SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of July
12, 1999, is made by Quidel Corporation, a Delaware corporation (the
"Borrower"), and those Significant Subsidiaries of the Borrower that are
parties hereto, as indicated on the signature pages hereof, and/or that
become parties hereto in the manner provided in SECTION 22 hereof, jointly
and severally, as Grantors, in favor of Bank of America National Trust and
Savings Association (the "Bank"), with reference to the following facts:
RECITALS
A. Pursuant to the Business Loan Agreement of even date
herewith by and between the Borrower and the Bank (the "Loan Agreement"), the
Bank has agreed to provide the Borrower with certain revolving and term
credit facilities.
B. The Loan Agreement provides, as a condition of the
availability of such credit facilities, that Grantors shall enter into this
Agreement and shall grant security interests to the Bank as herein provided.
C. Each Grantor expects to realize direct and indirect
benefits as a result of the availability of the aforementioned credit
facilities.
AGREEMENT
NOW, THEREFORE, in order to induce the Bank to extend the
aforementioned credit facilities to the Borrower, and for other good and
valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Grantors hereby jointly and severally represent, warrant,
covenant, agree, assign and grant as follows:
1. DEFINITIONS. This Agreement is the Security Agreement
referred to in the Loan Agreement. Terms defined in the Loan Agreement and
not otherwise defined in this Agreement shall have the meanings defined for
those terms in the Loan Agreement. Terms defined in the California Uniform
Commercial Code and not otherwise defined in this Agreement or in the Loan
Agreement shall have the meanings defined for those terms in the California
Uniform Commercial Code. As used in this Agreement, the following terms shall
have the meanings respectively set forth after each:
"AGREEMENT" means this Security Agreement, and any extensions,
modifications, renewals, restatements, supplements or amendments hereof,
INCLUDING, without limitation, any documents or agreements by which
additional Grantors become party hereto.
"COLLATERAL" means and includes all present and future right,
title and interest of Grantors, or any one or more of them, in or to any
personal property or assets whatsoever, wherever located, and all rights and
powers of Grantors, or any one or more of them, to transfer any interest in
or to any personal property or assets whatsoever, INCLUDING, without
limitation, any and all of the following personal property:
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(a) All present and future accounts, accounts
receivable, agreements, contracts, leases, contract rights, rights to
payment, instruments, documents, chattel paper, security agreements,
guaranties, letters of credit, undertakings, surety bonds, insurance
policies (whether or not required by the terms of the Loan Agreement),
notes and drafts, and all forms of obligations owing to any Grantor or in
which any Grantor may have any interest, however created or arising and
whether or not earned by performance;
(b) All present and future general intangibles, all tax
refunds of every kind and nature to which any Grantor now or hereafter
may become entitled, however arising, all other refunds, and all
deposits, reserves, loans, royalties, cost savings, deferred payments,
goodwill, choses in action, liquidated damages, rights to
indemnification, trade secrets, computer programs, software, customer
lists, trademarks, trade names, patents, licenses, copyrights,
technology, processes, proprietary information and insurance proceeds of
which any Grantor is a beneficiary;
(c) All present and future deposit accounts of any
Grantor, INCLUDING, without limitation, any demand, time, savings,
passbook or like account maintained by any Grantor with any bank, savings
and loan association, credit union or like organization, and all money,
Cash and Cash Equivalents of any Grantor, whether or not deposited in any
such deposit account, and INCLUDING, specifically, any and all deposit
accounts maintained by Metra Biosystems, Inc. with the Bank as collateral
security for the Secured Obligations;
(d) All present and future books and records, INCLUDING,
without limitation, books of account and ledgers of every kind and
nature, all electronically recorded data relating to any Grantor or the
business thereof, all receptacles and containers for such records, and
all files and correspondence;
(e) All present and future goods, INCLUDING, without
limitation, all consumer goods, farm products, inventory, equipment,
machinery, tools, molds, dies, furniture, furnishings, fixtures, trade
fixtures, motor vehicles, and all other goods used in connection with or
in the conduct of any Grantor's business;
(f) All present and future inventory and merchandise,
INCLUDING, without limitation, all present and future goods held for sale
or lease or to be furnished under a contract of service, all raw
materials, work in process and finished goods, all packing materials,
supplies and containers relating to or used in connection with any of the
foregoing, and all bills of lading, warehouse receipts or documents of
title relating to any of the foregoing;
(g) All present and future stocks, bonds, debentures,
securities, subscription rights, options, warrants, puts, calls,
certificates, partnership interests, joint venture interests, Investments
and/or brokerage accounts and all rights, preferences, privileges,
dividends, distributions, redemption payments, or liquidation payments
with respect thereto;
(h) All present and future accessions, appurtenances,
components, repairs, repair parts, spare parts, replacements,
substitutions, additions, issue and/or improvements to or of or with
respect to any of the foregoing;
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(i) All other tangible and intangible personal property
of any Grantor;
(j) All rights, remedies, powers and/or privileges of
any Grantor with respect to any of the foregoing; and
(k) Any and all proceeds and products of any of the
foregoing, INCLUDING, without limitation, all money, accounts, general
intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds, and any other tangible or intangible personal
property received upon the sale or disposition of any of the foregoing.
Notwithstanding anything herein to the contrary, the Collateral shall not
include (i) any stock of Metra Biosystems, Inc. unless and until the same is
delivered to the Bank; (ii) any agreement with a third party existing on the
date hereof that prohibits the grant of a lien or security interest on such
agreement or any of any Grantor's rights thereunder without the consent of
such party or under which a consent to such grant is otherwise required,
which consent has not been obtained, except to the extent rights under any
such agreement are covered by Section 9-318 of the Uniform Commercial Code;
or (iii) any license, permit or other governmental approval that, under the
terms and conditions of such governmental approval or under applicable law,
cannot be subjected to a lien or security interest in favor of the Bank
without the consent of the relevant governmental authority which consent has
not been obtained; PROVIDED, HOWEVER, that the Collateral shall include (A)
the proceeds of the above to the extent such proceeds are otherwise included
in the Collateral, and (B) all items excluded pursuant to clause (ii) and
(iii) from and after the date on which the requisite consent is obtained.
"SECURED OBLIGATIONS" means any and all present and future
obligations of any type or nature of the Borrower to the Bank arising under
or relating to the Loan Agreement, whether due or to become due, matured or
unmatured, liquidated or unliquidated, or contingent or noncontingent,
INCLUDING obligations of performance as well as obligations of payment, and
INCLUDING interest that accrues after the commencement of any bankruptcy or
insolvency proceeding by or against the Borrower.
2. FURTHER ASSURANCES. At any time and from time to time at
the request of the Bank, each Grantor shall execute and deliver to the Bank
all such financing statements and other instruments and documents in form and
substance satisfactory to the Bank as shall reasonably be necessary or
desirable to fully perfect, when filed and/or recorded, the Bank's security
interests granted pursuant to SECTION 3 of this Agreement. At any time and
from time to time, the Bank shall be entitled to file and/or record any or
all such financing statements, instruments and documents held by it, and any
or all such further financing statements, documents and instruments, and to
take all such other actions, as the Bank may reasonably deem appropriate to
perfect and to maintain perfected the security interests granted in SECTION 3
of this Agreement. Before and after the occurrence of any Event of Default,
at the Bank's request, each Grantor shall execute all such further financing
statements, instruments and documents, and shall do all such further acts and
things, as reasonably may be deemed necessary or desirable by the Bank to
create and perfect, and to continue and preserve, an indefeasible security
interest in the Collateral in favor of the Bank, or the priority thereof.
With respect to any Collateral consisting of certificated securities,
instruments, documents, certificates of title or the like, as to which the
Bank's security interest need be perfected by, or the priority thereof need
be assured by, possession of such Collateral, Grantors will upon demand of
the Bank deliver possession of same in pledge
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to the Bank. With respect to any Collateral consisting of securities,
instruments, partnership or joint venture interests or the like, Grantors
hereby consent and agree that the issuers of, or obligors on, any such
Collateral, or any registrar or transfer agent or trustee for any such
Collateral, shall be entitled to accept the provisions of this Agreement as
conclusive evidence of the right of the Bank to effect any transfer or
exercise any right hereunder or with respect to any such Collateral,
notwithstanding any other notice or direction to the contrary heretofore or
hereafter given by any Grantor or any other person to such issuers or such
obligors or to any such registrar or transfer agent or trustee.
3. SECURITY AGREEMENT. For valuable consideration, Grantors
and each of them hereby assign and pledge to the Bank, and grant to the Bank
a security interest in, all presently existing and hereafter acquired
Collateral, as security for the timely payment and performance of the Secured
Obligations, and each of them. This Agreement is a continuing and irrevocable
agreement and all the rights, powers, privileges and remedies hereunder shall
apply to any and all Secured Obligations, including those arising under
successive transactions which shall either continue the Secured Obligations,
increase or decrease them, or from time to time create new Secured
Obligations after all or any prior Secured Obligations have been satisfied,
and notwithstanding the bankruptcy of any Grantor or any other person or any
other event or proceeding affecting any person.
4. GRANTORS' REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
EXCEPT as otherwise disclosed to the Bank in writing concurrently herewith,
Grantors represent, warrant and agree that: (a) each Grantor will pay, prior
to delinquency, all taxes, charges, liens and assessments against the portion
of the Collateral owned by it, EXCEPT Permitted Encumbrances and such other
liens as are timely contested in good faith, and upon its failure to pay or
so contest such taxes, charges, liens and assessments, the Bank at its option
may pay any of them, and the Bank shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same; (b) the
Collateral will not be used for any unlawful purpose or in violation of any
law, regulation or ordinance, nor used in any way that will void or impair
any insurance required to be carried in connection therewith; (c) each
Grantor will, to the extent consistent with good business practice, keep the
portion of the Collateral owned by it in reasonably good repair, working
order and condition, and from time to time make all needful and proper
repairs, renewals, replacements, additions and improvements thereto and, as
appropriate and applicable, will otherwise deal with such portion of the
Collateral in all such ways as are considered good practice by owners of like
Property; (d) each Grantor will take all reasonable steps to preserve and
protect the Collateral; (e) each Grantor will maintain, with responsible
insurance companies, insurance covering the Collateral against such insurable
losses as is required by the Loan Agreement and as is consistent with sound
business practice, and will cause the Bank to be designated as an additional
insured and loss payee with respect to all insurance (whether or not required
by the Loan Agreement), will obtain the written agreement of the insurers
that such insurance shall not be cancelled, terminated or materially modified
to the detriment of the Bank without at least 30 days prior written notice to
the Bank, and will furnish copies of such insurance policies or certificates
to the Bank promptly upon request therefor; (f) Grantors will promptly notify
the Bank in writing in the event of damage to any material portion of the
Collateral from any source whatsoever, and, EXCEPT for the disposition of
collections and other proceeds of the Collateral permitted by SECTION 6
hereof, Grantors will not remove or permit to be removed any part of the
Collateral from their places of business without the prior written consent of
the Bank, EXCEPT for such items of the Collateral as are removed in the
ordinary course of business or in connection with any transaction or
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disposition otherwise permitted by the Loan Agreement; and (g) in the event
any Grantor changes its name or its address as either are set forth herein or
in the Loan Agreement, such Grantor will notify the Bank of such name and/or
address change promptly, but in any event, within five (5) banking days. If
any Collateral, or any interest therein, is disposed of in violation of these
provisions, the security interest shall continue in such Collateral or
interest notwithstanding such disposition. The Bank shall execute and deliver
any releases or other documents reasonably requested by the relevant Grantor
to accomplish or confirm the release of Collateral provided by this Section.
5. THE BANK'S RIGHTS RE COLLATERAL. At any time (whether or
not an Event of Default has occurred), without notice or demand and at the
expense of each Grantor with regard to the portion of the Collateral owned by
it, the Bank may, to the extent it may be necessary or desirable to protect
the security hereunder, but the Bank shall not be obligated to: (a) at all
reasonable times on reasonable notice, enter upon any premises on which
Collateral is situated and examine the same or (b) perform any obligation of
any Grantor under this Agreement or any obligation of the Borrower under the
Loan Agreement if such Grantor or Borrower has breached such obligation and
all cure periods, if any, have expired. At any time and from time to time, at
the expense of each Grantor with regard to the portion of the Collateral
owned by it, the Bank may, to the extent it may be necessary or desirable to
protect the security hereunder, but the Bank shall not be obligated to,
request from obligors on the Collateral, in the name of any Grantor or in the
name of the independent auditors (or in the name of the Bank if the Bank
shall then have the right directly to notify obligors on the Collateral as
provided in SECTION 9), information concerning the Collateral and the amounts
owing thereon. Each Grantor shall maintain books and records pertaining to
the Collateral in such detail, form and scope as the Bank shall reasonably
require consistent with the Bank's interests hereunder. Each Grantor shall at
any time at the Bank's request xxxx the Collateral and/or such Grantor's
ledger cards, books of account and other records relating to the Collateral
with appropriate notations satisfactory to the Bank disclosing that they are
subject to the Bank's security interests. The Bank shall at all reasonable
times on reasonable notice have full access to and the right to audit any and
all of Grantors' books and records pertaining to the Collateral, and to
confirm and verify the value of the Collateral and to do whatever else the
Bank reasonably may deem necessary or desirable to protect its interests;
PROVIDED, HOWEVER, that any such action which involves communicating with
customers of Grantors shall be carried out by the Bank through Grantors'
independent auditors unless the Bank shall then have the right directly to
notify obligors on the Collateral as provided in SECTION 9. The Bank shall be
under no duty or obligation whatsoever to take any action to preserve any
rights of or against any prior or other parties in connection with the
Collateral, to exercise any voting rights or managerial rights with respect
to any Collateral, whether or not an Event of Default shall have occurred, or
to make or give any presentments, demands for performance, notices of
non-performance, protests, notices of protests, notices of dishonor or
notices of any other nature whatsoever in connection with the Collateral or
the Secured Obligations. Subject to SECTION 7 hereof, the Bank shall be under
no duty or obligation whatsoever to take any action to protect or preserve
the Collateral or any rights of any Grantor therein, or to make collections
or enforce payment thereon, or to participate in any foreclosure or other
proceeding in connection therewith.
6. COLLECTIONS ON THE COLLATERAL. EXCEPT as otherwise
provided in the Loan Agreement, Grantors shall have the right to use and to
continue to make collections on and receive dividends and other proceeds of
all of the Collateral in the ordinary course of business so long as no
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Event of Default shall have occurred and be continuing and the Bank has not
exercised its option set forth below. Upon the occurrence and during the
continuance of an Event of Default, at the option of the Bank, Grantors'
right to make collections on and receive dividends and other proceeds of the
Collateral and to use or dispose of such collections and proceeds shall
terminate, and any and all dividends, proceeds and collections, including all
partial or total prepayments, then held or thereafter received on or on
account of the Collateral will be held or received by Grantors in trust for
the Bank and immediately delivered in kind to the Bank. Any remittance
received by any Grantor from any person shall be presumed to relate to the
Collateral and to be subject to the Bank's security interests. Upon the
occurrence and during the continuance of an Event of Default, the Bank shall
have the sole right at all times to receive, receipt for, endorse, assign,
deposit and deliver, in the name of the Bank or in the name of the
appropriate Grantor, any and all checks, notes, drafts and other instruments
for the payment of money constituting proceeds of or otherwise relating to
the Collateral; and each Grantor hereby authorizes the Bank to affix, by
facsimile signature or otherwise, the general or special endorsement of it,
in such manner as the Bank shall deem advisable, to any such instrument in
the event the same has been delivered to or obtained by the Bank without
appropriate endorsement, and the Bank and any collecting bank are hereby
authorized to consider such endorsement to be a sufficient, valid and
effective endorsement by the appropriate Grantor, to the same extent as
though it were manually executed by the duly authorized officer of the
appropriate Grantor, regardless of by whom or under what circumstances or by
what authority such facsimile signature or other endorsement actually is
affixed, without duty of inquiry or responsibility as to such matters, and
each Grantor hereby expressly waives demand, presentment, protest and notice
of protest or dishonor and all other notices of every kind and nature with
respect to any such instrument.
7. POSSESSION OF COLLATERAL BY THE BANK. All the Collateral
now, heretofore or hereafter delivered to the Bank shall be held by the Bank
in its possession, custody and control. Any or all of the Collateral
delivered to the Bank may be held in an interest-bearing or
non-interest-bearing account, in the Bank's sole and absolute discretion, and
the Bank may, in its discretion, apply any such interest to payment of the
Secured Obligations. Nothing herein shall obligate the Bank to invest any
Collateral or obtain any particular return thereon. Upon the occurrence and
during the continuance of an Event of Default, whenever any of the Collateral
is in the Bank's possession, custody or control, the Bank may use, operate
and consume the Collateral, whether for the purpose of preserving and/or
protecting the Collateral, or for the purpose of performing any of Grantors'
obligations with respect thereto, or otherwise, subject to compliance with
the requirements of applicable laws. The Bank may at any time deliver or
redeliver the Collateral or any part thereof to Grantors, and the receipt of
any of the same by any Grantor shall be complete and full acquittance for the
Collateral so delivered, and the Bank thereafter shall be discharged from any
liability or responsibility therefor. So long as the Bank exercises
reasonable care with respect to any Collateral in its possession, custody or
control, the Bank shall have no liability for any loss of or damage to such
Collateral, and in no event shall the Bank have liability for any diminution
in value of Collateral occasioned by economic or market conditions or events.
The Bank shall be deemed to have exercised reasonable care within the meaning
of the preceding sentence if the Collateral in the possession, custody or
control of the Bank is accorded treatment substantially equal to that which
the Bank accords its own property, it being understood that the Bank shall
not have any responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Collateral, whether or not the Bank has or is deemed
to
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have knowledge of such matters, or (b) taking any necessary steps to preserve
rights against any person with respect to any Collateral.
8. EVENTS OF DEFAULT. There shall be an Event of Default
hereunder upon the occurrence and during the continuance of an event of
default under the Loan Agreement.
9. RIGHTS UPON EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, subject to compliance with the
requirements of applicable laws, the Bank shall have, in any jurisdiction
where enforcement hereof is sought, in addition to all other rights and
remedies that the Bank may have under applicable law or in equity or under
this Agreement (INCLUDING, without limitation, all rights set forth in
SECTION 6 hereof) or under the Loan Agreement, all rights and remedies of the
Bank under the Uniform Commercial Code as enacted in any jurisdiction, and,
in addition, the following rights and remedies, all of which may be exercised
with or without notice to Grantors and without affecting the obligations of
Grantors hereunder or under the Loan Agreement, or the enforceability of the
liens and security interests created hereby: (a) to foreclose the liens and
security interests created hereunder or under any other agreement relating to
any Collateral by any available judicial procedure or without judicial
process; (b) to enter any premises where any Collateral may be located for
the purpose of securing, protecting, inventorying, appraising, inspecting,
repairing, preserving, storing, preparing, processing, taking possession of
or removing the same; (c) to sell, assign, lease or otherwise dispose of any
Collateral or any part thereof, either at public or private sale or at any
broker's board, in lot or in bulk, for cash, on credit or otherwise, with or
without representations or warranties and upon such terms as shall be
acceptable to the Bank; (d) to notify obligors on the Collateral that the
Collateral has been assigned to the Bank and that all payments thereon are to
be made directly and exclusively to the Bank; (e) to collect by legal
proceedings or otherwise all dividends, distributions, interest, principal or
other sums now or hereafter payable upon or on account of the Collateral; (f)
to cause the Collateral to be registered in the name of the Bank, as legal
owner; (g) to enter into any extension, reorganization, deposit, merger or
consolidation agreement, or any other agreement relating to or affecting the
Collateral, and in connection therewith the Bank may deposit or surrender
control of the Collateral and/or accept other property in exchange for the
Collateral; (h) to settle, compromise or release, on terms acceptable to the
Bank, in whole or in part, any amounts owing on the Collateral and/or any
disputes with respect thereto; (i) to extend the time of payment, make
allowances and adjustments and issue credits in connection with the
Collateral in the name of the Bank or in the name of any Grantor; (j) to
enforce payment and prosecute any action or proceeding with respect to any or
all of the Collateral and take or bring, in the name of the Bank or in the
name of any Grantor, any and all steps, actions, suits or proceedings deemed
by the Bank necessary or desirable to effect collection of or to realize upon
the Collateral, INCLUDING any judicial or nonjudicial foreclosure thereof or
thereon, and each Grantor specifically consents to any nonjudicial
foreclosure of any or all of the Collateral or any other action taken by the
Bank which may release any obligor from personal liability on any of the
Collateral, and each Grantor waives any right not expressly provided for in
this Agreement to receive notice of any public or private judicial or
nonjudicial sale or foreclosure of any security or any of the Collateral; and
any money or other property received by the Bank in exchange for or on
account of the Collateral, whether representing collections or proceeds of
Collateral, and whether resulting from voluntary payments or foreclosure
proceedings or other legal action taken by the Bank or Grantors may be
applied by the Bank without notice to Grantors to the Secured Obligations in
such order and manner as the Bank in its sole
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discretion shall determine; (k) to insure, process and preserve the
Collateral; (l) to exercise all rights, remedies, powers or privileges
provided under any of the Loan Documents; (m) to remove, from any premises
where the same may be located, the Collateral and any and all documents,
instruments, files and records, and any receptacles and cabinets containing
the same, relating to the Collateral, and the Bank may, at the cost and
expense of each Grantor, use such of its supplies, equipment, facilities and
space at its places of business as may be necessary or appropriate to
properly administer, process, store, control, prepare for sale or disposition
and/or sell or dispose of the portion of the Collateral owned by such Grantor
or to properly administer and control the handling of collections and
realizations thereon, and the Bank shall be deemed to have a rent-free
tenancy of any premises of any Grantor for such purposes and for such periods
of time as reasonably required by the Bank; (n) to receive, open and dispose
of all mail addressed to any Grantor and notify postal authorities to change
the address for delivery thereof to such address as the Bank may designate;
PROVIDED that the Bank agrees that it will promptly deliver over to the
appropriate Grantor such opened mail as does not relate to the Collateral;
and (o) to exercise all other rights, powers, privileges and remedies of an
owner of the Collateral; all at the Bank's sole option and as the Bank in its
sole discretion may deem advisable. Grantors will, at the Bank's request,
assemble the Collateral and make it available to the Bank at places which the
Bank may reasonably designate, whether at the premises of Grantors or
elsewhere, and will make available to the Bank, free of cost, all premises,
equipment and facilities of Grantors for the purpose of the Bank's taking
possession of the Collateral or storing same or removing or putting the
Collateral in salable form or selling or disposing of same.
Upon the occurrence and during the continuance of an Event of
Default, the Bank also shall have the right, without notice or demand, either
in person, by agent or by a receiver to be appointed by a court (and Grantors
hereby expressly consent upon the occurrence and during the continuance of an
Event of Default to the appointment of such a receiver), and without regard
to the adequacy of any security for the Secured Obligations, to take
possession of the Collateral or any part thereof and to collect and receive
the rents, issues, profits, income and proceeds thereof. Taking possession of
the Collateral shall not cure or waive any Event of Default or notice thereof
or invalidate any act done pursuant to such notice. The rights, remedies and
powers of any receiver appointed by a court shall be as ordered by said court.
Any public or private sale or other disposition of the
Collateral may be held at any office of the Bank, or at Grantors' places of
business, or at any other place permitted by applicable law, and without the
necessity of the Collateral's being within the view of prospective
purchasers. The Bank may direct the order and manner of sale of the
Collateral, or portions thereof, as it in its sole and absolute discretion
may determine, and Grantors expressly waive any right to direct the order and
manner of sale of any Collateral. The Bank or any person on the Bank's behalf
may bid and purchase at any such sale or other disposition. The net cash
proceeds resulting from the collection, liquidation, sale, lease or other
disposition of the Collateral shall be applied, first, to the expenses
(including reasonable attorneys' fees and disbursements) of retaking,
holding, storing, processing and preparing for sale or lease, selling,
leasing, collecting, liquidating and the like, and then to the satisfaction
of the Secured Obligations in such order as shall be determined by the Bank
in its sole and absolute discretion. Grantors and any other person then
obligated therefor shall pay to the Bank on demand any deficiency with regard
thereto which may remain after such sale, disposition, collection or
liquidation of the Collateral.
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Unless the Collateral is perishable or threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
the Bank will send or otherwise make available to the Borrower, as agent for
Grantors and each of them, reasonable notice of the time and place of any
public sale thereof or of the time on or after which any private sale thereof
is to be made. The requirement of sending reasonable notice conclusively
shall be met if such notice is mailed, first class mail, postage prepaid, to
the Borrower at its address set forth in the Loan Agreement, or delivered or
otherwise sent to the Borrower, at least five (5) days before the date of the
sale. Each Grantor other than the Borrower hereby irrevocably appoints the
Borrower as its agent for the purpose of receiving notice of sale hereunder,
and agrees that such Grantor conclusively shall be deemed to have received
notice of sale when notice of sale has been given to the Borrower. Each
Grantor expressly waives any right to receive notice of any public or private
sale of any Collateral or other security for the Secured Obligations EXCEPT
as expressly provided for in this paragraph.
With respect to any Collateral consisting of securities,
partnership interests, joint venture interests, Investments or the like, and
whether or not any of such Collateral has been effectively registered under
the Securities Act of 1933, as amended, or other applicable laws, the Bank
may, in its sole and absolute discretion, sell all or any part of such
Collateral at private sale in such manner and under such circumstances as the
Bank may deem necessary or advisable in order that the sale may be lawfully
conducted. Without limiting the foregoing, the Bank may (i) approach and
negotiate with a limited number of potential purchasers, and (ii) restrict
the prospective bidders or purchasers to persons who will represent and agree
that they are purchasing such Collateral for their own account for investment
and not with a view to the distribution or resale thereof. In the event that
any such Collateral is sold at private sale, Grantors agree that if such
Collateral is sold for a price which the Bank in good faith believes to be
reasonable under the circumstances then existing, then (a) the sale shall be
deemed to be commercially reasonable in all respects, (b) Grantors shall not
be entitled to a credit against the Secured Obligations in an amount in
excess of the purchase price, and (c) the Bank shall not incur any liability
or responsibility to Grantors in connection therewith, notwithstanding the
possibility that a substantially higher price might have been realized at a
public sale. Grantors recognize that a ready market may not exist for such
Collateral if it is not regularly traded on a recognized securities exchange,
and that a sale by the Bank of any such Collateral for an amount
substantially less than a pro rata share of the fair market value of the
issuer's assets minus liabilities may be commercially reasonable in view of
the difficulties that may be encountered in attempting to sell a large amount
of such Collateral or Collateral that is privately traded.
Upon consummation of any sale of Collateral hereunder, the Bank
shall have the right to assign, transfer and deliver to the purchaser or
purchasers thereof the Collateral so sold. Each such purchaser at any such
sale shall hold the Collateral so sold absolutely free from any claim or
right upon the part of any Grantor or any other person, and each Grantor
hereby waives (to the extent permitted by applicable laws) all rights of
redemption, stay and appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter
enacted. If the sale of all or any part of the Collateral is made on credit
or for future delivery, the Bank shall not be required to apply any portion
of the sale price to the Secured Obligations until such amount actually is
received by the Bank, and any Collateral so sold may be retained by the Bank
until the sale price is paid in full by the purchaser or purchasers thereof.
The Bank shall not incur any liability in case any such purchaser
-9-
or purchasers shall fail to pay for the Collateral so sold, and, in case of
any such failure, the Collateral may be sold again.
10. VOTING RIGHTS; DIVIDENDS; ETC. With respect to any
Collateral consisting of securities, partnership interests, joint venture
interests, investments or the like (referred to collectively and individually
in this SECTION 10 and in SECTION 11 as the "INVESTMENT COLLATERAL"), so long
as no Event of Default occurs and remains continuing:
10.1 VOTING RIGHTS. Grantors shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Investment Collateral, or any part thereof, for any purpose not inconsistent
with the terms of this Agreement or the Loan Agreement; PROVIDED, HOWEVER,
that Grantors shall not exercise, or shall refrain from exercising, any such
right if it would result in an Event of Default.
10.2 DIVIDEND AND DISTRIBUTION RIGHTS. EXCEPT as
otherwise provided in the Loan Agreement, Grantors shall be entitled to
receive and to retain and use any and all dividends or distributions paid in
respect of the Investment Collateral; PROVIDED, HOWEVER, that, subject to
compliance with the requirements of applicable laws, any and all such
dividends or distributions received in the form of capital stock,
certificated securities, warrants, options or rights to acquire capital stock
or certificated securities forthwith shall be, and the certificates
representing such capital stock or certificated securities, if any, forthwith
shall be delivered to the Bank to hold as pledged Collateral and shall, if
received by any Grantor, be received in trust for the benefit of the Bank, be
segregated from the other property of such Grantor, and forthwith be
delivered to the Bank as pledged Collateral in the same form as so received
(with any necessary endorsements).
11. RIGHTS DURING EVENT OF DEFAULT. With respect to any
Investment Collateral, so long as an Event of Default has occurred and is
continuing:
11.1 VOTING, DIVIDEND, AND DISTRIBUTION RIGHTS. At the
option of the Bank, subject to compliance with the requirements of applicable
laws, all rights of Grantors to exercise the voting and other consensual
rights which they would otherwise be entitled to exercise pursuant to SECTION
10.1 above, and to receive the dividends and distributions which they would
otherwise be authorized to receive and retain pursuant to SECTION 10.2 above,
shall cease, and all such rights thereupon shall become vested solely in the
Bank which thereupon shall have the sole right to exercise such voting and
other consensual rights and to receive and to hold as pledged Collateral such
dividends and distributions.
11.2 DIVIDENDS AND DISTRIBUTIONS HELD IN TRUST. All
dividends and other distributions which are received by Grantors contrary to
the provisions of this Agreement shall be received in trust for the benefit
of the Bank, shall be segregated from other funds of Grantors, and forthwith
shall be paid over to the Bank as pledged Collateral in the same form as so
received (with any necessary endorsements).
11.3 IRREVOCABLE PROXY. Subject to compliance with the
requirements of applicable laws, each Grantor does hereby revoke all previous
proxies with regard to the Investment Collateral and appoint the Bank as its
proxyholder to attend and vote at any and all meetings of the shareholders or
other equity holders of the persons that issued the Investment Collateral and
any adjournments thereof, held on or after the date of the giving of this
proxy and prior to the termination of this
-10-
proxy, and to execute any and all written consents of shareholders or equity
holders of such persons executed on or after the date of the giving of this
proxy and prior to the termination of this proxy, with the same effect as if
such Grantor had personally attended the meetings or had personally voted its
shares or other interests or had personally signed the written consents;
PROVIDED, HOWEVER, that the proxyholder shall have rights hereunder only upon
the occurrence and during the continuance of an Event of Default. Each
Grantor hereby authorizes the Bank to substitute another person as the
proxyholder and, upon the occurrence and during the continuance of any Event
of Default, hereby authorizes the proxyholder to file this proxy and any
substitution instrument with the secretary or other appropriate official of
the appropriate person. This proxy is coupled with an interest and is
irrevocable until such time as all Secured Obligations have been paid and
performed in full.
12. ATTORNEY-IN-FACT. Each Grantor hereby irrevocably
nominates and appoints the Bank as its attorney-in-fact for the following
purposes, subject to compliance with the requirements of applicable laws: (a)
to do all acts and things which the Bank may deem necessary or advisable to
perfect and continue perfected the security interests created by this
Agreement and, upon the occurrence and during the continuance of an Event of
Default, to preserve, process, develop, maintain and protect the Collateral;
(b) upon the occurrence and during the continuance of an Event of Default, to
do any and every act which any Grantor is obligated to do under this
Agreement, at the expense of the Grantor so obligated and without any
obligation to do so; (c) to prepare, sign, file and/or record, for any
Grantor, in the name of the appropriate Grantor, any financing statement,
application for registration, or like paper, and to take any other action
deemed by the Bank necessary or desirable in order to perfect or maintain
perfected the security interests granted hereby; and (d) upon the occurrence
and during the continuance of an Event of Default, to execute any and all
papers and instruments and do all other things necessary or desirable to
preserve and protect the Collateral and to protect the Bank's security
interests therein; PROVIDED, HOWEVER, that the Bank shall be under no
obligation whatsoever to take any of the foregoing actions, and, absent bad
faith or actual malice, the Bank shall have no liability or responsibility
for any act taken or omission with respect thereto.
13. COSTS AND EXPENSES. Each Grantor agrees to pay to the
Bank all reasonable costs and expenses (INCLUDING, without limitation,
reasonable attorneys' fees and disbursements) incurred by the Bank in the
enforcement or attempted enforcement of this Agreement, whether or not an
action is filed in connection therewith, and in connection with any waiver or
amendment of any term or provision hereof. All advances, charges, costs and
expenses, INCLUDING reasonable attorneys' fees and disbursements, incurred or
paid by the Bank in exercising any right, privilege, power or remedy
conferred by this Agreement (INCLUDING, without limitation, the right to
perform any Secured Obligation of any Grantor under the Loan Agreement), or
in the enforcement or attempted enforcement thereof, shall be secured hereby
and shall become a part of the Secured Obligations and shall be paid to the
Bank by each Grantor, immediately upon demand, together with interest thereon
at the rate(s) provided for under the Loan Agreement.
14. STATUTE OF LIMITATIONS AND OTHER LAWS. Until the Secured
Obligations shall have been paid and performed in full, the power of sale and
all other rights, privileges, powers and remedies granted to the Bank
hereunder shall continue to exist and may be exercised by the Bank at any
time and from time to time irrespective of the fact that any of the Secured
Obligations may have become barred by any statute of limitations. Each
-11-
Grantor expressly waives the benefit of any and all statutes of limitation,
and any and all laws providing for exemption of property from execution or
for valuation and appraisal upon foreclosure, to the maximum extent permitted
by applicable law.
15. OTHER AGREEMENTS. Nothing herein shall in any way modify
or limit the effect of terms or conditions set forth in any other security or
other agreement executed by any Grantor or in connection with the Secured
Obligations, but each and every term and condition hereof shall be in
addition thereto. All provisions contained in the Loan Agreement that apply
to loan documents generally are fully applicable to this Agreement and are
incorporated herein by this reference.
16. INCORPORATION OF SURETYSHIP PROVISIONS AND WAIVERS. The
attached EXHIBIT B, "Suretyship Provisions and Waivers", is hereby
incorporated by this reference as though set forth herein in full.
17. CONDITION OF BORROWER AND ITS SUBSIDIARIES. Each Grantor
represents and warrants to the Bank that each Grantor has established
adequate means of obtaining from the Borrower and its subsidiaries, on a
continuing basis, financial and other information pertaining to the
businesses, operations and condition (financial and otherwise) of the
Borrower and its subsidiaries and their respective assets and properties, and
each Grantor now is and hereafter will be completely familiar with the
businesses, operations and condition (financial and otherwise) of the
Borrower and its subsidiaries and their respective assets and properties.
Each Grantor hereby expressly waives and relinquishes any duty on the part of
the Bank (should any such duty exist) to disclose to any Grantor any matter,
fact or thing related to the businesses, operations or condition (financial
or otherwise) of the Borrower or its subsidiaries or their respective assets
and properties, whether now known or hereafter known by the Bank during the
life of this Agreement. With respect to any of the Secured Obligations, the
Bank need not inquire into the powers of Borrower or any subsidiaries thereof
or the officers or employees acting or purporting to act on their behalf, and
all Secured Obligations made or created in good faith reliance upon the
professed exercise of such powers shall be secured hereby.
18. LIENS ON REAL PROPERTY. In the event that all or any
part of the Secured Obligations at any time are secured by any one or more
deeds of trust or mortgages or other instruments creating or granting liens
on any interests in real property, each Grantor authorizes the Bank, upon the
occurrence of and during the continuance of any Event of Default, at its sole
option, without notice or demand and without affecting any Secured
Obligations of any Grantor, the enforceability of this Agreement, or the
validity or enforceability of any liens of the Bank on any Collateral, to
foreclose any or all of such deeds of trust or mortgages or other instruments
by judicial or nonjudicial sale. Insofar as the liens created herein secure
the obligations of other persons, (i) each Grantor expressly waives any
defenses to the enforcement of this Agreement or any liens created or granted
hereby or to the recovery by the Bank against Borrower or any guarantor or
any other person liable therefor of any deficiency after a judicial or
nonjudicial foreclosure or sale, even though such a foreclosure or sale may
impair the subrogation rights of Grantors and may preclude Grantors from
obtaining reimbursement or contribution from any of the other Grantors and
(ii) each Grantor expressly waives any defenses or benefits that may be
derived from California Code of Civil Procedure Sections 580a, 580b, 580d or
726, or comparable provisions of the laws of any other jurisdiction, and all
other suretyship defenses it other wise might or would have under California
law or other applicable law. Each Grantor expressly waives any right to
receive notice of any judicial or nonjudicial
-12-
foreclosure or sale of any real property or interest therein subject to any
such deeds of trust or mortgages or other instruments and any Grantor's
failure to receive any such notice shall not impair or affect such Grantor's
obligations or the enforceability of this Agreement or any liens created or
granted hereby.
19. WAIVER OF RIGHTS OF SUBROGATION. Notwithstanding
anything to the contrary elsewhere contained herein or in the Loan Agreement
to which any Grantor is a party until no part of any commitment to lend
remains outstanding and all of the Secured Obligations have been paid and
performed in full, Grantors hereby waive with respect to the Borrower and its
successors and assigns (including any surety) and any other person, any and
all rights at law or in equity to subrogation, to reimbursement, to
exoneration, to contribution, to setoff or to any other rights that could
accrue to a surety against a principal, to a guarantor against a maker or
obligor, to an accommodation party against the party accommodated, or to a
holder or transferee against a maker and which Grantors may have or hereafter
acquire against the Borrower or any other party in connection with or as a
result of Grantors' execution, delivery and/or performance of this Agreement
or any other loan document to which any Grantor is a party. Grantors agree
that they shall not have or assert any such rights against the Borrower or
its successors and assigns or any other attempted setoff to any action
commenced against Grantors by the Borrower (as borrower or in any other
capacity) or any other person. Grantors hereby acknowledge and agree that
this waiver is intended to benefit the Bank and shall not limit or otherwise
affect Grantors' liability hereunder, under any other Loan Document to which
any Grantor is a party, or the enforceability hereof or thereof.
20. UNDERSTANDINGS WITH RESPECT TO WAIVERS AND CONSENTS.
Grantors and each of them warrant and agree that each of the waivers and
consents set forth herein are made after consultation with legal counsel and
with full knowledge of their significance and consequences, with the
understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which Grantors
otherwise may have against the Borrower, the Bank or others, or against
Collateral, and that, under the circumstances, the waivers and consents
herein given are reasonable and not contrary to public policy or law. If any
of the waivers or consents herein are determined to be contrary to any
applicable law or public policy, such waivers and consents shall be effective
to the maximum extent permitted by law.
21. CONTINUING EFFECT. This Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by
or against any Grantor for liquidation or reorganization, should any Grantor
become insolvent or make an assignment for the benefit of creditors or should
a receiver or trustee be appointed for all or any significant part of any
Grantor's assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Secured
Obligations, or any part thereof, is, pursuant to applicable law, rescinded
or reduced in amount, or must otherwise be restored or returned by the Bank,
whether as a "voidable preference," "fraudulent conveyance," or otherwise,
all as though such payment or performance had not been made. In the event
that any payment or any part thereof is rescinded, reduced, restored or
returned, the Secured Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.
22. ADDITIONAL GRANTORS. From time to time following the
Closing Date, additional Significant Subsidiaries of the Borrower may become
parties hereto, as additional Grantors, by executing and delivering
-13-
to the Bank an Instrument of Joinder substantially in the form of EXHIBIT A,
accompanied by such documentation as the Bank may require in connection
therewith, wherein such additional Grantors agree to become a party hereto
and to be bound hereby. Upon delivery of such Instrument of Joinder to and
acceptance thereof by the Bank, notice of which acceptance is hereby waived
by Grantors, each such additional Grantor shall be as fully a party hereto as
if such Grantor were an original signatory hereof. Each Grantor expressly
agrees that its Secured Obligations and the liens upon its property granted
herein shall not be affected or diminished by the addition or release of
additional Grantors hereunder, nor by any election of the Bank not to cause
any other Significant Subsidiaries of the Borrower to become an additional
Grantor hereunder. This Agreement shall be fully effective as to any Grantor
who is or becomes a party hereto regardless of whether any other person
becomes or fails to become or ceases to be a Grantor hereunder.
23. RELEASE OF GRANTORS. This Agreement and all Secured
Obligations of Grantors hereunder shall be released when all Secured
Obligations have been paid in full in Cash or otherwise performed in full and
when the Bank's financing commitments under each of Facility No. 1 and
Facility No. 2 no longer remain outstanding. Upon such release of Grantors'
Secured Obligations hereunder, the Bank promptly shall return any pledged
Collateral to Grantors, or to the person or persons legally entitled thereto,
and promptly shall endorse, execute, deliver, record and file all instruments
and documents, and do all other acts and things, reasonably required for the
return of the Collateral to Grantors, or to the person or persons legally
entitled thereto, and to evidence or document the release of the Bank's
interests arising under this Agreement, all as reasonably requested by, and
at the sole expense of, Grantors.
24. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of
which, taken together, shall constitute one and the same agreement.
25. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA.
-14-
26. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE BANK
EXPRESSLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO
THIS AGREEMENT, THE LOAN AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR
OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH GRANTOR AND THE
BANK AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT, THE LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, THE LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS. ANY PARTY HERETO
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, each Grantor has executed this Agreement by
its duly authorized officer as of the date first written above.
"Grantors"
QUIDEL CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Title: Senior Vice President Corporate
Operations, Chief Financial
Officer and Secretary
---------------------------------
PACIFIC BIOTECH, INC.,
a California corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Title: Vice President and Chief Financial Officer
---------------------------------
MBS ACQUISITION CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Title: Secretary and Treasurer
---------------------------------
ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
-15-
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Title: Vice President
---------------------------------
-16-
EXHIBIT A
TO
SECURITY AGREEMENT
INSTRUMENT OF JOINDER
THIS INSTRUMENT OF JOINDER ("Joinder") is executed as of
_________________, ____, by ______________________________, a
___________________________ ("Joining Party"), and delivered to Bank of
America National Trust and Savings Association (the "Bank") pursuant to the
Security Agreement dated as of July 12, 1999 made by Quidel Corporation, a
Delaware corporation, Pacific Biotech, Inc., a California corporation, and
MBS Acquisition Corporation, a Delaware corporation (collectively with such
other parties that may be added from time to time, the "Grantors"), in favor
of the Bank (the "Security Agreement"). Terms used but not defined in this
Joinder shall have the meanings defined for those terms in the Security
Agreement.
RECITALS
(A) The Security Agreement was made by the Grantors in favor of the
Bank as required by that certain Business Loan Agreement dated as of July 12,
1999 by and between Quidel Corporation, a Delaware corporation ("Borrower"),
and the Bank (the "Loan Agreement").
(B) Joining Party has become a Significant Subsidiary (as such term
is defined in the Loan Agreement) of the Borrower and, as such, is required
by the Loan Agreement to become a party to the Security Agreement.
(C) Joining Party expects to realize direct and indirect benefits as
a result of the availability to the Borrower of the credit facilities under
the Loan Agreement.
NOW THEREFORE, Joining Party agrees as follows:
AGREEMENT
(1) By this Joinder, Joining Party becomes a party to the Security
Agreement as an additional joint and several "Grantor." Joining Party agrees
that, upon its execution hereof, it will become a Grantor under the Security
Agreement with respect to all obligations of the Borrower heretofore or
hereafter incurred under the Loan Agreement, and will be bound by all terms,
conditions, and duties applicable to a Grantor under the Security Agreement.
(2) The effective date of this Joinder is ________________.
"Joining Party"
---------------------------------------
a
-------------------------------------
By:
-----------------------------------
Title:
--------------------------------
-1-
ACKNOWLEDGED:
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By:
---------------------------------
Title:
-----------------------------
-2-
EXHIBIT B
TO
SECURITY AGREEMENT
SURETYSHIP PROVISIONS AND WAIVERS
Each Grantor acknowledges that the liens and security interests
created or granted herein will or may secure obligations of persons other
than such Grantor and, in full recognition of that fact, each Grantor
consents and agrees that the Bank may, at any time and from time to time,
without notice or demand, and without affecting the enforceability or
security hereof:
(a) supplement, modify, amend, extend, renew, or otherwise
change the time for payment or the terms of the Secured Obligations or any
part thereof, including any increase or decrease of the rate(s) of
interest thereon;
(b) supplement, modify, amend or waive, or enter into or give
any agreement, approval or consent with respect to, the Secured
Obligations or any part thereof or any provision of the Loan Agreement or
of any other agreement, document or instrument executed and delivered in
connection with the Loan Agreement (collectively with the Loan Agreement,
the "Loan Documents"), or any condition, covenant, default, remedy, right,
representation or term thereof or thereunder;
(c) accept new or additional instruments, documents or
agreements in exchange for or relative to any of the Loan Documents or the
Secured Obligations or any part thereof;
(d) accept partial payments on the Secured Obligations;
(e) receive and hold additional security or guaranties for
the Secured Obligations or any part thereof;
(f) release, reconvey, terminate, waive, abandon,
subordinate, exchange, substitute, transfer and enforce any security or
guaranties, and apply any security and direct the order or manner of
sale thereof as the Bank in its sole and absolute discretion may
determine;
(g) release any person or any guarantor from any personal
liability with respect to the Secured Obligations or any part thereof;
(h) settle, release on terms satisfactory to the Bank or by
operation of applicable laws or otherwise liquidate or enforce any Secured
Obligations and any security or guaranty therefor in any manner, consent
to the transfer of any security and bid and purchase at any sale; and
(i) consent to the merger, change or any other restructuring
or termination of the corporate existence of the Borrower or any other
person, and correspondingly restructure the Secured Obligations, and any
such merger, change, restructuring or termination shall not affect the
liability of any Grantor or the continuing existence of any liens
hereunder, under any other Loan Document to which any Grantor is a party
or the enforceability hereof
-1-
or thereof with respect to all or any part of the Secured Obligations.
Upon the occurrence of and during the continuance of any Event of
Default, the Bank may enforce this Agreement independently as to each Grantor
and independently of any other remedy or security the Bank at any time may
have or hold in connection with the Secured Obligations, and it shall not be
necessary for the Bank to marshal assets in favor of any Grantor, the
Borrower or any other person or to proceed upon or against and/or exhaust any
other security or remedy before proceeding to enforce this Agreement. Each
Grantor expressly waives any right to require the Bank to marshal assets in
favor of such Grantor, the Borrower or any other person or to proceed against
any other person or any collateral provided by any other person, and agrees
that the Bank may proceed against any person and/or collateral in such order
as it shall determine in its sole and absolute discretion. The Bank may file
a separate action or actions against any Grantor, whether action is brought
or prosecuted with respect to any other security or against any other
Grantor, the Borrower or any other person, or whether any other person is
joined in any such action or actions. Each Grantor agrees that the Bank and
the Borrower and any other person may deal with each other in connection with
the Secured Obligations or otherwise, or alter any contracts or agreements
now or hereafter existing between any of them, in any manner whatsoever, all
without in any way altering or affecting the security of this Agreement. The
Bank's rights hereunder shall be reinstated and revived, and the
enforceability of this Agreement shall continue, with respect to any amount
at any time paid on account of the Secured Obligations which thereafter shall
be required to be restored or returned by the Bank upon the bankruptcy,
insolvency or reorganization of the Borrower, any Grantor or any other
person, or otherwise, all as though such amount had not been paid. The liens
created or granted herein and the enforceability of this Agreement at all
times shall remain effective to secure the full amount of all the Secured
Obligations including, without limitation, the amount of all loans and
interest thereon at the rates provided for in the Loan Agreement and the
note(s) thereunder, even though the Secured Obligations, including any part
thereof or any other security or guaranty therefor, may be or hereafter may
become invalid or otherwise unenforceable as against the Borrower or any
other person and whether or not the Borrower or any other person shall have
any personal liability with respect thereto. Each Grantor expressly waives
any and all defenses now or hereafter arising or asserted by reason of (a)
any disability or other defense of the Borrower or any other person with
respect to the Secured Obligations, (b) the unenforceability or invalidity of
any security or guaranty for the Secured Obligations or the lack of
perfection or continuing perfection or failure of priority of any security
for the Secured Obligations, (c) the cessation for any cause whatsoever of
the liability of the Borrower or any other person (other than by reason of
the full payment and performance of all Secured Obligations), (d) any failure
of the Bank to marshal assets in favor of such Grantor or any other person,
(e) except as otherwise required by law or as provided in this Agreement, any
failure of the Bank to give notice of sale or other disposition of collateral
to such Grantor or any other person or any defect in any notice that may be
given in connection with any sale or disposition of collateral, (f) except as
otherwise required by law or as provided in this Agreement, any failure of
the Bank to comply with applicable laws in connection with the sale or other
disposition of any collateral or other security for any Obligation, including
without limitation any failure of the Bank to conduct a commercially
reasonable sale or other disposition of any collateral or other security for
any Obligation, (g) any act or omission of the Bank or others that directly
or indirectly results in or aids the discharge or release of the Borrower,
any Grantor or any other person or the Secured Obligations or any other
security or guaranty
-2-
therefor by operation of law, (h) any law which provides that the obligation
of a surety or guarantor must neither be larger in amount nor in other
respects more burdensome than that of the principal or which reduces a
surety's or guarantor's obligation in proportion to the principal obligation,
(i) any failure of the Bank to file or enforce a claim in any bankruptcy or
other proceeding with respect to any person, (j) the election by the Bank, in
any bankruptcy proceeding of any person, of the application or
non-application of Section 1111(b)(2) of the United States Bankruptcy Code,
(k) any extension of credit or the grant of any liens under Xxxxxxx 000 xx
xxx Xxxxxx Xxxxxx Bankruptcy Code, (l) any use of cash collateral under
Section 363 of the United States Bankruptcy Code, (m) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any person, (n) the avoidance of any liens in favor
of the Bank for any reason, (o) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any person, including any discharge of, or bar or
stay against collecting, all or any of the Secured Obligations (or any
interest thereon) in or as a result of any such proceeding, or (p) to the
extent permitted, the benefits of any form of one-action rule. Until no part
of any commitment to lend remains outstanding and all of the Secured
Obligations have been paid and performed in full, Grantors shall have no
right of subrogation, contribution, reimbursement or indemnity, and each
Grantor expressly waives any right to enforce any remedy that the Bank now
has or hereafter may have against any other person and waives the benefit of,
or any right to participate in, any other security now or hereafter held by
the Bank. Each Grantor expressly waives all setoffs and counterclaims and all
presentments, demands for payment or performance, notices of nonpayment or
nonperformance, protests, notices of protest, notices of dishonor and all
other notices or demands of any kind or nature whatsoever with respect to the
Secured Obligations, and all notices of acceptance of this Agreement or of
the existence, creation or incurring of new or additional Secured Obligations.
-3-
