SECURITY AGREEMENT
Exhibit 10.2
This SECURITY AGREEMENT, dated as of February 4,
2019 (this “Agreement”),
is among GT Biopharma, Inc., a Delaware corporation
(the “Company”),
certain Subsidiaries of the Company which shall become a party to
this Agreement by execution and delivery of the form annexed hereto
as Annex A and the Subsidiary Guaranty annexed thereto (each such
Subsidiary, a “Guarantor”
and together with the Company, the “Debtors”)
Alpha Capital Anstalt, as collateral agent (the
“Collateral
Agent”) for the holders
of the Company’s 10% senior Convertible Debentures issued on
August 2, 2018, September 7, 2018 and September 24, 2018 as
disclosed on Schedule 1
annexed hereto in the original
principal amount of $9,058,962 and the Secured Convertible Notes
issued at or about February 4, 2019 in the original aggregate
principal amount of $1,352,224, and such other of the
Company’s Secured Convertible Notes which may be issued in
the future pursuant to a Securities Purchase Agreement among the
Company and the purchasers party thereto first executed on February
4, 2019 (collectively, the “Notes”)
(collectively, the “Secured
Parties”).
W I T N E S S E T H:
WHEREAS,
pursuant to the Securities Purchase Agreement (as defined in the
Notes), the Secured Parties have severally agreed to extend loans
to the Company evidenced and to be evidenced by the
Notes;
WHEREAS, pursuant to a certain Subsidiary Guaranty
(“Guaranty”)
to be dated as of the date of the Additional Debtor Joinder, forms
of which are annexed hereto as Annex A, each Guarantor agrees to
guarantee and act as surety for payment of such Notes, and other
obligations of the Company;
WHEREAS,
in order to induce the Secured Parties to extend the loans
evidenced by the Notes, the Company has agreed to execute and
deliver to the Collateral Agent this Agreement and to grant
Collateral Agent, for the ratable benefit of the Secured Parties, a
security interest in certain property of the Company to secure the
prompt payment, performance and discharge in full of all of the
Company’s obligations under the Notes and Transaction
Documents.
NOW,
THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Certain
Definitions. As used in this
Agreement, the following terms shall have the meanings set forth in
this Section 1. Terms used but not otherwise defined in this
Agreement that are defined in Article 8 or 9 of the UCC (such as
“account,” “chattel paper,”
“commercial tort claim,” “deposit account,”
“document,” “equipment,”
“fixtures,” “general intangibles,”
“goods,” “instruments,”
“inventory,” “investment property,”
“letter-of-credit rights,” “proceeds” and
“supporting obligations”) shall have the respective
meanings given such terms in Article 8 or 9 of the UCC, as
applicable. Upper case terms shall have the meanings attributed to
them in the Securities Purchase Agreement.
(a) “Collateral”
means the collateral in which the Collateral Agent is granted a
security interest by this Agreement and which shall include the
following personal property of the Company, whether presently owned
or existing or hereafter acquired or coming into existence,
wherever situated, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products
and accounts thereof, including, without limitation, all proceeds
from the disposition, sale or transfer of the Collateral and of
insurance covering the same and of any tort claims in connection
therewith, and all dividends, interest, cash, notes, securities,
equity interest or other property at any time and from time to time
acquired, receivable or otherwise distributed in respect of, or in
exchange for, any or all of the Pledged Securities (as defined
below):
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(i) All
goods, including, without limitation, (A) all machinery, equipment,
computers, motor vehicles, trucks, tanks, boats, ships, appliances,
furniture, special and general tools, fixtures, test and quality
control devices and other equipment of every kind and nature and
wherever situated, together with all documents of title and
documents representing the same, all additions and accessions
thereto, replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other items used and
useful in connection with any Debtor’s businesses and all
improvements thereto; and (B) all inventory;
(ii) All
contract rights and other general intangibles, including, without
limitation, Intellectual Property, all partnership interests,
membership interests, stock or other securities, rights under any
of the Organizational Documents (as defined herein), agreements
related to the Pledged Securities (as defined herein), licenses,
distribution and other agreements, computer software (whether
“off-the-shelf,” licensed from any third party or
developed by any Debtor), computer software development rights,
leases, franchises, customer lists, quality control procedures,
grants and rights, goodwill, trademarks, service marks, trade
styles, trade names, patents, patent applications, copyrights,
income tax refunds;
(iii) All
accounts, together with all instruments, all documents of title
representing any of the foregoing, all rights in any merchandising,
goods, raw materials, timber cut or to be cut, oil, gas,
hydrocarbons, and minerals extracted or to be extracted, equipment,
motor vehicles and trucks which any of the same may represent, and
all right, title, security and guaranties with respect to each
account, including any right of stoppage in transit;
(iv) All
documents, letter-of-credit rights, instruments and chattel
paper;
(v) All
commercial tort claims;
(vi) All
deposit accounts and all cash (whether or not deposited in such
deposit accounts);
(vii) All
investment property;
(viii) All
supporting obligations;
(ix) All
files, records, books of account, business papers, and computer
programs; and
(x) the
products and proceeds of all of the foregoing Collateral set forth
in clauses (i)-(ix) above.
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Without limiting the generality of the foregoing,
the “Collateral”
shall include all investment property and general intangibles
respecting ownership and/or other equity interests in Guarantor,
including, without limitation, the shares of capital stock and the
other equity interests, including member interests in limited
liability companies listed on Schedule H
hereto, if any, (as the same may be
modified from time to time pursuant to the terms hereof), and any
other shares of capital stock and/or other equity interests of any
other direct or indirect Subsidiary of any Debtor obtained in the
future, and, in each case, all certificates representing such
shares and/or equity interests and, in each case, all rights,
options, warrants, stock, other securities and/or equity interests
that may hereafter be received, receivable or distributed in
respect of, or exchanged for, any of the foregoing and all rights
arising under or in connection with the Pledged Securities,
including, but not limited to, all dividends, interest and cash;
provided that Company’s equity interests in Oxis Isle of Man
Limited shall not be included in the Collateral;
provided
that “Collateral”
hereunder shall not include: (1) any lease, license, contract,
property rights or agreement to which any Debtor is a party (or to
any of its rights or interests thereunder) if the grant of such
security interest would constitute or result in the abandonment,
invalidation or unenforceability of any right, title or interest of
any Debtor therein provided
that the Collateral shall include, and
the security interest granted by each Debtor shall attach to,
immediately at such time as the contractual or legal prohibition
shall no longer be applicable and to the extent severable, any
portion of such lease, license, contract, property rights or
agreement not subject to the prohibitions specified previously in
this sentence, (2) any intent-to-use United States trademark
application for which an amendment to allege use or statement of
use has not been filed under 15 U.S.C. § 1051(c) or (d),
respectively, or, if filed, has not been deemed in conformance with
15 U.S.C. § 1051 (a) or (c), in each case, only to the extent
the grant of security interest in such intent-to-use trademark is
in violation of 15 U.S.C. § 1060 and only unless and until a
“Statement of Use” or “Amendment to Allege
Use” is filed, has been deemed in conformance with 15 U.S.C.
§ 1051 (a) and (c) or examined and accepted, respectively, by
the United States Patent and Trademark Office, (3) motor vehicles subject to certificates of
title, provided that perfection of security interests in such motor
vehicles shall be limited to the filing of UCC financing
statements), (4) commercial tort claims seeking damages not
exceeding $100,000 in the aggregate for all such commercial tort
claims excluded pursuant to this clause (4), (5) assets in respect
of which pledges and security interests are prohibited by
applicable U.S. law, rule or regulation or agreements with any U.S.
governmental authority, (6) Excluded Accounts, (7) letter-of-credit
rights (other than to the extent a lien on such assets or such
rights can be perfected by filing a UCC-1) not exceeding $100,000
in the aggregate for all such commercial tort claims excluded
pursuant to this clause (7) and (8) such assets as to which the
Collateral Agent and the applicable Debtor shall agree that the
costs of obtaining or perfecting a security interest therein are
excessive in relation to the benefit to the Secured Parties of the
security to be afforded thereby (each of the foregoing, the
“Excluded
Collateral”).
Notwithstanding the foregoing, nothing herein
shall be deemed to constitute an assignment of any asset which, in
the event of an assignment, becomes void by operation of applicable
law or the assignment of which is otherwise prohibited by
applicable law (in each case to the extent that such applicable law
is not overridden by Sections 9-406, 9-407 and/or 9-408 of the UCC
or other similar applicable law); provided,
however,
that to the extent permitted by applicable law, this Agreement
shall create a valid security interest in such asset and, to the
extent permitted by applicable law, this Agreement shall create a
valid security interest in the proceeds of such
asset.
(b) “Excluded
Accounts” means accounts
specifically and exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of
any Debtor’s employees.
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(c) “Intellectual
Property” means the
collective reference to all rights, priorities and privileges
relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including,
without limitation, (i) all copyrights arising under the laws of
the United States, any other country or any political subdivision
thereof, whether registered or unregistered and whether published
or unpublished, all registrations and recordings thereof, and all
applications in connection therewith, including, without
limitation, all registrations, recordings and applications in the
United States Copyright Office, (ii) all patents of the United
States, any other country or any political subdivision thereof, all
reissues and extensions thereof, and all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, (iii) all
trademarks, trade names, corporate names, company names, business
names, fictitious business names, trade dress, service marks,
logos, domain names and other source or business identifiers, and
all goodwill associated therewith, now existing or hereafter
adopted or acquired, all registrations and recordings thereof, and
all applications in connection therewith, whether in the United
States Patent and Trademark Office or in any similar office or
agency of the United States, any State thereof or any other country
or any political subdivision thereof, or otherwise, and all common
law rights related thereto, (iv) all trade secrets arising under
the laws of the United States, any other country or any political
subdivision thereof, (v) all rights to obtain any reissues,
renewals or extensions of the foregoing, (vi) all licenses for any
of the foregoing, (vii) any items included in the definition of
Intellectual Property Rights as defined in the Securities Purchase
Agreement and not set forth above, and (viii) all causes of action
for infringement of the foregoing.
(d) “Majority
in Interest” means, at
any time of determination, the holders of more than fifty percent
(50%) (based on then-outstanding principal amounts and accrued
interest of Notes at the time of such determination) of the
Notes.
(e) “Necessary
Endorsement” means
undated stock powers endorsed in blank and other proper instruments
of assignment duly executed and such other instruments or documents
as the Collateral Agent (as that term is defined below) may
reasonably request.
(f) “Obligations”
means all of the liabilities and obligations (primary, secondary,
direct, contingent, sole, joint or several) due or to become due,
or that are now or may be hereafter contracted or acquired, or
owing to, of any Debtor to the Secured Parties, including, without
limitation, all obligations under this Agreement, the Notes, the
Guaranty and obligations under any other Transaction Document,
instrument, agreement or other document executed and/or delivered
in connection herewith or therewith in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect,
absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or
recovered directly or indirectly from any of the Secured Parties as
a preference, fraudulent transfer or otherwise as such obligations
may be amended, supplemented, converted, extended or modified from
time to time. Without limiting the generality of the foregoing, the
term “Obligations” shall include, without limitation:
(i) principal of, and interest on the Notes and the loans extended
pursuant thereto; (ii) any and all other fees, indemnities, costs,
obligations and liabilities of the Debtors from time to time under
or in connection with this Agreement, the Notes and any other
Transaction Documents, instruments, agreements or other documents
executed and/or delivered in connection herewith or therewith; and
(iii) all amounts (including but not limited to post-petition
interest) in respect of the foregoing that would be payable but for
the fact that the obligations to pay such amounts are unenforceable
or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving any
Debtor.
(g) “Organizational
Documents” means with
respect to any Debtor, the documents by which such Debtor was
organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including,
without limitation, any certificates of designation for preferred
stock or other forms of preferred equity) and which relate to the
internal governance of such Debtor (such as bylaws, a partnership
agreement or an operating, limited liability or members
agreement).
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(h) “Pledged
Securities” shall have
the meaning ascribed to such term in Section
4(i).
(i) “UCC”
means the Uniform Commercial Code of the State of Delaware and or
any other applicable law of any state or states which has
jurisdiction with respect to all, or any portion of, the Collateral
or this Agreement, from time to time. It is the intent of the
parties that defined terms in the UCC should be construed in their
broadest sense so that the term “Collateral” will be
construed in its broadest sense. Accordingly, if there are, from
time to time, changes to defined terms in the UCC that broaden the
definitions, they are incorporated herein and if existing
definitions in the UCC are broader than the amended definitions,
the existing ones shall be controlling.
2. Grant
of Security Interest in Collateral. As an inducement for the Secured Parties to
extend the loans as evidenced by the Notes and to secure the
complete and timely payment, performance and discharge in full, as
the case may be, of all of the Obligations, each Debtor hereby
unconditionally and irrevocably pledges, grants and hypothecates to
the Secured Parties a security interest in and to, a lien upon and
a right of set-off against all of their respective right, title and
interest of whatsoever kind and nature in and to, the Collateral (a
“Security
Interest” and,
collectively, the “Security
Interests”).
3. Delivery
of Certain Collateral. At any
time at the reasonable request of the Collateral Agent, each Debtor
shall deliver or cause to be delivered to the Collateral Agent, any
and all certificates and other instruments or documents
representing any of the Collateral, in each case, together with all
Necessary Endorsements.
4. Representations,
Warranties, Covenants and Agreements of the
Debtors. Except as set forth
under the corresponding section of the disclosure schedules
delivered to the Secured Parties and Collateral Agent concurrently
herewith (the “Disclosure
Schedules”), which
Disclosure Schedules shall be deemed a part hereof. As of the date
hereof, each Debtor represents and warrants to the Secured Parties
as follows and, until the repayment in full of the Obligations,
covenants and agrees with, the Secured Parties as
follows:
(a) Each
Debtor has the requisite corporate, partnership, limited liability
company or other power and authority to enter into this Agreement
and otherwise to carry out its obligations hereunder. The
execution, delivery and performance by each Debtor of this
Agreement and the filings contemplated herein have been duly
authorized by all necessary action on the part of such Debtor and
no further action is required by such Debtor. This Agreement, when
executed and delivered, will constitute the legal, valid and
binding obligation of each Debtor, enforceable against each Debtor
in accordance with its terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization and
similar laws of general application relating to or affecting the
rights and remedies of creditors and by general principles of
equity.
(b) The
Debtors have no place of business or offices where their respective
books of account and records are kept (other than temporarily at
the offices of its attorneys or accountants) or places where
Collateral is stored or located, except as set forth on
Schedule
A attached hereto. Except as
specifically set forth on Schedule
A, each Debtor is the record
owner of the real property where such Collateral is located, and
there exist no mortgages or other liens on any such real property
or on the Collateral except for Permitted Liens (as defined in the
Securities Purchase Agreement), all of which are identified
on Schedule B
hereto. Except as disclosed on
Schedule
A and except for Collateral to
be held by the Collateral Agent, none of such Collateral is in the
possession of any consignee, bailee, warehouseman, agent or
processor.
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(c) Except
for Permitted Liens and except as set forth on Schedule B
attached hereto, the Debtors are the
sole owners of the Collateral (except for non-exclusive licenses
granted by any Debtor in the ordinary course of business), free and
clear of any liens, security interests, encumbrances, rights or
claims, and are fully authorized to grant the Security Interests.
Except for Permitted Liens and other items which are all as set
forth on Schedule B
attached hereto, there is not on file
in any governmental or regulatory authority, agency or recording
office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other
than those that will be filed in favor of the Secured Parties
pursuant to this Agreement) covering or affecting any of the
Collateral.
(d) No
written claim has been received that any Collateral or any
Debtor’s use of any Collateral violates the rights of any
third party. There has been no adverse decision to any
Debtor’s claim of ownership rights in or exclusive rights to
use the Collateral in any jurisdiction or to any Debtor’s
right to keep and maintain such Collateral in full force and
effect, and there is no proceeding involving said rights pending
or, to the best knowledge of any Debtor, threatened before any
court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.
(e) Each
Debtor shall at all times maintain its books of account and records
relating to the Collateral at its principal place of business and
its Collateral at the locations set forth on Schedule A
attached hereto and may not relocate
such books of account and records or tangible Collateral except in
the ordinary course of sales unless it delivers to the Secured
Parties at least 15 days prior to such relocation (i) written
notice of such relocation and the new location thereof (which must
be within the United States) and (ii) evidence that appropriate
financing statements under the UCC and other necessary documents
have been filed and recorded and other steps have been taken to
perfect the Security Interests to create in favor of the Secured
Parties a valid, perfected and continuing perfected first priority
lien in the Collateral, except as otherwise permitted
hereby.
(f) This
Agreement creates in favor of the Secured Parties a valid security
interest in the Collateral, subject only to Permitted Liens
securing the payment and performance of the Obligations. Upon
making the filings described in the immediately following
paragraph, all security interests created hereunder in any
Collateral that may be perfected by filing Uniform Commercial Code
financing statements shall have been duly perfected. Except for the
filing of the Uniform Commercial Code financing statements referred
to in the immediately following paragraph, the recordation of the
Intellectual Property Security Agreement (as defined below) with
respect to copyrights and copyright applications in the United
States Copyright Office referred to in paragraph (m), the execution
and delivery of deposit account control agreements satisfying the
requirements of Section 9-104(a)(2) of the UCC with respect to each
deposit account of the Debtors, and the delivery of the
certificates and other instruments provided in Section 3, no action
is necessary to create, perfect or protect the security interests
created hereunder. Without limiting the generality of the
foregoing, except for the filing of said financing statements, the
recordation of said Intellectual Property Security Agreement, and
the execution and delivery of said deposit account control
agreements, no consent of any third parties and no authorization,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body is required for (i) the
execution, delivery and performance of this Agreement, (ii) the
creation or perfection of the Security Interests created hereunder
in the Collateral or (iii) the enforcement of the rights of the
Collateral Agent and the Secured Parties hereunder.
(g) Each
Debtor hereby authorizes the Collateral Agent to file one or more
financing statements under the UCC, with respect to the Security
Interests, with the proper filing and recording agencies in any
jurisdiction deemed proper by it and authorizes Collateral Agent to
take any other action in Collateral Agent’s absolute
discretion to effectuate, memorialize and protect Secured
Parties’ interest and rights under this
Agreement.
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(h) The
execution, delivery and performance of this Agreement by the
Debtors does not (i) violate any of the provisions of any
Organizational Documents of any Debtor or, to the knowledge of any
Debtor, any judgment, decree, order or award of any court,
governmental body or arbitrator or any applicable law, rule or
regulation applicable to any Debtor or (ii) to the knowledge of
each Debtor, conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time
or both) of, any agreement, credit facility, debt or other
instrument (evidencing any Debtor’s debt or otherwise) or
other understanding to which such Debtor is a party or by which any
property or asset of any Debtor is bound or affected. If any, all
required consents (including, without limitation, from stockholders
or creditors of any Debtor) necessary for any Debtor to enter into
and perform its obligations hereunder have been
obtained.
(i) The
capital stock, other equity interests listed on Schedule H
hereto (the “Pledged
Securities”) represent
all of the capital stock of the Subsidiaries, if any, and represent
all capital stock and other equity interests owned, directly or
indirectly, by the Company (other than the Oxis Isle of Man
Limited). All of the Pledged Securities, if applicable, are validly
issued, fully paid and nonassessable, and the Company is the legal
and beneficial owner of the Pledged Securities, free and clear of
any lien, security interest or other encumbrance except for the
security interests created by this Agreement and other Permitted
Liens.
(j) The
ownership and other equity interests in partnerships and limited
liability companies (if any) included in the Collateral (the
“Pledged
Interests”) by their
express terms do not provide that they are securities governed by
Article 8 of the UCC and are not held in a securities account or by
any financial intermediary.
(k) Except
for Permitted Liens, each Debtor shall at all times maintain the
liens and Security Interests provided for hereunder as valid and
perfected first priority liens and security interests in the
Collateral in favor of the Secured Parties until this Agreement and
the Security Interest hereunder shall be terminated pursuant to
Section 14 hereof. Each Debtor hereby agrees to defend the same
against the claims of any and all persons and entities. Each Debtor
shall safeguard and protect all Collateral for the account of the
Secured Parties. Upon request of the Collateral Agent, each Debtor
will sign and deliver to the Collateral Agent on behalf of the
Secured Parties at any time or from time to time one or more
financing statements pursuant to the UCC in form reasonably
satisfactory to the Collateral Agent and will pay the cost of
filing the same in all public offices wherever filing is, or is
deemed by the Collateral Agent to be, necessary or desirable to
effect the rights and obligations provided for herein. Without
limiting the generality of the foregoing, each Debtor shall pay all
fees, taxes and other amounts necessary to maintain the Collateral
and the Security Interest hereunder, and each Debtor shall obtain
and furnish to the Collateral Agent from time to time, upon demand,
such releases and/or subordinations of claims and liens (other than
Permitted Liens) that may be required to maintain the priority of
the Security Interest hereunder.
(l) Other
than with respect to Permitted Liens, no Debtor will transfer,
pledge, hypothecate, encumber, license, sell or otherwise dispose
of any of the Collateral (except for non-exclusive licenses granted
by a Debtor in its ordinary course of business, sales of inventory
by a Debtor in its ordinary course of business and disposition of
obsolete equipment) without the prior written consent of the
Collateral Agent. The foregoing notwithstanding, Debtor may replace
noncash components of the Collateral with a cash or Cash Equivalent
deposit made at an institution subject to a cash account control
agreement acceptable to the Secured Parties, provided the amount of
cash deposited subject to such agreement is not less than the
highest amount of the Obligations that may be outstanding pursuant
to the Transaction Documents. Cash Equivalent shall mean U.S.
government Treasury bills, bank certificates of deposit, bankers'
acceptances, corporate commercial paper and other money market
instruments.
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(m) Each
Debtor shall keep and preserve its equipment, inventory and other
tangible Collateral in good condition, repair and order and shall
not operate or locate any such Collateral (or cause to be operated
or located) in any area excluded from insurance
coverage.
(n) Each
Debtor shall maintain with financially sound and reputable
insurers, insurance with respect to the Collateral, including
Collateral hereafter acquired, against loss or damage of the kinds
and in the amounts customarily insured against by entities of
established reputation having similar properties similarly situated
and in such amounts as are customarily carried under similar
circumstances by other such entities and otherwise as is prudent
for entities engaged in similar businesses but in any event
sufficient to cover the full replacement cost thereof. Each Debtor
shall cause each insurance policy issued in connection herewith to
provide, and the insurer issuing such policy to certify to the
Collateral Agent, that (a) the Collateral Agent will be named as
lender loss payee and additional insured under each such insurance
policy; and (b) if such insurance is proposed to be cancelled or
materially changed for any reason whatsoever, such insurer or the
Company will promptly notify the Collateral Agent. In addition, the
Collateral Agent will have the right (but no obligation) at its
election to remedy any default in the payment of premiums within
thirty (30) days of notice from the Company or the insurer of any
such default. If no Event of Default (as defined in the Notes)
exists and if the proceeds arising out of any claim or series of
related claims do not exceed $50,000, loss payments in each
instance will be applied by the applicable Debtor to the repair
and/or replacement of property with respect to which the loss was
incurred to the extent reasonably feasible, and any loss payments
or the balance thereof remaining, to the extent not so applied,
shall be payable to the applicable Debtor; provided
, however
, that payments received by any Debtor
after an Event of Default occurs and is continuing or in excess of
$50,000 for any occurrence or series of related occurrences shall
be paid to the Collateral Agent on behalf of the Secured Parties
and, if received by such Debtor, shall be held in trust for the
Secured Parties and immediately paid over to the Collateral Agent
unless otherwise directed in writing by the Collateral Agent.
Copies of such policies or the related certificates, in each case,
naming the Collateral Agent as lender loss payee and additional
insured shall be delivered to the Collateral Agent at least
annually and at the time any new policy of insurance is
issued.
(o) Each
Debtor shall, within ten (10) days of obtaining knowledge thereof,
advise Collateral Agent promptly, in sufficient detail, of any
material adverse change in the Collateral, and of the occurrence of
any event which would have a material adverse effect on the value
of the Collateral or on the Secured Parties’ security
interest.
(p) Each
Debtor shall promptly execute and deliver to the Collateral Agent
such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates
and assurances and take such further action as the Collateral Agent
may from time to time request and may in its sole discretion deem
necessary to perfect, protect or enforce the Secured Parties’
security interest in the Collateral including, without limitation,
one or more deposit account control agreements, and if applicable,
the execution and delivery of a separate security agreement with
respect to each Debtor’s Intellectual Property
(“Intellectual Property
Security Agreement”) in
which the Secured Parties have been granted a security interest
hereunder, all substantially in forms reasonably acceptable to the
Collateral Agent, which Intellectual Property Security Agreement,
and other such documents and agreements other than as stated
therein, shall be subject to all of the terms and conditions
hereof.
(q) Each
Debtor shall permit the Collateral Agent and its representatives
and agents to inspect the Collateral during normal business hours
and upon reasonable prior notice, and to make copies of records
pertaining to the Collateral as may be reasonably requested by the
Collateral Agent from time to time; provided
that so long as no Event of Default
shall have occurred and be continuing, such inspections shall be
limited to no more than one (1) time per fiscal
year.
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(r) Each
Debtor shall take commercially reasonable steps necessary to
diligently pursue and seek to preserve, enforce and collect any
rights, claims, causes of action and accounts receivable in respect
of the Collateral.
(s) Each
Debtor shall promptly notify the Secured Parties in sufficient
detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and
of any other information received by such Debtor that may
materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties
hereunder.
(t) All
information heretofore, herein or hereafter supplied to the Secured
Parties by or on behalf of any Debtor with respect to the
Collateral is accurate and complete in all material respects as of
the date furnished and in light of the circumstances under which
such statements were made.
(u) Each
Debtor shall at all times preserve and keep in full force and
effect its existence and good standing and any rights and
franchises material to its business.
(v) No
Debtor will change its name, type of organization, jurisdiction of
organization, organizational identification number (if it has one),
legal or corporate structure, or add any new fictitious name unless
it provides at least 15 days prior written notice to the Collateral
Agent of such change and, at the time of such written notification,
such Debtor provides any financing statements or fixture filings
necessary to perfect and continue the perfection of the Security
Interests granted and evidenced by this Agreement.
(w) Except
in the ordinary course of business, no Debtor may consign any of
its inventory or sell any of its inventory on xxxx and hold, sale
or return, sale on approval, or other conditional terms of sale
without the consent of the Collateral Agent which shall not be
unreasonably withheld.
(x) No
Debtor may relocate its chief executive office to a new location
without providing 30 days prior written notification thereof to the
Secured Parties and provided that at the time of such written
notification, such Debtor provides any financing statements
necessary to perfect and continue the perfection of the Security
Interests granted and evidenced by this Agreement.
(y) Each
Debtor was organized and remains organized solely under the laws of
the state set forth next to such Debtor’s name in
Schedule
D attached hereto, which
Schedule
D sets forth each
Debtor’s organizational identification number or, if any
Debtor does not have one, states that one does not
exist.
(z)
(i) The
actual name of each Debtor is the name set forth in
Schedule
D attached
hereto;
(ii) no
Debtor has any trade names except as set forth on
Schedule
E attached
hereto;
(iii) no
Debtor has used any name other than that stated in the preamble
hereto or as set forth on Schedule E
for the preceding five years;
and
(iv) no
entity has merged into any Debtor or been acquired by any Debtor
within the past five years except as set forth on
Schedule
E.
(aa) At
any time that any Collateral consists of instruments, certificated
securities or other items that require or permit possession by a
secured party to perfect the security interest created hereby, the
applicable Debtor shall deliver such Collateral to the Collateral
Agent.
9
(bb) During
the continuance of an Event of Default, each Debtor, in its
capacity as issuer, hereby agrees to comply with any and all orders
and instructions of Collateral Agent regarding the Pledged
Securities consistent with the terms of this Agreement without the
further consent of any Debtor as contemplated by Section 8-106 (or
any successor section) of the UCC. Further, each Debtor agrees,
solely with respect to the Pledged Securities, that it shall not
enter into a similar agreement (or one that would confer
“control” within the meaning of Article 8 of the UCC)
with any other person or entity.
(cc) each
Debtor shall cause all tangible chattel paper constituting
Collateral to be delivered to the Collateral Agent or, if such
delivery is not possible, then to cause such tangible chattel paper
to contain a legend noting that it is subject to the security
interest created by this Agreement. To the extent that any
Collateral consists of electronic chattel paper, the applicable
Debtor shall cause the underlying chattel paper to be
“marked” within the meaning of Section 9-105 of the UCC
(or successor section thereto).
(dd) If
there is any investment property or deposit account included as
Collateral that can be perfected by “control” through
an account control agreement, the applicable Debtor shall at the
request of the Collateral Agent cause such an account control
agreement, in form and substance in each case reasonably
satisfactory to the Collateral Agent, to be entered into and
delivered to the Collateral Agent for the benefit of the Secured
Parties.
(ee) To
the extent that any Collateral consists of letter-of-credit rights,
the applicable Debtor shall cause the issuer of each underlying
letter of credit to consent to an assignment of the proceeds
thereof to the Secured Parties.
(ff) To
the extent that any Collateral is in the possession of any third
party, the applicable Debtor shall join with the Collateral Agent
in notifying such third party of the Secured Parties’
security interest in such Collateral and shall use commercially
reasonable efforts to obtain an acknowledgement and agreement from
such third party with respect to the Collateral, in form and
substance reasonably satisfactory to the Collateral
Agent.
(gg) If
any Debtor shall at any time hold or acquire a commercial tort
claim, such Debtor shall promptly notify the Secured Parties in a
writing signed by such Debtor of the particulars thereof and grant
to the Secured Parties in such writing a security interest therein
and in the proceeds thereof, all upon the terms of this Agreement,
with such writing to be in form and substance satisfactory to the
Collateral Agent.
(hh) Each
Debtor shall promptly provide written notice to the Collateral
Agent of any and all accounts which arise out of contracts with any
governmental authority and, to the extent necessary to perfect or
continue the perfected status of the Security Interests in such
accounts and proceeds thereof, shall execute and deliver to the
Collateral Agent an assignment of claims for such accounts and
cooperate with the Collateral Agent in taking any other steps
required, in its judgment, under the Federal Assignment of Claims
Act or any similar federal, state or local statute or rule to
perfect or continue the perfected status of the Security Interests
in such accounts and proceeds thereof.
(ii) The
Company shall cause each subsidiary of the Company (other than Oxis
Isle of Man Limited) to promptly become a party hereto (an
“Additional
Debtor”), by executing
and delivering an Additional Debtor Joinder substantially in the
form of Annex A
attached hereto and comply with the
provisions hereof applicable to the Debtors. Concurrent therewith,
the Additional Debtor shall deliver replacement schedules for, or
supplements to all other Disclosure Schedules to (or referred to
in) this Agreement, as applicable, which replacement schedules
shall supersede, or supplements shall modify, the Schedules then in
effect. The Additional Debtor shall also deliver such opinions of
counsel, authorizing resolutions, good standing certificates,
incumbency certificates, organizational documents, financing
statements and other information and documentation as the
Collateral Agent may reasonably request. Upon delivery of the
foregoing to the Collateral Agent, the Additional Debtor shall be
and become a party to this Agreement with the same rights and
obligations as the Debtors, for all purposes hereof as fully and to
the same extent as if it were an original signatory hereto and
shall be deemed to have made the representations, warranties and
covenants set forth herein as of the date of execution and delivery
of such Additional Debtor Joinder (other than representations and
warranties that specifically refer to an earlier date), and all
references herein to the “Debtors” shall be deemed to
include each Additional Debtor.
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(jj) Each
Debtor shall vote the Pledged Securities to comply with the
covenants and agreements set forth herein and in the
Notes.
(kk) Each
Debtor shall register the pledge of the applicable Pledged
Securities on the books of such Debtor. Each Debtor shall notify
each issuer of Pledged Securities to register the pledge of the
applicable Pledged Securities in the name of the Collateral Agent
on the books of such issuer. Further, except with respect to
certificated securities delivered to the Collateral Agent, the
applicable Debtor shall deliver to Collateral Agent an
acknowledgement of pledge (which, where appropriate, shall comply
with the requirements of the relevant UCC with respect to
perfection by registration) signed by the issuer of the applicable
Pledged Securities, which acknowledgement shall confirm that: (a)
it has registered the pledge on its books and records; and (b) at
any time directed by Collateral Agent during the continuation of an
Event of Default, such issuer will transfer the record ownership of
such Pledged Securities into the name of any designee of the
Collateral Agent, will take such steps as may be necessary to
effect the transfer, and will comply with all other instructions of
the Collateral Agent regarding such Pledged Securities without the
further consent of the applicable Debtor.
(ll) In
the event that, upon an occurrence of an Event of Default,
Collateral Agent shall sell all or any of the Pledged Securities to
another party or parties (herein called the
“Transferee”)
or shall purchase or retain all or any of the Pledged Securities,
each Debtor shall, to the extent applicable: (i) deliver to
Collateral Agent or the Transferee, as the case may be, the
articles of incorporation, bylaws, minute books, stock certificate
books, corporate seals, deeds, leases, indentures, agreements,
evidences of indebtedness, books of account, financial records and
all other Organizational Documents and records of the Debtors and
their direct and indirect subsidiaries; (ii) use its commercially
reasonable efforts to obtain resignations of the persons then
serving as officers and directors of the Debtors and their direct
and indirect subsidiaries, if so requested; and (iii) use its
commercially reasonable efforts to obtain any approvals that are
required by any governmental or regulatory body in order to permit
the sale of the Pledged Securities to the Transferee or the
purchase or retention of the Pledged Securities by Collateral Agent
and allow the Transferee or Collateral Agent to continue the
business of the Debtors and their direct and indirect
subsidiaries.
(mm) Without
limiting the generality of the other obligations of the Debtors
hereunder, each Debtor shall (i) cause to be registered at the
United States Copyright Office all of its material copyrights, (ii)
cause the security interest contemplated hereby with respect to all
Intellectual Property registered at the United States Copyright
Office or United States Patent and Trademark Office to be duly
recorded at the applicable office, and (iii) give the Collateral
Agent notice whenever it acquires (whether absolutely or by
license) or creates any additional material Intellectual
Property.
(nn) Each
Debtor will from time to time, at the joint and several expense of
the Debtors, promptly execute and deliver all such further
instruments and documents, and take all such further action as may
be reasonably necessary or desirable, or as the Collateral Agent
may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce Collateral
Agent’s rights and remedies hereunder and with respect to any
Collateral or to otherwise carry out the purposes of this
Agreement.
(oo) Schedule
F attached hereto lists all of
the patents, patent applications, trademarks, trademark
applications, registered copyrights, and domain names owned by the
any of the Debtors as of the date hereof. Schedule F
lists all material licenses in favor
of Debtor for the use of any patents, trademarks, copyrights and
domain names as of the date hereof. All material patents and
trademarks of the Debtors have been duly recorded at the United
States Patent and Trademark Office and all material copyrights of
the Debtors have been duly recorded at the United States Copyright
Office.
11
(pp) Except
as set forth on Schedule G
attached hereto, none of the account
debtors or other persons or entities obligated on any of the
Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local
statute or rule in respect of such Collateral.
5. Effect
of Pledge on Certain Rights. If any of the Collateral subject to this Agreement
consists of nonvoting equity or ownership interests (regardless of
class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of
certain events (including, without limitation, upon the transfer of
all or any of the other stock or assets of the issuer), it is
agreed that the pledge of such equity or ownership interests
pursuant to this Agreement or the enforcement of any of Collateral
Agent’s rights hereunder shall not be deemed to be the type
of event which would trigger such conversion rights notwithstanding
any provisions in the Organizational Documents or agreements to
which any Debtor is subject or to which any Debtor is
party.
6. Defaults.
The following events shall be “Events of
Default”:
(a) The
occurrence of an Event of Default (as defined in the Notes) under
the Notes;
(b) Any
representation or warranty of any Debtor in this Agreement shall
prove to have been incorrect in any material respect when
made;
(c) The
failure by any Debtor to observe or perform any of its obligations
hereunder for five (5) calendar days after delivery to such Debtor
of written notice of such failure by or on behalf of a Secured
Party or ten (10) calendar days after Debtor otherwise becomes
aware of such non-observance or non-performance; or
(d) If
any material provision of this Agreement shall at any time for any
reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Debtor, or a
proceeding shall be commenced by any Debtor, or by any governmental
authority having jurisdiction over any Debtor, seeking to establish
the invalidity or unenforceability thereof, or any Debtor shall
deny that any Debtor has any liability or obligation purported to
be created under this Agreement.
7. Duty
to Hold In Trust.
(a) During
the continuance of an Event of Default, each Debtor shall, upon
receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interests, whether payable pursuant to the
Notes or otherwise, or of any check, draft, note, trade acceptance
or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Secured Parties and shall forthwith
endorse and transfer any such sums or instruments, or both, to the
Collateral Agent for distribution to the Secured Parties, pro-rata
in proportion to their respective then-currently outstanding
principal amount of Notes for application to the satisfaction of
the Obligations (and if any Note is not outstanding, pro-rata in
proportion to the initial purchases of the remaining
Notes).
(b) If
any Debtor shall become entitled to receive or shall receive any
securities or other property (including, without limitation, shares
of Pledged Securities or instruments representing Pledged
Securities acquired after the date hereof, or any options,
warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of
capital, or issued in connection with any reorganization of such
Debtor or any of its direct or indirect subsidiaries) in respect of
the Pledged Securities (whether as an addition to, in substitution
of, or in exchange for, such Pledged Securities or otherwise), such
Debtor agrees to (i) hold the same in trust on behalf of and for
the benefit of the Secured Parties; and (ii) to deliver any and all
certificates or instruments evidencing the same to Collateral Agent
on or before the close of business on the fifth Business Day
following the receipt thereof by such Debtor, in the exact form
received together with the Necessary Endorsements, to be held by
Collateral Agent subject to the terms of this Agreement as
Collateral.
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8. Rights
and Remedies Upon Default.
(a) After
the occurrence and during the continuance of any Event of Default,
the Collateral Agent shall have the right to exercise all of the
remedies conferred hereunder and under the Notes, and the
Collateral Agent shall have all the rights and remedies of a
secured party under the UCC. Without limitation, the Collateral
Agent, for the benefit of the Secured Parties, shall have the
following rights and powers:
(i) The
Collateral Agent shall have the right to take possession of the
Collateral and, for that purpose, enter, with the aid and
assistance of any person, any premises where the Collateral, or any
part thereof, is or may be placed and remove the same, so long as
the same can be accomplished without breach of the peace and
otherwise in compliance with applicable law, and each Debtor shall
assemble the Collateral and make it available to the Collateral
Agent at places which the Collateral Agent shall reasonably select,
whether at such Debtor’s premises or elsewhere, and make
available to the Collateral Agent, without rent, all of such
Debtor’s respective premises and facilities for the purpose
of the Collateral Agent taking possession of, removing or putting
the Collateral in saleable or disposable form.
(ii) Upon
notice to the Debtors by Collateral Agent, all rights of each
Debtor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise and all rights of each
Debtor to receive the dividends and interest which it would
otherwise be authorized to receive and retain, shall cease. Upon
such notice, Collateral Agent shall have the right to receive, for
the benefit of the Secured Parties, any interest, cash dividends or
other payments on the Collateral and, at the option of Collateral
Agent, to exercise in such Collateral Agent’s discretion all
voting rights pertaining thereto. Without limiting the generality
of the foregoing, Collateral Agent shall have the right (but not
the obligation) to exercise all rights with respect to the
Collateral as if it were the sole and absolute owner thereof,
including, without limitation, to vote and/or to exchange, at its
sole discretion, any or all of the Collateral in connection with a
merger, reorganization, consolidation, recapitalization or other
readjustment concerning or involving the Collateral or any Debtor
or any of its direct or indirect subsidiaries.
(iii) The
Collateral Agent shall have the right to seek an Order from a court
appointing a Trustee to operate the business of each Debtor using
the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral,
at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for
future delivery, in such parcel or parcels and at such time or
times and at such place or places, and upon such terms and
conditions as are commercially reasonable. Upon each such sale,
lease, assignment or other transfer or disposition of Collateral,
the Collateral Agent, for the benefit of the Secured Parties, may,
unless prohibited by applicable law which cannot be waived,
purchase all or any part of the Collateral being sold, free from
and discharged of all trusts, claims, right of redemption and
equities of any Debtor, which are hereby waived and
released.
(iv) The
Collateral Agent shall have the right (but not the obligation) to
notify any account debtors and any obligors under instruments or
accounts to make payments directly to the Collateral Agent, on
behalf of the Secured Parties, and to enforce the Debtors’
rights against such account debtors and obligors.
(v) The
Collateral Agent, for the benefit of the Secured Parties, may (but
is not obligated to) direct any financial intermediary or any other
person or entity holding any investment property to transfer the
same to the Collateral Agent, on behalf of the Secured Parties, or
its designee.
13
(vi) The
Collateral Agent may (but is not obligated to) transfer any or all
Intellectual Property registered in the name of any Debtor at the
United States Patent and Trademark Office and/or Copyright Office
into the name of the Collateral Agent or any purchaser of any
Collateral.
(b) The
Collateral Agent shall comply with any applicable law in connection
with a disposition of Collateral and such compliance will not be
considered adversely to affect the commercial reasonableness of any
sale of the Collateral. The Collateral Agent may sell the
Collateral without giving any warranties and may specifically
disclaim such warranties. If the Collateral Agent sells any of the
Collateral on credit, the Debtors will only be credited with
payments actually made by the purchaser. In addition, each Debtor
waives any and all rights that it may have to a judicial hearing in
advance of the enforcement of any of the Collateral Agent’s
rights and remedies hereunder, including, without limitation, its
right following an Event of Default to take immediate possession of
the Collateral and to exercise its rights and remedies with respect
thereto.
(c) If
any notice to Debtor of the sale or other disposition of Collateral
is required by then applicable law, five (5) business days prior
written notice (which Debtor agree is reasonable notice within the
meaning of Section 9.612(a) of the Uniform Commercial Code) shall
be given to Debtor of the time and place of any sale of Collateral.
The rights granted in this Section are in addition to any and all
rights available to Collateral Agent under the Uniform Commercial
Code.
(d) For
the purpose of enabling the Collateral Agent to further exercise
rights and remedies under this Section 8 or elsewhere provided by
agreement or applicable law, each Debtor hereby grants to the
Collateral Agent, for the benefit of the Collateral Agent and the
Secured Parties, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Debtor) to
use, license or sublicense during the continuance of an Event of
Default, any Intellectual Property now owned or hereafter acquired
by such Debtor, 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.
9. Applications
of Proceeds. The proceeds of
any such sale, lease or other disposition of the Collateral
hereunder or from payments made on account of any insurance policy
insuring any portion of the Collateral shall be applied first, to
the expenses of retaking, holding, storing, processing and
preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection
therewith) of the Collateral, if any, to the reasonable
attorneys’ fees and expenses incurred by the Collateral Agent
in enforcing the Secured Parties’ rights hereunder and in
connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata
among the Secured Parties (based on then-outstanding principal
amounts of Notes at the time of any such determination), and then
to the payment of any other amounts required by applicable law,
after which the Secured Parties shall pay to the applicable Debtor
any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are
insufficient to pay all amounts to which the Secured Parties are
legally entitled, the Debtors will be liable for the deficiency,
together with interest thereon, at the rate of 18% per annum or the
lesser amount permitted by applicable law (the “Default
Rate”), and the reasonable fees of any attorneys employed by
the Secured Parties to collect such deficiency. To the extent
permitted by applicable law, each Debtor waives all claims, damages
and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless
due solely to the gross negligence or willful misconduct of the
Secured Parties as determined by a final judgment (not subject to
further appeal) of a court of competent
jurisdiction.
14
10. Securities
Law Provision. Each Debtor
recognizes that Collateral Agent may be limited in its ability to
effect a sale to the public of all or part of the Pledged
Securities by reason of certain prohibitions in the Securities Act
of 1933, as amended, or other federal or state securities laws
(collectively, the “Securities
Laws”), and may
reasonably be obliged to resort to one or more sales to a
restricted group of purchasers who may be required to agree to
acquire the Pledged Securities for their own account, for
investment and not with a view to the distribution or resale
thereof. Each Debtor agrees that sales so made may be at prices and
on terms less favorable than if the Pledged Securities were sold to
the public, and that Collateral Agent has no obligation to delay
the sale of any Pledged Securities for the period of time necessary
to register the Pledged Securities for sale to the public under the
Securities Laws. Each Debtor shall cooperate with Collateral Agent
in its attempt to satisfy any requirements under the Securities
Laws (including, without limitation, registration thereunder if
requested by Collateral Agent) applicable to the sale of the
Pledged Securities by Collateral Agent.
11. Costs
and Expenses. Each Debtor
agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder,
including without limitation, any financing statements pursuant to
the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any
searches reasonably required by the Collateral Agent. The Debtors
shall also pay all other claims and charges which in the reasonable
opinion of the Collateral Agent is reasonably likely to prejudice,
imperil or otherwise affect the Collateral or the Security
Interests therein. The Debtors will also, upon demand, pay to the
Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of
any experts and agents, which the Collateral Agent, for the benefit
of the Secured Parties, may incur in connection with (i) the
enforcement of this Agreement, (ii) the custody or preservation of,
or the sale of, collection from, or other realization upon, any of
the Collateral, or (iii) the exercise or enforcement of any of the
rights of the Secured Parties under the Notes. Until so paid, any
fees payable hereunder shall be added to the principal amount of
the Notes and shall bear interest at the Default
Rate.
12. Responsibility
for Collateral. The Debtors
assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or
diminished by reason of the loss, destruction, damage or theft of
any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) neither the
Collateral Agent nor any Secured Party (i) has any duty (either
before or after an Event of Default) to collect any amounts in
respect of the Collateral or to preserve any rights relating to the
Collateral, or (ii) has any obligation to clean-up or otherwise
prepare the Collateral for sale, and (b) each Debtor shall remain
obligated and liable under each contract or agreement included in
the Collateral to be observed or performed by such Debtor
thereunder. Neither the Collateral Agent nor any Secured Party
shall have any obligation or liability under any such contract or
agreement by reason of or arising out of this Agreement or the
receipt by the Collateral Agent or any Secured Party of any payment
relating to any of the Collateral, nor shall the Collateral Agent
or any Secured Party be obligated in any manner to perform any of
the obligations of any Debtor under or pursuant to any such
contract or agreement, to make inquiry as to the nature or
sufficiency of any payment received by the Collateral Agent or any
Secured Party in respect of the Collateral or as to the sufficiency
of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts
which may have been assigned to the Collateral Agent or to which
the Collateral Agent or any Secured Party may be entitled at any
time or times.
15
13. Security
Interests Absolute. All rights
of the Secured Parties and all obligations of the Debtors
hereunder, shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of this Agreement, the
Notes or any agreement entered into in connection with the
foregoing, or any portion hereof or thereof; (b) any change in the
time, manner or place of payment or performance of, or in any other
term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Notes or any
other agreement entered into in connection with the foregoing; (c)
any exchange, release or non-perfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure
from any other collateral for, or any guarantee, or any other
security, for all or any of the Obligations; (d) any action by the
Secured Parties to obtain, adjust, settle and cancel in its sole
discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which
might otherwise constitute any legal or equitable defense available
to a Debtor, or a discharge of all or any part of the Security
Interests granted hereby. Until the Obligations shall have been
paid and performed in full, the rights of the Secured Parties shall
continue even if the Obligations are barred for any reason,
including, without limitation, the running of the statute of
limitations or bankruptcy. Each Debtor expressly waives
presentment, protest, notice of protest, demand, notice of
nonpayment and demand for performance. In the event that at any
time any transfer of any Collateral or any payment received by the
Secured Parties hereunder shall be deemed by final order of a court
of competent jurisdiction to have been a voidable preference or
fraudulent conveyance under the bankruptcy or insolvency laws of
the United States, or shall be deemed to be otherwise due to any
party other than the Secured Parties, then, in any such event, each
Debtor’s obligations hereunder shall survive cancellation of
this Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement, but
shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. Each Debtor waives
all right to require the Secured Parties to proceed against any
other person or entity or to apply any Collateral which the Secured
Parties may hold at any time, or to marshal assets, or to pursue
any other remedy. Each Debtor waives any defense arising by reason
of the application of the statute of limitations to any Obligations
secured hereby.
14. Term
of Agreement. This Agreement
and the Security Interest shall terminate on the date on which all
payments under the Notes have been indefeasibly paid in full and
all other Obligations have been paid or discharged; provided,
however, that all indemnities of the Debtors contained in this
Agreement (including, without limitation, Annex B hereto) shall
survive and remain operative and in full force and effect
regardless of the termination of this
Agreement.
15. Power
of Attorney; Further Assurances.
(a) Each
Debtor authorizes the Collateral Agent, and does hereby make,
constitute and appoint the Collateral Agent and its officers,
agents, successors or permitted assigns with full power of
substitution, as such Debtor’s true and lawful
attorney-in-fact, with power, in the name of the Collateral Agent
or such Debtor, after the occurrence and during the continuance of
an Event of Default, (i) to endorse any note, checks, drafts, money
orders or other instruments of payment (including, without
limitation, payments payable under or in respect of any policy of
insurance) in respect of the Collateral that may come into
possession of the Collateral Agent; (ii) to sign and endorse any
financing statement pursuant to the UCC or any invoice, freight or
express xxxx, xxxx of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in
connection with accounts, and other documents relating to the
Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or
threatened against the Collateral; (iv) to demand, collect, receipt
for, compromise, settle and xxx for monies due in respect of the
Collateral; (v) to transfer any Intellectual Property or provide
licenses respecting any Intellectual Property; and (vi) generally,
at the option of the Collateral Agent, and at the expense of the
Debtors, at any time, or from time to time, to execute and deliver
any and all documents and instruments and to do all acts and things
which the Collateral Agent deems necessary to protect, preserve and
realize upon the Collateral and the Security Interests granted
therein in order to effect the intent of this Agreement and the
Notes all as fully and effectually as the Debtors might or could
do; and each Debtor hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and shall be irrevocable for
the term of this Agreement and thereafter as long as any of the
Obligations shall be outstanding. The designation set forth herein
shall be deemed to amend and supersede any inconsistent provision
in the Organizational Documents or other documents or agreements to
which any Debtor is subject or to which any Debtor is a party.
Without limiting the generality of the foregoing, after the
occurrence and during the continuance of an Event of Default, each
Secured Party is specifically authorized to execute and file any
applications for or instruments of transfer and assignment of any
patents, trademarks, copyrights or other Intellectual Property with
the United States Patent and Trademark Office and the United States
Copyright Office.
16
(b) On
a continuing basis, each Debtor will make, execute, acknowledge,
deliver, file and record, as the case may be, with the proper
filing and recording agencies in any jurisdiction, including,
without limitation, the jurisdictions indicated on
Schedule
C attached hereto, all such
instruments, and take all such action as may reasonably be deemed
necessary or advisable, or as reasonably requested by the
Collateral Agent, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of
this Agreement, or for assuring and confirming to the Collateral
Agent the grant or perfection of a perfected security interest in
all the Collateral under the UCC.
(c) Each
Debtor hereby irrevocably appoints the Collateral Agent as such
Debtor’s attorney-in-fact, with full authority in the place
and instead of such Debtor and in the name of such Debtor, from
time to time in the Collateral Agent’s discretion, to take
any action permitted under this Agreement and to execute any
instrument which the Collateral Agent may reasonably deem necessary
or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto,
relative to any of the Collateral without the signature of such
Debtor where permitted by law, which financing statements may (but
need not) describe the Collateral as “all assets” or
“all personal property” or words of like import, and
ratifies all such actions taken by the Collateral Agent. This power
of attorney is coupled with an interest and shall be irrevocable
for the term of this Agreement and thereafter as long as any of the
Obligations shall be outstanding.
16. Notices.
All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (a) personally
served, (b) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (c) delivered by a reputable
overnight courier service with charges prepaid, or (d) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on
a Business Day during normal business hours), or the first Business
Day following such delivery (if delivered other than on a Business
Day during normal business hours), (ii) on the first Business Day
following the date deposited with an overnight courier service with
charges prepaid, or (iii) on the fifth Business Day following the
date of mailing pursuant to subpart (b) above, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such communications shall
be:
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To
Debtor, to:
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000
X. Xxxxxxxx Xxxx, Xxxxx 000
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Xxxxxxxx
Xxxxxxx, XX 00000
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With
a copy only to
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(which shall not constitute
notice):
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Xxxx
X. Xxxxxx, Esq.
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X.X.
Xxx 000
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Xxxxxx,
XX 00000
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Email:
xxxxxx@xxxxxxx.xxx
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To the Collateral
Agent:
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Alpha
Capital Anstalt
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c/o
Grushko & Xxxxxxx, P.C.
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000
Xxxxxxxx Xxxxxx
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Xxxxxx
Xxxxxx, XX 00000
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Fax:
(000) 000-0000
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17
17. Other
Security. To the extent that
the Obligations are now or hereafter secured by property other than
the Collateral or by the guarantee, endorsement or property of any
other person, firm, corporation or other entity, then the
Collateral Agent shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify or take any other action
with respect thereto, without in any way modifying or affecting any
of the Secured Parties’ rights and remedies
hereunder.
18. Appointment
of Collateral Agent. The
Secured Parties hereby appoint Alpha Capital Anstalt to act as
their agent (“Collateral
Agent”) for purposes of
exercising any and all rights and remedies of the Secured Parties
hereunder. Such appointment shall continue until revoked in writing
by a Majority in Interest, at which time a Majority in Interest
shall appoint a new Collateral Agent. The Collateral Agent shall
have the rights, responsibilities and immunities set forth
in Annex B
hereto.
19. Miscellaneous.
(a) No
course of dealing between the Debtors and the Collateral Agent, nor
any failure to exercise, nor any delay in exercising, on the part
of the Collateral Agent, any right, power or privilege hereunder or
under the Notes shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege
hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, power or
privilege.
(b) All
of the rights and remedies of the Collateral Agent with respect to
the Collateral, whether established hereby or by the Notes or by
any other agreements, instruments or documents or by law shall be
cumulative and may be exercised singly or
concurrently.
(c) This
Agreement, together with the exhibits and schedules hereto, contain
the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Agreement
and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except
in a written instrument signed, in the case of an amendment, by the
Debtors and Collateral Agent or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is
sought.
(d) If
any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or
invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
(e) No
waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right
hereunder in any manner impair the exercise of any such
right.
18
(f) This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Debtors may
not assign this Agreement or any rights or obligations hereunder
without the prior written consent of a Majority in Interest (other
than by merger). Any Secured Party may assign any or all of its
rights under this Agreement to any Person to whom such Secured
Party assigns or transfers any Obligations, provided such
transferee agrees in writing to be bound, with respect to the
transferred Obligations, by the provisions of this Agreement that
apply to the “Secured Parties.”
(g) Each
party shall take such further action and execute and deliver such
further documents as may be necessary or appropriate in order to
carry out the provisions and purposes of this
Agreement.
(h) Except
as otherwise stated herein, all questions concerning the
construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each Debtor
agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this
Agreement and the Notes (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of
New York, Borough of Manhattan. Each Debtor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for
the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such proceeding is improper.
Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such proceeding
by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner
permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions
contemplated hereby. If any
party shall commence a proceeding to enforce any provisions of this
Agreement, then the prevailing party in such proceeding shall be
reimbursed by the other party for its reasonable attorney’s
fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such proceeding.
(i) This
Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and, all
of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by
facsimile or other electronic transmission, such signature shall
create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same
force and effect as if such signature were the original
thereof.
(j) All
Debtors shall jointly and severally be liable for the obligations
of each Debtor to the Secured Parties hereunder.
(k) Debtor
shall indemnify, reimburse and hold harmless the Collateral Agent
and the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (and any
other persons with other titles that have similar functions)
(collectively, “Indemnitees”)
from and against any and all losses, claims, liabilities, damages,
penalties, suits, costs and expenses, of any kind or nature,
(including fees relating to the cost of investigating and defending
any of the foregoing) imposed on, incurred by or asserted against
such Indemnitee in any way related to or arising from or alleged to
arise from this Agreement or the Collateral, except any such
losses, claims, liabilities, damages, penalties, suits, costs and
expenses which result from the gross negligence or willful
misconduct of the Indemnitee as determined by a final,
nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation
of, any other indemnification provision in the Notes, the
Securities Purchase Agreement (as such term is defined in the
Notes) or any other agreement, instrument or other document
executed or delivered in connection herewith or
therewith.
19
(l) Nothing
in this Agreement shall be construed to subject Collateral Agent or
any Secured Party to liability as a partner in any Debtor or any if
its direct or indirect subsidiaries that is a partnership or as a
member in any Debtor or any of its direct or indirect subsidiaries
that is a limited liability company, nor shall Collateral Agent or
any Secured Party be deemed to have assumed any obligations under
any partnership agreement or limited liability company agreement,
as applicable, of any such Debtor or any if its direct or indirect
subsidiaries or otherwise, unless and until any such Secured Party
exercises its right to be substituted for such Debtor as a partner
or member, as applicable, pursuant hereto.
(m) To
the extent that the grant of the security interest in the
Collateral and the enforcement of the terms hereof require the
consent, approval or action of any partner or member, as
applicable, of any Debtor or any direct or indirect subsidiary of
any Debtor or compliance with any provisions of any of the
Organizational Documents, the Debtors hereby grant such consent and
approval and waive any such noncompliance with the terms of said
documents.
20
IN
WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above
written.
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By:
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Name: Xxxxxxx X. Xxxxxxxx
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Title: Chief Executive Officer
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COLLATERAL AGENT
ALPHA CAPITAL ANSTALT
____________________________________________
21
OMNIBUS SECURED PARTY SIGNATURE PAGE TO
SECURITY AGREEMENT
The
undersigned, in its capacity as a Secured Party, hereby executes
and delivers the Security Agreement to which this signature page is
attached and agrees to be bound by the Security Agreement on the
date set forth on the first page of the Security Agreement. This
counterpart signature page, together with all counterparts of the
Security Agreement and signature pages of the other parties named
therein, shall constitute one and the same instrument in accordance
with the terms of the Security Agreement.
___________________________________________
[Print
Name of Investor]
___________________________________________
[Signature]
Name:
_____________________________________
Title:
______________________________________
Address
______________________________________
______________________________________
______________________________________
Email:
_______________________________________
Taxpayer
ID# (if applicable): ______________________
22
ANNEX A to SECURITY AGREEMENT
FORM OF ADDITIONAL DEBTOR JOINDER
Security Agreement dated as of February ___, 2019 made
by
and certain of its Subsidiaries party thereto from time to time, as
Debtors
to and in favor of
the Secured Parties identified therein (the
“Security
Agreement”)
Reference is made to the Security Agreement as defined above;
capitalized terms used herein and not otherwise defined herein
shall have the meanings given to such terms in, or by reference in,
the Security Agreement.
The undersigned hereby agrees that upon delivery of this Additional
Debtor Joinder to the Secured Parties referred to above, the
undersigned shall (a) be an Additional Debtor under the Security
Agreement, (b) have all the rights and obligations of the Debtors
under the Security Agreement as fully and to the same extent as if
the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth therein
as of the date of execution and delivery of this Additional Debtor
Joinder (except to the extent such representation or warranty
specifically refers to an earlier date). WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO
THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE
FULLY SET FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND
AGREES TO THE WAIVER OF JURY TRIAL PROVISIONS SET FORTH
THEREIN.
Attached hereto are supplemental and/or replacement Schedules to
the Security Agreement, as applicable.
Attached
hereto is an original Subsidiary Guaranty executed by the
undersigned and delivered herewith.
An executed copy of this Additional Debtor Joinder shall be
delivered to the Secured Parties, and the Secured Parties may rely
on the matters set forth herein on or after the date hereof. This
Additional Debtor Joinder shall not be modified, amended or
terminated without the prior written consent of the Secured
Parties.
IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be
executed in the name and on behalf of the undersigned.
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[___]
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By:
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Name: Xxxxxxx X. Xxxxxxxx
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Title: Chief Executive Officer
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Address: 000
X. Xxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx Xxxxxxx, XX
00000
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Dated:
23
SUBSIDIARY GUARANTY
1.
Identification.
This
Guaranty (the “Guaranty”), dated as of
_____________, 2019 is entered into by [___],
a [___]
corporation (“Guarantor”), for the
benefit of the Collateral Agent identified below and the parties
identified on Schedule
A hereto (each a “Lender” and collectively,
the “Lenders”).
2.
Recitals.
2.1 Guarantor
is a direct or indirect subsidiary of GT Biopharma, Inc., a
Delaware corporation (“Parent”). The Lenders
have made and/or are making loans to Parent (the
“Loans”).
Guarantor will obtain substantial benefit from the proceeds of the
Loans.
2.2
The Loans are and
will be evidenced by certain 10% senior Convertible Debentures
issued by Parent on August 2, 2018, September 7, 2018 and September
24, 2018 as set forth on Schedule 1 to the Security Agreement and
certain Secured Convertible Notes (collectively, the 10% senior
Convertible Debentures and the senior Convertible Notes are
referred to as “Note” or the
“Notes”) issued by Parent
on, about or after the date of this Guaranty pursuant to those
certain Securities Purchase Agreements dated August 2, 2018,
September 7, 2018 and September 24, 2018 and at or about the date
hereof, respectively (“Securities Purchase
Agreements”). The Notes issued on the Closing Date are
further described on Schedule A hereto and were and
or will be executed by Parent as “Borrower” for the
benefit of each Lender as the “Holder”
thereof.
2.3 In
consideration of the Loans made and to be made by Lenders to Parent
and for other good and valuable consideration, and as security for
the performance by Parent of its obligations under the Notes and as
security for the repayment of the Loans and all other sums due from
Debtor to Lenders arising under the Notes (collectively, the
“Obligations”), Guarantor,
for good and valuable consideration, receipt of which is
acknowledged, has agreed to enter into this Guaranty.
2.4 The
Lenders have appointed Alpha Capital Anstalt as Collateral Agent
pursuant to that certain Security Agreement dated at or about the
date of this Agreement (“Security Agreement”),
among the Lenders and Collateral Agent.
2.5 Upper
case terms employed but not defined herein shall have the meanings
ascribed to them in the Transaction Documents (as defined in the
Securities Purchase Agreement).
3.
Guaranty.
3.1 Guaranty.
Guarantor hereby unconditionally and irrevocably guarantees,
jointly and severally with any other guarantor of the Obligations,
the punctual payment, performance and observance when due, whether
at stated maturity, by acceleration or otherwise, of all of the
Obligations now or hereafter existing, whether for principal,
interest (including, without limitation, all interest that accrues
after the commencement of any insolvency, bankruptcy or
reorganization of Parent, whether or not constituting an allowed
claim in such proceeding), fees, commissions, expense
reimbursements, liquidated damages, indemnifications or otherwise
arising under the Notes, Security Agreement, or any other
Transaction Document (as defined in the Securities Purchase
Agreement) (such obligations, to the extent not paid by Parent
being the “Guaranteed Obligations”
and included in the definition of Obligations), and agrees to pay
any and all reasonable costs, fees and expenses (including
reasonable counsel fees and expenses) incurred by Collateral Agent
and the Lenders in enforcing any rights under the Guaranty set
forth herein. Without limiting the generality of the foregoing,
Guarantor’s liability shall extend to all amounts that
constitute part of the Guaranteed Obligations and would be owed by
Parent to Collateral Agent and the Lenders, but for the fact that
they are unenforceable or not allowable due to the existence of an
insolvency, bankruptcy or reorganization involving
Parent.
24
3.2 Guaranty
Absolute. Guarantor guarantees that the Guaranteed
Obligations will be paid strictly in accordance with the terms of
the Notes, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms
or the rights of Collateral Agent or the Lenders with respect
thereto. The obligations of Guarantor under this Guaranty are
independent of the Guaranteed Obligations, and a separate action or
actions may be brought and prosecuted against Guarantor to enforce
such obligations, irrespective of whether any action is brought
against Parent or any other guarantor or whether Parent or any
other guarantor is joined in any such action or actions. The
liability of Guarantor under this Guaranty constitutes a primary
obligation, and not a contract of surety, and to the extent
permitted by law, shall be irrevocable, absolute and unconditional
irrespective of, and Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to, any
or all of the following:
(a)
any lack of
validity of the Notes or any agreement or instrument relating
thereto;
(b)
any change in the
time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or
waiver of or any consent to departure from the Notes, including,
without limitation, any increase in the Guaranteed Obligations
resulting from the extension of additional credit to Parent or
otherwise;
(c)
any taking,
exchange, release, subordination or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(d)
any change,
restructuring or termination of the corporate, limited liability
company or partnership structure or existence of Parent;
or
(e) any
other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation
by Collateral Agent or the Lenders that might otherwise constitute
a defense available to, or a discharge of, Parent or any other
guarantor or surety.
This
Guaranty shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by
Collateral Agent, the Lenders or any other entity upon the
insolvency, bankruptcy or reorganization of the Parent or otherwise
(and whether as a result of any demand, settlement, litigation or
otherwise), all as though such payment had not been
made.
3.3 Waiver.
Guarantor hereby waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Guaranteed
Obligations and this Guaranty and any requirement that Collateral
Agent or the Lenders exhaust any right or take any action against
any Borrower or any other person or entity or any Collateral.
Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated herein and
that the waiver set forth in this Section 3.3 is knowingly
made in contemplation of such benefits. Guarantor hereby waives any
right to revoke this Guaranty, and acknowledges that this Guaranty
is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.
3.4
Continuing Guaranty;
Assignments. This Guaranty is a continuing guaranty and
shall (a) remain in full force and effect until the later of the
indefeasible cash or other payment in full of the Guaranteed
Obligations, (b) be binding upon Guarantor, its successors and
assigns, and (c) inure to the benefit of and be enforceable by the
Lenders and their successors, pledgees, transferees and assigns.
Without limiting the generality of the foregoing clause (c),
any Lender may pledge, assign or otherwise transfer all or any
portion of its rights and obligations under this Guaranty
(including, without limitation, all or any portion of its Notes
owing to it) to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof
granted such Collateral Agent or Lender herein or
otherwise.
25
3.5 Subrogation. Guarantor will not
exercise any rights that it may now or hereafter acquire against
the Collateral Agent or any Lender or other guarantor (if any) that
arise from the existence, payment, performance or enforcement of
such Guarantor’s obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification, whether or not such
claim, remedy or right arises in equity or under contract, statute
or common law, including, without limitation, the right to take or
receive from the Collateral Agent or any Lender or other guarantor
(if any), directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security solely on
account of such claim, remedy or right, unless and until all of the
Guaranteed Obligations and all other amounts payable under this
Guaranty shall have been indefeasibly paid in full.
3.6
Maximum
Obligations. Notwithstanding any provision herein contained
to the contrary, Guarantor’s liability with respect to the
Obligations shall be limited to an amount not to exceed, as of any
date of determination, the amount that could be claimed by Lenders
from Guarantor without rendering such claim voidable or avoidable
under Section 548 of the Bankruptcy Code or under any applicable
state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.
4.
Miscellaneous.
4.1 Expenses.
Guarantor shall pay to the Lenders, on demand, the amount of any
and all reasonable expenses, including, without limitation,
reasonable attorneys’ fees, reasonable legal expenses and
reasonable brokers’ fees, which the Lenders may incur in
connection with exercise or enforcement of any the rights, remedies
or powers of the Lenders hereunder or with respect to any or all of
the Obligations.
4.2 Waivers,
Amendment and Remedies. No course of dealing by the Lenders
and no failure by the Lenders to exercise, or delay by the Lender
in exercising, any right, remedy or power hereunder shall operate
as a waiver thereof, and no single or partial exercise thereof
shall preclude any other or further exercise thereof or the
exercise of any other right, remedy or power of the Lenders. No
amendment, modification or waiver of any provision of this Guaranty
and no consent to any departure by Guarantor therefrom, shall, in
any event, be effective unless contained in a writing signed by the
Guarantor and the Majority in Interest (as such term is defined in
the Security Agreement) or Lenders against whom such amendment,
modification or waiver is sought, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given. The rights, remedies and powers
of the Lenders, not only hereunder, but also under any other
Transaction Documents and under applicable law are cumulative, and
may be exercised by the Lenders from time to time in such order as
the Lenders may elect.
4.3 Notices.
All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (a) personally
served, (b) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (c) delivered by a reputable
overnight courier service with charges prepaid, or (d) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication
required or permitted to be given hereunder shall be deemed
effective (i) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below if delivered on
a Business Day during normal business hours, or the first Business
Day following such delivery (if delivered other than on a Business
Day during normal business hours), (ii) on the first Business Day
following the date deposited with an overnight courier service with
charges prepaid, or (iii) on the fifth Business Day following the
date of mailing pursuant to subpart (b) above, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such communications shall
be:
26
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To
Guarantor, to:
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000
X. Xxxxxxxx Xxxx, Xxxxx 000
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Xxxxxxxx
Xxxxxxx, XX 00000
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With
a copy only to
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(which shall not constitute
notice):
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Xxxx
X. Xxxxxx, Esq.
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X.X.
Xxx 000
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Xxxxxx,
XX 00000
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Email:
xxxxxx@xxxxxxx.xxx
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To
the Collateral Agent:
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Alpha
Capital Anstalt
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c/o
Grushko & Xxxxxxx, P.C.
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000
Xxxxxxxx Xxxxxx
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Xxxxxx
Xxxxxx, XX 00000
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Fax:
(000) 000-0000
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To
Lenders:
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To
the addresses and telecopier numbers set forth on Schedule
A
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Any
party may change its address by written notice in accordance with
this paragraph.
4.4 Term;
Binding Effect. This Guaranty shall (a) remain in full force
and effect until payment and satisfaction in full of all of the
Guaranteed Obligations; (b) be binding upon Guarantor and its
successors and permitted assigns; and (c) inure to the benefit of
the Lenders and their respective successors and assigns. All the
rights and benefits granted by Guarantor to the Collateral Agent
and Lenders hereunder and other agreements and documents delivered
in connection therewith are deemed granted to both the Collateral
Agent and Lenders. Upon the payment in full of the Guaranteed
Obligations, (i) this Guaranty shall terminate and (ii) the Lenders
will, upon Guarantor’s request and at Guarantor’s
expense, execute and deliver to Guarantor such documents as
Guarantor shall reasonably request to evidence such termination,
all without any representation, warranty or recourse
whatsoever.
4.5 Captions.
The captions of Paragraphs, Articles and Sections in this Guaranty
have been included for convenience of reference only, and shall not
define or limit the provisions hereof and have no legal or other
significance whatsoever.
4.6 Governing
Law; Venue; Severability. This Guaranty shall be governed by
and construed in accordance with the laws of the State of New York
without regard to principles of conflicts or choice of law. Any
legal action or proceeding against Guarantor with respect to this
Guaranty may be brought in the courts of the State of New York or
of the United States for the Southern District of New York, and, by
execution and delivery of this Guaranty, Guarantor hereby
irrevocably accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid
courts. Guarantor hereby irrevocably waives any objection which it
may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection
with this Guaranty brought in the aforesaid courts and hereby
further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such
court has been brought in an inconvenient forum. If any provision
of this Guaranty, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any
other provisions which can be given effect without the invalid
provision or application, and to this end the provisions hereof
shall be severable and the remaining, valid provisions shall remain
of full force and effect. This
Guaranty shall be deemed an unconditional obligation of Guarantor
for the payment of money and, without limitation to any other
remedies of Lenders, may be enforced against Guarantor by summary
proceeding pursuant to New York Civil Procedure Law and Rules
Section 3213 or any similar rule or statute in the jurisdiction
where enforcement is sought. For purposes of such rule or statute,
any other document or agreement to which Lenders and Guarantor are
parties or which Guarantor delivered to Lenders, which may be
convenient or necessary to determine Lenders’ rights
hereunder or Guarantor’s obligations to Lenders are deemed a
part of this Guaranty, whether or not such other document or
agreement was delivered together herewith or was executed apart
from this Guaranty. Each party
hereto hereby irrevocably waives personal service of process and
consents to process being served in any such proceeding by mailing
a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address
in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any
other manner permitted by law. Guarantor irrevocably appoints
Parent its true and lawful agent for service of process upon whom
all processes of law and notices may be served and given in the
manner described above; and such service and notice shall be deemed
valid personal service and notice upon Guarantor with the same
force and validity as if served upon Guarantor.
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4.7 Satisfaction
of Obligations. For all purposes of this Guaranty, the
payment in full of the Obligations shall be conclusively deemed to
have occurred when the Obligations have been paid pursuant to the
terms of the Notes and the Securities Purchase
Agreements.
4.8 Counterparts/Execution.
This Agreement may be executed in any number of counterparts and by
the different signatories hereto on separate counterparts, each of
which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This
Agreement may be executed by facsimile signature and delivered by
electronic transmission.
[THE
BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT
BLANK]
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IN WITNESS WHEREOF, the undersigned have
executed and delivered this Guaranty, as of the date first written
above.
“GUARANTOR”
[___]
By:
_____________________________________
Xxxxxxx
X. Xxxxxxxx
Its:
Chief Executive Officer
This Guaranty Agreement may be signed by facsimile signature
and
delivered by confirmed facsimile transmission.
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ANNEX B to SECURITY AGREEMENT
THE COLLATERAL AGENT
1. Appointment. The Secured Parties (all capitalized terms used
herein and not otherwise defined shall have the respective meanings
provided in the Security Agreement to which this Annex B is
attached (the “Agreement”),
by their acceptance of the benefits of the Agreement, hereby
designate Alpha Capital Anstalt (“Collateral
Agent”) as the Collateral
Agent to act as specified herein and in the Agreement. Each Secured
Party shall be deemed irrevocably to authorize the Collateral Agent
to take such action on its behalf under the provisions of the
Agreement and any other Transaction Document (as such term is
defined in the Notes) and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated
to or required of the Collateral Agent by the terms hereof and
thereof and such other powers as are reasonably incidental thereto.
The Collateral Agent may perform any of its duties hereunder by or
through its agents or employees.
2. Nature of
Duties. The Collateral Agent shall have no duties or
responsibilities except those expressly set forth in the Agreement.
Neither the Collateral Agent nor any of its partners, members,
shareholders, officers, directors, employees or agents shall be
liable for any action taken or omitted by it as such under the
Agreement or hereunder or in connection herewith or therewith, be
responsible for the consequence of any oversight or error of
judgment or answerable for any loss, unless caused solely by its or
their gross negligence or willful misconduct as determined by a
final judgment (not subject to further appeal) of a court of
competent jurisdiction. The duties of the Collateral Agent shall be
mechanical and administrative in nature; the Collateral Agent shall
not have by reason of the Agreement or any other Transaction
Document a fiduciary relationship in respect of any Debtor or any
Secured Party; and nothing in the Agreement or any other
Transaction Document, expressed or implied, is intended to or shall
be so construed as to impose upon the Collateral Agent any
obligations in respect of the Agreement or any other Transaction
Document except as expressly set forth herein and
therein.
3. Lack of
Reliance on the Collateral Agent. Independently and without reliance upon the
Collateral Agent, each Secured Party, to the extent it deems
appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of
the Company and its subsidiaries in connection with such Secured
Party’s investment in the Debtors, the creation and
continuance of the Obligations, the transactions contemplated by
the Transaction Documents, and the taking or not taking of any
action in connection therewith, and (ii) its own appraisal of the
creditworthiness of the Company and its subsidiaries, and of the
value of the Collateral from time to time, and the Collateral Agent
shall have no duty or responsibility, either initially or on a
continuing basis, to provide any Secured Party with any credit,
market or other information with respect thereto, whether coming
into its possession before any Obligations are incurred or at any
time or times thereafter. The Collateral Agent shall not be
responsible to the Debtors or any Secured Party for any recitals,
statements, information, representations or warranties herein or in
any document, certificate or other writing delivered in connection
herewith, or for the execution, effectiveness, genuineness,
validity, enforceability, perfection, collectibility, priority or
sufficiency of the Agreement or any other Transaction Document, or
for the financial condition of the Debtors or the value of any of
the Collateral, or be required to make any inquiry concerning
either the performance or observance of any of the terms,
provisions or conditions of the Agreement or any other Transaction
Document, or the financial condition of the Debtors, or the value
of any of the Collateral, or the existence or possible existence of
any default or Event of Default under the Agreement, the Notes or
any of the other Transaction Documents.
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4. Certain
Rights of the Collateral Agent.
The Collateral Agent shall have the right to take any action with
respect to the Collateral, on behalf of all of the Secured Parties.
To the extent practical, the Collateral Agent shall request
instructions from the Secured Parties with respect to any material
act or action (including failure to act) in connection with the
Agreement or any other Transaction Document, and shall be entitled
to act or refrain from acting in accordance with the instructions
of Secured Parties holding a majority in principal amount of Notes
(based on then-outstanding principal amounts of Notes at the time
of any such determination); if such instructions are not provided
despite the Collateral Agent’s request therefor, the
Collateral Agent shall be entitled to refrain from such act or
taking such action, and if such action is taken, shall be entitled
to appropriate indemnification from the Secured Parties in respect
of actions to be taken by the Collateral Agent; and the Collateral
Agent shall not incur liability to any person or entity by reason
of so refraining. Without limiting the foregoing, (a) no Secured
Party shall have any right of action whatsoever against the
Collateral Agent as a result of the Collateral Agent acting or
refraining from acting hereunder in accordance with the terms of
the Agreement or any other Transaction Document, and the Debtors
shall have no right to question or challenge the authority of, or
the instructions given to, the Collateral Agent pursuant to the
foregoing and (b) the Collateral Agent shall not be required to
take any action which the Collateral Agent believes (i) could
reasonably be expected to expose it to personal liability or (ii)
is contrary to this Agreement, the Transaction Documents or
applicable law.
5. Reliance. The Collateral Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing,
resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document
or telephone message signed, sent or made by the proper person or
entity, and, with respect to all legal matters pertaining to the
Agreement and the other Transaction Documents and its duties
thereunder, upon advice of counsel selected by it and upon all
other matters pertaining to this Agreement and the other
Transaction Documents and its duties thereunder, upon advice of
other experts selected by it. Anything to the contrary
notwithstanding, the Collateral Agent shall have no obligation
whatsoever to any Secured Party to assure that the Collateral
exists or is owned by the Debtors or is cared for, protected or
insured or that the liens granted pursuant to the Agreement have
been properly or sufficiently or lawfully created, perfected, or
enforced or are entitled to any particular
priority.
6. Indemnification.
To the extent that the Collateral
Agent is not reimbursed and indemnified by the Debtors, the Secured
Parties will jointly and severally reimburse and indemnify the
Collateral Agent, in proportion to their initially purchased
respective principal amounts of Notes, from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted
against the Collateral Agent in performing its duties hereunder or
under the Agreement or any other Transaction Document, or in any
way relating to or arising out of the Agreement or any other
Transaction Document except for those determined by a final
judgment (not subject to further appeal) of a court of competent
jurisdiction to have resulted solely from the Collateral
Agent’s own gross negligence or willful misconduct. Prior to
taking any action hereunder as Collateral Agent, the Collateral
Agent may require each Secured Party to deposit with it sufficient
sums as it determines in good faith is necessary to protect the
Collateral Agent for costs and expenses associated with taking such
action.
7. Resignation by the Collateral
Agent.
(a)
The Collateral Agent may resign from the performance of all its
functions and duties under the Agreement and the other Transaction
Documents at any time by giving 5 days’ prior written notice
(as provided in the Agreement) to the Debtors and the Secured
Parties. Such resignation shall take effect upon the appointment of
a successor Collateral Agent pursuant to clauses (b) and (c)
below.
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(b)
Upon any such notice of resignation, the Secured Parties, acting by
a Majority in Interest, shall appoint a successor Collateral
Agent hereunder.
(c)
If a successor Collateral Agent shall not have been so appointed
within said 5-day period, the Collateral Agent shall then appoint a
successor Collateral Agent who shall serve as Collateral Agent
until such time, if any, as the Secured Parties appoint a successor
Collateral Agent as provided above. If a successor Collateral Agent
has not been appointed within such 5-day period, the Collateral
Agent may petition any court of competent jurisdiction or may
interplead the Debtors and the Secured Parties in a proceeding for
the appointment of a successor Collateral Agent, and all fees,
including, but not limited to, extraordinary fees associated with
the filing of interpleader and expenses associated therewith, shall
be payable by the Debtors on demand.
8. Rights
with respect to Collateral. Each Secured Party agrees with all other Secured
Parties and the Collateral Agent (i) that it shall not, and shall
not attempt to, exercise any rights with respect to its security
interest in the Collateral, whether pursuant to any other agreement
or otherwise (other than pursuant to this Agreement), or take or
institute any action against the Collateral Agent or any of the
other Secured Parties in respect of the Collateral or its rights
hereunder (other than any such action arising from the breach of
this Agreement) and (ii) that such Secured Party has no other
rights with respect to the Collateral other than as set forth in
this Agreement and the other Transaction Documents. Upon the
acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent and the
retiring Collateral Agent shall be discharged from its duties and
obligations under the Agreement. After any retiring
Collateral Agent’s resignation or removal hereunder as
Collateral Agent, the provisions of the Agreement including this
Annex B shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Collateral
Agent.
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