DEBENTURE GENERAL COLLATERAL SECURITY AGREEMENT
DEBENTURE GENERAL COLLATERAL SECURITY AGREEMENT dated as of October 4,
2002, made by Alliance Pharmaceutical Corp., a New York corporation (the
"Grantor"), to the parties signatory hereto (as hereinafter defined)
(collectively, the "Secured Parties").
WITNESSETH
WHEREAS, the Grantor and certain investors (the "Investors") are
entering into a Convertible Secured Note Purchase Agreement, dated as of the
date hereof (the "Convertible Secured Note Purchase Agreement"), with the
initial closing taking place on the date hereof and subsequent closings taking
place at a later date;
WHEREAS, pursuant to the Convertible Secured Note Purchase Agreement,
the Investors may purchase up to $3,000,000 in aggregate principal amount of the
Grantor's 8% Convertible Secured Promissory Notes (the "Notes");
WHEREAS, the Secured Parties hold an aggregate principal amount of
$11,000,000 of the Grantor's 5% Convertible Debentures Due 2004 (the
"Debentures") issued pursuant to those certain Securities Purchase Agreements
dated as of February 11, 2002 and August 22, 2000 among the Grantor and the
Secured Parties (the "Securities Purchase Agreements");
WHEREAS, in exchange for certain waivers of provisions under the
Debentures in connection with the Convertible Secured Note Purchase Agreement
and the purchase of the Notes, the Grantor has agreed to grant to the Secured
Parties a security interest in certain of the Grantor's property and assets,
junior in priority only to the Prior Liens to secure, among other things, the
performance of the obligations of the Grantor under the Securities Purchase
Agreements and the Debentures; and
WHEREAS, the Grantor is contemporaneously entering into a Debenture
Imagent Security Agreement with the Secured Parties and a Debenture Imagent and
Oxygent Patent and Trademark Security Agreement with the Secured Parties.
NOW, THEREFORE, in consideration of the premises set forth above the
Grantor hereby agrees with the Secured Parties as follows:
TERMS
1. DEFINED TERMS. The terms set forth below have the following
meanings:
"ACCOUNTS" shall have the meaning assigned to such term under the
Code.
"CHATTEL PAPER" shall have the meaning assigned to such term under the
Code.
"CODE" means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"COMMERCIAL TORT CLAIMS" shall have the meaning assigned to such term
under the Code.
"DEPOSIT ACCOUNT" shall have the meaning assigned to such term under
the Code.
"DOCUMENTS" shall have the meaning assigned to such term under the
Code.
"EQUIPMENT" shall have the meaning assigned to such term under the
Code.
"EVENT OF DEFAULT" means:
(1) the failure by the Grantor to perform in any material respect any
obligation of the Grantor under this Security Agreement as and when required by
this Security Agreement; or
(2) any representation or warranty made by the Grantor pursuant to
this Security Agreement is untrue in any material respect when made; or
(3) the failure by the Grantor to perform in any material respect any
obligation of the Grantor under the Imagent Security Agreement as and when
required by the Imagent Security Agreement; or
(4) any representation or warranty made by the Grantor pursuant to the
Imagent Security Agreement is untrue in any material respect when made; or
(5) the failure by the Grantor to perform in any material respect any
obligation of the Grantor under the Patent and Trademark Security Agreement as
and when required by the Patent and Trademark Security Agreement; or
(6) any representation or warranty made by the Grantor pursuant to the
Patent and Trademark Security Agreement is untrue in any material respect when
made; or
(7) any Event of Default (as defined in the Debentures) specified in
Section 3.1 of the Debentures occurs and is continuing, and has not been waived
in accordance with the terms thereof; or
(8) the security interests granted herein and pursuant to the Imagent
Security Agreement and the Patent and Trademark Security Agreement do not
constitute for any reason a perfected security interest in the Collateral
covered thereby (other than as a result of a failure to make the filings
specified in SCHEDULE I of this Security Agreement, SCHEDULE II of the Imagent
Security Agreement and Exhibits E, F and G of the Patent and Trademark Security
Agreement or the possession of Collateral by or on behalf of the Prior
Lienholders), junior in priority only to the Prior Liens; or
(9) the Grantor shall file a petition under bankruptcy, insolvency or
debtor's relief law or make an assignment for the benefit of its creditors; or
(10) proceedings shall be instituted against the Grantor before a
court of competent jurisdiction under any federal or state bankruptcy law that
(X) is for relief against the Grantor in an involuntary case brought with
respect to the Grantor in such court, (Y) seeks to appoint a custodian, receiver
or other similar official for all or substantially all the Grantor's property or
(Z) seeks to liquidate the Grantor, and such proceedings remain unstayed and in
effect for 60 days; or
(11) failure of the Grantor to pay any Obligation when due; or
(12) the Grantor shall fail to pay when due any principal of, premium
or interest on or any amount payable in respect of any borrowed money
indebtedness.
"FIXTURES" shall have the meaning assigned to such term under the
Code.
"GENERAL INTANGIBLES" shall have the meaning assigned to such term
under the Code.
"GOODS" shall have the meaning assigned to such term under the Code.
"IMAGENT SECURITY AGREEMENT" shall mean that certain Debenture Imagent
Security Agreement dated as of the date hereof between the Grantor and the
Secured Parties, as amended, supplemented or otherwise modified from time to
time
"INSTRUMENT" shall have the meaning assigned to such term under the
Code.
"INVENTORY" shall have the meaning assigned to such term under the
Code, and in any event, including all inventory, merchandise, goods and other
personal property that are held by or on behalf of a person for sale or lease or
to be furnished under a contract of service or which give rise to any Account,
including returned goods.
"INVESTMENT PROPERTY" shall have the meaning assigned to such term
under the Code.
"LETTER-OF-CREDIT RIGHT" shall have the meaning assigned to such term
under the Code.
"LIEN" shall mean any lien, mortgage, security interest, chattel
mortgage, pledge or other encumbrance (statutory or otherwise) of any kind
securing satisfaction or performance of an obligation, including any agreement
to give any of the foregoing, any conditional sales or other title retention
agreement, any lease in the nature thereof, and the filing of or the agreement
to give any financing statement under the Code of any jurisdiction or similar
evidence of any encumbrance, whether within or outside the United States.
"OBLIGATIONS" shall mean:
(1) all obligations and liabilities to the Secured Parties, whether
now existing or hereafter arising, under the Securities Purchase Agreements, the
Debentures, this Security Agreement, the Imagent Security Agreement, the Patent
and Trademark Security Agreement and/or any document or agreement related to any
of the foregoing and the due performance and compliance with the terms of the
Securities Purchase Agreements, the Debentures, this Security Agreement, the
Imagent Security Agreement, the Patent and Trademark Security Agreement and/or
any document or agreement related to any of the foregoing;
(2) any and all sums advanced by the Secured Parties in order to
preserve the Collateral or to preserve the Secured Parties' security interest in
the Collateral; and
(3) in the event of any proceeding for the collection or enforcement
of any obligations or liabilities of the Grantor referred to in the immediately
preceding clauses (1) through (2) in accordance with the terms of the Securities
Purchase Agreements, the Debentures, this Security Agreement, the Imagent
Security Agreement, the Patent and Trademark Security Agreement and/or any
document or agreement related to the foregoing, the expenses of re-taking,
holding, preparing for sale, selling or otherwise disposing of or realizing on
the Collateral, or of any other exercise by the Secured Parties of their rights
hereunder, together with reasonable attorneys' fees and court costs.
"PATENT AND TRADEMARK SECURITY AGREEMENT" shall mean that certain
Debenture Imagent and Oxygent Patent and Trademark Security Agreement dated as
of the date hereof between the Grantor and the Secured Parties, as amended,
supplemented or otherwise modified from time to time.
"PRIOR LIENHOLDERS" means the holders of the Prior Liens.
"PRIOR LIENS" means the Liens of the Prior Lienholders created under
the Prior Lienholders Security Agreements.
"PRIOR LIENHOLDERS SECURITY AGREEMENTS" means the (i) Security
Agreement, dated July 23, 2002, made by the Grantor in favor of Xmark Fund, L.P.
and Xmark Fund, Ltd., (ii) Patent and Trademark Security Agreement, dated July
23, 2002 made by the Grantor in favor of Xmark Fund, L.P. and Xmark Fund, Ltd.,
(iii) Imagent Security Agreement, dated October 4, 2002, made by the Grantor in
favor of SDS Merchant Fund, L.P. as Collateral Agent for the benefit of the
holders of the notes issued pursuant to the Convertible Secured Note Purchase
Agreement, (iv) General Collateral Security Agreement, dated October 4, 2002,
made by the Grantor in favor of SDS Merchant Fund, L.P., as Collateral Agent for
the benefit of the holders of the notes issued pursuant to the Convertible
Secured Note Purchase Agreement and, (v) Imagent and Oxygent Patent and
Trademark Security Agreement, dated October 4, 2002, made by the Grantor in
favor of SDS Merchant Fund, L.P., as Collateral Agent for the benefit of the
holders of the notes issued pursuant to the Convertible Secured Note Purchase
Agreement, and (vi) Alliance/PFC Security Agreement, dated as of May 19, 2000,
by and between Alliance and PFC Therapeutics, LLC.
"PROCEEDS" shall have the meaning assigned to such term under the
Code.
"SECURITY AGREEMENT" means this General Collateral Security Agreement,
as amended, supplemented or otherwise modified from time to time.
"SUPPORTING OBLIGATIONS" shall have the meaning assigned to such term
under the Code.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt
and complete payment and performance when due of the Obligations, the Grantor
hereby pledges, hypothecates, delivers and assigns to the Secured Parties, and
grants to the Secured Parties a continuing security interest junior in priority
only to the Prior Liens in and to, all of the Grantor's right, title and
interest in and to all of the following property now owned or at any time
hereafter acquired by the Grantor or in which the Grantor now has or at any time
in the future may acquire right, title or interest (collectively, the
"Collateral"):
(i) All Equipment in all of its forms, wherever located;
(ii) All Inventory and Goods in all of its forms, wherever located;
(iii) All Accounts, in all of their forms, wherever located;
(iv) All General Intangibles in all their forms, wherever located;
(v) All Fixtures in all their forms, wherever located;
(vi) All Documents, Letter-of-Credit Rights, Chattel Paper, in all
their forms, wherever located;
(vii) All Deposit Accounts, in all their forms, wherever located;
(viii) All Instruments and Investment Property, in all their forms,
wherever located;
(ix) All Supporting Obligations, in all their forms wherever located;
and
(x) All Proceeds of any and all of the foregoing.
Notwithstanding the foregoing provisions of this Section 2, the grant of a
security interest as provided herein shall not extend to, and the term
"Collateral" shall not include the items set forth on SCHEDULE II hereto.
3. RIGHTS OF THE SECURED PARTIES; LIMITATIONS ON SECURED PARTIES'
OBLIGATIONS.
(a) GRANTOR REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and contracts that constitute part of the Collateral to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise to each such Account and in accordance with and pursuant to the
terms and provisions of each such contract. The Secured Parties shall not have
any obligation or liability under any Account that constitutes part of the
Collateral (or any agreement giving rise thereto) or under any contract that
constitutes part of the Collateral by reason of or arising out of this Security
Agreement or the receipt by the Secured Parties of any payment relating to such
Account or contract pursuant hereto, nor shall the Secured Parties be obligated
in any manner to perform any of the obligations of the Grantor under or pursuant
to any such Account (or any agreement giving rise thereto) or under or pursuant
to any such contract, to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any such Account (or any agreement giving rise
thereto) or under any such contract, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
(b) VERIFICATION AND ANALYSIS OF ACCOUNTS. If an Event of Default has
occurred and is continuing under the Debentures, the Secured Parties shall have
the right to communicate with account debtors on the Accounts that constitute
part of the Collateral and parties to the contracts that constitute part of the
Collateral to verify with them to its satisfaction the existence, amount and
terms of any such Accounts or contracts and to make test verifications of such
Accounts in any manner and through any medium that it reasonably considers
advisable, and the Grantor shall furnish all such assistance and information as
the Secured Parties may require in connection therewith. At any time and from
time to time, upon the Secured Parties' reasonable request and at the expense of
the Grantor, the Grantor shall cause independent public accountants or others
satisfactory to the Secured Parties to furnish to the Secured Parties reports
showing reconciliations, aging and test verifications of, and trial balances
for, such Accounts.
4. REPRESENTATIONS AND WARRANTIES. The Grantor hereby represents and
warrants that:
(a) TITLE; NO OTHER LIENS. Except for the Prior Liens and for the Lien
granted to the Secured Parties pursuant to this Security Agreement, the Lien
granted to the Secured Parties pursuant to the Imagent Security Agreement and
the Lien granted to the Secured Parties pursuant to the Patent and Trademark
Security Agreement, the Grantor solely owns each item of the 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 in respect of
the Prior Liens and such as may have been filed in favor of the Secured Parties
pursuant to this Security Agreement, the Imagent Security Agreement or the
Patent and Trademark Security Agreement.
(b) PERFECTED JUNIOR PRIORITY LIENS. The Liens granted pursuant to
this Security Agreement will constitute upon the completion of all the filings
or notices listed in SCHEDULE I hereto, perfected Liens on all Collateral, which
are in priority to all other Liens on such Collateral, except the Prior Liens,
and which are enforceable as such against all creditors of the Grantor.
(c) ACCOUNTS. No amount payable to the Grantor under or in connection
with any Account that constitutes part of the Collateral is evidenced by any
Instrument (other than checks in the ordinary course of business) or Chattel
Paper which has not been previously delivered to the Prior Lienholders. The
place where the Grantor keeps its records concerning the Accounts that
constitute part of the Collateral is set forth on SCHEDULE III hereto.
(d) CONSENTS. No consent (other than consents that have been obtained
and those set forth in items 7, 8 and 9 on Schedule 2(e) of the Convertible
Secured Note Purchase Agreement) of any party (other than the Grantor) to any
contract that constitutes part of the Collateral is required, or purports to be
required, in connection with the execution, delivery and performance of this
Security Agreement.
(e) INVENTORY AND EQUIPMENT. The Inventory and Equipment that
constitutes part of the Collateral is, as of the date hereof, kept at the
locations listed on SCHEDULE IV hereto and has not been kept at any other
location within the five-year period ending on the date hereof.
(f) CHIEF EXECUTIVE OFFICE. The Grantor's chief executive office and
chief place of business is located at 0000 Xxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000.
(g) POWER AND AUTHORITY; DUE AUTHORIZATION. The Grantor has full
power, authority and legal right to enter into this Security Agreement and to
grant the Secured Parties the Lien on the Collateral pursuant to this Security
Agreement and has taken all necessary corporate and other action to authorize
the execution, delivery and performance of this Security Agreement.
(h) BINDING OBLIGATION. This Security Agreement has been duly executed
and delivered by the Grantor and constitutes a legal, valid and binding
obligation of the Grantor enforceable in accordance with its terms.
(i) NO VIOLATION. The execution, delivery and performance of this
Security Agreement will not violate any provision of the Grantor's Certificate
of Incorporation or Bylaws, or of any applicable law or regulation or of any
order, judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of any securities issued by the Grantor, or
of any mortgage, indenture, lease, contract or other agreement (other than those
set forth in items 7, 8 and 9 on Schedule 2(e) of the Convertible Secured Note
Purchase Agreement), instrument or undertaking to which the Grantor is a party
or which purports to be binding upon the Grantor or upon any of its assets and
will not result in the creation or imposition of any Lien on any of the assets
of the Grantor except as contemplated by this Security Agreement, the Imagent
Security Agreement and the Patent and Trademark Security Agreement.
(j) CONSENTS. No consent, filing, approval, registration, recording,
or other action is required (x) for the grant by the Grantor of the Lien on the
Collateral pursuant to this Security Agreement or for the execution, delivery or
performance of this Security Agreement by the Grantor, or (y) to perfect the
Lien purported to be created by this Security Agreement, in each case other than
consents that have been obtained and except as set forth in items 7, 8 and 9 on
Schedule 2(e) of the Convertible Secured Note Purchase Agreement with respect to
the consents obtained after the date hereof and as contemplated by section 4(b)
above.
(k) VALIDITY OF COLLATERAL. To the knowledge of the Grantor, all of
the Collateral is subsisting and is valid.
(l) ORGANIZATION. The Grantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and duly
qualified and in good standing in every other state or jurisdiction in which the
nature of the Grantor's business or the ownership of its assets requires such
qualification. The Grantor's state organizational identification number and
federal employer identification number are as set forth on SCHEDULE V hereto.
(m) NAMES USED BY GRANTOR. (i) The actual corporate name of the
Grantor is the name set forth in the preamble above; (ii) the Grantor has no
trade names; (iii) the Grantor has not used any name other than that stated in
the preamble hereto for the preceding five years; and (iv) no entity has merged
into the Grantor or been acquired by the Grantor within the past five years.
(n) ACCOUNT DEBTORS. None of the account debtors or other persons
obligated on any of the Collateral is a governmental authority covered by the
Federal Assignment of Claims Act or any like federal, state or local statute or
rule in respect of such Collateral.
5. [RESERVED].
6. COVENANTS.
(a) The Grantor covenants and agrees with the Secured Parties that
from and after the date of this Security Agreement until the payment and
performance in full by the Grantor of all of its Obligations:
(i) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL
PAPER. At any time and from time to time, upon the written request of the
Secured Parties, and at the sole expense of the Grantor, the Grantor will
promptly and duly execute and deliver such further instruments and documents and
take such further action as the Secured Parties may reasonably request for the
purpose of obtaining or preserving the full benefits of this Security Agreement
and of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements, or amendments thereto, under
the Code in effect in any such jurisdiction with respect to the Liens created
hereby. The Grantor also hereby authorizes the Secured Parties to file any such
financing or continuation statement, or amendment thereto, without the signature
of the Grantor to the extent permitted by applicable law. A carbon, photographic
or other reproduction of this Security Agreement shall be sufficient as a
financing statement for filing in any jurisdiction. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Secured Parties, duly endorsed in a manner
satisfactory to the Secured Parties, to be held as Collateral pursuant to this
Security Agreement (except for such Instruments and/or Chattel Paper which are
delivered to the Prior Lienholders provided that the Secured Parties otherwise
has a perfected security interest in such Instruments and/or Chattel Paper and
provided further that the Grantor delivers such Instruments and/or Chattel Paper
to the Secured Parties upon the Prior Lienholders' release of their interest
therein). To the extent that any Collateral consists of electronic Chattel
Paper, the Grantor shall cause the underlying Chattel Paper to be marked within
the meaning of Section 9-105 of the Code (or successor section thereto).
(ii) INDEMNIFICATION. The Grantor agrees to pay, and to save the
Secured Parties harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) 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, (ii) with respect to, or resulting from, any delay by the Grantor in
complying with any law or regulation applicable to any of the Collateral, (iii)
in connection with any action taken by the Secured Parties in exercising its
rights under this Security Agreement, and (iv) in connection with the
preparation and enforcement of this Security Agreement and the related
documents. In any suit, proceeding or action brought by the Secured Parties
under any Account or contract that constitutes part of the Collateral for any
sum owing thereunder, or to enforce any provisions of any such Account or
contract, the Grantor will save, indemnify and keep the Secured Parties harmless
from and against all expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by the Grantor of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Grantor. The obligations under this section 6(a)(ii)
shall survive termination of this Security Agreement.
(iii) MAINTENANCE OF RECORDS. The Grantor will keep and maintain
at its own cost and expense 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 that constitute part of the Collateral. The
Grantor hereby grants to the Secured Parties access to all of the Grantor's
books and records pertaining to the Collateral, and the Grantor shall turn over
any such books and records for inspection at the office of the Grantor to the
Secured Parties or to their representatives during normal business hours at the
request of the Secured Parties.
(iv) LIMITATION ON LIENS ON COLLATERAL. The Grantor will not
create, incur or permit to exist, will defend at its own expense the Collateral
against, and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the Prior Liens, and will defend the
right, title and interest of the Secured Parties in and to any of the Collateral
against the claims and demands of all persons whomsoever, other than the Prior
Lienholders.
(v) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Grantor will
not sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so except for sales of Inventory and the
collection and use of cash proceeds in the ordinary course of its business
without express, written agreement by the Secured Parties.
(vi) LIMITATIONS ON PERFORMANCE OF CONTRACTS AND AGREEMENTS
GIVING RISE TO ACCOUNTS. The Grantor will not (i) fail to exercise promptly and
diligently each and every material right or fail to perform each material
obligation which it may have under each contract that constitutes part of the
Collateral and each agreement giving rise to an Account that constitutes part of
the Collateral (other than any right of termination) except where the Grantor
determines in its reasonable business judgment that the failure to exercise such
right or perform such obligation is in the best interest of the Grantor and
consistent with the protection and preservation of the rights and interests of
the Secured Parties in the Collateral or (ii) fail to deliver to the Secured
Parties, upon request, a copy of each material demand, notice or document
received by it relating in any way to any contract that constitutes part of the
Collateral or any agreement giving rise to an Account that constitutes part of
the Collateral. The Grantor will not amend or modify the terms of, or waive any
rights under, any contracts, without the express written consent of Secured
Parties.
(vii) FURTHER IDENTIFICATION OF COLLATERAL. The Grantor will
furnish to the Secured Parties from time to time, upon the request of the
Secured Parties, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Secured Parties may reasonably request, all in reasonable detail.
(viii) NOTICES. The Grantor will advise the Secured Parties
promptly, in reasonable detail, at its address in accordance with section 15,
(i) of any Lien (other than Liens permitted hereunder) on, or claim asserted
against, any of the Collateral and (ii) of the occurrence of any other event
which could reasonably be expected to have a material adverse effect on the
value of any material portion of the Collateral or on the Liens created
hereunder.
(ix) CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS; PLACE OF
BUSINESS. The Grantor shall not make any change (a) in its name, (b) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office facility at which Collateral owned by it is located (including the
establishment of any such new office or facility) from 0000 Xxxx Xxxxxxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000, (c) in its identity or type of organization or
corporate structure, (d) in its Federal Taxpayer Identification Number or
organizational identification number or (e) in its jurisdiction of organization
unless (i) the Grantor provides the Secured Parties at least 30 days prior
written notice of such change and (ii) all filings have been made under the Code
or otherwise that are required in order for the Secured Parties to continue at
all times following such change to have a valid, legal and perfected security
interest in all the Collateral, junior in priority only to the Prior Liens.
(x) SUBSIDIARIES. This Security Agreement is entered into on
behalf of and for the benefit of the Grantor and its subsidiaries and other
entities controlled by the Grantor which have rights in the Collateral. The
security interest granted by the Grantor hereunder is intended to include all
rights of the Grantor in and to the Collateral, including any rights of its
subsidiaries and such other entities in and to such Collateral, and the Grantor
will not permit such subsidiaries and entities to exercise any of their rights
with respect to the Collateral.
(xi) PAYMENT OF TAXES AND OTHER CLAIMS. The Grantor shall pay or
discharge when due all taxes, assessments and governmental charges or levies
imposed upon it unless same are not delinquent, provided, however, that the
Grantor shall have the right to challenge in good faith by appropriate
proceedings any disputed taxes, assessments or governmental charges or levies
provided that the Grantor establishes appropriate reserves therefor in
accordance with generally accepted accounting principles; and, provided,
further, that notwithstanding any such contest, the Grantor shall pay such
disputed taxes, assessments and governmental charges or levies if nonpayment
would result in the imposition of any Lien on the Grantor's assets or
properties.
(xii) INDEBTEDNESS; DISTRIBUTIONS; INVESTMENTS; CONSOLIDATION AND
MERGER; SUBSIDIARIES; NATURE OF BUSINESS; AFFILIATE TRANSACTIONS; INVOICES. The
Grantor shall not (i) make advances, loans or extensions of credit to any
person; (ii) become either directly or contingently liable upon the obligations
of any person by assumption, endorsement or guaranty thereof or otherwise; (iii)
enter into any merger, consolidation or other reorganization with or into any
other person or acquire all or a portion of the assets or stock of any person or
permit any other person to consolidate with or merge with it; (iv) form any
subsidiary or enter into any partnership, joint venture or similar arrangement;
(v) materially change the nature of the business in which it is presently
engaged; (vi) enter into any transaction with any affiliate, except in ordinary
course on arms-length terms; or (vii) xxxx accounts under any name except the
present name of the Grantor.
(xiii) PFC THERAPEUTICS, LLC. Until such time as the Obligations
are indefeasibly paid in full, the Grantor shall (i) continue to own not less
than a 50% membership interest in PFC Therapeutics, LLC (the "LLC") and not less
than 50% of the profit interest in the LLC, (ii) not sell, transfer or otherwise
dispose of any of its right, title and interest in the LLC (including, but not
limited to, the pledge, hypothecation or granting of any security interest with
respect thereto) and (iii) cause the LLC not to, directly or indirectly, (A)
incur, assume, guarantee or otherwise become liable with respect to any
indebtedness for borrowed money, (B) incur, grant or otherwise suffer to exist
any lien, claim, charge or other encumbrance on its assets, (C) amend, modify or
alter its certificate of formation or the operating agreement of the LLC if such
amendment, modification or alteration would adversely affect the rights of
Grantor, or (D) merge with or into, or consolidate with, or sell or transfer all
or any substantial portion of its assets (other than the sale of inventory in
the ordinary course of business), in one or a series of related transactions, to
any third party unless, after giving effect to any such transaction, Grantor
continues to own not less than 50% of the equity interests and profit interest
in any successor entity.
(xiv) USE AND DISPOSITION OF COLLATERAL. The Grantor shall (i)
not dispose of any of the Collateral whether by sale, lease or otherwise except
for (A) the sale of Inventory in the ordinary course of business, and (B) the
disposition or transfer of obsolete and worn-out Equipment in the ordinary
course of business and (ii) keep and maintain the Equipment in good operating
condition, except for ordinary wear and tear, and shall make all necessary
repairs and replacements thereof so that the value and operating efficiency
shall at all times be maintained and preserved.
(xv) RISK OF LOSS; INSURANCE. The Grantor shall bear the full
risk of loss from any loss of any nature whatsoever with respect to the
Collateral. At it's own cost and expense in amounts and with carriers acceptable
to the Secured Parties, it shall (a) keep all its insurable properties and
properties in which it has an interest insured against the hazards of fire,
flood, sprinkler leakage, those hazards covered by extended coverage insurance
and such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to the Grantor's including, without
limitation, public and product liability insurance, worker's compensation,
insurance against larceny, embezzlement or other criminal misappropriation of
insured's officers and employees and business interruption insurance; (b)
furnish the Secured Parties with (i) copies of all policies and evidence of the
maintenance of such policies at least 30 days before any expiration date, and
(ii) appropriate loss payable endorsements in form and substance satisfactory to
the Secured Parties, naming the Secured Parties as loss payees and providing
that as to the Secured Parties the insurance coverage shall not be impaired or
invalidated by any act or neglect of the Grantor and the insurer will provide
the Secured Parties with at least 30 days notice prior to cancellation. The
Grantor shall instruct the insurance carriers that in the event of any loss
thereunder, the carriers shall make payment for such loss to the Secured Parties
and not to the Grantor and the Secured Parties jointly. If any insurance losses
are paid by check, draft or other instrument payable to the Grantor and the
Secured Parties jointly, the Secured Parties may endorse the Grantor's name
thereon and do such other things as the Secured Parties may deem advisable to
reduce the same to cash. The Secured Parties is hereby authorized to adjust and
compromise claims. All loss recoveries received by the Secured Parties upon any
such insurance may be applied to the Obligations, in such order as the Secured
Parties in its sole discretion shall determine. Any surplus shall be paid by the
Secured Parties to the Grantor or applied as may be otherwise required by law.
Any deficiency thereon shall be paid by the Grantor to the Secured Parties, on
demand.
(xvi) NOTICE OF CERTAIN EVENTS. The Grantor shall promptly inform
the Secured Parties in writing of: (a) the commencement of all proceedings and
investigations by or before and/or the receipt of any notices from, any
governmental or nongovernmental body and all actions and proceedings in any
court or before any arbitrator against or in any way concerning any of the
Grantor's properties, assets or business, which might singly or in the
aggregate, have a materially adverse effect on the Grantor; (b) any amendment of
the Grantor's certificate of incorporation or by-laws; (c) any change in the
Grantor's business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects which has had or might have a
materially adverse effect on the Grantor; (d) any Event of Default or any event,
circumstance or condition which with the passage of time or giving of notice or
both would constitute an Event of Default; (e) any default or any event,
circumstance or condition which with the passage of time or giving of notice or
both would constitute a default under any agreement for the payment of money to
which the Grantor is a party or by which the Grantor or any of the Grantor's
properties may be bound which would have a material adverse effect on the
Grantor's business, operations, property or condition (financial or otherwise)
or the Collateral; (f) any change in the location of the Grantor's executive
offices; (g) any change in the location of the Grantor's Inventory or Equipment
from the locations listed on SCHEDULE IV hereto, (h) any material delay in the
Grantor's performance of any of its obligations to any Customer and of any
assertion of any material claims, offsets or counterclaims by any Customer and
of any allowances, credits and/or other monies granted by it to any Customer;
(i) any material adverse information relating to the financial condition of any
Customer; and (k) any material return of goods.
(xvii) ATTORNEY-IN-FACT. The Grantor hereby irrevocably appoints,
subject to the rights of the Prior Lienholders, the Secured Parties or any other
person whom the Secured Parties may designate as the Grantor's attorney-in-fact,
with full power and authority in place and stead of the Grantor and in the name
of the Grantor or in its own name to: (i) endorse the Grantor's name on any
checks, notes, acceptances, money orders, drafts or other forms of payment or
security that may come into the Secured Parties' possession; (ii) sign the
Grantor's name on any invoice or xxxx of lading relating to any Accounts, drafts
against Customers, schedules and assignments of Accounts, notices of assignment,
financing statements and other public records, verifications of account and
notices to or from Customers; (iii) verify the validity, amount or any other
matter relating to any Account Receivable (as defined in the Code) by mail,
telephone, telegraph or otherwise with Customers; (iv) execute customs
declarations and such other documents as may be required to clear Inventory
through United States Customs; (v) do all things necessary to carry out this
Security Agreement and all other documents and agreements related hereto; (vi)
continue any insurance existing pursuant to the terms of this Security Agreement
and pay all or any part of the premium therefor and the cost thereof; and (vii)
on or after the occurrence and continuation of an Event of Default, notify the
post office authorities to change the address for delivery of the Grantor's mail
to an address designated by the Secured Parties, and to receive, open and
dispose of all mail addressed to the Grantor. The Grantor hereby ratifies and
approves all acts of the attorney. The powers conferred on the Secured Parties
hereunder are solely to protect the Secured Parties' interests in the Collateral
and shall not impose any duty upon them to exercise any such powers. Neither the
Secured Parties nor the attorney will be liable for any acts or omissions or for
any error of judgment or mistake of fact or law. This power, being coupled with
an interest, is irrevocable until the Obligations have been fully satisfied.
(xviii) INVESTMENT PROPERTY AND DEPOSIT ACCOUNTS. If there is any
Investment Property or Deposit Accounts (as defined in the Code) included as
Collateral that can be perfected by "control" through an account control
agreement, the Grantor shall cause such an account control agreement to be
entered into and delivered to the Secured Parties.
(xix) LETTER-OF-CREDIT RIGHTS. To the extent that any Collateral
consists of Letter-of-Credit Rights, the Grantor shall cause the issuer of each
underlying letter of credit to consent to the assignment to the Secured Parties
of the proceeds of such letter of credit.
(xix) COLLATERAL IN POSSESSION OF THIRD PARTIES. To the extent
that any Collateral is in the possession of a third party, the Grantor will join
with the Secured Parties in notifying the third party of the Secured Parties'
security interest and in obtaining an acknowledgement from the third party that
it is holding the Collateral for the benefit of the Secured Parties.
(xx) COMMERCIAL TORT CLAIMS. If the Grantor shall at any time
hold or acquire a Commercial Tort Claim, the Grantor shall immediately notify
the Secured Parties in a writing signed by the Grantor of the brief details
thereof and grant to the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Security
Agreement, with such writing to be in form and substance satisfactory to the
Secured Parties.
(b) [RESERVED].
(c) [RESERVED].
7. PERFORMANCE BY SECURED PARTIES OF GRANTOR'S OBLIGATIONS. If the
Grantor fails to perform or comply with any of its agreements contained herein
and the Secured Parties, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreements, the expenses of the Secured Parties incurred
in connection with such performance or compliance shall be payable by the
Grantor to the Secured Parties on demand and shall constitute Obligations
secured hereby.
8. REMEDIES.
(a) If an Event of Default (i) has occurred and has continued for a
period of 30 consecutive days without cure by the Grantor with respect to items
1, 2, 3, and 4 set forth in the definition of Event of Default, or (ii) has
occurred and is continuing with respect to all other items in the definition of
Event of Default, the Secured Parties may exercise, in addition to all other
rights and remedies granted to it in this Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Secured Parties, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below or expressly provided for)
to or upon the Grantor or any other person (all and each of which demands,
defenses, advertisements and notices are, to the extent permitted by applicable
law, hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, license, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), at public or private sale or sales, at any
exchange, broker's board or office of the Secured Parties or elsewhere upon such
terms and conditions as they may deem advisable and at such prices as they may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Secured Parties shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in the Grantor, which right or equity is
hereby waived, to the extent permitted by applicable law, or released.
(b) The Grantor further agrees that, if an Event of Default has
occurred and is continuing, at the Secured Parties' request, to assemble the
Collateral and make it available to the Secured Parties at places which the
Secured Parties shall reasonably select, whether at the Grantor's premises or
elsewhere. The Secured Parties shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Secured Parties hereunder,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Obligations, in such order as the Secured
Parties may elect, and only after such application and after the payment by the
Secured Parties of any other amount required by any provision of law, must the
Secured Parties account for the surplus, if any, to the Grantor. To the extent
permitted by applicable law, the Grantor waives all claims, damages and demands
it may acquire against the Secured Parties arising out of the exercise by it of
any rights hereunder, provided, that nothing contained in this section 8 shall
relieve the Secured Parties from liability arising solely from its gross
negligence or willful misconduct. If any notice of a proposed sale or other
disposition of 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 Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Secured Parties to collect such deficiency.
(c) For the purpose of enabling the Secured Parties to exercise rights
and remedies under this section 8 at such time as the Secured Parties shall be
lawfully entitled to exercise such rights and remedies, the Grantor hereby
grants to the Secured Parties an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Grantor) to use, license
or sublicense any of the Collateral consisting of intellectual property now
owned or hereafter acquired by the Grantor or as to which the Grantor has the
right to use, and wherever the same may be located, and including in such
license reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Secured Parties
shall be exercised, at the option of the Secured Parties, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sublicense or other transaction entered into by the Secured Parties in
accordance herewith shall be binding upon the Grantor notwithstanding any
subsequent cure of an Event of Default.
(d) All rights, powers and remedies provided to the Secured Parties in
this Agreement are subject to the rights, powers and remedies of the Prior
Lienholders as set forth in the Prior Lienholders Security Agreements and to the
terms and provisions of those certain Intercreditor Agreements, dated as of even
date herewith, among the Grantor, the Prior Lienholders signatory thereto, and
the Secured Parties.
9. SEVERABILITY. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10. PARAGRAPH HEADINGS. The paragraph headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
11. CUMULATIVE REMEDIES. The rights and remedies provided herein, in
the Imagent Security Agreement, in the Patent and Trademark Security Agreement,
in the Securities Purchase Agreements and in the Debentures are cumulative, may
be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law or in equity or by statute.
12. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the terms
or provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Grantor and
the holders of a majority of the outstanding aggregate principal amount of the
Notes; provided, however, that Section 8(d) hereof may not be waived, amended,
supplemented or otherwise modified, nor may a provision inconsistent with
Section 8(d) hereof be added, unless such written instrument is also executed by
the prior Lienholders. No course of dealing between the Grantor and the Secured
Parties nor any delay in exercising or failure to exercise any rights, power or
privilege under this Security Agreement shall operate as a waiver. This Security
Agreement shall be binding upon the successors and permitted assigns of the
Grantor and shall inure to the benefit of the Secured Parties and their
successors and assigns. The Grantor may not assign its rights or obligations
under this Security Agreement without the prior written consent of the Secured
Parties.
13. TERMINATION OF SECURITY INTEREST; RELEASE OF COLLATERAL.
(a) Upon the payment and performance in full by the Grantor of its
Obligations, the security interest granted in the Collateral pursuant to this
Security Agreement (the "Security Interest") shall terminate and all rights to
the Collateral shall revert to the Grantor.
(b) Upon any such termination of the Security Interest, the Secured
Parties will, at the expense of the Grantor, execute and deliver to the Grantor
such documents and take such other actions as the Grantor shall reasonably
request to evidence the termination of the Security Interest and deliver to the
Grantor all Collateral so released then in its possession.
14. NOTICES. Any notices required or permitted to be given under the
terms of this Security Agreement shall be in writing and shall be sent by mail,
personal delivery, telephone line facsimile transmission or courier and shall be
effective five days after being placed in the mail, if mailed, or upon receipt,
if delivered personally, by telephone line facsimile transmission or by courier,
in each case addressed to a party at such party's address (or telephone line
facsimile transmission number) shown below or such other address (or telephone
line facsimile transmission number) as a party shall have provided by notice to
the other party in accordance with this provision. In the case of any notice to
the Grantor, such notice shall be addressed to the Grantor at 0000 Xxxx
Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: President (telephone line
facsimile number (000) 000-0000), and a copy shall also be given to: Stroock &
Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxxxxx, Esq. (telephone line facsimile transmission number (212)
806-6006), and in the case of any notice to the Secured Parties, such notice
shall be addressed to.
15. INTEGRATION. This Security Agreement represents the agreement of
the Grantor and the Secured Parties with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Secured Parties relative to subject matter hereof not expressly set forth or
referred to herein.
16. GOVERNING LAW. This Security Agreement and the rights and
obligations of the Grantor hereunder shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York, except to the
extent that under the New York Uniform Commercial Code the laws of another
jurisdiction govern matters of perfection and the effect of perfection or
non-perfection of any security interest granted hereunder.
17. COUNTERPARTS. This Security Agreement may be executed in
counterparts and by the parties hereto on separate counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument. A telephone line facsimile transmission of this
Security Agreement bearing a signature on behalf of a party hereto shall be
legal and binding on such party.
18. WAIVER OF JURY TRIAL. To the extent permitted by applicable law,
each of the Grantor and the Secured Parties waives any right to have a jury
participate in resolving any dispute, whether sounding in contract, tort, or
otherwise between the parties hereto arising out of, connected with, related to,
or incidental to the relationship between any of them in connection with this
Security Agreement or the transactions contemplated hereby. Instead, any such
dispute resolved in court will be resolved in a bench trial without a jury,
submitted to jurisdiction in the Southern District of New York and New York
State Courts located in the County of New York.
19. CODE TERMS. All terms defined in Article 9 of the Code and used in
this Security Agreement shall have the same definitions herein as specified in
Article 9 of the Code, and such definitions are hereby incorporated herein by
reference and made a part hereof.
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
GRANTOR:
ALLIANCE PHARMACEUTICAL CORP.
By:
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Name: Xxxxxxxx X. Xxxx
Title: President and Chief Operating
Officer
ACKNOWLEDGED AND AGREED BY THE SECURED PARTIES:
