EXHIBIT 10.36
SECURITY AND INTERCREDITOR AGREEMENT
AGREEMENT, dated December 1, 1999, among Biofund, Inc., a Delaware
corporation with an address at Xxx X, Xxxxxxxxx, XX 00000 ("Biofund"), Xxxxxx X.
Xxxxxx ("Xxxxxx"), with an address at Xxxxx Xxxxx Xxxx Xxxx, Xxx X, Xxxxxxxxx,
XX 00000, and Epigen, Inc., a Delaware corporation with an address at Xxxxx
Xxxxx Xxxx Xxxx, Xxx X, Xxxxxxxxx, XX 00000 ("Epigen").
RECITALS
1. Epigen has obtained a loan from the Bank of Millbrook ("Bank") in
the original principal amount of up to $800,000 (the "Loan") upon the condition
that the Loan be secured by collateral in the form of certificates of deposit
issued by the Bank aggregating the original principal amount of the Loan (the
"Security").
2. Biofund has agreed to provide such security (the "Guaranty"),
subject to the terms and conditions herein provided.
3. Epigen presently owes Fresne an aggregate of approximately
$1,699,000, secured by a first priority security interest in all of Epigen's
rights to its proprietary technology, patents, trademarks and copyrights and
scientific formulae (the "Collateral") pursuant to an Agreement dated as of May
1, 1995.
4. Biofund requires a security interest in the Collateral and certain
other rights as herein provided as a condition of providing the Security.
NOW, THEREFORE, in consideration of the foregoing and the covenants and
conditions herein contained, Biofund, Epigen and Fresne, intending to be legally
bound, hereby agree as follows:
Section 1. Grant of Security Interest.
--------------------------
1.1 In order to secure repayment of the Security in the event the Loan
is foreclosed upon by the Bank and the Security is used to satisfy the Loan,
Epigen hereby grants to Biofund a security interest in the Collateral to the
same extent as that granted to Fresne, and Fresne hereby consents to such grant.
Section 2. Priority of Liens.
-----------------
2.1 Priority among Lenders. Each of Fresne and Biofund hereby agrees
that in the event either of the liens granted to them is foreclosed upon the
holder thereof the holder of the other lien shall cooperate with the foreclosing
party in such foreclosure. To the extent the Collateral is sold or otherwise
disposed of to satisfy such lien, the proceeds of such foreclosure, less costs
thereof, shall be disbursed sixty percent (60%) to Biofund and forty percent
(40%) to
-1-
Fresne until the smaller of the two obligations secured by such liens shall have
been satisfied in full. Thereafter, any remaining proceeds shall be disbursed
first to the holder of the unsatisfied lien until the obligation secured by such
lien is paid in full and any remaining proceeds shall be returned to Epigen.
2.2 Execution of Documents. The parties hereto hereby agree to execute
and deliver all such financing statements and other documents as shall be
necessary to effectuate the intent of this Agreement and the transactions
contemplated hereby.
Section 3. Warrant to Purchase Shares of Epigen Stock.
------------------------------------------
3.1 Epigen hereby grants to Biofund, or its nominees who must be
shareholders of Biofund, the right to acquire shares of Epigen's Common Stock,
$.001 par value per share ("Common Stock"), as follows:
(a) For each $100,000 of funds provided for the Guaranty by
Biofund, upon retirement of the Loan and return of the
Security Biofund shall have the right to acquire up to that
number of shares of Common Stock equal to two and one-half
percent (2-1/5%) of the issued and outstanding shares of
Common Stock, on a fully diluted basis as of November 1, 1999,
at a price of $.01 per share.
(b) In consideration for such right, Biofund shall apply all
interest earned on the Security to repayment of interest
accrued on the Loan, which application shall be made
immediately upon the maturity date(s) of the Security.
(c) Epigen promptly shall take all steps necessary to reserve for
issuance a sufficient number of shares of Common Stock to
satisfy the exercise of such right in its entirety by Biofund.
Section 4. Miscellaneous.
-------------
4.1 Notices. Except as herein provided, all notices which may be
required or permitted under this Agreement shall be given in writing by
certified mail, return receipt requested, or by hand, by facsimile or by Express
Mail or other recognized over night delivery service and shall be delivered or
transmitted to the parties hereto at their respective addresses set forth above,
or such other addresses as any of them shall designate in accordance with the
provisions of this Section 4.1
4.2 Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto regarding the subject matter hereof and supersedes any
prior agreement of the parties hereto regarding such subject matter.
4.3 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of New York.
-2-
4.4 Counterparts. This Agreement may be signed in one or more
counterparts which together shall constitute one and the same instrument.
4.5 Modification. No modification or amendment of this Agreement shall
be effective unless in writing and signed by the parties hereto.
4.6 Severability. Should any provision of this Agreement be determined
to be invalid or unenforceable or at variance with any present or future
requirement of applicable law then such provision alone shall become inoperative
to the extent necessary, and this Agreement may remain in full force and should
be construed so as to give effect to the intent and purpose of the parties to
the maximum extent possible.
4.7 Assignment. Except as herein provided, no party may assign all or
any portion of this Agreement without the prior written consent of the other
parties.
4.8 Headings. The headings contained in this Agreement are for the
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
executed by their duly authorized representatives as of the day and year first
above written.
BIOFUND, INC. EPIGEN, INC.
By: /s/Xxxxx Xxxxx By: /s/Xxxxxx X. Xxxxxx
---------------------- ---------------------
Xxxxx Xxxxx, President Xxxxxx X. Xxxxxx, CEO,
President and Chairman
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx, individually
-3-
