SECURITY AGREEMENT
October 6, 2000
LipoMed, Inc.
0000 Xxx Xxxx Xxxxxx
Xxxxxxx, Xxxxx Xxxxxxxx 00000
(Hereinafter referred to as the "Debtor")
First Union National Bank
000 Xxxxxxxxxxxx Xxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
(Hereinafter referred to as the "Bank")
For value received and to secure the payment and performance of the Promissory
Note executed by the Debtor dated October 6, 2000, in the original principal
amount of $2,000,000.00, payable to Bank, and any extensions, renewals,
modifications or novations thereof (the "Note"), this Security Agreement and the
other Loan Documents (defined below), 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, including swap
agreements (as defined in 11 U.S.C. (S) 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 certain of
Debtor's personal property (excluding Debtor Intellectual Property, Oxford
Equipment, and Centura Accounts, each as defined below), including, without
limitation, the following described property, now owned or hereafter acquired,
any additions, accessions, or substitutions thereof and thereto (including but
not limited to investment property and security entitlements), and all cash and
non-cash proceeds and products thereof (collectively, "Collateral"):
.. All accounts, contract rights, leases, and any other rights of Debtor to
payment for goods sold or leased or for services rendered, chattel paper,
instruments, documents, stock and bonds, together with all cash and non-cash
proceeds thereof (including investment property, security entitlements, and
dividends), and all credit insurance, guaranties, letters of credit, and other
security for any of the foregoing;
.. All furniture, furnishings, fixtures, equipment, machinery, accessories,
moveable trade fixtures, goods held for sale or being processed for sale in
Debtor's business, including all raw materials, supplies, and other materials
used or consumed in Debtor's business, goods in process, finished goods, and all
other items customarily classified as inventory (excluding specifically any
equipment, machinery, accessories, and similar items which may now or in the
future be covered under that certain Master Loan and Security Agreement dated
September 27, 2000 between Debtor and Oxford Venture Finance, LLC (such excluded
equipment being the "Oxford Equipment")); building improvement and construction
materials, supplies and equipment (the foregoing fixture Collateral is located
at or affixed to real property known as 0000 Xxx Xxxx Xxxxxx, Xxxxxxx, Xxxxx
Xxxxxxxx;
.. All instruments, documents, chattel paper, goods, moneys, securities, drafts,
and other property of Debtor now in possession of and at any time and from time
to time hereafter delivered to Bank, its agents or affiliates, whether for
safekeeping, pledge, custody, transmission, collection, or otherwise, and all of
Debtor's deposits, demand deposit accounts, checking accounts, time savings
accounts, certificates of deposit, balances, sums, proceeds, and credits with,
and any of its claims against Bank and affiliates of Bank, at any time existing,
together with the increases and profits received therefrom and the proceeds
thereof, including insurance payable because of loss or damage thereto,
excepting specifically from the foregoing certain certificate of deposit
accounts with Centura Bank which serve as collateral under certain equipment
lease agreements between Debtor and Centura Bank (such excepted accounts being
the "Centura Accounts");
.. All general intangibles (including, without limitation, all contract rights,
tax refunds and tax refund claims, choses in action, causes of action, corporate
or other business records, goodwill, claims under guaranties, security interests
or other security held or granted to secure payment of contracts by account
debtors, all rights to indemnification and all other intangible property of
every kind and nature) excepting specifically Debtor's interest in inventions,
computer software programs, applications, and all related documentation,
designs, design rights, know-how, patents,
patent applications, registered and unregistered trademarks, trade names, trade
secrets, and registered and unregistered copyrights, including amendments,
renewals, extensions, and all licenses or other rights to use the same and all
license fees and royalties from such use (such excepted property being
collectively the "Debtor Intellectual Property");
.. All parts, replacements, substitutions, profits, products and cash and
non-cash proceeds of the foregoing (including insurance and condemnation
proceeds payable by reason of condemnation of or loss or damage thereto and
excluding any such proceeds and products of Debtor Intellectual Property, Oxford
Equipment, and Centura Accounts) in any form and wherever located; and
.. All books and records relating to any of the foregoing.
Debtor hereby represents and agrees that:
OWNERSHIP. Except as disclosed on Schedule A attached hereto, Debtor owns the
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Collateral. Except as disclosed on Schedule A attached hereto, the Collateral is
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free and clear of all liens, security interests, and claims, and Debtor will
keep the Collateral free and clear from all liens, security interests and
claims, other than those granted to Bank except as is specifically disclosed to
Bank on Schedule A attached hereto.
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NAME AND OFFICES. There has been no change in the name of Debtor, or the name
under which Debtor conducts business, within the 5 years preceding the date of
execution of this Security Agreement and Debtor has not moved its executive
offices or residence within the 5 years preceding the date of execution of this
Security Agreement except as previously reported in writing to Bank. The
taxpayer identification number of Debtor as provided herein is correct.
TITLE/TAXES. Debtor has (except as disclosed on Schedule A) good and marketable
title to the Collateral and will warrant and defend same against all claims.
Debtor will not transfer, sell, or lease the Collateral (except in the ordinary
course of business). Debtor agrees to pay promptly all taxes and assessments
upon or for the use of the 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. Except as otherwise provided herein or in the other Loan Documents,
Debtor waives presentment, demand, protest, notice of dishonor, notice of
default, demand for payment, notice of intention to accelerate, and notice of
acceleration of maturity. Debtor further 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. Except as otherwise
provided herein or in the other Loan Documents, Debtor waives all exemptions and
homestead rights with regard to the Collateral. Except as otherwise provided
herein or in the other Loan Documents, Debtor waives any and all rights to
notice or to hearing prior to Bank's taking immediate possession or control of
any Collateral, and 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.
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EXTENSIONS, RELEASES. Debtor agrees that Bank may extend, renew or modify any of
the Obligations and grant any releases, compromises or indulgences with respect
to any security for the Obligations, or with respect to any party liable for the
Obligations, all without notice to or consent of Debtor and without affecting
the liability of Debtor or the enforceability of this Security Agreement.
NOTIFICATIONS OF CHANGE. Debtor will notify Bank in writing at least 30 days
prior to any change in: (i) Debtor's chief place of business; (ii) Debtor's name
or identity; or (iii) Debtor's corporate/organizational structure. 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.
COLLATERAL CONDITION AND LAWFUL USE. Debtor represents that Collateral is in
good repair and condition (ordinary wear and tear excepted)and that Debtor shall
use reasonable care to prevent Collateral from being damaged or depreciating.
Debtor shall immediately notify Bank of any material loss or damage to
Collateral. Debtor shall not permit any item of equipment to become a fixture to
real estate or an accession to other personal property. Debtor represents it is
in compliance in all material respects with all federal, state and local laws,
rules and regulations applicable to its properties, Collateral, operations,
business, and finances, including, without limitation, all applicable federal,
state and local laws and regulations intended to protect the environment, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), if
applicable, and/or any commercial crimes.
RISK OF LOSS AND INSURANCE. Debtor shall bear all risk of loss with respect to
the Collateral. The injury to or loss of Collateral, either partial or total,
shall not release Debtor from payment or other performance hereof. Debtor agrees
to obtain and keep in force casualty and hazard insurance on Collateral naming
Bank as loss payee. Such insurance is to be in form and amounts satisfactory to
Bank. All such policies shall provide to Bank a minimum of 30 days written
notice of cancellation. Debtor shall furnish to Bank such policies, or other
evidence of such policies satisfactory to Bank. Bank is authorized, but not
obligated, to purchase any or all insurance or "Single Interest Insurance"
protecting such interest as Bank deems appropriate against such risks and for
such coverage and for such amounts, including either the loan amount or value of
the Collateral, all at its discretion, and at Debtor's expense. In such event,
Debtor agrees to reimburse Bank for the cost of such insurance and Bank may add
such cost to the Obligations. Debtor shall bear the risk of loss to the extent
of any deficiency in the effective insurance coverage with respect to loss or
damage to any of the Collateral. Debtor hereby assigns to Bank the proceeds of
all such insurance and directs any insurer to make payments directly to Bank.
Debtor hereby appoints Bank its attorney-in-fact, which appointment shall be
irrevocable and coupled with an interest for so long as the Obligations are
unpaid, to file proof of loss and/or any other forms required to collect from
any insurer any amount due from any damage or destruction of Collateral, to
agree to and bind Debtor as to the amount of said recovery, to designate
payee(s) of such recovery, to grant releases to insurer, to grant subrogation
rights to any insurer, and to endorse any settlement check or draft. Debtor
agrees not to exercise any of the foregoing powers granted to Bank without the
Bank's prior written consent.
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ADDITIONAL COLLATERAL. If at any time Collateral is unsatisfactory to Bank, as
determined by Bank in its reasonable, good faith judgment, then on demand of
Bank, Debtor shall immediately furnish such additional Collateral satisfactory
to Bank to be held by Bank as if originally pledged hereunder and shall execute
such additional security agreements and financing statements as requested by
Bank.
FINANCING STATEMENTS. No financing statement (other than any filed by Bank or
disclosed on Schedule A referred to above) covering any of Collateral or
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proceeds thereof is on file in any public filing office. This Security
Agreement, or a copy thereof, or any financing statement executed hereunder may
be recorded. 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 filing
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 appoints Bank as its attorney-in-fact to execute
such documents necessary to accomplish perfection of Bank's security interest.
The appointment is coupled with an interest and shall be irrevocable as long as
any Obligations remain outstanding. Debtor further agrees to take such other
actions as might be requested for the perfection, continuation and assignment,
in whole or in part, of the security interests granted herein. If certificates
are issued or outstanding as to any of the Collateral, Debtor will cause the
security interests of Bank to be properly protected, including perfection of
notation thereon.
LANDLORD/MORTGAGEE WAIVERS. Debtor shall cause each mortgagee of real property
owned by Debtor and each landlord of real property leased by Debtor to execute
and deliver instruments satisfactory in form and substance to Bank by which such
mortgagee or landlord waives its rights, if any, in the Collateral.
STOCK, DIVIDENDS. If, with respect to any security 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. If Debtor has granted to Bank a security interest in
securities, 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.
CONTRACTS, CHATTEL PAPER, ACCOUNTS, GENERAL INTANGIBLES. Debtor warrants that
Collateral consisting of contract rights, chattel paper, accounts, or general
intangibles is (i) genuine and enforceable in accordance with its terms except
as limited by law; (ii) not subject to any defense, set-off, claim or
counterclaim of a material nature against Debtor; and (iii) not subject to any
other circumstances that would impair the validity, enforceability, value, or
amount of such Collateral. Debtor shall not amend, modify or supplement any
lease, contract or agreement contained in Collateral or waive any provision
therein, without prior written consent of Bank except such amendments, waivers,
modifications, or supplements as are
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not material or are entered into in the ordinary course of business. Bank's
consent shall not be unreasonably withheld.
ACCOUNT INFORMATION. Debtor shall provide Bank with such account information as
is required by the applicable provisions on the Loan Agreement between Debtor
and Bank dated October 6, 2000, as may be amended from time to time.
ACCOUNT AND CONTRACT DEBTORS. After a Default occurs and only during the
continuation of such Default, Bank shall have the right to notify the account
and contract debtors obligated on any or all of the Collateral to make payment
thereof directly to Bank and Bank may take control of all proceeds of any such
Collateral, which rights Bank may exercise at any time. The cost of such
collection and enforcement, including reasonable attorneys' fees and expenses,
shall be borne solely by Debtor whether the same is incurred by Bank or Debtor.
After a Default occurs and only during the continuation of such Default, upon
demand of Bank, Debtor will, upon receipt of all checks, drafts, cash and other
remittances in payment on Collateral, deposit the same in a special bank account
maintained with Bank, over which Bank also has the power of withdrawal.
If a Default occurs and only during the continuation of such Default, no
discount, credit, or allowance shall be granted by Debtor to any account or
contract debtor and no return of merchandise shall be accepted by Debtor without
Bank's consent. Bank may, after Default and only during the continuation of such
Default, settle or adjust disputes and claims directly with account contract
debtors for amounts and upon terms that Bank considers advisable, and in such
cases, Bank will credit the Obligations with the net amounts received by Bank,
after deducting all of the expenses incurred by Bank. Debtor agrees to indemnify
and defend Bank and hold it harmless with respect to any claim or proceeding
arising out of any matter related to collection of Collateral.
GOVERNMENT CONTRACTS. If any Collateral covered hereby arises from obligations
due to Debtor from any governmental unit or organization, Debtor shall
immediately notify Bank in writing and execute all documents and take all
actions demanded by Bank to ensure recognition by such governmental unit or
organization of the rights of Bank in the Collateral.
INVENTORY. So long as no Default has occurred, Debtor shall have the right in
the regular course of business, to process and sell Debtor's inventory. Upon
demand of Bank in the event of Default and only during the continuation of such
Default, Debtor will, upon receipt of all checks, drafts, cash and other
remittances, in payment of Collateral sold, deposit the same in a special bank
account maintained with Bank, over which Bank also has the power of withdrawal.
Debtor shall comply with all federal, state, and local laws, regulations,
rulings, and orders applicable to Debtor or its assets or business, in all
respects. Without limiting the generality of the previous sentence, Debtor shall
comply with all requirements of the federal Fair Labor Standards Act in the
conduct of its business and the production of inventory. Debtor shall notify
Bank immediately of any violation by Debtor of the Fair Labor Standards Act, and
a failure of Debtor to so notify Bank shall constitute a continuing
representation that all inventory then existing has been produced in compliance
with the Fair Labor Standards Act.
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INSTRUMENTS, CHATTEL PAPER. Any Collateral that is instruments, chattel paper
and negotiable documents will be properly assigned to, deposited with and held
by Bank, unless Bank shall hereafter otherwise direct or consent in writing.
Bank may, without notice, before or after maturity of the Obligations, exercise
any or all rights of collection, conversion, or exchange and other similar
rights, privileges and options pertaining to Collateral, but shall have no duty
to do so.
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
gross negligence or willful misconduct), (ii) its failure to present any paper
for payment or protest, to protest or give notice of nonpayment, or any other
notice with respect to any paper or Collateral, or (iii) its failure to present
or surrender for redemption, conversion or exchange any bond, stock, paper or
other security whether in connection with any merger, consolidation,
recapitalization, or reorganization, arising out of the refunding of the
original security, or for any other reason, or its failure to notify any party
hereto that Collateral should be so presented or surrendered.
TRANSFER OF COLLATERAL. The Bank may assign its rights in the Collateral or any
part thereof to any assignee who shall thereupon become vested with all the
powers and rights herein given to the Bank with respect to the property so
transferred and delivered, and the 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 the Bank shall
retain all rights and powers hereby given. Bank agrees to notify Borrower
promptly following any such assignment.
SUBSTITUTE COLLATERAL. With prior written consent of Bank, other Collateral may
be substituted for the original Collateral herein in which event all rights,
duties, obligations, remedies and security interests provided for, created or
granted shall apply fully to such substitute Collateral.
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, 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.
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 without the commencement of a suit, in any trial, arbitration, or
administrative proceeding, or in any appellate or bankruptcy proceeding.
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DEFAULT. If any of the following occurs, a default ("Default") under this
Security Agreement shall exist: (i) The failure of timely payment or performance
of any of the Obligations or a default under any Loan Document; (ii) Any breach
of any representation or agreement contained or referred to in this Security
Agreement or other Loan Document which remains uncured for more than 30 days
after receipt of written notice thereof; (iii) 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;
any sale (except the sale of inventory in the ordinary course of business),
lease, or encumbrance of any of Collateral without prior written consent of
Bank; or the making of any levy, seizure, or attachment on or of Collateral
which is not removed within 20 days; or (iv) The dissolution of, termination of
existence of, loss of good standing status by (which remains uncured for more
than 60 days), or appointment of a receiver for, assignment for the benefit of
creditors of, or commencement of any bankruptcy or insolvency proceeding by or
against Debtor, its Subsidiaries or Affiliates which is not dismissed or stayed
within 60 days ("Affiliate" shall have the meaning as defined in 11 U.S.C. ss.
101; and "Subsidiary" shall mean any corporation of which more than 50% of the
issued and outstanding voting stock is owned directly or indirectly by Debtor),
if any, or any general partner of or the holder(s) of the majority ownership
interests in Debtor or any party to the Loan Documents.
REMEDIES ON DEFAULT (INCLUDING POWER OF SALE). If a Default occurs, all of the
Obligations shall be immediately due and payable, without notice, and, during
the continuance of a Default, Bank shall have all the rights and remedies of a
secured party under the Uniform Commercial Code. Without limitation thereto,
Bank shall have the 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
the 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 demand, checking, time, savings,
certificate of deposit or other 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. 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 the 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.
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
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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. Except for waivers provided by the
Bank, no waiver, amendment or modification of any provision of this Security
Agreement shall be valid unless in writing and signed by an officer of both
parties. 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. Neither the failure of, nor
any delay by, Bank in exercising any right, power or privilege granted pursuant
to this Security Agreement shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or further exercise of any other
right, power or privilege.(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. Bank agrees to
notify Borrower promptly following any such assignment. 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 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 State of North
Carolina without regard to that state's conflict of laws principles. 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 State of North Carolina. (v) Severability. If any provisio
of this Security 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 personally or via overnight courier to the address of Debtor shown
above or such other address as provided hereunder; and to Bank, if in writing
and mailed or delivered personally or via overnight courier 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 the 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) Loan Documents. The term "Loan Documents" refers to all documents,
whether now or hereafter existing, executed in connection with the Obligations
and may include, without limitation and whether executed by Borrower, Debtor or
others, commitment letters, loan agreements, guaranty agreements, other security
agreements, letters of credit, instruments, financing statements, mortgages,
deeds of trust, deeds to secure debt, and any amendments or supplements
(excluding swap agreements as defined in 11 U.S.C. (S)101). (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.
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IN WITNESS WHEREOF, Debtor, on the day and year first written above, has caused
this Security Agreement to be executed.
LipoMed, Inc.
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx X. Xxxxxx, President
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SCHEDULE A
TO SECURITY AGREEMENT / LOAN AGREEMENT
Existing Liens, Encumbrances:
1. Certain equipment used in connection with the Debtor's business and located
(or to be located) at the Debtor's facility will be subject to a security
agreement and lien in favor of Oxford Venture Finance, LLC ("Oxford") and GE
Capital Corporation pursuant to the terms of a Master Loan and Security
Agreement dated September 27, 2000 between Debtor and Oxford (the "Master Loan
Agreement"). The equipment financed under the Master Loan Agreement will be
owned by Debtor and subject to a first priority lien in favor of Oxford. Debtor
is currently finalizing its initial advance under the Master Loan Agreement; it
is anticipated that up to $2,000,000 of equipment will be financed under this
facility. UCC financings statements will be filed in connection with each
equipment loan advance.
2. Pursuant to the terms of a Financial Assistance Agreement dated December 1,
1998 between Debtor and the North Carolina Biotechnology Center ("NCBC") and a
Promissory Note in favor of NCBC in the principal amount of $99,298, NCBC is
entitled to secure the obligations owed to it through a first lien (and the
filing of appropriate UCC financing statements) on real or personal property
purchased with funds received by Debtor from NCBC.
3. Debtor has pledged Certificate of Deposit Accounts maintained at Centura Bank
in the aggregate amount of $135,000 as collateral to secure Debtor's obligations
under [Equipment] Lease Agreements dated April 8, 1998, July 16, 1998 and March
29, 1999, respectively, between Debtor and Centura Bank. Centura Bank has filed
UCC financing statements on the equipment leased under these agreements.
4. Debtor has entered into several equipment lease agreements for office and
related equipment used in its business, pursuant to which the Lessors have filed
UCC financing statements covering the leased equipment.
5. Debtor has issued Convertible Promissory Notes dated June 30, 1997, August
20, 1997 and September 26, 1997, respectively, in the aggregate principal amount
of $300,000.00 to each of Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx,
Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxx (the "Lenders"),
which are secured pursuant to a Security Agreement, dated as of June 30, 1997,
as amended, executed by Debtor. The collateral securing the loans includes
certain equipment, inventory, patent rights, copyrights, licensing rights and
accounts of Debtor. The Lenders have filed UCC financing statements covering
such collateral. Each of the Lenders has agreed to subordinate his rights under
the Note and the Security Agreement to the rights of First Union pursuant to a
Subordination Agreement dated as of October 6, 2000 by and among the Debtor,
First Union National Bank and the Lenders.
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FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT (the "First Amendment") is
entered into as of the 19 day of December, 2001 by and between LIPOMED, INC., a
North Carolina corporation ("Debtor") and FIRST UNION NATIONAL BANK, N. A., a
national banking association ("Bank").
W I T N E S S E T H
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WHEREAS, Debtor and Bank entered into a Security Agreement dated as of
October 6, 2000, (the "Security Agreement"); and
WHEREAS, the parties now desire to amend the Security Agreement
effective as of the date hereof;
NOW THERFORE, in consideration of mutual promises between the parties
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree to the following amendments to
the Security Agreement:
1. References to the "Loan Documents" in the Security Agreement are hereby
modified to include that Promissory Note from Borrower to Bank in the
principal amount of $2,000,000.00 dated October 6, 2001, as modified by
the Renewal Agreement dated July 17, 2001 (the "Renewal Agreement") and
Modification and Estoppel Agreement dated of even date herewith (the
"Note") and that Loan Agreement between Debtor and Bank dated October
6, 2000, as modified by the Renewal Agreement and amended by First
Amendment to Loan Agreement dated of even date herewith, and as they
may be modified, extended or renewed from time to time.
2. The Security Agreement is modified to provide that the security
interest granted therein shall secure all obligations of Borrower under
the Note and Loan Agreement, as amended, and the other Loan Documents,
as amended, as well as all obligations of Borrower in connection with
any letters of credit issued by Bank for the account of Borrower under
the terms of the Loan Agreement, as amended.
3. Except as modified by this First Amendment, all terms and conditions of
the Security Agreement remain in full force and effect. The Security
Agreement as modified by this First Amendment, and all documents
executed in connection therewith are ratified and confirmed by the
parties, with those of said documents executed therewith applying to
the Security Agreement now applying with full force and effect to the
Security Agreement, as modified by this First Amendment.
4. This First Amendment may be executed in multiple counterparts which,
taken together, shall be deemed one original.
IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed by their duly authorized officers as of the date first above written.
BORROWER:
LIPOMED, INC.
By: /s/ F. Xxxxxx Xxxxxxx
------------------------------------------
Print Name: F. Xxxxxx Xxxxxxx
----------------------------------
Title: President and CEO
---------------------------------------
(AFFIX CORPORATE SEAL)
BANK:
FIRST UNION NATIONAL BANK, N.A.
By: /s/ C. Xxxxxxxx Xxxxxx
------------------------------------------
Print Name: C. Xxxxxxxx Xxxxxx
----------------------------------
Title: Senior Vice President
---------------------------------------
2
