PLEDGE AND SECURITY AGREEMENT
THIS
PLEDGE AND SECURITY AGREEMENT (as it may be amended or modified from time to
time, the “Security
Agreement”)
is
entered into as of November 2, 2007 by and among Lev Pharmaceuticals, Inc.,
a
Delaware corporation (“Lev”),
and
Lev Development Corp., a Delaware corporation (“Development”),
(each
a “Grantor”,
and
collectively, the “Grantors”),
and
Mast Capital Management, LLC, in its capacity as collateral agent (the
“Collateral
Agent”)
for
the lenders party to the Credit Agreement referred to below.
PRELIMINARY
STATEMENT
Reference
is hereby made to the Term Loan Agreement, dated as of November 2, 2007 (as
it
may be amended or modified from time to time the “Credit
Agreement”),
by
and among Lev and Development as joint and several borrowers (together, the
“Borrowers”),
the
lenders from time to time party thereto (the “Lenders”)
and
Mast Capital Management, LLC, in its capacities as administrative agent and
collateral agent for the Lenders (the “Agent”).
The
Grantors are entering into this Security Agreement in order to induce the
Lenders to enter into and extend credit to the Borrowers under the Credit
Agreement and to secure the Obligations (as such term is defined in the Credit
Agreement).
NOW,
THEREFORE, in consideration of the premises and the agreements, provisions
and
covenants set forth herein, each of the Grantors and the Collateral Agent,
on
behalf of the Lenders, hereby agreed as follows:
ARTICLE
I
DEFINITIONS
1.1. Terms
Defined in Credit Agreement.
All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Credit Agreement.
1.2. Terms
Defined in UCC.
Terms
defined in the UCC which are not otherwise defined in this Security Agreement
are used herein as defined in the UCC.
1.3. Definitions
of Certain Terms Used Herein.
As used
in this Security Agreement, in addition to the terms defined in the Preliminary
Statement, the following terms shall have the following meanings:
“Article”
means
a
numbered article of this Security Agreement, unless another document is
specifically referenced.
“Assigned
Contracts”
means,
collectively, all of the Grantors’ rights and remedies under, and all moneys and
claims for money due or to become due to the Grantor under all material
contracts and agreements to which any Grantor is a party or by which its assets
are bound, and any and all amendments, supplements, extensions, and renewals
thereof, including all rights and claims of the Grantors now or hereafter
existing: (a) under any insurance, indemnities, warranties, and guarantees
provided for or arising out of or in connection with any of the foregoing
agreements; (b) for any damages arising out of or for breach or default under
or
in connection with any of the foregoing contracts; (c) to all other amounts
from
time to time paid or payable under or in connection with any of the foregoing
agreements; or (d) to exercise or enforce any and all covenants, remedies,
powers and privileges thereunder.
“Chattel
Paper”
shall
have the meaning set forth in Article 9 of the UCC.
“Closing
Date”
means
the date of the Credit Agreement.
“Collateral”
shall
have the meaning set forth in Article II.
“Collateral
Access Agreement”
means
any landlord waiver and consent or other agreement, in form and substance
satisfactory to the Collateral Agent, between the Collateral Agent and any
third
party (including any bailee, consignee, customs broker, or other similar Person)
in possession of any Collateral or any landlord of any Credit Party for any
real
property where any Collateral is located, as such landlord waiver and consent
or
other agreement may be amended, restated, or otherwise modified from time to
time.
“Collateral
Report”
means
any certificate (including any Borrowing Base Certificate), report or other
document delivered by any Grantor to the Collateral Agent or any Lender with
respect to the Collateral pursuant to any Loan Document.
“Commercial
Tort Claims”
means
“commercial tort claims” as set forth in Article 9 of the UCC and shall include,
without limitation, the existing commercial tort claims of the Grantor set
forth
in Exhibit
C-2
attached
hereto.
“Control”
shall
have the meaning set forth in Article 8 or, if applicable, in Section 9-104,
9-105, 9-106 or 9-107 of Article 9 of the UCC.
“Deposit
Account Control Agreement”
means
an agreement, in form and substance satisfactory to the Collateral Agent, among
any Credit Party, a banking institution holding such Credit Party’s funds, and
the Collateral Agent with respect to collection and control of all deposits
and
balances held in a deposit account maintained by any Credit Party with such
banking institution.
“Deposit
Accounts”
shall
have the meaning set forth in Article 9 of the UCC.
“Documents”
shall
have the meaning set forth in Article 9 of the UCC.
“Equipment”
shall
have the meaning set forth in Article 9 of the UCC.
“Equity
Interests”
means
shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such equity
interest.
“Event
of Default”
means
an event described in Section 5.1.
“Exhibit”
refers
to a specific exhibit to this Security Agreement, unless another document is
specifically referenced.
“Fixtures”
shall
have the meaning set forth in Article 9 of the UCC.
“General
Intangibles”
shall
have the meaning set forth in Article 9 of the UCC,
“Goods”
shall
have the meaning set forth in Article 9 of the UCC.
“Instruments”
shall
have the meaning set forth in Article 9 of the UCC.
“Inventory”
shall
have the meaning set forth in Article 9 of the UCC.
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“Investment
Property”
shall
have the meaning set forth in Article 9 of the UCC.
“Lenders”
means
the lenders party to the Credit Agreement and their successors and
assigns.
“Letter-of-Credit
Rights”
shall
have the meaning set forth in Article 9 of the UCC.
“Licenses”
means,
with respect to any Person, all of such Person’s right, title, and interest in
and to (a) any and all licensing agreements or similar arrangements in and
to
its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages,
claims, and payments now or hereafter due or payable under and with respect
thereto, including, without limitation, damages and payments for past and future
breaches thereof, and (c) all rights to xxx for past, present, and future
breaches thereof.
“Permit(s)”
shall
have the meaning set forth in Section
8.19.
“Pledged
Collateral”
means
all Instruments, Securities and other Investment Property of the Grantors,
whether or not physically delivered to the Collateral Agent pursuant to this
Security Agreement.
“Receivables”
means,
with respect to the Grantor, all rights to payment, whether or not earned by
performance, for goods or other property sold, leased, licensed, assigned or
otherwise disposed of, or services rendered, including, without limitation,
all
such rights constituting or evidenced by an Account, Chattel Paper, Document,
Investment Property, Instrument, or any other right or claim to receive money
which is a General Intangible or which is otherwise included as
Collateral.
“Section”
means
a
numbered section of this Security Agreement, unless another document is
specifically referenced.
“Security”
has
the
meaning set forth in Article 8 of the UCC.
“Stock
Rights”
means
all dividends, instruments or other distributions and any other right or
property which the Grantors shall receive or shall become entitled to receive
for any reason whatsoever with respect to, in substitution for or in exchange
for any Equity Interest constituting Collateral, any right to receive an Equity
Interest and any right to receive earnings, in which the Grantors now have
or
hereafter acquire any right, issued by an issuer of such Equity
Interest.
“Supporting
Obligations”
shall
have the meaning set forth in Article 9 of the UCC.
“UCC”
means
the Uniform Commercial Code, as in effect from time to time, of the State of
New
York or
of any
other state the laws of which are required as a result thereof to be applied
in
connection with the attachment, perfection or priority of, or remedies with
respect to, Collateral Agent’s or any Lender’s Lien on any
Collateral.
The
foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.
ARTICLE
II
GRANT
OF SECURITY INTEREST
2.1. Grant
of Security Interest.
Each
Grantor hereby pledges, assigns and grants to the Collateral Agent, on behalf
of
and for the ratable benefit of the Lenders, a security interest in all of its
right, title and interest in, to and under all personal property and other
assets, whether now owned by or owing to, or hereafter acquired by or arising
in
favor of such Grantor (including under any trade name or derivations thereof),
and whether owned or consigned by or to, or leased from or to, such Grantor,
and
wherever located (all of which will be collectively referred to as the
“Collateral”),
including, without limitation:
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(i) all
Accounts;
(ii) all
Chattel Paper;
(iii) all
Copyrights, Patents and Trademarks;
(iv) all
Documents;
(v) all
Equipment;
(vi) all
Fixtures;
(vii) all
General Intangibles;
(viii) all
Goods;
(ix) all
Instruments;
(x) all
Inventory;
(xi) all
Investment Property;
(xii) all
cash
or cash equivalents;
(xiii) all
letters of credit, Letter-of-Credit Rights and Supporting
Obligations;
(xiv) all
Deposit Accounts with any bank or other financial institution;
(xv) all
Commercial Tort Claims;
(xvi) all
Assigned Contracts; and
(xvii) all
accessions to, substitutions for and replacements, proceeds (including Stock
Rights), insurance proceeds and products of the foregoing, together with all
books and records, customer lists, credit files, computer files, programs,
printouts and other computer materials and records related thereto and any
General Intangibles at any time evidencing or relating to any of the
foregoing.
2.2. Security
for Obligations.
This
Security Agreement secures, and the Collateral is collateral security for,
the
prompt and complete payment and performance in full when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise, of all Obligations of the Grantors.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
Each
Grantor represents and warrants to the Collateral Agent and the Lenders
that:
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3.1. Title,
Perfection and Priority.
Such
Grantor has good and valid rights in or the power to transfer the Collateral
and
title to the Collateral with respect to which it has purported to grant a
security interest hereunder, free and clear of all Liens except for Permitted
Liens, and has full power and authority to grant to the Collateral Agent the
security interest in such Collateral pursuant hereto. When financing statements
have been filed in the appropriate offices against such Grantor in the locations
listed on Exhibit
H,
the
Collateral Agent will have a fully perfected first priority security interest
in
that Collateral of such Grantor in which a security interest may be perfected
by
filing, subject only to Permitted Liens.
3.2. Type
and Jurisdiction of Organization, Organizational and Identification
Numbers.
The
type of entity of such Grantor, its state of organization, the organizational
number issued to it by its state of organization and its federal employer
identification number are set forth on Exhibit
A.
3.3. Principal
Location.
Such
Grantor’s mailing address and the location of its place of business (if it has
only one) or its chief executive office (if it has more than one place of
business), is disclosed in Exhibit
A;
such
Grantor has no other places of business except those set forth in Exhibit
A.
3.4. Collateral
Locations.
All of
such Grantor’s locations where Collateral is located are listed on Exhibit
A.
All of
said locations are owned by such Grantor except for locations (i) which are
leased by the Grantor as lessee and designated in Part
VII(b)
of
Exhibit
A
and (ii)
at which Inventory is held in a public warehouse or is otherwise held by a
bailee or on consignment as designated in Part
VII(c)
of
Exhibit
A.
3.5. Accounts.
(a) All
of
such Grantor’s Deposit Accounts are listed on Exhibit
B.
No
Grantor has consented to, nor is otherwise aware of, any other Person (other
than the Collateral Agent pursuant hereto) having Control over any Deposit
Account. The Collateral Agent agrees with each Grantor that the Collateral
Agent
shall not give any instructions directing the disposition of funds from time
to
time credited to any Deposit Account or withhold any withdrawal rights from
such
Grantor with respect to funds from time to time credited to any Deposit Account
unless an Event of Default has occurred and is continuing. No Grantor shall
grant (or permit the granting of) Control of any Deposit Account to any person
other than the Collateral Agent.
(b) All
of
such Grantor’s Securities Accounts or Commodities Accounts are listed on
Exhibit
B.
No
Grantor has consented to, nor is otherwise aware of, any other Person (other
than the Collateral Agent pursuant hereto) having Control over any Securities
Account or Commodities Account. The Collateral Agent agrees with each Grantor
that the Collateral Agent shall not give any Entitlement Orders or instructions
or directions to any issuer of uncertificated securities, Securities
Intermediary or Commodity Intermediary, and shall not withhold its consent
to
the exercise of any withdrawal or dealing rights by such Grantor, unless an
Event of Default has occurred and is continuing or, after giving effect to
any
such investment and withdrawal rights, would occur. No Grantor shall grant
Control over any Investment Property to any person other than the Collateral
Agent.
3.6. Exact
Names.
Such
Grantor’s name in which it has executed this Security Agreement is the exact
name as it appears in such Grantor’s organizational documents, as amended, as
filed with such Grantor’s jurisdiction of organization. Such Grantor has not,
during the past five years, been known by or used any other corporate or
fictitious name, or been a party to any merger or consolidation, or been a
party
to any acquisition other than as described in the SEC Reports.
3.7. Letter-of-Credit
Rights and Chattel Paper.
Exhibit
C-1
lists
all Letter-of-Credit Rights and Chattel Paper of such Grantor. All action by
such Grantor necessary or desirable to protect and perfect the Collateral
Agent’s Lien on each item listed on Exhibit
C
(including the delivery of all originals and the placement of a legend on all
Chattel Paper as required hereunder) has been duly taken. The Collateral Agent
will have a fully perfected first priority security interest in the Collateral
listed on Exhibit
C-1,
subject
only to Permitted Liens.
5
3.8. Accounts
and Chattel Paper.
(a) The
names
of the obligors, amounts owing, due dates and other information with respect
to
its Accounts and Chattel Paper are and will be correctly stated in all records
of such Grantor relating thereto and in all invoices and Collateral Reports
with
respect thereto furnished to the Collateral Agent by such Grantor from time
to
time. As of the time when each Account or each item of Chattel Paper arises,
such Grantor shall be deemed to have represented and warranted that such Account
or Chattel Paper, as the case may be, and all records relating thereto, are
genuine and in all respects what they purport to be.
(b) With
respect to its Accounts, except as specifically disclosed on the most recent
Collateral Report, (i) all Accounts of the Borrowers are Eligible Accounts;
(ii)
all Accounts represent bona fide sales of Inventory or rendering of services
to
Account Debtors in the ordinary course of such Grantor’s business and are not
evidenced by a judgment, Instrument or Chattel Paper; (iii) there are no
setoffs, claims or disputes existing or asserted with respect thereto and such
Grantor has not made any agreement with any Account Debtor for any extension
of
time for the payment thereof, any compromise or settlement for less than the
full amount thereof, any release of any Account Debtor from liability therefor,
or any deduction therefrom except a discount or allowance allowed by such
Grantor in the ordinary course of its business for prompt payment and disclosed
to the Collateral Agent; (iv) to such Grantor’s knowledge, there are no facts,
events or occurrences which in any way impair the validity or enforceability
thereof or could reasonably be expected to reduce the amount payable thereunder
as shown on such Grantor’s books and records and any invoices, statements and
Collateral Reports with respect thereto; (v) such Grantor has not received
any
notice of proceedings or actions which are threatened or pending against any
Account Debtor which might result in any adverse change in such Account Debtor’s
financial condition; and (vi) such Grantor has no knowledge that any Account
Debtor is unable generally to pay its debts as they become due.
(c) In
addition, with respect to all of its Accounts, (i) the amounts shown on all
invoices, statements and Collateral Reports with respect thereto are actually
and absolutely owing to such Grantor as indicated thereon and are not in any
way
contingent, other than (A) as arise pursuant to the Grantors’ agreements with
Sanquin and any amendments, extensions or modifications thereto and (B) rights
granted to a counterparty to inspect or approve delivery of products pursuant
to
an arm’s-length agreement with such counterparty; (ii) no payments have been or
shall be made thereon except payments immediately delivered to a Collateral
Deposit Account as required by Section
7.1;
and
(iii) to such Grantor’s knowledge, all Account Debtors have the capacity to
contract.
3.9. Inventory.
With
respect to any of its Inventory scheduled or listed on the most recent
Collateral Report, (a) such Inventory (other than Inventory in transit) is
located at one of such Grantor’s locations set forth on Exhibit
A,
(b) no
Inventory (other than Inventory in transit) is now, or shall at any time or
times hereafter be stored at any other location except as permitted by
Section
4.1(f),
(c)
such Grantor has good, indefeasible and merchantable title to such Inventory
and
such Inventory is not subject to any Lien or security interest or document
whatsoever except for the Lien granted to the Collateral Agent, for the benefit
of the Collateral Agent and Lenders, and except for Permitted Liens, (d) except
as specifically disclosed in the most recent Collateral Report, such Inventory
of the Borrowers is Inventory of good and merchantable quality, free from any
material defects, (e) other than the license granted by Sanquin to Lev pursuant
to that certain Exclusive License Agreement effective as of January 27, 2004,
such Inventory is not subject to any licensing, patent, royalty, trademark,
trade name or copyright agreements with any third parties which would require
any consent of any third party upon sale or disposition of that Inventory or
the
payment of any monies to any third party upon such sale or other disposition,
(f) to the extent that it has been produced in the United States, such Inventory
has been produced by third parties and to the Grantors’ knowledge in accordance
with the Federal Fair Labor Standards Act of 1938, as amended, and all rules,
regulations and orders thereunder and (g) subject to Section
8.19,
the
completion of manufacture, sale or other disposition of such Inventory by the
Collateral Agent following an Event of Default shall not require the consent
of
any Person and shall not constitute a breach or default under any contract
or
agreement to which such Grantor is a party or to which such property is
subject.
6
3.10. Intellectual
Property.
Such
Grantor does not have any interest in, or title to, any Patent, registered
or
applied for Trademark registered or applied for or Copyright except as set
forth
in Exhibit
D.
This
Security Agreement is effective to create a valid and continuing Lien and,
upon
filing of appropriate financing statements in the offices listed on Exhibit
H
and this
Security Agreement with the United States Copyright Office and the United States
Patent and Trademark Office, fully perfected first priority security interests
in favor of the Collateral Agent on such Grantor’s Patents, registered
Trademarks and registered Copyrights, such perfected security interests are
enforceable as such as against any and all creditors of and purchasers from
such
Grantor; and all action necessary or desirable to protect and perfect the
Collateral Agent’s Lien on such Grantor’s Patents, Trademarks or Copyrights
shall have been duly taken.
3.11. Filing
Requirements.
None of
its Equipment is covered by any certificate of title, except for the vehicles
described in Part I of Exhibit
E.
None of
the Collateral owned by it is of a type for which security interests or liens
may be perfected by filing under any federal statute except for (a) the vehicles
described in Part II of Exhibit
E
and (b)
Patents, Trademarks and Copyrights held by such Grantor and described in
Exhibit
D.
The
legal description, county and street address of each property on which any
Fixtures are located is set forth in Exhibit
F
together
with the name and address of the record owner of each such
property.
3.12. No
Financing Statements, Security Agreements.
No
financing statement or security agreement describing all or any portion of
the
Collateral which has not lapsed or been terminated naming such Grantor as debtor
has been filed or is of record in any jurisdiction except (a) for financing
statements or security agreements naming the Collateral Agent on behalf of
the
Lenders as the secured party and (b) as permitted by the Credit
Agreement.
3.13. Pledged
Collateral.
(a) Exhibit
G
sets
forth a complete and accurate list of the Pledged Collateral. Each Grantor
is
the record and beneficial owner of the Pledged Collateral listed on Exhibit
G
as being
owned by such Grantor, free and clear of any Liens, except for the security
interest granted to the Collateral Agent for the benefit of the Lenders
hereunder. Each Grantor further represents and warrants that (i) with respect
to
any certificates delivered to the Collateral Agent representing Equity
Interests, either such certificates are Securities as defined in Article 8
of
the UCC as a result of actions by the issuer or otherwise or, if such
certificates are not Securities, such Grantor has so informed the Collateral
Agent so that the Collateral Agent may take steps to perfect its security
interest therein as a General Intangible, (ii) all Pledged Collateral held
by a
securities intermediary is covered by a control agreement among such Grantor,
the securities intermediary and the Collateral Agent pursuant to which the
Collateral Agent has Control, (iii) none of the Pledged Collateral owned by
such
Grantor has been issued or transferred in violation of the securities
registration, securities disclosure or similar laws of any jurisdiction to
which
such issuance or transfer may be subject, (iv) there are existing no options,
warrants, calls or commitments of any character whatsoever relating to such
Pledged Collateral or which obligate the issuer of any Equity Interest included
in the Pledged Collateral to issue additional Equity Interests except as
disclosed in the SEC Reports, and (v) no consent, approval, authorization,
or
other action by, and no giving of notice, filing with, any governmental
authority or any other Person is required for the pledge by such Grantor of
such
Pledged Collateral pursuant to this Security Agreement or for the execution,
delivery and performance of this Security Agreement by such Grantor, or for
the
exercise by the Collateral Agent of the voting or other rights provided for
in
this Security Agreement or for the remedies in respect of the Pledged Collateral
pursuant to this Security Agreement, except as may be required in connection
with such disposition by laws affecting the offering and sale of securities
generally.
7
(b) Except
as
set forth in Exhibit
G,
such
Grantor owns 100% of the issued and outstanding Equity Interests which
constitute Pledged Collateral owned by it and none of the Pledged Collateral
which represents Indebtedness owed to such Grantor is subordinated in right
of
payment to other Indebtedness or subject to the terms of an
indenture.
ARTICLE
IV
COVENANTS
From
the
date of this Security Agreement, and thereafter until this Security Agreement
is
terminated, each Grantor agrees that:
4.1. General.
(a) Collateral
Records.
Such
Grantor will maintain complete and accurate books and records with respect
to
the Collateral owned by it, and furnish to the Collateral Agent, with sufficient
copies for each of the Lenders, updates with respect to Exhibits
X, X, X-0, X-0, X, X, X xxx X
hereto
in accordance with Section
4.1(c)
and such
other such reports relating to such Collateral as the Collateral Agent shall
from time to time reasonably request.
(b) Authorization
to File Financing Statements; Ratification.
Such
Grantor hereby authorizes the Collateral Agent to file, and if requested will
deliver to the Collateral Agent, all financing statements and other documents
and take such other actions as may from time to time be requested by the
Collateral Agent in order to maintain a first perfected security interest in
and, if applicable, Control of, the Collateral owned by such Grantor. Any
financing statement filed by the Collateral Agent may be filed in any filing
office in any UCC jurisdiction and may (i) indicate such Grantor’s Collateral
(1) as all assets of the Grantor or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC or such jurisdiction, or (2) by any other description
which reasonably approximates the description contained in this Security
Agreement, and (ii) contain any other information required by part 5 of Article
9 of the UCC for the sufficiency or filing office acceptance of any financing
statement or amendment, including (A) whether such Grantor is an organization,
the type of organization and any organization identification number issued
to
such Grantor and (B) in the case of a financing statement filed as a fixture
filing or indicating such Grantor’s Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which the
Collateral relates. Such Grantor also agrees to furnish any such information
to
the Collateral Agent promptly upon request. Such Grantor also ratifies its
authorization for the Collateral Agent to have filed in any UCC jurisdiction
any
initial financing statements or amendments thereto if filed prior to the date
hereof.
(c) Further
Assurances.
Such
Grantor will, if so requested by the Collateral Agent, furnish to the Collateral
Agent, as often as the Collateral Agent requests, statements and schedules
further identifying and describing the Collateral owned by it and such other
reports and information in connection with its Collateral as the Collateral
Agent may reasonably request, all in such detail as the Collateral Agent may
specify. Such Grantor also agrees to take any and all actions necessary to
defend title to the Collateral against all persons and to defend the security
interest of the Collateral Agent in its Collateral and the priority thereof
against any Lien not expressly permitted hereunder. Each Grantor agrees to
deliver to the Collateral Agent supplements with respect to the information
set
forth in Exhibits
A, B, C-1, C-2, D, E, F and G
promptly
after obtaining information which would require a material correction of or
addition to any such Exhibit.
8
(d) Disposition
of Collateral.
Such
Grantor will not sell, lease or otherwise dispose of the Collateral owned by
it
except for dispositions specifically permitted pursuant to Section 7. 4 of
the
Credit Agreement.
(e) Other
Financing Statements.
Such
Grantor will not authorize the filing of any financing statement naming it
as
debtor covering all or any portion of the Collateral owned by it, except as
permitted by the Credit Agreement. Such Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination statement
with respect to any financing statement without the prior written consent of
the
Collateral Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of
the UCC.
(f) Locations.
Such
Grantor will not (i) except as set forth in this Section
4.1(f)
maintain
any Collateral owned by it at any location other than those locations listed
on
Exhibit
A,
(ii)
otherwise change, or add to, such locations without providing the Collateral
Agent with prior written notice of such change or addition (and if requested
by
the Collateral Agent, such Grantor will concurrently therewith obtain a
Collateral Access Agreement for each such location to the extent required by
the
Credit Agreement), or (iii) change its principal place of business or chief
executive office from the location identified on Exhibit
A,
without
providing the Collateral Agent with prior written notice of such relocation
(and
if requested by the Collateral Agent, such Grantor will concurrently therewith
obtain a Collateral Access Agreement for such new location).
(g) Compliance
with Terms.
Such
Grantor will perform and comply with all obligations in respect of the
Collateral owned by it and all agreements to which it is a party or by which
it
is bound relating to such Collateral.
4.2. Receivables.
(a) Certain
Agreements on Receivables.
Such
Grantor will not make or agree to make any discount, credit, rebate or other
reduction in the original amount owing on a Receivable or accept in satisfaction
of a Receivable less than the original amount thereof, except that, prior to
the
occurrence of an Event of Default, such Grantor may reduce the amount of
Accounts arising from the sale of Inventory in accordance with its present
policies and in the ordinary course of business.
(b) Collection
of Receivables.
Except
as otherwise provided in this Security Agreement, such Grantor will collect
and
enforce, at such Grantor’s sole expense, all amounts due or hereafter due to
such Grantor under the Receivables owned by it.
(c) Delivery
of Invoices.
Such
Grantor will deliver to the Collateral Agent promptly upon its request duplicate
invoices with respect to each Account owned by it bearing such language of
assignment as the Collateral Agent shall reasonably specify.
(d) Disclosure
of Counterclaims on Receivables.
If (i)
any discount, credit or agreement to make a rebate or to otherwise reduce the
amount owing on any Receivable owned by such Grantor exists or (ii) if, to
the
knowledge of such Grantor, any dispute, setoff, claim, counterclaim or defense
exists or has been asserted or threatened with respect to any such Receivable,
such Grantor will promptly disclose such fact to the Collateral Agent in
writing. Such Grantor shall send the Collateral Agent a copy of each credit
memo
in excess of $250,000 as soon as issued, and such Grantor shall promptly report
each credit memo and each of the facts required to be disclosed to the
Collateral Agent in accordance with this Section
4.2(d)
on the
Borrowing Base Certificates submitted by it.
9
(e) Electronic
Chattel Paper.
Such
Grantor shall take all steps necessary to grant the Collateral Agent Control
of
all electronic chattel paper in accordance with the UCC and all “transferable
records” as defined in each of the Uniform Electronic Transactions Act and the
Electronic Signatures in Global and National Commerce Act.
4.3. Inventory
and Equipment.
(a) Maintenance
of Goods.
Such
Grantor will do all things necessary to maintain, preserve, protect and keep
its
Inventory and the Equipment in good repair and working and saleable condition,
except for damaged or defective goods arising in the ordinary course of such
Grantor’s business and except for ordinary wear and tear in respect of the
Equipment.
(b) Returned
Inventory.
If an
Account Debtor returns any Inventory to such Grantor when no Event of Default
exists, then such Grantor shall promptly determine the reason for such return
and shall issue a credit memorandum to the Account Debtor in the appropriate
amount. Such Grantor shall immediately report to the Collateral Agent any return
involving Inventory in an amount in excess of $250,000. Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to such
Grantor when an Event of Default exists, such Grantor, upon the request of
the
Collateral Agent, shall: (i) hold the returned Inventory in trust for the
Collateral Agent; (ii) segregate all returned Inventory from all of its other
property; (iii) dispose of the returned Inventory solely according to the
Collateral Agent’s written instructions; and (iv) not issue any credits or
allowances with respect thereto without the Collateral Agent’s prior written
consent. All returned Inventory shall be subject to the Collateral Agent’s Liens
thereon. Whenever any Inventory is returned, the related Account shall be deemed
ineligible to the extent of the amount owing by the Account Debtor with respect
to such returned Inventory and such returned Inventory shall be excluded from
the Borrowing Base.
(c) Inventory
Count.
Such
Grantor will, to the extent required by the Grantor’s accountants, conduct a
physical count of its Inventory at least once per Fiscal Year (or at such
intervals as required by the Grantor’s accountants), and after and during the
continuation of an Event of Default, at such other times as the Collateral
Agent
requests. Such
Grantor, at its own expense, shall deliver to the Collateral Agent the results
of each physical verification, which such Grantor has made, or has caused any
other Person to make on its behalf, of all or any portion of its Inventory.
(d) Equipment.
Such
Grantor shall promptly inform the Collateral Agent of any additions to or
deletions from its Equipment which individually exceed $100,000. Such Grantor
shall not permit any Equipment to become a fixture with respect to real property
or to become an accession with respect to other personal property with respect
to which real or personal property the Collateral Agent does not have a Lien.
Such Grantor will not, without the Collateral Agent’s prior written consent, not
to be unreasonably withheld or conditioned, alter or remove any identifying
symbol or number on any of such Grantor’s Equipment constituting
Collateral.
(e) Titled
Vehicles.
Such
Grantor will give the Collateral Agent notice of its acquisition of any vehicle
covered by a certificate of title and deliver to the Collateral Agent, upon
request, the original of any vehicle title certificate and provide and/or file
all other documents or instruments necessary to have the Lien of the Collateral
Agent noted on any such certificate or with the appropriate state
office.
10
4.4. Delivery
of Instruments, Securities, Chattel Paper and Documents.
Such
Grantor will (a) deliver to the Collateral Agent immediately upon execution
of
this Security Agreement the originals of all Chattel Paper (except for the
Distribution and Manufacturing Services Agreement between Grantors and Sanquin,
dated as of January 16, 2004 as amended), Securities (to the extent
certificated) and Instruments constituting Collateral owned by it (if any then
exist), (b) hold in trust for the Collateral Agent upon receipt and immediately
thereafter deliver to the Collateral Agent any such Chattel Paper, Securities
and Instruments constituting Collateral, (c) upon the Collateral Agent’s
request, deliver to the Collateral Agent (and thereafter hold in trust for
the
Collateral Agent upon receipt and immediately deliver to the Collateral Agent)
any Document evidencing or constituting Collateral and (d) upon the Collateral
Agent’s request, deliver to the Collateral Agent a duly executed amendment to
this Security Agreement, in the form of Exhibit
I
hereto
(the “Amendment”),
pursuant to which such Grantor will pledge such additional Collateral. Such
Grantor hereby authorizes the Collateral Agent to attach each Amendment to
this
Security Agreement and agrees that all additional Collateral owned by it set
forth in such Amendments shall be considered to be part of the
Collateral.
4.5. Uncertificated
Pledged Collateral.
Such
Grantor will permit the Collateral Agent from time to time to cause the
appropriate issuers (and, if held with a securities intermediary, such
securities intermediary) of uncertificated securities or other types of Pledged
Collateral owned by it not represented by certificates to xxxx their books
and
records with the numbers and face amounts of all such uncertificated securities
or other types of Pledged Collateral not represented by certificates and all
rollovers and replacements therefor to reflect the Lien of the Collateral Agent
granted pursuant to this Security Agreement. With respect to any Pledged
Collateral owned by it, such Grantor will take any actions necessary to cause
(a) the issuers of uncertificated securities which are Pledged Collateral and
(b) any securities intermediary which is the holder of any such Pledged
Collateral, to cause the Collateral Agent to have and retain Control over such
Pledged Collateral. Without limiting the foregoing, such Grantor will, with
respect to any such Pledged Collateral held with a securities intermediary,
cause such securities intermediary to enter into a control agreement with the
Collateral Agent, in form and substance satisfactory to the Collateral Agent,
giving the Collateral Agent Control.
4.6. Pledged
Collateral.
(a) Issuance
of Additional Securities.
If any
issuer of Equity Interests constituting Pledged Collateral issues additional
Equity Interests to any Grantor, such Grantor shall promptly notify the
Collateral Agent of such issuance of Equity Interests and to the extent such
Equity Interests are represented by physical certificates shall promptly be
deposited with and pledged to the Collateral Agent for itself and for the
benefit of the Lenders in accordance with Section
4.4
and
4.5
hereof.
(b) Registration
of Pledged Collateral.
After
the occurrence of an Event of Default, such Grantor will permit any registerable
Pledged Collateral owned by it to be registered in the name of the Collateral
Agent or its nominee at any time at the option Collateral Agent.
(c) Exercise
of Rights in Pledged Collateral.
(i) Without
in any way limiting the foregoing and subject to clause (ii) below, such Grantor
shall have the right to exercise all voting rights or other rights relating
to
the Pledged Collateral owned by it for all purposes not inconsistent with this
Security Agreement, the Credit Agreement or any other Loan Document;
provided
however,
that
no vote
or other right shall be exercised or action taken which would have the effect
of
impairing the rights of the Collateral Agent in respect of such Pledged
Collateral.
11
(ii) Such
Grantor will permit the Collateral Agent or its nominee at any time after the
occurrence of an Event of Default, without notice, to exercise all voting rights
or other rights relating to the Pledged Collateral owned by it, including,
without limitation, exchange, subscription or any other rights, privileges,
or
options pertaining to any Equity Interests or Investment Property constituting
such Pledged Collateral as if it were the absolute owner thereof.
(iii) Such
Grantor shall be entitled to collect and receive for its own use all cash
dividends and interest paid in respect of the Pledged Collateral owned by it
to
the extent not in violation of the Credit Agreement other
than
any of
the following distributions and payments (collectively referred to as the
“Excluded
Payments”):
(A)
dividends and interest paid or payable other than in cash in respect of such
Pledged Collateral, and instruments and other property received, receivable
or
otherwise distributed in respect of, or in exchange for, any Pledged Collateral;
(B) dividends and other distributions paid or payable in cash in respect of
such
Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in capital of an issuer; and (C) cash paid, payable or otherwise
distributed, in respect of principal of, or in redemption of, or in exchange
for, such Pledged Collateral; provided
however, that
until
actually paid, all rights to such distributions shall remain subject to the
Lien
created by this Security Agreement; and
(iv) All
Excluded Payments and all other distributions in respect of any of the Pledged
Collateral owned by such Grantor, whenever paid or made, shall be delivered
to
the Collateral Agent to hold as Pledged Collateral and shall, if received by
such Grantor, be received in trust for the benefit of the Collateral Agent,
be
segregated from the other property or funds of such Grantor, and be forthwith
delivered to the Collateral Agent as Pledged Collateral in the same form as
so
received (with any necessary endorsement).
4.7. Intellectual
Property.
(a) Such
Grantor will use its best efforts to secure all consents and approvals necessary
or appropriate for the assignment to or benefit of the Collateral Agent of
any
License held by such Grantor and to enforce the security interests granted
hereunder.
(b) Such
Grantor shall notify the Collateral Agent immediately if it knows or has reason
to know that any application or registration relating to any Patent, Trademark
or Copyright (now or hereafter existing) may become abandoned or dedicated,
or
of any adverse determination or material development (including the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office, the United States Copyright Office or any
court) regarding such Grantor’s ownership of any Patent, Trademark or Copyright,
its right to register the same, or to keep and maintain the same.
(c) In
no
event shall such Grantor, either directly or through any agent, employee,
licensee or designee, file an application for the registration of any Patent,
Trademark or Copyright with the United States Patent and Trademark Office,
the
United States Copyright Office or any similar office or agency without
giving the Collateral Agent written notice thereof contemporaneously or promptly
thereafter (but in any event no more than 3 Business Days
thereafter),
and,
upon request of the Collateral Agent, such Grantor shall execute and deliver
any
and all security agreements as the Collateral Agent may request to evidence
the
Collateral Agent’s first priority security interest on such Patent, Trademark or
Copyright, and the General Intangibles of such Grantor relating thereto or
represented thereby.
12
(d) Such
Grantor shall take all actions necessary or reasonably requested by the
Collateral Agent to maintain and pursue each application, to obtain the relevant
registration and to maintain the registration of each of its Patents, registered
Trademarks and registered Copyrights (now or hereafter existing), including
the
filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation proceedings,
unless the Collateral Agent and Grantor shall agree that such Patent, Trademark
or Copyright is not material to the conduct of such Grantor’s business. The
Collateral Agent shall provide the Grantors with all assistance required or
reasonably requested by the Grantors to assist the Grantors in complying with
Grantors’ obligations herein.
(e) Such
Grantor shall, unless it shall reasonably determine that such Patent, Trademark
or Copyright is in no way material to the conduct of its business or operations,
promptly xxx for, or take other commercially reasonable steps to protect the
Patents, Trademarks and Copyrights against, infringement, misappropriation
or
dilution and to recover any and all damages for such infringement,
misappropriation or dilution, and shall take such other actions as the
Collateral Agent shall deem appropriate under the circumstances to protect
such
Patent, Trademark or Copyright. In the event that such Grantor institutes suit
because any of its Patents, Trademarks or Copyrights constituting Collateral
is
infringed upon, or misappropriated or diluted by a third party, such Grantor
shall comply with Section 4.8.
4.8. Commercial
Tort Claims.
Such
Grantor shall promptly, and in any event within five Business Days after the
same is acquired by it, notify the Collateral Agent of any Commercial Tort
Claim
acquired by it and, unless the Collateral Agent otherwise consents, such Grantor
shall enter into an amendment to this Security Agreement, in the form of
Exhibit
I
hereto,
granting to Collateral Agent a first priority security interest in such
commercial tort claim.
4.9. Letter-of-Credit
Rights.
If such
Grantor is or becomes the beneficiary of a letter of credit, it shall promptly,
and in any event within five Business Days after becoming a beneficiary, notify
the Collateral Agent thereof and cause the issuer and/or confirmation bank
to
(i) consent to the assignment of any Letter-of-Credit Rights to the Collateral
Agent and (ii) agree to direct all payments thereunder to the Agent for
application to the Obligations, all in form and substance reasonably
satisfactory to the Collateral Agent.
4.10. Federal,
State or Municipal Claims.
Such
Grantor will promptly notify the Collateral Agent of any Collateral which
constitutes a claim against the United States government or any state or local
government or any instrumentality or agency thereof, the assignment of which
claim is restricted by federal, state or municipal law.
4.11. No
Interference.
Such
Grantor agrees that it will not interfere with any right, power and remedy
of
the Collateral Agent provided for in this Security Agreement or now or hereafter
existing at law or in equity or by statute or otherwise, or the exercise or
beginning of the exercise by the Collateral Agent of any one or more of such
rights, powers or remedies.
4.12. Insurance.
(a) All
insurance policies required hereunder and under Section 6.5 of the Credit
Agreement shall name the Collateral Agent (for the benefit of the Collateral
Agent and the Lenders) as an additional insured or as loss payee, as applicable,
and shall contain loss payable clauses or mortgagee clauses, through
endorsements in form and substance satisfactory to the Collateral Agent, which
provide that: (i) subject to the limitations set forth in the Credit Agreement,
all proceeds thereunder with respect to any Collateral shall be payable to
the
Collateral Agent; (ii) no such insurance shall be affected by any act or neglect
of the insured or owner of the property described in such policy; and (iii)
such
policy and loss payable or mortgagee clauses may be canceled, amended, or
terminated only upon at least thirty days prior written notice given to the
Collateral Agent.
13
(b) All
premiums on any such insurance shall be paid when due by such Grantor, and
copies of the policies delivered to the Collateral Agent. If such Grantor fails
to obtain any insurance as required by this Section, the Collateral Agent may
obtain such insurance at the Borrowers’ expense.
4.13. Collateral
Access Agreements.
Such
Grantor shall use its best efforts to obtain a Collateral Access Agreement,
from
the lessor of each leased property, mortgagee of owned property or bailee or
consignee with respect to any warehouse, processor or converter facility or
other location where Collateral is stored or located, which agreement or letter
shall provide access rights, contain a waiver or subordination of all Liens
or
claims that the landlord, mortgagee, bailee or consignee may assert against
the
Collateral at that location, and shall otherwise be reasonably satisfactory
in
form and substance to the Collateral Agent. With respect to such locations
or
warehouse space leased as of the Closing Date and thereafter, if the Collateral
Agent has not received a Collateral Access Agreement as of the Effective Time
(or, if later, as of the date such location is acquired or leased), the
Borrowers’ Inventory at that location shall be deemed to be ineligible and shall
be excluded from the Borrowing Base until such time that a Collateral Access
Agreement is obtained. After the Closing Date, no real property or warehouse
space shall be leased by such Grantor and no Inventory shall be shipped to
a
processor or converter under arrangements established after the Closing Date,
unless and until a satisfactory Collateral Access Agreement shall first have
been obtained with respect to such location and if it has not been obtained,
the
Borrowers’ Inventory at that location shall be deemed to be ineligible and shall
be excluded from the Borrowing Base until such time that a Collateral Access
Agreement is obtained. Such Grantor shall timely and fully pay and perform
its
obligations under all leases and other agreements with respect to each leased
location or third party warehouse where any Collateral is or may be
located.
4.14. Control
Agreements.
(a) Such
Grantor will provide to the Collateral Agent a Control Agreement duly executed
on behalf of each financial institution holding a Deposit Account of such
Grantor. No Grantor shall establish or maintain any Deposit Account unless
(1)
it shall have given the Collateral Agent fifteen (15) days’ prior written notice
of its intention to establish such new Deposit Account with a bank and (2)
such
bank and such Grantor shall have duly executed and delivered to the Collateral
Agent a Control Agreement with respect to such Deposit Account, in form and
substance reasonable satisfactory to the Collateral Agent.
(b) Such
Grantor will provide to the Collateral Agent a Control Agreement duly executed
on behalf of each financial institution holding a Securities Account or
Commodity Account of such Grantor. No Grantor shall hereafter establish and
maintain any Securities Account or Commodity Account with any Securities
Intermediary or Commodity Intermediary unless (1) it shall have given the
Collateral Agent fifteen (15) days’ prior written notice of its intention to
establish such new Securities Account or Commodity Account with such Securities
Intermediary or Commodity Intermediary and (2) such Securities Intermediary
or
Commodity Intermediary, as the case may be, and such Grantor shall have duly
executed and delivered a Control Agreement with respect to such Securities
Account or Commodity Account, as the case may be, in form and substance
reasonable satisfactory to the Collateral Agent.
4.15. Change
of Name or Location; Change of Fiscal Year.
Such
Grantor shall not (a) change its name as it appears in official filings in
the
state of its incorporation or organization, (b) change its chief executive
office, principal place of business, mailing address, corporate offices or
warehouses or locations at which Collateral is held or stored, or the location
of its records concerning the Collateral as set forth in the Security Agreement,
(c) change the type of entity that it is, (d) change its organization
identification number, if any, issued by its state of incorporation or other
organization, or (e) change its state of incorporation or organization, in
each
case, unless the Collateral Agent shall have received at least fifteen (15)
days’ prior written notice of such change and the Collateral Agent shall have
acknowledged in writing that either (1) such change will not adversely affect
the validity, perfection or priority of the Collateral Agent’s security interest
in the Collateral, or (2) any reasonable action requested by the Collateral
Agent in connection therewith has been completed or taken (including any action
to continue the perfection of any Liens in favor of the Collateral Agent, on
behalf of Lenders, in any Collateral), provided
that,
any new
location shall be in the continental U.S.; provided that Inventory may be stored
in locations outside of the U.S. in the ordinary course of the Company’s
business.
14
ARTICLE
V
EVENTS
OF DEFAULT AND REMEDIES
5.1. Events
of Default.
The
occurrence of any one or more of the following events shall constitute an Event
of Default hereunder:
(a) Any
representation or warranty made by or on behalf of any Grantor under or in
connection with this Security Agreement shall be materially false as of the
date
on which made.
(b) The
failure by any Grantor (other than a breach which constitutes an Event of
Default under any other Section of this Article
V)
to
perform or observe any other terms or provisions of this Security Agreement
and
such failure continues for thirty days after the earlier of (i) a Designated
Financial Officer of any Grantor becoming aware of such failure or (ii) notice
thereof to any Grantor by the Collateral Agent.
(c) The
occurrence of any “Event of Default” under, and as defined in, the Credit
Agreement.
5.2. Remedies.
(a) If
an
Event of Default has occurred and for so long as such Event of Default is
continuing, the Collateral Agent may exercise any or all of the following rights
and remedies:
(i) those
rights and remedies provided in this Security Agreement, the Credit Agreement,
or any other Loan Document; provided
that,
this
Section
5.2(a)
shall
not be understood to limit any rights or remedies available to the Collateral
Agent and the Lenders prior to an Event of Default;
(ii) those
rights and remedies available to a secured party under the UCC (whether or
not
the UCC applies to the affected Collateral) or under any other applicable law
(including, without limitation, any law governing the exercise of a bank’s right
of setoff or bankers’ lien) when a debtor is in default under a security
agreement;
(iii) give
notice of sole control or any other instruction under any Deposit Account
Control Agreement or and other control agreement with any securities
intermediary and take any action therein with respect to such
Collateral;
(iv) without
notice (except as specifically provided in Section
8.1
or
elsewhere herein), demand or advertisement of any kind to any Grantor or any
other Person, enter the premises of any Grantor where any Collateral is located
(through self-help and without judicial process) to collect, receive, assemble,
process, appropriate, sell, lease, assign, grant an option or options to
purchase or otherwise dispose of, deliver, or realize upon, the Collateral
or
any part thereof in one or more parcels at public or private sale or sales
(which sales may be adjourned or continued from time to time with or without
notice and may take place at any Grantor’s premises or elsewhere), for cash, on
credit or for future delivery without assumption of any credit risk, and upon
such other terms as the Collateral Agent may deem commercially reasonable;
and
15
(v) concurrently
with written notice to the applicable Grantor, transfer and register in its
name
or in the name of its nominee the whole or any part of the Pledged Collateral,
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations,
to exercise the voting and all other rights as a holder with respect thereto,
to
collect and receive all cash dividends, interest, principal and other
distributions made thereon and to otherwise act with respect to the Pledged
Collateral as though the Collateral Agent was the outright owner
thereof.
(b) The
Collateral Agent, on behalf of the Lenders, may comply with any applicable
state
or federal law requirements in connection with a disposition of the Collateral
and compliance will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral.
(c) The
Collateral Agent 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
for the benefit of the Collateral Agent and the Lenders, the whole or any part
of the Collateral so sold, free of any right of equity redemption, which equity
redemption the Grantor hereby expressly releases.
(d) Until
the
Collateral Agent is able to effect a sale, lease, or other disposition of
Collateral, the Collateral Agent shall have the right to hold or use Collateral,
or any part thereof, to the extent that it deems appropriate for the purpose
of
preserving Collateral or its value or for any other purpose deemed appropriate
by the Collateral Agent. The Collateral Agent may, if it so elects, designate
an
agent or designee to take possession of Collateral and to enforce any of the
Collateral Agent’s remedies (for the benefit of the Collateral Agent and
Lenders), with respect to such appointment without prior notice or hearing
as to
such appointment.
(e) Notwithstanding
the foregoing, neither the Collateral Agent nor the Lenders shall be required
to
(i) make any demand upon, or pursue or exhaust any of their rights or remedies
against, any Grantor, any other obligor, guarantor, pledgor or any other Person
with respect to the payment of the Obligations or to pursue or exhaust any
of
their rights or remedies with respect to any Collateral therefor or any direct
or indirect guarantee thereof, (ii) marshal the Collateral or any guarantee
of
the Obligations or to resort to the Collateral or any such guarantee in any
particular order, or (iii) effect a public sale of any Collateral.
(f) Each
Grantor recognizes that the Collateral Agent may be unable to effect a public
sale of any or all the Pledged Collateral and may be compelled to resort to
one
or more private sales thereof in accordance with clause
(a)
above.
Each Grantor also acknowledges that any private sale may result in prices and
other terms less favorable to the seller than if such sale were a public sale
and, notwithstanding such circumstances, agrees that any such private sale
shall
not be deemed to have been made in a commercially unreasonable manner solely
by
virtue of such sale being private. The Collateral Agent shall be under no
obligation to delay a sale of any of the Pledged Collateral for the period
of
time necessary to permit any Grantor or the issuer of the Pledged Collateral
to
register such securities for public sale under the Securities Act of 1933,
as
amended, or under applicable state securities laws, even if the applicable
Grantor and the issuer would agree to do so.
16
5.3. Grantor’s
Obligations Upon Default.
Upon
the request of the Collateral Agent after the occurrence of an Event of Default,
each Grantor will:
(a) assemble
and make available to the Collateral Agent the Collateral and all books and
records relating thereto at any place or places specified by the Collateral
Agent, whether at a Grantor’s premises or elsewhere;
(b) permit
the Collateral Agent, by the Collateral Agent’s representatives and Collateral
Agents, to enter, occupy and use any premises where all or any part of the
Collateral, or the books and records relating thereto, or both, are located,
to
take possession of all or any part of the Collateral or the books and records
relating thereto, or both, to remove all or any part of the Collateral or the
books and records relating thereto, or both, and to conduct sales of the
Collateral, without any obligation to pay the Grantor for such use and
occupancy;
(c) prepare
and file, or cause the issuer of any Pledged Collateral to prepare and file,
with the Securities and Exchange Commission or any other applicable government
agency, registration statements, a prospectus and such other documentation
in
connection with the Pledged Collateral as the Collateral Agent may request,
all
in form and substance satisfactory to the Collateral Agent, and furnish to
the
Collateral Agent, or cause the issuer of any Pledged Collateral to furnish
to
the Collateral Agent, any information regarding the Pledged Collateral in such
detail as the Collateral Agent may specify;
(d) take,
or
cause an issuer of Pledged Collateral to take, any and all actions necessary
to
register or qualify the Pledged Collateral to enable the Collateral Agent to
consummate a public sale or other disposition of the Pledged Collateral;
and
(e) at
its
own expense, request that the independent certified public accountants then
engaged by each Grantor to prepare and deliver to the Collateral Agent and
each
Lender, at any time, and from time to time, promptly upon the Collateral Agent’s
request, the following reports with respect to the applicable Grantor: (i)
a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts.
5.4. Grant
of Intellectual Property License.
For the
purpose of enabling the Collateral Agent to exercise the rights and remedies
under this Article
V
at such
time as the Collateral Agent shall be lawfully entitled to exercise such rights
and remedies, each Grantor hereby (a) grants to the Collateral Agent, for the
benefit of the Collateral Agent and the Lenders, an irrevocable, nonexclusive
license (exercisable without payment of royalty or other compensation to any
Grantor) to use, license or sublicense any Registered Proprietary Rights now
owned or hereafter acquired by such Grantor, and wherever the same may be
located, and including in such license 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 and (b) irrevocably agrees
that the Collateral Agent may sell any of such Grantor’s Inventory directly to
any person, including without limitation persons who have previously purchased
the Grantor’s Inventory from such Grantor and in connection with any such sale
or other enforcement of the Collateral Agent’s rights under this Security
Agreement, may sell Inventory which bears any Trademark owned by or licensed
to
such Grantor and any Inventory that is covered by any Copyright owned by or
licensed to such Grantor and the Collateral Agent may finish any work in process
and affix any Trademark owned by or licensed to such Grantor and sell such
Inventory as provided herein. The Collateral Agent and the Grantors agree that
any irrevocable, nonexclusive license granted hereunder may be used by the
Collateral Agent only during the continuance of an Event of Default and in
connection with the exercise the rights and remedies under this Article
V.
17
ARTICLE
VI
ACCOUNT
VERIFICATION; ATTORNEY IN FACT; PROXY
6.1. Account
Verification.
The
Collateral Agent may at any time, in the Collateral Agent’s own name, in the
name of a nominee of the Collateral Agent, or in the name of any Grantor
communicate (by mail, telephone, facsimile or otherwise) with the Account
Debtors of any such Grantor, parties to contracts with any such Grantor and
obligors in respect of Instruments of any such Grantor to verify with such
Persons, to the Collateral Agent’s satisfaction, the existence, amount, terms
of, and any other matter relating to, Accounts, Instruments, Chattel Paper,
payment intangibles and/or other Receivables.
6.2. Authorization
for Secured Party to Take Certain Action.
(a) Each
Grantor irrevocably authorizes the Collateral Agent at any time and from time
to
time in the sole discretion of the Collateral Agent and appoints the Collateral
Agent as its attorney in fact (i) to execute on behalf of such Grantor as debtor
and to file financing statements necessary or desirable in the Collateral
Agent’s sole discretion to perfect and to maintain the perfection and priority
of the Collateral Agent’s security interest in the Collateral, (ii) to endorse
and collect any cash proceeds of the Collateral, (iii) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing
statement with respect to the Collateral as a financing statement and to file
any other financing statement or amendment of a financing statement (which
does
not add new collateral or add a debtor) in such offices as the Collateral Agent
in its sole discretion deems necessary or desirable to perfect and to maintain
the perfection and priority of the Collateral Agent’s security interest in the
Collateral, (iv) upon reasonable prior written notice to the Grantors, to
contact and enter into one or more agreements with the issuers of uncertificated
securities which are Pledged Collateral or with securities intermediaries
holding Pledged Collateral as may be necessary or advisable to give the
Collateral Agent Control over such Pledged Collateral, (v) to apply the proceeds
of any Collateral received by the Collateral Agent to the Obligations as
provided in Section 2.3 of the Credit Agreement, (vi) to discharge past due
taxes, assessments, charges, fees or Liens on the Collateral (except for
Permitted Liens), (vii) to contact Account Debtors for any reason, (viii) to
demand payment or enforce payment of the Receivables in the name of the
Collateral Agent or such Grantor and to endorse any and all checks, drafts,
and
other instruments for the payment of money relating to the Receivables, (ix)
to
sign such Grantor’s name on any invoice or xxxx of lading relating to the
Receivables, drafts against any Account Debtor of the Grantor, assignments
and
verifications of Receivables, (x) to exercise all of such Grantor’s rights and
remedies with respect to the collection of the Receivables and any other
Collateral, (xi) to settle, adjust, compromise, extend or renew the Receivables,
(xii) to settle, adjust or compromise any legal proceedings brought to collect
Receivables, (xiii) to prepare, file and sign such Grantor’s name on a proof of
claim in bankruptcy or similar document against any Account Debtor of such
Grantor, (xiv) to prepare, file and sign such Grantor’s name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection
with
the Receivables, (xv) to change the address for delivery of mail addressed
to
such Grantor to such address as the Collateral Agent may designate and to
receive, open and dispose of all mail addressed to such Grantor and (xvi) to
do
all other acts and things reasonably necessary to carry out this Security
Agreement; and such Grantor agrees to reimburse the Collateral Agent on demand
for any payment made or any expense incurred by the Collateral Agent (including
the reasonable fees, charges and disbursements of counsel) in connection with
any of the foregoing; provided
that,
this
authorization shall not relieve such Grantor of any of its obligations under
this Security Agreement or under the Credit Agreement.
18
(b) All
acts
of said attorney or designee are hereby ratified and approved. The powers
conferred on the Collateral Agent, for the benefit of the Collateral Agent
and
Lenders, under this Section
6.2
are
solely to protect the Collateral Agent’s interests in the Collateral and shall
not impose any duty upon the Collateral Agent or any Lender to exercise any
such
powers. The Collateral Agent agrees that, except for the powers granted in
Section
6.2(a)(i)-(vi),
it
shall not exercise any power or authority granted to it unless an Event of
Default has occurred and is continuing. The rights granted to the Collateral
Agent pursuant to this Section 6.2 shall be irrevocable until the date on which
this Security Agreement is terminated in accordance with Section
8.14.
6.3. Proxy.
EACH
GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE COLLATERAL AGENT AS
ITS
PROXY AND ATTORNEY-IN-FACT (TO THE EXTENT SET FORTH IN SECTION 6.2 ABOVE) WITH
RESPECT TO ITS PLEDGED COLLATERAL, INCLUDING THE RIGHT TO VOTE SUCH PLEDGED
COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO. IN ADDITION TO THE RIGHT
TO VOTE ANY SUCH PLEDGED COLLATERAL, THE APPOINTMENT OF THE COLLATERAL AGENT
AS
PROXY AND ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS,
POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH PLEDGED COLLATERAL
WOULD BE ENTITLED (INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF
SHAREHOLDERS, CALLING SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH
MEETINGS). SUCH PROXY SHALL BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE
NECESSITY OF ANY ACTION (INCLUDING ANY TRANSFER OF ANY SUCH PLEDGED COLLATERAL
ON THE RECORD BOOKS OF THE ISSUER THEREOF) BY ANY PERSON (INCLUDING THE ISSUER
OF SUCH PLEDGED COLLATERAL OR ANY OFFICER OR COLLATERAL AGENT THEREOF), UPON
THE
OCCURRENCE OF AN EVENT OF DEFAULT.
6.4. Nature
of Appointment; Limitation of Duty.
THE
APPOINTMENT OF THE COLLATERAL AGENT AS PROXY AND ATTORNEY-IN-FACT IN THIS
ARTICLE VI IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE DATE
ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.14.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN, NEITHER THE COLLATERAL AGENT, NOR
ANY
LENDER, NOR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
ADMINISTRATIVE AGENTS OR REPRESENTATIVES SHALL HAVE ANY DUTY TO EXERCISE ANY
RIGHT OR POWER GRANTED HEREUNDER OR OTHERWISE OR TO PRESERVE THE SAME AND SHALL
NOT BE LIABLE FOR ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO, EXCEPT
IN
RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION; PROVIDED
THAT, IN NO EVENT SHALL THEY BE LIABLE FOR ANY PUNITIVE, EXEMPLARY, INDIRECT
OR
CONSEQUENTIAL DAMAGES.
ARTICLE
VII
COLLECTION
AND APPLICATION OF COLLATERAL PROCEEDS; DEPOSIT ACCOUNTS
7.1. Application
of Proceeds; Deficiency.
All
proceeds of the Collateral received by the Collateral Agent (i) after an Event
of Default has occurred and is continuing and the Collateral Agent so elects
and
(ii) the exercise of remedies provided for in Article 8 of the Credit Agreement
(or after the Term Loans have automatically become immediately due and payable),
shall be applied to the Obligations in the order set forth in Section 2.3 of
the
Credit Agreement unless a court of competent jurisdiction shall otherwise
direct. The Grantors shall remain liable for any deficiency if the proceeds
of
any sale or disposition of the Collateral are insufficient to pay all of the
Obligations, including any attorneys’ fees and other expenses incurred by
Collateral Agent or any Lender to collect such deficiency.
19
ARTICLE
VIII
GENERAL
PROVISIONS
8.1. Waivers.
Each
Grantor hereby waives notice of the time and place of any public sale or the
time after which any private sale or other disposition of all or any part of
the
Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the
Grantors, addressed as set forth in Article
IX,
at
least ten (10) days prior to (i) the date of any such public sale or (ii) the
time after which any such private sale or other disposition may be made. To
the
maximum extent permitted by applicable law, each Grantor waives all claims,
damages, and demands against the Collateral Agent or any Lender arising out
of
the repossession, retention or sale of the Collateral, except such as arise
solely out of the gross negligence or willful misconduct of the Collateral
Agent
or such Lender as finally determined by a court of competent jurisdiction.
To
the extent it may lawfully do so, each Grantor absolutely and irrevocably waives
and relinquishes the benefit and advantage of, and covenants not to assert
against the Collateral Agent or any Lender, any valuation, stay, appraisal,
extension, moratorium, redemption or similar laws and any and all rights or
defenses it may have as a surety now or hereafter existing which, but for this
provision, might be applicable to the sale of any Collateral made under the
judgment, order or decree of any court, or privately under the power of sale
conferred by this Security Agreement, or otherwise. Except as otherwise
specifically provided herein, each Grantor hereby waives presentment, demand,
protest or any notice (to the maximum extent permitted by applicable law) of
any
kind in connection with this Security Agreement or any Collateral.
8.2. Limitation
on Collateral Agent’s and Lenders’ Duty with Respect to the
Collateral.
The
Collateral Agent shall have no obligation to clean-up or otherwise prepare
the
Collateral for sale. The Collateral Agent and each Lender shall use reasonable
care with respect to the Collateral in its possession or under its control.
Neither the Collateral Agent nor any Lender shall have any other duty as to
any
Collateral in its possession or control or in the possession or control of
any
Collateral Agent or nominee of the Collateral Agent or such Lender, or any
income thereon or as to the preservation of rights against prior parties or
any
other rights pertaining thereto. To the extent that applicable law imposes
duties on the Collateral Agent to exercise remedies in a commercially reasonable
manner, each Grantor acknowledges and agrees that it is commercially reasonable
for the Collateral Agent (i) to fail to incur expenses deemed significant by
the
Collateral Agent to prepare Collateral for disposition or otherwise to transform
raw material or work in process into finished goods or other finished products
for disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not required by other law,
to
fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against Collateral,
(iv) to exercise collection remedies against Account Debtors and other Persons
obligated on Collateral directly or through the use of collection agencies
and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other Persons, whether
or
not in the same business as such Grantor, for expressions of interest in
acquiring all or any portion of such Collateral, (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether
or
not the Collateral is of a specialized nature, (viii) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capacity of doing so,
or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale
rather than retail markets, (x) to disclaim disposition warranties, such as
title, possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Collateral Agent against risks of loss, collection
or
disposition of Collateral or to provide to the Collateral Agent a guaranteed
return from the collection or disposition of Collateral, or (xii) to the extent
deemed appropriate by the Collateral Agent, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist
the
Collateral Agent in the collection or disposition of any of the Collateral.
Each
Grantor acknowledges that the purpose of this Section 8.2 is to provide
non-exhaustive indications of what actions or omissions by the Collateral Agent
would be commercially reasonable in the Collateral Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Collateral
Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section 8.2. Without limitation upon the foregoing,
nothing contained in this Section 8.2 shall be construed to grant any rights
to
any Grantor or to impose any duties on the Collateral Agent that would not
have
been granted or imposed by this Security Agreement or by applicable law in
the
absence of this Section 8.2.
20
8.3. Compromises
and Collection of Collateral.
The
Grantors and the Collateral Agent recognize that setoffs, counterclaims,
defenses and other claims may be asserted by obligors with respect to certain
of
the Receivables, that certain of the Receivables may be or become uncollectible
in whole or in part and that the expense and probability of success in
litigating a disputed Receivable may exceed the amount that reasonably may
be
expected to be recovered with respect to a Receivable. In view of the foregoing,
each Grantor agrees that the Collateral Agent may at any time and from time
to
time, if an Event of Default has occurred and is continuing, compromise with
the
obligor on any Receivable, accept in full payment of any Receivable such amount
as the Collateral Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Collateral Agent shall be commercially
reasonable so long as the Collateral Agent acts in good faith based on
information known to it at the time it takes any such action.
8.4. Secured
Party Performance of Debtor Obligations.
Without
having any obligation to do so, the Collateral Agent may perform or pay any
obligation which any Grantor has agreed to perform or pay in this Security
Agreement and the Grantors shall reimburse the Collateral Agent for any amounts
paid by the Collateral Agent pursuant to this Section
8.4.
The
Grantors’ obligation to reimburse the Collateral Agent pursuant to the preceding
sentence shall be a Obligation payable on demand.
8.5. Specific
Performance of Certain Covenants.
Each
Grantor acknowledges and agrees that a breach of any of the covenants contained
in Sections
4.1(d),
Sections
4.1(e), 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10,
4.12, 4.13, 4.14, 4.15, 4.16, 5.3, or 8.7
or in
Article
VII
will
cause irreparable injury to the Collateral Agent and the Lenders, that the
Collateral Agent and Lenders have no adequate remedy at law in respect of such
breaches and therefore agrees, without limiting the right of the Collateral
Agent or the Lenders to seek and obtain specific performance of other
obligations of the Grantors contained in this Security Agreement, that the
covenants of the Grantors contained in the Sections referred to in this Section
8.5 shall be specifically enforceable against the Grantors.
8.6. Dispositions
Not Authorized.
No
Grantor is authorized to sell or otherwise dispose of the Collateral except
as
set forth in Section
4.1(d)
and
notwithstanding any course of dealing between any Grantor and the Collateral
Agent or other conduct of the Collateral Agent, no authorization to sell or
otherwise dispose of the Collateral (except as set forth in Section
4.1(d))
shall
be binding upon the Collateral Agent or the Lenders unless such authorization
is
in writing signed by the Collateral Agent.
8.7. No
Waiver; Amendments; Cumulative Remedies.
No
delay or omission of the Collateral Agent or any Lender to exercise any right
or
remedy granted under this Security Agreement shall impair such right or remedy
or be construed to be a waiver of any Event of Default or an acquiescence
therein, and any single or partial exercise of any such right or remedy shall
not preclude any other or further exercise thereof or the exercise of any other
right or remedy. No waiver, amendment or other variation of the terms,
conditions or provisions of this Security Agreement whatsoever shall be valid
unless in writing signed by the Collateral Agent with the concurrence or at
the
direction of the Lenders required under Section 10.2 of the Credit Agreement
and
then only to the extent in such writing specifically set forth. All rights
and
remedies contained in this Security Agreement or by law afforded shall be
cumulative and all shall be available to the Collateral Agent and the Lenders
until the Obligations have been paid in full.
21
8.8. Limitation
by Law; Severability of Provisions.
All
rights, remedies and powers provided in this Security Agreement may be exercised
only to the extent that the exercise thereof does not violate any applicable
provision of law, and all the provisions of this Security Agreement are intended
to be subject to all applicable mandatory provisions of law that may be
controlling and to be limited to the extent necessary so that they shall not
render this Security Agreement invalid, unenforceable or not entitled to be
recorded or registered, in whole or in part. Any provision in any this Security
Agreement that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or
invalid without affecting the remaining provisions in that jurisdiction or
the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Security Agreement are
declared to be severable.
8.9. Reinstatement.
This
Security Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Grantor for liquidation
or reorganization, should any Grantor become insolvent or make an assignment
for
the benefit of any creditor or creditors or should a receiver or trustee be
appointed for all or any significant part of any Grantor’s assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant
to
applicable law, rescinded or reduced in amount, or must otherwise be restored
or
returned by any obligee of the Obligations, whether as a “voidable preference,”
“fraudulent conveyance,” or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
8.10. Benefit
of Agreement.
The
terms and provisions of this Security Agreement shall be binding upon and inure
to the benefit of the Grantors, the Collateral Agent and the Lenders and their
respective successors and assigns (including all persons who become bound as
a
debtor to this Security Agreement), except that no Grantor shall have the right
to assign its rights or delegate its obligations under this Security Agreement
or any interest herein, without the prior written consent of the Collateral
Agent. No sales of participations, assignments, transfers, or other dispositions
of any agreement governing the Obligations or any portion thereof or interest
therein shall in any manner impair the Lien granted to the Collateral Agent,
for
the benefit of the Collateral Agent and the Lenders, hereunder.
8.11. Survival
of Representations.
All
representations and warranties of the Grantors contained in this Security
Agreement shall survive the execution and delivery of this Security
Agreement.
8.12. Taxes
and Expenses.
Any
taxes (including income taxes) payable or ruled payable by Federal or State
authority in respect of this Security Agreement shall be paid by the Grantors,
together with interest and penalties, if any. The Grantors shall reimburse
the
Collateral Agent for any and all out-of-pocket expenses and internal charges
(including reasonable attorneys’, auditors’ and accountants’ fees and reasonable
time charges of attorneys, paralegals, auditors and accountants who may be
employees of the Collateral Agent) paid or incurred by the Collateral Agent
in
connection with the preparation, execution, delivery, administration, collection
and enforcement of this Security Agreement and in the audit, analysis,
administration, collection, preservation or sale of the Collateral (including
the expenses and charges associated with any periodic or special audit of the
Collateral). Any and all costs and expenses incurred by the Grantors in the
performance of actions required pursuant to the terms hereof shall be borne
solely by the Grantors.
22
8.13. Headings.
The
title of and section headings in this Security Agreement are for convenience
of
reference only, and shall not govern the interpretation of any of the terms
and
provisions of this Security Agreement.
8.14. Termination.
This
Security Agreement shall continue in effect (notwithstanding the fact that
from
time to time there may be no Obligations outstanding) until (i) the Credit
Agreement has terminated pursuant to its express terms and (ii) all of the
Obligations have been indefeasibly paid and performed in full and no Commitments
of the Lenders which would give rise to any Obligations are outstanding. Upon
any termination or expiration of this Security Agreement, the Collateral Agent
shall promptly following the date of such termination at the sole cost and
expense of the Grantors (A) make such filings in all jurisdictions in which
it
filed or caused to be filed a financing statement or other evidence of the
security agreements granted hereunder a termination statement regarding such
liens and (B) terminate its rights under any Collateral Access Agreement,
Deposit Account Control Agreement and any other similar agreement.
8.15. Entire
Agreement.
This
Security Agreement embodies the entire agreement and understanding between
the
Grantors and the Collateral Agent relating to the Collateral and supersedes
all
prior agreements and understandings between the Grantors and the Collateral
Agent relating to the Collateral.
8.16. CHOICE
OF LAW.
THIS
SECURITY AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
INTERNAL LAWS (INCLUDING, WITHOUT LIMITATION, SECTION 5-1401 OF THE NEW YORK
STATE CONSOLIDATED LAWS, BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF NEW YORK.
8.17. CONSENT
TO JURISDICTION.
EACH
PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY
U.S. FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK, NEW YORK IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENT ANY EACH PARTY
HERETO HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION
OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION, OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT
IN
ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
NOTHING IN THIS SECURITY AGREEMENT SHALL AFFECT ANY RIGHT THAT THE AGENT OR
ANY
LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS
SECURITY AGREEMENT AGAINST ANY CREDIT PARTY OR ITS PROPERTIES IN THE COURTS
OF
ANY JURISDICTION.
EACH
PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST
EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW
OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE OTHER LOAN DOCUMENTS IN
ANY
COURT REFERRED TO IN PARAGRAPH ABOVE. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF
AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT.
23
EACH
PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN THE CREDIT AGREEMENT. NOTHING IN THIS SECURITY AGREEMENT
WILL AFFECT THE RIGHT OF ANY PARTY TO THIS SECURITY AGREEMENT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW.
8.18. WAIVER
OF JURY TRIAL.
EACH
PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 8.18.
8.19. Certain
Regulatory Restrictions.
Notwithstanding anything to the contrary set forth herein, certain rights,
remedies and powers provided the Agent in this Security Agreement, such as
actions that involve taking possession or controlling the use of human blood
products or facilities for which a Permit is required, are subject to regulatory
restrictions that may require the Agent to obtain the prior written consent
or
approval of certain state and/or federal agencies, and all provisions of this
Security Agreement shall be limited to conform with such restrictions. For
purposes hereof, “Permits”
means
permits, licenses, certificates, approvals and other authorizations issued
by a
state and/or federal agency exercising authority over human blood products.
Grantors shall not be held liable for any damages resulting from the exercise
by
the Collateral Agent of any rights under this Security Agreement in
contravention of any Permits.
8.20. Indemnity.
Each
Grantor hereby agrees to indemnify the Collateral Agent and the Lenders, and
their respective successors, assigns, Collateral Agents and employees, from
and
against any and all liabilities, damages, penalties, suits, costs, and expenses
of any kind and nature (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Collateral Agent or any
Lender is a party thereto) imposed on, incurred by or asserted against the
Collateral Agent or the Lenders, or their respective successors, assigns,
Collateral Agents and employees, in any way relating to or arising out of this
Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including, without limitation, latent
and other defects, whether or not discoverable by the Collateral Agent or the
Lenders or any Grantor, and any claim for Patent, Trademark or Copyright
infringement). The parties will adhere to the provisions of Section 10.3 of
the
Credit Agreement with respect to any claim for indemnification pursuant to
this
Security Agreement.
8.21. Counterparts.
This
Security Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto
may
execute this Security Agreement by signing any such counterpart.
24
ARTICLE
IX
NOTICES
9.1. Sending
Notices.
Any
notice required or permitted to be given under this Security Agreement shall
be
sent by United States mail, telecopier, personal delivery or nationally
established overnight courier service, and shall be deemed received (a) when
received, if sent by hand or overnight courier service, or mailed by certified
or registered mail notices or (b) when sent, if sent by telecopier (except
that,
if not given during normal business hours for the recipient, shall be deemed
to
have been given at the opening of business on the next Business Day for the
recipient), in each case addressed to the Grantors at the notice address set
forth on Exhibit
A,
and to
the Collateral Agent and the Lenders at the addresses set forth in accordance
with Section 10.1 of the Credit Agreement.
9.2. Change
in Address for Notices.
Each of
the Grantors, the Collateral Agent and the Lenders may change the address for
service of notice upon it by a notice in writing to the other
parties.
ARTICLE
X
THE
COLLATERAL AGENT
Mast
Capital Management, LLC has been appointed as the exclusive Collateral Agent
for
the Lenders hereunder pursuant to Article 9 of the Credit Agreement. It is
expressly understood and agreed by the parties to this Security Agreement that
any authority conferred upon the Collateral Agent hereunder is subject to the
terms of the delegation of authority made by the Lenders to the Collateral
Agent
pursuant to the Credit Agreement, and that the Collateral Agent has agreed
to
act (and any successor Collateral Agent shall act) as such hereunder only on
the
express conditions contained in such Article 9 of the Credit Agreement. Any
successor Collateral Agent appointed pursuant to Article 9 of the Credit
Agreement shall be entitled to all the rights, interests and benefits of the
Collateral Agent hereunder.
[Signature
Page Follows]
25
[Signature
Page to Pledge and Security Agreement]
IN
WITNESS WHEREOF, the Grantors and the Collateral Agent have executed this
Security Agreement as of the date first above written.
| GRANTORS: | ||
| LEV PHARMACEUTICALS, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxx | |
|
Name: Xxxxxx X. Xxxxxx |
||
| Title: Chief Executive Officer | ||
| LEV DEVELOPMENT CORP. | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxx | |
|
Name: Xxxxxx X. Xxxxxx |
||
| Title: Chief Executive Officer | ||
[Signature
Page to Pledge and Security Agreement]
| COLLATERAL AGENT: | ||
| MAST CAPITAL MANAGEMENT, LLC | ||
| |
|
|
| By: | /s/ Xxxx X. Xxxxxxxx | |
|
Name: Xxxx X. Xxxxxxxx |
||
| Title: Partner | ||
