less) 85%
A1/P1 Commercial Paper 85%
TRADING OF COLLATERAL. Until a Default occurs, if securities pledged hereunder
are held in the Account, Debtor shall have the right to vote such Collateral, to
exchange it or any part thereof for other easily marketable investment property
or cash of at least equivalent value or purchase for cash readily marketable
investment property, all of which property or cash proceeds shall be placed or
paid into the Account, to collect and receive all cash dividends and interest
distributed periodically in the ordinary course by the obligor or issuer of such
Collateral or part thereof, and unless otherwise restricted by this Security
Agreement, to exercise other rights with respect to such Collateral. In the
event that, notwithstanding the above, any such property or cash proceeds are
received by Debtor (other than in the Account) as a result of such an exchange
or purchase, such property or cash proceeds shall be held by Debtor in trust
for, and immediately delivered to, Bank.
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CONTROL. Debtor will cooperate with Bank in obtaining control with respect to
Collateral consisting of investment property. Debtor authorizes and directs
Third Party to comply with the terms of this Security Agreement, to enter into a
Control Agreement, to xxxx its records to show the security interest of and/or
the transfer to Bank of the property pledged hereunder and to mail monthly
statements to the Bank, in addition to Debtor, to the address provided herein.
COLLATERAL DUTIES. Bank shall have no custodial or ministerial duties to perform
with respect to Collateral pledged except as set forth herein; and by way of
explanation and not by way of limitation, Bank shall incur no liability for any
of the following: (i) loss or depreciation of Collateral (unless caused by its
willful misconduct or gross negligence), (ii) failure to present any paper for
payment or protest, to protest or dve notice of nonpayment, or any other notice
with respect to any paper or Collateral, (iii) failure to ascertain, notify
Debtor of, or take any action in connection with any conversion, call,
redemption, retirement or any other event relating to any of the Collateral, or
failure to notify any party hereto that Collateral should be presented or
surrendered for any such reason. Debtor acknowledges that Bank is not an
investment advisor or insurer with respect to the Collateral; and Bank has no
duty to advise Debtor of any actual or anticipated changes in the value of the
Collateral.
TRANSFER OF COLLATERAL. Bank may assign its rights in Collateral or any part
thereof to any assignee who shall thereupon become vested with all the powers
and rights herein given to Bank with respect to the property so transferred and
delivered, and Bank shall thereafter be forever relieved and fully discharged
from any liability with respect to such property so transferred, but with
respect to any property not so transferred, Bank shall retain all rights and
powers hereby given.
INSPECTION, BOOKS AND RECORDS. Debtor will at all times keep accurate and
complete records covering each item of Collateral, including the proceeds
therefrom. Bank, or any of its agents, shall have the right, at intervals to be
determined by Bank and without hindrance or delay, at Debtor's expense, to
inspect, audit, and examine the Collateral and to make extracts from the books,
records, journals, orders, receipts, correspondence and other data relating to
Collateral, Debtor's business or any other transaction between the parties
hereto. Debtor will at its expense furnish Bank copies thereof upon request.
CROSS COLLATERALIZATION LIMITATION. As to any other existing or future consumer
purpose loan made by Bank to Debtor, within the meaning of the Federal Consumer
Credit Protection Act, Bank expressly waives any security interest granted
herein in Collateral that Debtor uses as a principal dwelling and household
goods.
ATTORNEYS' FEES AND OTHER COSTS OF COLLECTION. Debtor shall pay all of Bank's
reasonable expenses incurred in enforcing this Security Agreement and in
preserving and liquidating Collateral, including but not limited to, reasonable
arbitration, paralegals', attorneys' and experts' fees and expenses, whether
incurred with or without the commencement of a suit, trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.
DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: Loan Document Default. A default under any Loan
Document. Collateral Loss or Destruction. Any loss, theft, substantial damage,
or destruction of Collateral not fully covered by insurance, or as to which
insurance proceeds are not remitted to Bank within 30 days of the loss.
Collateral Sale, Lease or Encumbrance. Any sale, lease, or encumbrance of any
Collateral not specifically permitted herein without prior written consent of
Bank. Levy, Seizure or Attachment. The making of any levy, seizure, or
attachment on or of Collateral which is not removed within 10 days. Third Party
Breach. Any default or breach by a Third Party of any provision contained in any
Control Agreement executed in connection with any of the Collateral.
Unauthorized Termination. Any attempt to terminate, revoke, rescind, modify, or
violate the terms of this Security Agreement or any Control Agreement without
the prior written consent of Bank.
REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs, all of the
Obligations shall be immediately due and payable, without notice and Bank shall
have all the rights and remedies of a secured party under the Uniform Commercial
Code. Without limitation thereto, Bank shall have the
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following rights and remedies: (i) to take immediate possession of Collateral,
without notice or resort to legal process, and for such purpose, to enter upon
any premises on which Collateral or any part thereof may be situated and to
remove the same therefrom, or, at its option, to render Collateral unusable or
dispose of said Collateral on Debtor's premises; (ii) to require Debtor to
assemble the Collateral and make it available to Bank at a place to be
designated by Bank; (iii) to exercise its right of set-off or bank lien as to
any monies of Debtor deposited in accounts of any nature maintained by Debtor
with Bank or affiliates of Bank, without advance notice, regardless of whether
such accounts are general or special; (iv) to dispose of Collateral, as a unit
or in parcels, separately or with any real property interests also securing the
Obligations, in any county or place to be selected by Bank, at either private or
public sale (at which public sale Bank may be the purchaser) with or without
having the Collateral physically present at said sale. In addition to the
foregoing, Bank shall be authorized to: notify Third Party to terminate
immediately any trading, other rights or entitlements of Debtor with respect to
the Collateral and any distributions to Debtor from the Collateral; transfer
into Bank's name or the name of its nominee, all or any part of the Collateral;
receive all interest, dividends, and other proceeds of the Collateral; notify
any person obligated on any Collateral of the security interest of Bank therein
and require such person to make payment directly to Bank; demand, xxx for,
collect or receive the Collateral and any proceeds thereof, and/or make any
settlement or compromise as Bank deems desirable with respect to any Collateral;
and exercise any voting, conversion, registration, purchase or other rights of
an owner, holder or entitlement holder of the Collateral. Debtor agrees that
Bank may exercise its rights under this Security Agreement without regard for
the actual or potential tax consequences to Debtor under federal or state law
and without regard to any instructions or directives given Bank by Debtor.
Any notice of sale, disposition or other action by Bank required by law and sent
to Debtor at Debtor's address shown above, or at such other address of Debtor as
may from time to time be shown on the records of Bank, at least 5 days prior to
such action, shall constitute reasonable notice to Debtor. Notice shall be
deemed given or sent when mailed postage prepaid to Debtor's address as provided
herein. Bank shall be entitled to apply the proceeds of any sale or other
disposition of the Collateral, and the payments received by Bank with respect to
any of the Collateral, to Obligations in such order and manner as Bank may
determine. Collateral that is subject to rapid declines in value and is
customarily sold in recognized markets may be disposed of by Bank in a
recognized market for such collateral without providing notice of sale. Debtor
waives any and all requirements that the Bank sell or dispose of dl or any part
of the Collateral at any particular time, regardless of whether Debtor has
requested such sale or disposition.
REMEDIES ARE CUMULATIVE. No failure on the part of Bank to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Bank or any right,
power or remedy hereunder preclude any other or further exercise thereof or the
exercise of any right, power or remedy. The remedies herein provided are
cumulative and are not exclusive of any remedies provided by law, in equity, or
in other Loan Documents.
MISCELLANEOUS. (i) Amendments and Waivers. No waiver, amendment or modification
of any provision of this Security Agreement shall be valid unless in writing and
signed by Debtor and an officer of Bank. No waiver by Bank of any Default shall
operate as a waiver of any other Default or of the same Default on a future
occasion. (ii) Assignment. All rights of Bank hereunder are freely assignable,
in whole or in part, and shall inure to the benefit of and be enforceable by
Bank, its successors, assigns and affiliates. Debtor shall not assign its rights
and interest hereunder without the prior written consent of Bank, and any
attempt by Debtor to assign without Bank's prior written consent is null and
void. Any assignment shall not release Debtor from the Obligations. This
Security Agreement shall be binding upon Debtor, and the heirs, personal
representatives, successors, and assigns of Debtor. (iii) Applicable Law;
Conflict Between Documents. This Security Agreement shall be governed by and
construed under the law of the jurisdiction named in the address of the Bank
first shown above (the "Jurisdiction") without regard to that Jurisdiction's
conflict of laws principles, except to the extent that the UCC requires the
application of the law of a different jurisdiction. If any terms of this
Security Agreement conflict with the terms of any commitment letter or loan
proposal, the terms of this Security Agreement shall control. (iv) Jurisdiction.
Debtor irrevocably agrees to non-exclusive personal jurisdiction in the
Jurisdiction in which the office of Bank as stated above is located. (v)
Severability. If any provision of this Security
Page 5
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective but only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Security Agreement. (vi) Notices. Any notices to Debtor shall be
sufficiently given, if in writing and mailed or delivered to the address of
Debtor shown above or such other address as provided hereunder; and to Bank, if
in writing and mailed or delivered to Bank's office address shown above or such
other address as Bank may specify in writing from time to time. In the event
that Debtor changes Debtor's mailing address at any time prior to the date the
Obligations are paid in full, Debtor agrees to promptly give written notice of
said change of address by registered or certified mail, return receipt
requested, all charges prepaid. (vii) Captions. The captions contained herein
are inserted for convenience only and shall not affect the meaning or
interpretation of this Security Agreement or any provision hereof. The use of
the plural shall also mean the singular, and vice versa. (viii) Joint and
Several Liability. If more than one party has signed this Security Agreement,
such parties are jointly and severally obligated hereunder. (ix) Binding
Contract. Debtor by execution and Bank by acceptance of this Security Agreement,
agree that each party is bound by all terms and provisions of this Security
Agreement.
DEFINITIONS. Loan Documents. The term "Loan Documents" refers to all documents,
including this Agreement, whether now or hereafter existing, executed in
connection with or related to the Obligations, and may include, without
limitation and whether executed by Debtor or others, commitment letters that
survive closing, loan agreements, promissory notes, guaranty agreements, deposit
or other similar agreements, other security agreements, letters of credit and
applications for letters of credit, security instruments, financing statements,
mortgage instruments, any renewals or modifications, whenever any of the
foregoing are executed, but does not include swap agreements (as defined in 11
U.S.C. ss. 101). Third Party. The term "Third Party" means each and every
Broker, Collateral Agent or Securities Intermediary maintaining a securities
account, and acting in such capacity, for Debtor with respect to some or all of
the Collateral. UCC. "UCC" means the Uniform Commercial Code as presently and
hereafter enacted in the Jurisdiction. Terms defined in the UCC. Any term used
in this Agreement and in any financing statement filed in connection herewith
which is defined in the UCC and not otherwise defined in this Agreement or any
other Loan Document has the meaning given to the term in the UCC. Debtor
acknowledges and understands that any such term relating to the description of
Collateral may be defined in one or both of (i) the version of Article 9 of the
UCC as enacted and in force in the Jurisdiction on the date this Agreement is
signed by Debtor or (ii) a revised version of Article 9 of the UCC
(substantially in the form of Revised Article 9 (2000 Revision) version thereof
promulgated by the National Conference of Commissioners on Uniform State Laws
and the American Law Institute) ("Revised Article 9") enacted and in force in
the Jurisdiction at any relevant future time. In light of the foregoing, Debtor
agrees that, if terms defining items or classes of Collateral change or are
added as a result of the enactment of Revised Article 9 in the Jurisdiction, the
meaning to be ascribed to any such term with respect to any particular item or
class of Collateral hereunder and the interpretation thereof after the date of
such enactment shall be (a) if such term is defined in both versions of Article
9 and such definitions differ, the broader or more encompassing of the two
definitions, regardless of duplication, and (b) if such term is defined under
only one of the versions of Article 9, the definition in that version.
IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed under seal.
Q-Med, Inc.
Taxpayer Identification Number: 00-0000000
By:
------------------------------------(SEAL)
Xxxxxxx X. Xxx, President and Treasurer
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Payer's Request for Taxpayers Identification Number and Certification
Account Name Q-Med, Inc.
Address 000 Xxxxx Xxxx Xxxxx
Xxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
W-9 Substitute
Taxpayer Identification Number 00-0000000
Check this box if you are not subject to backup withholding under the
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code ----------> [ ]
Check this box if you qualify as a Non-Resident Alien ---------------------> [ ]
Date August 27, 2001
Certification - Under penalties of perjury, I certify that the information
provided on this form is true, correct and complete.
Q-Med, Inc.
Signature:
----------------------------------------
Xxxxxxx X. Xxx, President and Treasurer
