EXHIBIT 10.7
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT (the "AGREEMENT") is made as of the 16th day of
August, 1995, between COLLATERAL THERAPEUTICS, INC., a California corporation
(the "COMPANY"), and Schering Berlin Venture Corp., a Delaware corporation (the
"SECURED PARTY").
RECITALS
A. Secured Party has agreed to lend the Company $250,000 pursuant to a
Secured Promissory Note dated the same date as this Agreement (the "NOTE") and
the Company and Secured Party have set forth the terms pursuant to which Secured
Party may advance an additional amount of $250,000 to the Company under an
additional promissory note as the Company and Secured Party mutually agree; and
B. In connection with the Note, the Company has agreed to grant to
Secured Party a security interest in all of the personal property assets of the
Company as security for the prompt payment by the Company of its obligations
contained in the Note.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereby agree as follows:
1. SECURITY INTEREST. Pursuant to the provisions of the California
Uniform Commercial Code (the "CODE"), the Company hereby grants to Secured Party
a security interest in all of the Company's right, title and interest in and to
all of its personal property, including without limitation the following
personal property of the Company (collectively, the "COLLATERAL"):
1.1 ACCOUNTS. All presently existing and hereafter arising accounts,
contract rights, and all other forms of obligations owing to the Company arising
out of the sale or lease of goods or the rendition of services by the Company,
whether or not earned by performance, and any and all credit insurance,
guaranties, and other security therefor, as well as all merchandise returned to
or reclaimed by the Company.
1.2 BOOKS. All of the Company's books and records relating to the
Collateral, including: ledgers; records indicating, summarizing, or evidencing
the Company's assets or liabilities, or the Collateral; all information relating
to the Company's business operations or financial condition; and all computer
programs, disc or tape files, printouts, runs, or other computer prepared
information, and the equipment containing such information.
1.3 EQUIPMENT. All of the Company's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture, furnishings, fixtures,
motor vehicles, tools, parts, dies, jigs, goods (other than consumer goods or
farm products), and any interest in
any of the foregoing, and all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any of the
foregoing, wherever located.
1.4 GENERAL INTANGIBLES. All of the Company's present and future
general intangibles and other personal property (including any choses or things
in action, goodwill, patents, trade names, trademarks, servicemarks, blueprints,
drawings, purchase orders, customer lists, monies due or recoverable from
pension funds, route lists, infringement claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, deposit accounts, tax
refunds, and tax refund claims) other than goods and Accounts.
1.5 INTELLECTUAL PROPERTY COLLATERAL. The following properties and
assets owned or held by the Company or in which the Company otherwise has any
interest, now existing or hereafter acquired or arising (collectively, the
"Intellectual Property Rights"):
(a) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties with
respect to any licenses, all rights to xxx for past, present or future
infringement thereof, all rights arising therefrom and pertaining thereto and
all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof;
(b) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship, all rights, claims and demands in any way
relating to any such copyrights or works, including royalties and rights to xxx
for past, present or future infringement, and all rights of renewal and
extension of copyright;
(c) all state (including common law), federal and foreign trademarks,
service marks and trade names, and applications for registration of such
trademarks, service marks and trade names, all licenses relating to any of the
foregoing and all income and royalties with respect to any licenses, whether
registered or unregistered and wherever registered, all rights to xxx for past,
present or future infringement or unconsented use thereof, all rights arising
therefrom and pertaining thereto and all reissues, extensions and renewals
thereof;
(d) all trade secrets, confidential information, customer lists,
license rights, advertising materials, operating manuals, methods, processes,
know-how, sales literature, drawings, specifications, blue prints, descriptions,
inventions, name plates and catalogs; and
(e) the entire goodwill of or associated with the businesses now or
hereafter conducted by the Company connected with and symbolized by any of the
aforementioned properties and assets.
1.6 INVENTORY. All present and future inventory in which the Company
has any interest, including goods held for sale or lease or to be furnished
under a contract of service and all of the Company's present and future raw
materials, work in process, finished goods, and packing and shipping materials,
wherever located, and any documents of title representing any of the above.
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1.7 NEGOTIABLE COLLATERAL. All of the Company's present and future
letters of credit, notes, drafts, instruments, documents, leases and chattel
paper.
1.8 OTHER COLLATERAL. Any money, deposit accounts, notes, drafts,
instruments, chattel paper, or other assets of the Company which hereafter come
into the possession, custody, or control of Secured Party.
1.9 PROCEEDS. Any and all proceeds whether receivable or received
from or upon the sale, lease, license, collection, use, exchange or other
disposition, whether voluntary or involuntary, of any Collateral including
"proceeds" as defined in Section 9306 of the Code, any and all proceeds of any
insurance, indemnity, warranty or guaranty payable to or for the account of the
Company from time to time with respect to any of the Collateral, any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral, and all proceeds of such proceeds. Proceeds pursuant to this
Agreement include (i) whatever is now or subsequently received by the Company
upon the sale, exchange, collection or other disposition of any item of
Collateral, whether such proceeds constitute inventory, accounts, accounts
receivable, general intangibles, instruments, securities, credits, documents,
letters of credit, chattel paper, documents of title, warehouse receipts,
leases, deposit accounts, money, contract rights, goods or equipment, and (ii)
any such items which are now or subsequently acquired by the Company with any
proceeds of Collateral.
2. PERFORMANCE SECURED. The security interest granted hereby secures the
prompt payment of the amounts due under the Note and any other note issued by
the Company after the date of this Agreement which specifically recites that it
is secured by this Security Agreement (an "ADDITIONAL NOTE").
3. COVENANTS OF THE COMPANY. The Company covenants and agrees, unless
compliance is waived in writing by Secured Party, that:
3.1 MAINTENANCE OF COLLATERAL. The Company will properly maintain
and care for the Collateral, including the payment of all filing and other fees
necessary to maintain the Intellectual Property Rights; PROVIDED, HOWEVER, the
Company shall not be required to pay any such fees in connection with or take
any other act to maintain any Intellectual Property Rights that the Company in
the exercise of its reasonable business judgment determines are not useful in
the operation of the Company's business.
3.2 SALE OF COLLATERAL. The Company will not sell, transfer, trade
or otherwise dispose of all or substantially all of the Collateral, except in
the ordinary course of business conducted by the Company, in connection with a
reorganization, recapitalization, liquidation or business combination involving
the Company or its subsidiaries or in a transaction pursuant to which the
outstanding amounts owed under the Note and any Additional Note will be repaid
in full; PROVIDED, HOWEVER, the Company reserves the right to license,
sublicense or otherwise grant rights in any of the Intellectual Property Rights,
which the Secured Party hereby agrees shall not be prohibited by any term or
provision of this Agreement, so long as such license, sublicense or other grant
of rights is made (a) subject to the security interest of the Secured Party in
the
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Intellectual Property Rights and (b) in connection with a collaboration or
partnership with some other entity or in the ordinary course of the Company's
business.
3.3 CHANGE IN COMPANY. The Company will notify Secured Party in
writing of any proposed or actual change of the Company's name, identity or
corporate structure.
3.4 PAYMENT OF TAXES. The Company will pay prior to delinquency all
taxes, liens and assessments which are levied or assessed against the
Collateral.
3.5 PERFECTION FILING. The Company will file the Form UCC-1
Financing Statement (the "UCC-1") in the form mutually agreed upon with the
Office of the California Secretary of State within five (5) business days after
the date of this Agreement.
4. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under this Agreement:
4.1 PAYMENT OF NOTES. The Company fails to make any payment of
principal or interest when required under the Note or any Additional Note.
4.2 BANKRUPTCY, INSOLVENCY, ETC. COMMENCED BY THE COMPANY. If the
Company:
(a) shall commence any proceeding or any other action relating to it
in bankruptcy or seek reorganization, arrangement, readjustment of its
debts, dissolution, liquidation, winding-up, composition or any other
relief under the United States Bankruptcy Act, as amended, or under any
other insolvency, reorganization, liquidation, dissolution, arrangement,
composition, readjustment of debt or any other similar act or law, of any
jurisdiction, domestic or foreign, now or hereafter existing;
(b) shall admit its inability to pay its debts as they mature in any
petition or pleading in connection with any such proceeding;
(c) shall apply for, or consent to or acquiesce in, an appointment of
a receiver, conservator, trustee or similar officer for it or for all or
substantially all of its assets and properties; or
(d) shall make a general assignment for the benefit of creditors.
4.3 BANKRUPTCY, INSOLVENCY, ETC. COMMENCED AGAINST THE COMPANY. If
any proceedings are commenced or any other action is taken against the Company
in bankruptcy or seeking reorganization, arrangement, readjustment of its debts,
dissolution, liquidation, winding-up, composition or any other relief under the
United States Bankruptcy Act, as amended, or under any other insolvency,
reorganization, liquidation, dissolution, arrangement, composition, readjustment
of debt or any other similar act or law, of any jurisdiction, domestic or
foreign, now or hereafter existing; or a receiver, conservator, trustee or
similar officer for the Company or for
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all or substantially all of its assets and properties is appointed; and in each
such case, such event continues for ninety (90) days undismissed, unbonded and
undischarged.
5. SECURED PARTY'S REMEDIES AFTER DEFAULT. Upon the occurrence of an
Event of Default, Secured Party may, after delivering written notice of such
Event of Default to the Company, do any one or more of the following:
5.1 ACCELERATE NOTES. Declare the outstanding principal balance
under the Note and any Additional Note, together with the accrued but unpaid
interest thereon, immediately due and payable.
5.2 ACTIONS AGAINST THE COMPANY. Proceed against the Company with or
without proceeding against the Collateral secured hereby.
5.3 ACTIONS AGAINST THE COLLATERAL. Exercise all of the rights and
remedies provided to Secured Party by this Agreement, by the Code as then in
effect, or any other applicable law.
6. COVENANT OF SECURED PARTY. Secured Party agrees that neither it nor
any of its employees, representatives or agents shall inform any third party
with whom the Company is negotiating or otherwise pursuing the possible license
or other acquisition of Intellectual Property Rights of the security interest
granted pursuant to this Agreement or the funds advanced to the Company pursuant
to the Note or any Additional Note without first obtaining the prior written
consent of the Company.
7. GENERAL PROVISIONS.
7.1 CONSTRUCTION. This Agreement shall be governed, construed and
enforced in accordance with the internal laws of the State of California. All
terms not defined herein are used as set forth in the Code.
7.2 ENTIRE AGREEMENT. This Agreement, together with the agreements
and documents referred to herein, constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and supersede all prior
and contemporaneous negotiations, agreements and understandings.
7.3 NOTICES. All payments, notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given at the earlier of (i) the time of actual delivery or (ii) on the
third business day following the date deposited with the United States Postal
Service, postage prepaid, certified with return receipt requested, to the
parties at the following addresses or at such other address as shall be given in
writing by any party to each of the other parties:
Secured Party: Schering Berlin Venture Corp.
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Fax No.:
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The Company: Collateral Therapeutics, Inc.
0000 Xxxxx Xxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax No.:
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7.4 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of, and shall be binding upon, the parties and their respective
successors and assigns.
7.5 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.6 FURTHER ASSURANCES. Each party hereto will execute, acknowledge,
and deliver any further assurances, documents and instruments reasonably
requested by any other party hereto for the purpose of creating and perfecting
Secured Party's security interest in the Collateral hereunder (other than the
security interest in any foreign Intellectual Property Rights, which shall not
be perfected), including (without limitation) any financing statement, amended
financing statement, continuation statement, patent filing, or other instrument
permitted or required by the Code or other applicable law.
7.7 COOPERATION. The Company and Secured Party each agree from time
to time execute and deliver, or cause to be executed and delivered, such further
instruments and do and cause to be done such further acts as may be necessary or
proper to carry out more effectively the provisions of this Agreement.
7.8 AMENDMENTS AND WAIVER. The rights of Secured Party hereunder and
under any financing statement, amended financing statement, continuation
statement, patent filing, or other document or instrument creating or perfecting
the Secured Party's security interest in the Collateral may be amended or waived
at any time by the written consent of the Secured Party and the Company.
7.9 TERMINATION. Upon payment in full of the Note and any Additional
Note, the security interest provided under this Agreement shall automatically
terminate and shall be deemed null and void. Secured Party agrees to execute
all appropriate instruments or other documentation (including releases of any
patent filings and one or more Form UCC-2 Statements of Termination) to evidence
the termination of such security interest.
7.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement, effective
as of the date first written above.
THE COMPANY: COLLATERAL THERAPEUTICS, INC.
By: /s Xxxx X. Xxxxx, Ph.D.
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Its: President and C.E.O.
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SECURED PARTY: SCHERING BERLIN VENTURE CORP.
By: /s/ Illegible
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Its: President
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