SECURITY AGREEMENT
Exhibit
10.2
This
Security Agreement (this “Agreement”), dated as of March 20, 2006, is by and
between SIGA Technologies, Inc., a Delaware corporation with an address at
000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000 (the “Debtor”), and
PharmAthene, Inc., a Delaware corporation with an address at 000 Xxxxxxx
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 (the
“Holder”).
WITNESSETH
A. The
Holder has agreed to purchase certain notes (“Notes”) from the Debtor under the
terms and conditions set forth in that certain Note Purchase Agreement between
the Holder and the Debtor of even date herewith (the “Purchase
Agreement”).
B. It
is a
condition to the effectiveness of the Purchase Agreement that the Debtor provide
a security interest to the Holder in certain of its assets under the terms
and
conditions of this Agreement to secure its obligations thereunder.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
SECTION
I
DEFINITIONS
AND OTHER PROVISIONS
1.01 Certain
Defined Terms
The
following terms have the following meanings:
“Accounts”
means
all rights to the payment of money for goods sold or leased or for services
rendered by the Debtor whether in form of accounts receivable, contract rights,
chattel paper, instruments, notes, bills, acceptances, general intangibles
and
other forms of obligations relating to such rights, together with any property
evidencing or relating to such rights, including, without limitation, all books,
records, invoices, magnetic tapes, processing software, processing contracts
(such as contracts for computer time and services) and any other rights or
property of the Debtor that is an “account” within the meaning of the
UCC.
“Chattel
Paper”
means
all chattel paper, as that term is defined in the UCC, including without
limitation any writings which evidence both a monetary obligation and a security
interest in or a lease of specific goods.
“Collateral”
means
all tangible and intangible personal property of Debtor including without
limitation all Accounts, Chattel Paper, Commercial Tort Claims, Deposit
Accounts, Documents, Equipment, General Intangibles, Instruments, Inventory,
Investment Property, Intellectual Property and Letters of Credit whether
presently owned or hereafter acquired together with all supporting obligations
with respect thereto and all Proceeds thereof, provided, however, that the
Collateral shall not include the property that is subject to the security
interest granted in the GE Capital Loan Agreement, which property is listed
on
Schedule A hereto and provided further that the Collateral shall not include
those Material License
Agreement
rights that are listed on Schedule 1.01(b), in which the grant to the Holder
of
a security interest in those Material License Agreements would result in a
breach of the terms thereof.
“Commercial
Tort Claims”
means
tort claims of the Debtor arising from time to time including the commercial
tort claims listed on Schedule B.
“Deposit
Accounts”
means
all demand, time, savings, passbook or like accounts maintained with a bank,
savings and loan association, credit union or like organization including an
account evidenced by a certificate of deposit.
“Documents”
means
all documents, as that term is defined in the UCC, including but not limited
to
documents of title (as that term is defined in the UCC) and any and all receipts
of the kind described in Article 7 of the UCC.
“Equipment”
means
all machinery, apparatus, equipment, fittings and other tangible personal
property (other than Inventory) of every kind and description owned by the
Debtor, whether or not affixed to realty, including without limitation, all
motor vehicles, trucks, trailers, handling and delivery equipment, cranes,
hoisting equipment, fixtures, office machines and furniture, together with
all
accessions, replacements, rights under any manufacturer’s warranties relating to
the foregoing and any other rights or property of the Debtor that is equipment
within the meaning of the UCC.
“GAAP”
means
generally accepted accounting principles in the United States of America in
effect from time to time.
“GE
Capital Agreement”
means
the Master Security Agreement between General Electric Capital Corporation
and
Debtor, dated as of April 29, 2005.
“General
Intangibles”
means
all general intangibles, as that term is defined in the UCC, including, without
limitation, all choses in action, causes in action, designs, plans, goodwill,
all intellectual property and tax refunds.
“Governmental
Authority”
means
any nation or government, any state or other political subdivision thereof
and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
“Instruments”
means
instruments, as that term is defined in the UCC, including without limitation
bills of exchange, notes and all negotiable instruments, all certificated
securities, all certificates of deposit and any other writing which evidences
a
right to payment of money and is a type which is in the ordinary course of
business transferred by delivery with any necessary endorsement or
assignment.
“Intellectual
Property”
means
each patent, patent application, copyright registration or application
therefore, mask work registration or application therefore, and trademark,
trademark application, trade name, service xxxx and domain name registration
or
application therefore owned by the Corporation, licensed by the Corporation
or
otherwise used by the Corporation, whether presently owned or hereafter
acquired, including, without limitation,
those
listed on Schedule 1.01(a) and Schedule 1.01(b) attached hereto, all proceeds
thereof, all rights corresponding thereto and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, and
the
recordings and applications therefore.
“Inventory”
means
all goods intended for sale or lease by the Debtor, of every nature, kind and
description wherever located, including without limitation raw materials, goods,
work in process and finished goods and all goods returned or reclaimed from
customers, together with any other rights or property of the Debtor that is
inventory within the meaning of the UCC.
“Investment
Property”
means
(i) all securities, or securities certificates or uncertificated securities
representing the securities, (ii) security entitlements, (iii) securities
accounts, (iv) commodity contracts, or (v) commodity accounts.
“Letters
of Credit”
means
all letters of credit including, but not limited to, any written undertaking
to
pay money conditioned upon the presentation of specified documents and advances
of letters of credit, and including all letters of credit rights as defined
in
the UCC.
“Liens”
means
any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the filing of any financing statement under
the
UCC or comparable law of any jurisdiction in respect of any of the
foregoing).
“Noteholders”
means
at any time and from time to time, the holders of the Notes issued under the
Purchase Agreement, their successor, transferees and assigns.
“Permitted
Liens”
means:
”: (i) Liens set forth on Schedule C, (ii) Liens currently existing as of the
date of this Agreement under the GE Capital Agreement, (iii) Liens in favor
of
the Holder, (iii) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith by appropriate
proceedings; provided that adequate reserves with respect to such taxes, fees,
assessments or other government charges or levies which are being contested
are
maintained on the books of the Debtor, in conformity with GAAP, (v) pledges
or
deposits in connection with workers’ compensation, unemployment insurance and
other social security legislation, (vi) purchase money Liens not relating to
any
obligations in excess of $20,000 (A) on assets acquired or held by Debtor
incurred for financing the acquisition of such assets, or (B) existing on such
asset when acquired; provided
that
such Liens are in each case confined to the property and improvements and the
proceeds of such assets, and (vii) leases or subleases and non-exclusive
licenses or sublicenses, not representing obligations of the Debtor in excess
of
$50,000 per year, granted in the ordinary course of the Debtor’s business.
“Proceeds”
means
all proceeds as that term is defined in the UCC including without limitation
whatever is received upon the use, lease, sale, exchange, collection, any other
utilization of any disposition of any property whether or not in cash, all
rental or lease payments, accounts, chattel paper, instruments, documents,
general intangibles, equipment, inventory,
substitutions,
additions, accessions, replacements, products and renewals of, for, or to such
property and all insurance therefore.
“Purchase
Agreement”
has
the
meaning assigned in the Recitals to this Agreement.
“Requirement
of Law”
as
to
any person, the Certificate of Incorporation and By-Laws or other organizational
or governing documents of such person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority,
in
each case applicable to or binding upon such person or any of its property
or to
which such person or any of its material property is subject.
“Secured
Obligations”
means
all present and future obligations of the Debtor arising under the Purchase
Agreement, the Notes issued thereunder, this Agreement and any present or future
obligations of the Debtor to the Holder or the Noteholders whether direct or
indirect, joint or several, secured or unsecured, primary or secondary, absolute
or contingent, which are due or that may become due whether contracted, acquired
or arising by operation of law including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding.
“UCC”
means
the Uniform Commercial Code as effect in the State of Delaware from time to
time.
1.02 Other
Definitional Provisions
a. As
used
herein and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in Subsection 1.01 shall have
the respective meanings given to them under GAAP.
b. The
words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section, subsection schedule and exhibit
references are to this agreement unless otherwise specified. The meaning of
defined terms shall be equally applicable to the singular and plural forms
of
the defined terms.
SECTION
II
SECURITY
INTERESTS
2.01 Grant
of Security Interest
The
Debtor hereby grants to the Holder, a first lien on and a security interest
in
the Collateral to secure the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Secured Obligations.
2.02 Failure
to Perform Agreements
If
the
Debtor fails to perform or comply with any of its agreements contained herein
or
in the Purchase Agreement then the Holder may, on behalf of the Debtor and
on
five (5)
days
advance written notice to the Debtor, perform or comply, or otherwise cause
performance or compliance with such agreement in order to provide for protection
of the value of the Collateral. Debtor shall reimburse the Holder for all
amounts expended in connection with such payment, performance or compliance,
together with interest thereon at a rate equal to a rate per annum equal to
3%
per annum, such interest to be calculated from the date of such advance to
the
date of repayment thereof, shall be payable by the Debtor to the Holder ten
(10)
business days following demand for payment by the Holder.
2.03 Holder’s
Appointment as Attorney-in-Fact
Subject
to the agreement of the Holder in the last sentence of this Section 2.03 and
only to exercise the following rights during the existence of an Event of
Default the Debtor, hereby irrevocably constitutes and appoints the Holder
and
any officer or agent thereof, with full power of substitution, as its true
and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Debtor and in the name of the Debtor or in its own name, from
time to time in the Holder’s discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality
of the foregoing, the Debtor hereby gives the Holder the power and right, on
behalf of the Debtor without notice to or assent by the Debtor, to do the
following:
a. to
take
possession of and endorse and collect any checks, drafts, notes, acceptances
or
other instruments for the payment of moneys due under any Collateral and to
file
any claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Holder for the purpose of
collecting any and all such moneys due under any Collateral whenever
payable;
b. to
pay or
discharge taxes and Liens levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the terms
of
this Agreement and to pay all or any part of the premiums therefore and the
costs thereof;
c. to
direct
any party liable for any payment under any of the Collateral to make payment
of
any and all moneys due or to become due thereunder directly to the
Holder;
d. to
ask or
demand for, or collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral;
e. to
sign
and endorse any invoices, freight or express bills, bills of lading, storage
or
warehouse receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral;
f. to
commence and prosecute any suits, actions or proceedings at law or in equity
in
any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any
Collateral;
g.
to
defend any suit, action or proceeding brought against the Debtor with respect
to
any Collateral;
h. to
settle, compromise or adjust any suit, action or proceeding described above
and,
in connection therewith, to give such discharges or releases as the Holder
may
deem appropriate;
i. generally,
to sell, transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the Holder
were the absolute owner thereof for all purposes, and to do, at the Holder’s
option and the Debtor’s expense, at any time, or from time to time, all acts and
things which the Holder deems necessary to protect, preserve or realize upon
the
Collateral and the Security Interests thereon in order to effect the intent
of
this Agreement, all as fully and effectively as the Debtor might do;
and
j. in
connection with the sale of Collateral provided for herein, execute any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
This
power of attorney is a power coupled with an interest and shall be irrevocable
during the existence of an Event of Default and shall be automatically revoked
without any action on the part of the Debtor once the Event of Default giving
rise to such power of attorney has been cured. The powers conferred on the
Holder hereunder are solely to protect the Holder’s interest in the Collateral
and shall not impose any duty upon the Holder to exercise any such powers.
The
Holder shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Debtor for any act
or
failure to act hereunder, except for its own gross negligence or willful
misconduct. The Holder shall only exercise the foregoing power of attorney
during the existence of an Event of Default; provided that any person relying
on
the authority of the Holder under this power of attorney may rely exclusively
upon the representation of the Holder as to its authority hereunder and with
respect to the Holder’s right to exercise the powers granted above, shall not be
under any obligation to determine whether an Event of Default exists at the
time
the Holder attempts to exercise the powers granted above, and may disregard
any
claim by the Debtor to the contrary. If the Holder transfers the Notes or any
portion thereof to any other parties, the Holder will provide for appropriate
considerations such that any action of the Holder may be taken either by a
majority in interest of the Holders or by a collateral agent to be appointed
by
the Holder or Holders.
SECTION
III
REPRESENTATIONS
AND WARRANTIES
3.01 Power
and Authority
The
Debtor has the power and authority to execute and deliver, to perform its
obligations under, this Agreement, and to grant the security interest in and
lien on the Collateral pursuant to, this Agreement. The Debtor has taken all
necessary action to authorize the execution,
delivery and performance of this Agreement, and the grant of the security
interest in the Collateral pursuant to this Agreement.
3.02
Title; No Other Liens
Except
for Permitted Liens and as otherwise listed on Schedule D, the Debtor owns
each
item of Collateral free and clear of any and all Liens or claims of others.
No
security agreement, financing statement or other public notice with respect
to
all or any part of the Collateral is on file or of record in any public office
except as may have been filed in favor of the Holder, the holders of Permitted
Liens or as reflected on such schedule.
3.03 Perfected
First Security Interest
To
the
extent that perfection may be accomplished by filing a UCC financing statement
the security interests granted herein will, upon such filing, constitute a
first
priority perfected security interest in the Collateral in favor of the Holder
enforceable against all creditors of the Debtor except the holders of Permitted
Liens.
3.04 Intellectual
Property.
All
the
Intellectual Property, if any, owned or licensed by the Debtor, used by the
Debtor or in which the Debtor may have an interest and is material to the
business of the Debtor is listed on Schedule 1.01(a)
and
Schedule 1.01(b).
Each
item of Intellectual Property owned by or licensed to the Debtor or in which
the
Debtor has a right is (i) valid, subsisting, existing, unexpired, enforceable
and has not been abandoned, (ii) not the subject of any holding, decision or
judgment by any Governmental Authority which would limit, cancel or question
its
validity, (iii) not the subject of any action or proceeding (A) seeking to
limit, cancel or question its validity, or (B) which, if adversely determined,
would have a material adverse effect on its value, and (iv) to the knowledge
of
the Debtor, the use of the Intellectual Property does not infringe upon the
rights of any Person. The Debtor owns all rights to all patents relating to
SIGA
246, as defined in the Purchase Agreement. None
of
the aspects of the use by the Debtor of SIGA 246 are subject to any license
or
license agreement from any third party, or, to the extent that it would
adversely affect the rights of Holder hereunder, to any third party.
SECTION
IV
COVENANTS
4.01 Further
Documentation; Financing Statements
At
any
time and from time to time, upon the written request of the Holder, and at
the
sole expense of the Debtor, the Debtor will promptly and duly execute and
deliver such further instruments and documents and take such further action
as
the Holder may reasonably request for the purpose of obtaining or preserving
the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, any financing or continuation statements under
the law of any jurisdiction with respect to the Liens created hereby or any
Patent Assignment of Security Interest or Trademark Collateral Assignment with
the United States Patent and Trademark Office with respect tot the Intellectual
Property. The Debtor hereby authorizes the Holder to file any such financing
or
continuation statement without the signature of the Debtor to the extent
permitted by applicable law. The Debtor authorizes the Holder to execute and
file, in the name of the Debtor or otherwise, UCC-1 financing statements which
the Holder in its sole discretion may deem necessary or appropriate to further
perfect its security interest in the Collateral. The Debtor agrees and
authorizes that a carbon, photographic or other reproduction of this Agreement
may be used as a financing statement for filing in any
jurisdiction.
4.02 Intellectual
Property.
a. Upon
request of the Holder, the Debtor shall execute and deliver any and all
agreements, instruments, documents, and papers as the Holder may request to
evidence the Holder’s security interests in any patent, trademark or copyright
and any goodwill, know-how, trade secrets
and
general intangibles of the Debtor relating thereto or represented thereby.
The
agreements evidencing the Holder's security interest in such patents, trademark
or copyrights will contain terms reasonably satisfactory to the
Holder.
b. The
Debtor shall, consistent with its past practices, take whatever action is
necessary to protect its rights in any patents, trademarks or copyrights. The
Debtor (either itself or through licensees) will take all commercially
reasonable steps to not allow any third party to infringe on any of its patents,
trademarks or copyrights.
4.03 Maintenance
Subject
to Section 4.07 herein, the Debtor will keep and maintain at its own cost and
expense reasonably satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. The Debtor will maintain each item of
Equipment in good operating condition, ordinary wear and tear excepted, and
will
provide all maintenance, service and repairs necessary for such
purpose.
4.04 Compliance
with Laws, etc.
The
Debtor will comply in all material respects with all Requirements of Law
applicable to the Collateral or any part thereof or to the operation of the
Debtor’s business.
4.05 Payment
of Obligations
The
Debtor will pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon the Collateral or in respect of its income or
profits therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with respect
to
the Collateral, except that no such charge need be paid if (a) the validity
thereof is being contested in good faith by appropriate proceedings, (b) such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any of the Collateral or any interest therein, and (c) such charge is
adequately reserved against on the Debtor’s books in accordance with
GAAP.
4.06 Limitation
on Liens
The
Debtor will not create, incur or permit to exist, will defend the Collateral
against, and will take such other action as is reasonably necessary to remove,
any Lien or claim on or to the Collateral other than Permitted Liens, and will
defend the right, title and interest of the Holder in and to any of the
Collateral against the claims and demands of all persons other than the holders
of Permitted Liens.
4.07 Limitations
on Disposition of Collateral
The
Debtor will not sell, transfer, lease or otherwise dispose of any of the
Collateral, except for (a) collection of Accounts in the ordinary course of
business, (b) sales of Inventory in the ordinary course of business, or (c)
sales of Equipment which is obsolete and/or not of material value.
4.08 Limitations
on Modifications to Accounts
The
Debtor will not (a) amend, modify, terminate or waive any provision of any
agreement giving rise to an Account in any manner which could reasonably be
expected to materially adversely affect the value of the Collateral as a whole,
(b) fail to exercise promptly and diligently material rights giving rise to
Accounts (other than any right of termination), or (c) fail to deliver to the
Holder a copy of each material demand, notice or document received by it
relating in any way to any agreement giving rise to an Account that could
reasonably be expected to materially adversely affect the value of the
Collateral as a whole.
4.09 Limitations
on Discounts, Compromises, Extensions of Accounts
Other
than in the ordinary course of business, the Debtor will not grant any extension
of time of payment of any of the Accounts, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partially, any
person liable for the payment thereof, or allow any credit or discount
whatsoever thereon.
4.10 Insurance
a. The
Debtor will maintain, with financially sound and reputable companies insurance
policies (i) insuring any tangible Collateral against loss by fire, explosion,
theft and such other casualties as are usually insured against in the same
general area by companies engaged in the same or similar business, and (ii)
insuring the Debtor and the Holder against liability for personal injury and
property damage relating to the Collateral.
b. Subject
to the prior rights of any other holders of Permitted Liens and the other
holders of any capital leases or purchase money liens and only during the
existence of an Event of Default, in the event the Collateral is impaired:
(i)
the Debtor hereby authorizes and directs payment directly and solely to the
Holder of any proceeds of any such policy of insurance; (ii) the Holder is
hereby authorized to adjust and compromise any loss under any such policies
and
to collect and receive all such proceeds; (iii) the Holder is hereby authorized
to execute and endorse in the Debtor’s name all proofs of loss, drafts, checks
and other documents necessary to accomplish such collection and any person
making payment to the Holder is hereby relieved from obligation to see to the
application of the sums so paid.
c. After
deduction from any proceeds of any such insurance of all costs and expenses
incurred by the Holder in collection and handling of such proceeds, the net
proceeds may be applied, at the Holder's option, either toward replacing or
restoring the Collateral or as a credit against the Secured Obligations, whether
matured or unmatured.
4.11 Further
Identification of Collateral
The
Debtor will furnish to the Holder from time to time statements and schedules
but
no more than twice annually further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Holder may
reasonably request, all in reasonable detail.
4.12 Notices
The
Debtor will advise the Holder promptly, in reasonable detail (a) of any Lien
(other than Liens created hereby, Permitted Liens, and any other Liens permitted
to exist on the Collateral under the Purchase Agreement) on, or claim asserted
against, any of the Collateral in excess of $25,000; and (b) of the occurrence
of any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the Liens created
hereunder.
4.13 Changes
in Locations, Name, etc.
The
Debtor will not (a) change the location of its chief executive office/chief
place of business from that specified in this Agreement or remove its books
and
records from the location specified in this Agreement, (b) permit any of the
Inventory to be kept at a location other than those listed in this Agreement,
or
(c) change its name, identity or structure to such an extent that any financing
statement filed by the Holder in connection with this Agreement would become
seriously misleading, unless it shall have given the Holder at least 5 days
prior written notice thereof.
4.14 Commercial
Tort Claims
The
Debtor shall notify the Holder of any Commercial Tort Claim that may arise
from
time to time and execute documents, including a supplementary security agreement
and additional financing statements as the Holder may reasonably request so
that
the Holder is at all times the holder of a perfected security interest (to
the
extent that such security interest can be perfected by filing a UCC Statement)
in such claims.
SECTION
V
EVENT
OF DEFAULT AND REMEDIES
5.01 Events
of Default
An
“Event
of Default” under the terms of the Purchase Agreement shall constitute an “Event
of Default” under this Agreement.
5.02
General
During
the existence of an Event of Default, the Holder may exercise, in addition
to
all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the obligations
of
the Debtor, all rights and remedies of a secured party upon default under the
UCC.
5.03 With
respect to Accounts and General Intangibles
During
the existence of an Event of Default:
a. if
the
Holder shall so request, the Debtor shall forthwith do one or more of the
following: (i) legend, in form and manner acceptable to the Holder, its books,
records and documents evidencing or pertaining to its Accounts and General
Intangibles with an appropriate reference to the fact that such Collateral
has
been assigned to the Holder and that the Holder has a security interest therein
and notify any person with an obligation with respect to such Collateral of
the
Holder’s security interest therein, (ii) account for and transmit to the Holder,
in the same form as received, all proceeds of collection of such Collateral
received by the Debtor and, until so transmitted, hold the same in trust for
the
Holder and not commingle such proceeds with any other of its funds, (iii)
deliver, at its own expense, any or all books, record or other documents
relating to such Collateral to the Holder at a place designated by the Holder,
and (iv) notify the obligors on such Collateral that the Accounts and General
Intangibles of the Debtor have been assigned to the Holder and that payments
in
respect thereof shall be made directly to the Holder.
b. the
Holder, without notice to, or assent by, the Debtor and in the name of the
Debtor or its own name, or otherwise, may (but need not) (i) notify the obligors
of any of the Debtor’s Accounts or General Intangibles to make payments thereon
directly to the Holder; (ii) ask for, demand, collect, receive, compound and
give acquittance for such Collateral or any part thereof; (iii) extend the
time
of payment for such Collateral or compromise or settle any such Collateral
for
cash, credit or otherwise, and upon any terms and conditions; (iv) endorse
the
name of the Debtor on any check, draft or other order or instrument for the
payment of moneys payable to the Debtor which has been issued in respect of
such
Collateral; (v) file any claims and commence, maintain or discontinue any
action, suits or other proceedings deemed by the Holder necessary or advisable
for the purpose of collecting or enforcing payment of any such Collateral;
(vi)
at the Holder’s sole discretion make test verifications of such Collateral or
any portion thereof; (vii) execute any instrument and do any and all other
things necessary and proper to protect and preserve and realize upon such
Collateral and other rights contemplated hereby; and (viii) without obligation
to resort to other security, at any time and from time to time, sell, re-sell,
assign and deliver all or any of such Collateral, in one or more parcels at
the
same or different times, and all right, title and interest, claim and demand
therein and any right of redemption thereof, at public or private sale, for
cash, upon credit or for future delivery and at such price or prices and on
such
terms as the Holder may determine, with the proceeds thereof to be applied
in
the manner provided herein.
The
Debtor hereby agrees that the Holder may exercise the rights and remedies
provided herein and that the exercise of such rights and remedies by the Holder,
including, without limitation, the sale of Accounts or General Intangibles,
may
be accomplished without demand, advertisement or notice (except as required
by
law) all of which (to the extent permitted by law) are hereby expressly waived.
If any notice of a proposed sale or other disposition of such Collateral shall
be required by law, such notice shall be deemed reasonable and proper if given
at least 10 days before such sale or other disposition. The Holder shall not
be
obligated to make any sale regardless of notice of sale having been given.
The
Holder may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefore, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. The Holder
shall not be obligated to take any action authorized by this section, but in
the
event that the Holder elects to take any such action, it shall not be
responsible to the Debtor except for its willful misconduct.
5.04 As
to Inventory and Equipment
During
the existence of an Event of Default:
a. upon
notice to such effect, the Debtor shall deliver, at Debtor’s own expense, any or
all Inventory and Equipment to the Holder at a place designated by the
Holder;
b. take
possession of any or all Inventory and Equipment and, for that purpose, enter,
with the aid and assistance of any person or persons, any premises where the
Collateral, or any part thereof, is, or may be, placed or assembled, and remove
any of the same;
c. execute
any instrument and do all other things necessary and proper to protect and
preserve and realize upon such Collateral and other rights contemplated hereby;
and
d. without
obligation to resort to other security, at any time and from time to time,
sell,
assign and deliver at the same or different times, all right, title, interest
or
claim of the Debtor in such Collateral, and any right of redemption thereof,
at
public or private sale, in one or more parcels, for cash, upon credit or for
future delivery, and at such price or prices and on such terms as the Holder
may
determine.
The
Debtor hereby agrees that the exercise by the Holder of the rights and remedies
under this section, including, without limitation, sale of Inventory or
Equipment may be accomplished without demand, advertisement or notice (except
as
required by law), all of which (to the extent permitted by law) are hereby
expressly waived. If any notice of a proposed sale or other disposition shall
be
required by law, such notice shall be deemed reasonable and proper if given
at
least 10 days before such sale or other disposition. The Holder shall not be
obligated to make any sale regardless of notice of sale having been given.
The
Holder may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefore, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
The
Holder may offer any Inventory or Equipment for sale in its then present
condition and has no duty to repair or clean the Collateral prior to sale and
the failure to make such repairs or clean the Collateral shall not effect the
commercial reasonableness of the sale. The Holder may disclaim all warranties
including warranties of title, possession, quiet enjoyment, merchantability,
fitness for a particular and any such disclaimer shall not effect the commercial
reasonableness of the sale. The Holder shall not be obligated to take any of
the
action authorized by this section, but in the event that the Holder elects
to
take any such action, it shall not be responsible to the Debtor except for
its
willful misconduct.
5.05 As
to Instruments, Chattel Paper and Investment Property
During
the existence of an Event of Default, subject to the prior rights of any other
holders of Permitted Liens:
a. if
the
Holder shall so request, the Debtor shall forthwith do one or more of the
following: (i) legend, in form and manner acceptable to the Holder, the Debtor’s
books, records and documents evidencing or pertaining to any Instruments,
Chattel Paper or Investment Property with an appropriate reference to the fact
that such assets have been assigned to the Holder and that the Holder has a
security interest therein and notify any person with an obligation with respect
to such Collateral of the Holder’s security interest therein, (ii) account for
and transmit to the Holder, in the same form as received, all proceeds of
collection of such Collateral received by it and, until so transmitted, to
hold
the same in trust for the Holder and not commingle such proceeds with any other
of its funds, (iii) deliver, at its own expense, any or all books, records
or
other documents relating to such Collateral to the Holder at a place designated
by the Holder, and (iv) notify the obligors on such Collateral that such assets
have been assigned to the Holder and that payments in respect thereof shall
be
made directly to the Holder.
b. the
Holder, without notice to, or assent by, the Debtor and in the name of the
Debtor or its own name, or otherwise, may (but need not) (i) notify the obligors
of any of the Debtor’s Instruments, Chattel Paper or Investment Property to make
payments thereon directly to the Holder; (ii) ask for, demand, collect, receive,
compound and give acceptance for the such Collateral or any part thereof; (iii)
extend the time of payment for such Collateral or compromise or settle any
such
Collateral for cash, credit or otherwise, and upon any terms and conditions;
(iv) endorse the name of the Debtor on any check, draft or other order or
instrument for the payment of moneys payable to the Debtor which has been issued
in respect of such Collateral; (v) file any claims and commence, maintain or
discontinue any action, suits or other proceedings deemed by the Holder
necessary or advisable for the purpose of collecting or enforcing payment of
any
such Collateral; (vi) at the Holder’s sole discretion make test verifications of
such Collateral or any portion thereof; (vii) execute any instrument and do
any
and all other things necessary and proper to protect and preserve and realize
upon such Collateral and other rights contemplated hereby; and (viii) without
obligation to resort to other security, at any time and from time to time,
sell,
re-sell, assign and deliver all or any such Collateral, in one or more parcels
at the same or different times, and all right, title and interest, claim and
demand therein and any right of redemption thereof, at public or private sale,
for cash, upon credit or for future delivery and at such price or prices and
on
such terms as the Holder may determine, with the proceeds thereof to be applied
in the manner provided herein.
The
Debtor hereby agrees that the Holder may sell such Collateral or any part
thereof at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery, and at such price or
prices as the Holder may deem satisfactory. The Holder may be the purchaser
of
any or all of the Collateral so sold at any public sale. The Debtor covenants
and agrees that it will execute and deliver such documents and take such other
action as the Holder deems necessary or advisable in order that any such sale
may be made in compliance with law. Upon any such sale the Holder shall have
the
right to deliver, assign and transfer to the purchaser thereof the Collateral
so
sold. Each purchaser at any such sale shall hold the Collateral so sold
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Debtor which may be waived, and the Debtor,
to the extent permitted by law, hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The Debtor further acknowledges that the Holder
may deem it impracticable to effect a public sale of any part of the securities
included in the Collateral, and therefore authorizes the Holder in connection
with any such private sale, if the Holder deems it advisable to do so, (i)
to
restrict the prospective bidders on or purchasers of any of the Collateral
to a
limited number of sophisticated investors who will represent and agree that
they
are purchasing for their own account for investment and not with a view to
the
distribution or sale of any of such securities, (ii) to cause to be placed
on
certificates for any or all of the Collateral or on any other securities pledged
hereunder a legend to the effect that such security has not been registered
under the Securities Act of 1933 and may not be disposed of in violation of
the
provision of said Act, and (iii) to impose such other limitations or conditions
in connection with any such sale as the Holder deems necessary or advisable
in
order to comply with said Act or any other law. The notice (if any) of such
sale
shall (1) in case of a public sale, state the time and place fixed for such
sale, (2) in case of sale at a broker's board or on a securities exchange,
state
the board or exchange at which such sale is to be made and the day on which
the
Collateral, or the portion thereof so being sold, will first be offered for
sale
at such board or exchange, and (3) in the case of a private sale, state the
day
after which such sale may be consummated. Any such public sale shall be held
at
such time or times within ordinary business hours and at such place or places
as
the Holder may fix in the notice of such sale. At any such sale, the Collateral
may be sold in one lot as an entirety or in separate parcels, as the Holder
may
determine. The Holder shall not be obligated to make any such sale pursuant
to
any such notice. The Holder may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by
announcement at the time and place fixed for the sale, and such sale may be
made
at any time or place to which the same may be so adjourned. In case of any
sale
of all or any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Holder until the selling price is
paid
by the purchaser thereof, but the Holder shall not incur any liability in case
of the failure of such purchaser to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may again be sold upon like
notice.
5.06 Application
of Proceeds; Deficiency
a. The
Holder shall apply the net proceeds of any such collection, realization or
sale,
after deducting all reasonable costs and expenses of every kind incurred
thereinor
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Holder hereunder, including,
without limitation, reasonable attorneys’ fees and disbursements, to the payment
in whole or in part of the Secured Obligations pro rata in proportion to the
amounts owed to each of the holders, and only after such application and after
the payment by the Holder of any other amount required by any provision of
law,
need the Holder account for the surplus, if any, to the
Debtor.
b. The
Debtor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Secured
Obligations and the reasonable fees and disbursements of any attorneys employed
by the Holder to collect such deficiency.
SECTION
VI
MISCELLANEOUS
6.01 Limitations
on Rights and Obligations
Notwithstanding
any of the terms of this Agreement to the contrary, each of the rights of the
Holder and the obligations of the Debtor are subject to the rights of the
holders of Permitted Liens described herein.
6.02 Amendments
and Waivers
The
Debtor and the Holder may, from time to time, enter into written waivers,
amendments, supplements or modifications hereto for the purpose of adding any
provision to this Agreement or enter into written instruments waiving any of
the
requirements of this Agreement or any Event of Default and its consequences.
In
the case of any waiver, the Debtor shall be restored to its former positions
and
rights hereunder and any Event of Default waived shall be deemed to be cured
and
not existing; but no such waiver shall extend to any subsequent or other Event
of Default, or impair any right consequent thereon.
6.03 Notices
Unless
this Agreement specifically provides otherwise, all notices and communications
under this Agreement shall be provided in accordance with the provisions of
the
Purchase Agreement.
6.04 No
Waiver; Cumulative Remedies
No
failure to exercise or delay in exercising, on the part of the Holder, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided to the Holder are cumulative and not
exclusive of any rights, remedies, powers and privileges provided to the Holder
by law. In accordance with this section, the Holder may exercise its rights,
remedies, powers or privileges hereunder in any order it deems
appropriate.
6.05
Termination; Filing of Termination Statement;
Indemnification
This
Agreement, any and all security interests and any and all rights and powers
granted to the Holder under this Agreement shall automatically terminate and
be
of no further force and effect upon the earlier of the Maturity Date (as defined
in the Purchase Agreement), unless an Event of Default is in existence on that
date and then only until such Event of Default has been cured (the “Termination
Date”). The Holder hereby irrevocably constitutes and appoints Debtor and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in place
and
stead of the Holder and in the name of the Holder or in its own name,
immediately upon the Termination Date, for the exclusive purpose of filing
(a) a
Termination Statement on Form UCC 3 (or any successor form) and (b) any other
documents necessary or desirable to evidence the termination of any and all
security interests held by the Holder. The Debtor agrees to pay, and to hold
the
Holder harmless from, any and all liabilities, costs and expenses (including,
without limitation, reasonable legal fees and expenses) (a) with respect to,
or
resulting from, any delay in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, except in connection with any costs resulting from the gross
negligence or willful misconduct of the Holder, or (b) with respect to, or
resulting from, any delay in complying with any Requirement of Law applicable
to
any of the Collateral, except in connection with any costs resulting from the
gross negligence or willful misconduct of the Holder. In any suit, proceeding
or
action brought by the Holder under any Account for any sum owing thereunder,
or
to enforce any provisions of any Account, the Debtor will save, indemnify and
keep the Holder harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out
of
a breach by the Debtor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor or such
account debtor or obligor or its successors.
6.06 Governing
Law
This
Agreement shall be governed by, and construed and interpreted in accordance
with
the law of the State of New York.
6.07 Section
Headings
The
section headings herein are intended for convenience only and shall be ignored
in construing this Agreement.
6.08 Entire
Agreement
All
understandings and agreements heretofore made or exchanged between the Debtor
and the Holder with respect to the subject matter hereof are merged into this
Agreement, which fully, completely, and integrally expresses the understanding
of the Debtor and the Holder concerning the subject matter hereof.
6.09
Severability
If
any
provision hereof is invalid or unenforceable in any jurisdiction, then, to
the
fullest extent permitted by law, (a) the other provisions hereof shall remain
in
full force and effect in such jurisdiction and shall be liberally construed
in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (b) the invalidity or enforceability of any provision hereof
in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
6.10 WAIVER
OF TRIAL BY JURY
THE
DEBTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATED TO THIS AGREEMENT.
6.11 NOTWITHSTANDING
ANY PROVISION HEREOF TO THE CONTRARY, THE HOLDER ACKNOWLEDGES THAT ALL RIGHTS,
INTERESTS AND REMEDIES ARE SUBORDINATE TO GE CAPITAL AS FURTHER PROVIDED IN
THE
SUBORDINATION AGREEMENT.
[signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by
their respective officers thereunto duly authorized, as of the date first above
written.
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THE
DEBTOR
SIGA
TECHNOLOGIES, INC.
|
|
By: /s/
Xxxxxx
Xxxxxxxx
|
|
Xxxxxx
Xxxxxxxx
Chief
Financial Officer
|
|
THE
HOLDER:
PHARMATHENE,
INC.
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|
By: /s/
Xxxxx X.
Xxxxxx
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Xxxxx
X. Xxxxxx, President and
Chief
Executive Officer
|
