Exhibit 10.10
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made effective as of the
18th day of October, 2004 (the "Effective Date"), by and among CAMBREX BIO
SCIENCE WALKERSVILLE, INC., a Delaware corporation ("Secured Party"), ORCEL LLC,
a Delaware limited liability company ("OrCel") and ORTEC INTERNATIONAL INC., a
Delaware corporation ("Ortec") (OrCel and Ortec being herein individually called
a "Grantor" and collectively called the "Grantors").
RECITALS:
WHEREAS, Secured Party and Ortec are parties to a Cell Therapy
Manufacturing Agreement, dated as of October 29, 2003, as amended (as amended
from time to time, the "Manufacturing Agreement"), and a Sales Agency Agreement,
dated as of October 18, 2004 (as amended from time to time, the "Sales
Agreement"), pursuant to which Secured Party will provide, among other things,
certain manufacturing, sales and marketing services necessary for the
production, distribution and sale of OrCel'r';
WHEREAS, Ortec, OrCel and Secured Party are parties to a License
Agreement, dated as of October 18, 2004 (as amended from time to time, the
"Cambrex License Agreement"), pursuant to which OrCel and Ortec have agreed to
license to Secured Party certain of their intellectual property rights; and
WHEREAS, in connection with the performance of its duties under the
Manufacturing Agreement and the execution of the Sales Agreement and the Cambrex
License Agreement, Secured Party desires to obtain and the Grantors desire to
grant to Secured Party a security interest in the Collateral (as hereinafter
defined) to secure the performance of certain obligations of Ortec and OrCel to
Secured Party under the Manufacturing Agreement, the Cambrex License Agreement
and the Sales Agreement.
NOW, THEREFORE, the Grantors and Secured Party, intending to be legally
bound, hereby agree as follows:
1. Definitions.
(a) "Account" shall have the meaning as provided in the UCC.
(b) "Assignment Agreement" means that certain Amended and
Restated Revenue Interests Assignment Agreement, dated as of February
26, 2003, among PRF, Ortec and OrCel.
(c) "Collateral" shall mean:
(i) all Accounts, contract rights, payment
intangibles, Instruments and General Intangibles
arising out of or in connection with the sale of
Products pursuant to the Sales Agreement and/or the
License Agreement, and all supporting obligations,
guarantees and other security therefor, whether
secured or unsecured, and whether now existing or
hereafter created;
(ii) all money now or at any time in the
possession or under the control of, or in transit to,
the PRF/Cambrex Lockbox Bank (as defined in the
Consent and Agreement) or Secured Party received from
or on account of the sale of Products pursuant to the
Sales Agreement and/or the License Agreement, or
otherwise relating to any of the foregoing
Collateral;
(iii) the PRF/Cambrex Lockbox Account (as
defined in the Consent and Agreement), all funds on
deposit in the PRF/Cambrex Lockbox Account, all funds
on deposit in any bank account or deposit account of
Secured Party which were received from or on account
of the sale of Products pursuant to the Sales
Agreement and/or the License Agreement, all
investments arising out of such funds, all claims
thereunder or in connection therewith, and all monies
and credit balances from time to time held in the
PRF/Cambrex Lockbox Account or such bank accounts or
deposit accounts; all notes, certificates of deposit,
deposit accounts, checks and other instruments from
time to time hereafter delivered to or otherwise
possessed by Secured Party in substitution for or in
addition to any or all of the then existing items
described in this clause (iii); and all interest,
dividends, cash, securities, rights, instruments and
other property at any time and from time to time
received, receivable or otherwise distributed in
respect of such accounts, such funds, or such
investments or received in exchange for any or all of
the items described in this clause (iii); and
(iv) all products and Proceeds of and from
any and all of the foregoing Collateral, and all
proceeds which constitute property of the types
described in clauses (i) through (iii).
(d) "Consent and Agreement" means the Consent and Agreement
dated as of October 18, 2004 between Secured Party and PRF, as the same
may be amended from time to time.
(e) "Event of Default" is defined in Section 8.
(f) "General Intangible" shall have the meaning as provided in
the UCC.
(g) "Instrument" shall have the meaning as provided in the
UCC.
(h) "Obligations" shall mean any and all obligations of
Grantors to Secured Party under the Manufacturing Agreement, the
Cambrex License Agreement and the Sales Agreement and all costs and
expenses of Secured Party incurred in connection with enforcement or
collection under this Agreement.
-2-
(i) "Ortec/OrCel Security Agreement" shall mean that certain
Security Agreement, dated as of August 29, 2001, between Ortec and
OrCel, as amended by Amendment No. 1 to Security Agreement dated as of
October 18, 2004 and as the same may be further amended from time to
time.
(j) "PRF" shall mean Xxxx Royalty Fund, L.P. (formerly known
as Xxxx Capital Royalty Acquisition Fund, L.P.).
(k) "PRF-Ortec-Orcel Agreements" shall have the meaning as
provided in the Consent and Agreement.
(l) "PRF Security Agreement" shall mean that certain Amended
and Restated Security Agreement dated as of October 18, 2004 among
Ortec, OrCel and PRF as the same may be amended from time to time.
(m) "Proceeds" shall have the meaning as provided in the UCC.
(n) "Products" shall mean any and all (i) "Products" as such
term is defined in the Sales Agreement and (ii) "Licensed Products" as
such term is defined in the Cambrex License Agreement.
(o) "UCC" shall mean the Uniform Commercial Code as in effect
on the date hereof in the State of Delaware, as amended from time to
time, and any successor statute; provided that if by reason of
mandatory provision of law, the perfection or the effect of perfection
or non-perfection of the security interest in the Collateral is
governed by the Uniform Commercial Code of another jurisdiction, "UCC"
means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provision hereof relating to such
perfection or effect of perfection or non-perfection.
2. Grant of Security Interest. As collateral security for the prompt,
full and faithful payment and performance when due of the Obligations, each
Grantor hereby assigns, pledges, transfers and grants to Secured Party a
continuing lien on and a security interest in all of such Grantor's right, title
and interest in and to the Collateral, where the same may be now or hereafter
located, whether now owned or hereafter existing or acquired. The lien and
security interest granted herein are subordinate and junior in priority to the
perfected lien and security interest granted to PRF as secured party under the
PRF Security Agreement and are subject to the terms and provisions of the
Consent and Agreement.
3. Change in Name or Locations. Each Grantor hereby agrees that if such
Grantor changes its name or form of organization or jurisdiction of
organization, or establishes a name in which it may do business that is not
listed as a trade name on Exhibit "A" hereto, such Grantor will immediately
notify Secured Party in writing of the additions or changes.
4. Representations and Warranties. Each Grantor represents, warrants
and covenants to Secured Party that: (a) other than the lien granted pursuant to
the PRF Security Agreement and the Ortec/OrCel Security Agreement, such Grantor
has not made
-3-
any prior sale, pledge, encumbrance, assignment or other disposition of any of
the Collateral and the same are free from all encumbrances and rights of setoff
of any kind; and (b) except as herein provided, such Grantor will not hereafter
without the prior written consent of Secured Party sell, pledge, encumber,
assign or otherwise dispose of any of the Collateral or permit any right of
setoff, lien or security interest to exist thereon except to Secured Party
and/or PRF.
5. Grantors' Covenants. Each Grantor covenants that it shall obtain,
make, execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as Secured Party may reasonably require to vest in
and assure to Secured Party its rights hereunder and in or to the Collateral.
6. Covenants for Accounts. With respect to accounts, accounts
receivable and general intangibles that are included in the definition of
Collateral, upon the occurrence and during the continuance of an Event of
Default, at the request of Secured Party, but subject to the Consent and
Agreement (including, without limitation, the requirements that payments in
respect thereof shall be made to the PRF/Cambrex Lockbox Account), each Grantor
will direct any persons who are indebted to such Grantor on any Collateral
consisting of accounts, accounts receivable or general intangibles to make
payment directly to Secured Party.
7. Further Assurances. By its signature hereto, each Grantor hereby
authorizes Secured Party to file against such Grantor, one or more financing,
continuation or amendment statements pursuant to the UCC.
8. Events of Default. The Grantors shall, at the option of Secured
Party, be in default under this Agreement upon the happening of any of the
following events or conditions (each, an "Event of Default"): (a) any default
under the Obligations; (b) the failure by either Grantor to perform any of its
obligations under this Agreement; (c) falsity, inaccuracy or breach in any
material respect by either Grantor of any written warranty, representation or
statement that, pursuant to this Agreement, is made or furnished to Secured
Party by or on behalf of such Grantor; (d) any lien (except for liens in favor
of PRF under the PRF Security Agreement) against or the making of any levy,
seizure or attachment of or on the Collateral; or (e) except as otherwise
provided herein, the failure of Secured Party to have a perfected security
interest in the Collateral.
9. Remedies. Upon the occurrence of any such Event of Default and at
any time thereafter, Secured Party may declare the Obligations secured hereby
immediately due and payable and shall have, in addition to any remedies provided
herein or by any applicable law or in equity, all the remedies of a secured
party under the UCC. Notwithstanding the foregoing, nothing in this Section 9
shall be deemed to limit any provision contained in the Consent and Agreement.
10. Power of Attorney. Each Grantor does hereby make, constitute and
appoint any officer, director or agent of Secured Party as such Grantor's true
and lawful attorney-in-fact, with power to endorse the name of such Grantor or
any of such Grantor's officers or agents upon any notes, checks, drafts, money
orders, or other
-4-
instruments of payment or Collateral that may come into the possession of
Secured Party in full or part payment of any amounts owing to Secured Party;
granting to such Grantor's said attorney full power to do any and all things
necessary to be done in and about the premises as fully and effectually as such
Grantor might or could do, including the right to sign, for such Grantor, UCC-1
financing statements and UCC-3 Statements of Change and, from and after the
occurrence of an Event of Default, to xxx for, compromise, settle and release
all claims and disputes with respect to, the Collateral; provided, however, that
Secured Party may not xxx for, compromise, settle or release any claims and
disputes with respect to any accounts receivable for which Secured Party has
previously made a deduction pursuant to Section 3(c)(i)(C) or (D) of the Sales
Agreement and has the indefeasible right to retain the amounts so deducted.
11. Payment of Expenses. At its option, Secured Party may discharge
taxes, liens, security interests or such other encumbrances as may attach to the
Collateral. Each Grantor will reimburse Secured Party for bona fide payments so
made pursuant to the foregoing authorization, and the Collateral also will
secure any advances or payments so made by Secured Party.
12. Notices. Any notice, request, demand, report, offer, acceptance,
approval, consent or other communication (collectively, a "Notice") required or
permitted under this Agreement must be in writing and delivered personally, or
by certified mail, return receipt requested, postage prepaid, or by a nationally
recognized courier, addressed to the parties at their respective addresses set
forth below or to such other address as any party may request with advanced
Notice to the other parties. A Notice that is sent by certified mail is deemed
given three (3) business days after it is mailed.
If to OrCel: Orcel LLC
c/o Ortec International Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxx Xxxxxxxx,
Vice Chairman
with a copy to:
Xxxxx Kaszovitz Xxxxxxxx
Xxxxx Xxxxx Bass & Rhine, LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
with a copy to:
Xxxx Royalty Fund, L.P.
Two Grand Central Tower
-5-
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
If to Ortec: Ortec International Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxx Xxxxxxxx,
Vice Chairman
with a copy to:
Xxxxx Xxxxxxxxx Xxxxxxxx
Xxxxx Xxxxx Bass & Rhine, LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
with a copy to:
Xxxx Royalty Fund, L.P.
Two Grand Central Tower
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
If to Secured Party: Cambrex Bio Science Walkersville, Inc.
0000 Xxxxx Xxxx Xxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: N. Xxxxx Xxxxxx,
President of BioProducts
Strategic Business Unit
with a copy to:
Xxxxx Cummis Xxxxxxx & Xxxxx P.C.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
Attention: Xxx X. Xxxxxxxxx, Esq.
-6-
with a copy to:
Xxxx Royalty Fund, L.P.
Two Grand Central Tower
000 Xxxx 00xx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
13. Preservation of Rights. No delay or omission on the part of Secured
Party to exercise any right or power arising hereunder will impair any such
right or power or be considered a waiver of any such right or power or any
acquiescence therein, nor will the action or inaction of Secured Party impair
any right or power arising hereunder. Secured Party's rights and remedies
hereunder are cumulative and not exclusive of any other rights or remedies which
Secured Party may have under other agreements, at law or in equity.
14. Illegality. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
15. Changes in Writing. No modification, amendment or waiver of any
provision of this Agreement nor consent to any departure by either Grantor
therefrom, will in any event be effective unless the same is in writing and
signed by the parties hereto, and then such waiver or consent shall be effective
only in the specific instance and for the purpose for which given. No notice to
or demand on either Grantor in any case will entitle either Grantor to any other
or further notice or demand in the same, similar or other circumstance.
16. Entire Agreement. This Agreement (including the documents and
instruments referred to herein) constitutes the entire agreement and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
17. Counterparts. This Agreement may be signed in any number of
counterpart copies and by the parties hereto on separate counterparts, but all
such copies shall constitute one and the same instrument.
18. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of Grantors and Secured Party and their respective legal
representatives, successors and permitted assigns. Neither Grantor may assign
this Agreement in whole or in part without the prior written consent of Secured
Party. Any assignment or any attempt by either Grantor to make an assignment of
this Agreement or any of its rights or obligations hereunder will be void ab
initio, and of no force and effect. Secured Party may assign this Agreement, or
any of its rights and obligations hereunder, at any time to any other person or
entity it deems necessary or desirable without advance notice to
-7-
Grantors, provided that prior to or concurrently with such assignment such
person or entity agrees in writing (in form and substance reasonably
satisfactory to PRF) to assume and be bound by the provisions of the Consent and
Agreement and provided that written notice of such assignment is promptly
thereafter given to Grantors and PRF.
19. Term. This Agreement shall be effective from the Effective Date and
shall continue until the date that is two years after the Launch Date (as
defined in the Sales Agreement) (the "Expiration Date"); provided, however, that
if on or as of the Expiration Date an Event of Default, or event which with the
lapse of time or notice or both would become an Event of Default, or a default
by OrCel and/or Ortec under the Assignment Agreement, has occurred and is
continuing, this Agreement shall continue in full force and effect after the
Expiration Date unless and until such Event of Default or event or default has
been waived in writing by Secured Party or is no longer continuing or has been
cured.
20. Interpretation. In this Agreement, unless the parties otherwise
agree in writing, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to statutes are
to be construed as including all statutory provisions consolidating, amending or
replacing the statute referred to; the word "or" shall be deemed to include
"and/or", the words "including", "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to articles, sections (or
subdivisions of sections) or exhibits are to those of this Agreement unless
otherwise indicated. Section headings in this Agreement are included for
convenience of reference only and shall not constitute a part of this Agreement
for any other purpose.
21. Governing Law. This Agreement will be interpreted and the rights
and liabilities of the parties hereto determined in accordance with the laws of
the State of New York without regard to its conflicts of law principles.
22. Subordination of Security Interest under Ortec/OrCel Security
Agreement. Each Grantor hereby agrees that the security interest granted by
Ortec to OrCel in the Collateral (as such term is defined in the Ortec/OrCel
Security Agreement) pursuant to the Ortec/OrCel Security Agreement shall be and
is hereby made subordinate and junior in priority to the security interest
granted herein to Secured Party in the Collateral (as such term is defined is
defined in this Agreement).
[SIGNATURE PAGE FOLLOWS]
-8-
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
SECURED PARTY:
CAMBREX BIO SCIENCE WALKERSVILLE, INC.
By: /s/ Xxxxx Xxxxxx
---------------------------------------------
[Signature]
N. Xxxxx Xxxxxx
---------------------------------------------
[Name]
President, BioProducts
---------------------------------------------
[Title]
GRANTOR:
ORCEL LLC
By: /s/ Xxx Xxxxxxxx
---------------------------------------------
[Signature]
Xxx Xxxxxxxx
---------------------------------------------
[Name]
Chief Executive Officer / Vice Chairman
---------------------------------------------
[Title]
GRANTOR:
ORTEC INTERNATIONAL INC.
By: /s/ Xxx Xxxxxxxx
---------------------------------------------
[Signature]
Xxx Xxxxxxxx
---------------------------------------------
[Name]
Chief Executive Officer / Vice Chairman
---------------------------------------------
[Title]
-9-
EXHIBIT "A"
TO SECURITY AGREEMENT
Trade Names
None.
-10-
