SECURITY AGREEMENT
Exhibit
10.2
THIS SECURITY AGREEMENT
(“Agreement”), dated as
of October 23, 2009, between MICROFLUIDICS INTERNATIONAL
CORPORATION, a Delaware corporation, MICROFLUIDICS CORPORATION, a
Delaware corporation (collectively, the "Company"), and XXXXXXX BANK, NATIONAL
ASSOCIATION, a national banking association (hereinafter, the "Lender").
WHEREAS,
the Company has entered into a Loan Agreement dated as of even date herewith (as
amended and in effect from time to time, the "Loan Agreement"), with the
Lender, pursuant to which the Lender, subject to the terms and conditions
contained therein, is to make loans or otherwise to extend credit or provide
financial accommodations to the Company; and
WHEREAS,
it is a condition precedent to the Lender's making any loans or otherwise
extending credit or providing financial accommodations to the Company under the
Loan Agreement that the Company execute and deliver to the Lender a security
agreement in substantially the form hereof; and
WHEREAS,
the Company wishes to grant a security interest in favor of the Lender as herein
provided.
NOW,
THEREFORE, in consideration of the promises contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions. All
capitalized terms used herein without definitions shall have the respective
meanings provided therefor in the Loan Agreement. The term "State,"
as used herein, means the State of Connecticut. All terms defined in
the Uniform Commercial Code of the State and used herein shall have the same
definitions herein as specified therein. However, if a term is
defined in Article 9 of the Uniform Commercial Code of the State differently
than in another Article of the Uniform Commercial Code of the State, the term
has the meaning specified in Article 9. The term "Obligations," as
used herein, means all of the indebtedness, obligations and liabilities of the
Company to the Lender, individually or collectively, whether direct or indirect,
joint or several, absolute or contingent, due or to become due, now existing or
hereafter arising under or in respect of the Loan Agreement, any promissory
notes or other instruments or agreements executed and delivered pursuant thereto
or in connection therewith or this Agreement.
2. Grant of
Security Interest.
The Company hereby grants to the Lender, to secure the payment and
performance in full of all of the Obligations, a first priority (except as set
forth in the Loan Agreement) security interest in and pledges and assigns to the
Lender the following properties, assets and rights of the Company and any
Subsidiary, wherever located, whether now owned or hereafter acquired or
arising, and all proceeds and products thereof (all of the same being
hereinafter called the "Collateral"): all
corporate assets including all personal and fixture property of every kind and
nature, including without limitation all goods (including inventory, equipment
and any accessions thereto), instruments (including promissory notes),
documents, accounts (including health-care-insurance receivables), chattel paper
(whether tangible or electronic), deposit accounts, letter-of-credit rights
(whether or not the letter of credit is evidenced by a writing), commercial tort
claims, securities and all other investment property, supporting obligations,
any other contract rights or rights to the payment of money, insurance claims
and proceeds, all general intangibles (including all payment intangibles), and
all products and proceeds of the foregoing. The Lender acknowledges
that the attachment of its security interest in any commercial tort claim as
original collateral is subject to the Company's compliance with
§4.7. At any time after an Event of Default has occurred and is
continuing, the Lender may retain money or funds received as proceeds from the
Collateral as additional Collateral, which shall become part of the “Collateral”
under this Agreement and the Lender shall apply such proceeds in accordance with
the terms of the Subordination Agreement and the Loan Agreement.
Notwithstanding
the foregoing provisions of this Section 2, such grant of security interest
shall not extend to, and the term Collateral shall not include, any chattel
paper, leases or general intangibles which are now or hereafter held by the
Company as licensee, lessee or otherwise, to the extent that (a) such chattel
paper, lease or general intangible is not assignable or capable of being
encumbered as a matter of law or under the terms of the license, lease or other
agreement applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the licensor
or lessor thereof or other applicable party thereto and (b) such consent has not
been obtained; provided, however, that the foregoing grant of security interest
shall extend to, and the term Collateral shall include, (i) any and all proceeds
of such chattel paper, lease or general intangibles to the extent that the
assignment or encumbering of such proceeds is not so restricted and (ii) upon
any such licensor, lessor or other applicable party consent with respect to any
such otherwise excluded chattel paper, lease or general intangibles being
obtained, thereafter such chattel paper, lease or general intangibles as well as
any and all proceeds thereof that might have theretofore have been excluded from
such grant of a security interest and the term Collateral.
3. Authorization
to File Financing Statements. The Company hereby irrevocably
authorizes the Lender at any time and from time to time to file in any filing
office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets or, as the case may be, all personal property of the Company or words of
similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the Uniform Commercial Code of
the State or such jurisdiction, or (ii) as being of an equal or lesser scope or
with greater detail, and (b) provide any other information required by Part 5 of
Article 9 of the Uniform Commercial Code of the State or such other
jurisdictions for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether the Company is an organization,
the type of organization and any organizational identification number issued to
the Company and, (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of real property to which the Collateral
relates. The Company agrees to furnish any such information to the
Lender promptly upon the Lender's request. The Company also ratifies
its authorization for the Lender to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof.
4. Other
Actions. Further to insure
the attachment, perfection and first priority of, and the ability of the Lender
to enforce, the Lender's security interest in the Collateral, the Company
agrees, in each case at the Company's expense, to take the following actions
with respect to the following Collateral and without limitation on the Company's
other obligations contained in this Agreement:
4.1. Promissory
Notes and Tangible Chattel Paper. If the Company
shall now or at any time hereafter hold or acquire any promissory notes or
tangible chattel paper, the Company shall forthwith endorse, assign and deliver
the same to the Lender, accompanied by such instruments of transfer or
assignment duly executed in blank as the Lender may from time to time
specify.
4.2. Deposit
Accounts. For each deposit
account that the Company now or at any time hereafter opens or maintains, the
Company shall, at the Lender's request and option, pursuant to an agreement in
form and substance satisfactory to the Lender, either (a) cause the depositary
bank to agree to comply, without further consent of the Company, at any time
with instructions from the Lender to such depositary bank directing the
disposition of funds from time to time credited to such deposit account, or (b)
arrange for the Lender to become the customer of the depositary bank with
respect to the deposit account, with the Company being permitted, only with the
consent of the Lender, to exercise rights to withdraw funds from such deposit
account. The Lender agrees with the Company that the Lender shall not
give any such instructions or withhold any withdrawal rights from the Company,
unless an Event of Default has occurred and is continuing, or, if effect were
given to any withdrawal not otherwise permitted by the Loan Documents, would
occur. The provisions of this Section 4.2 shall not apply to (i) any
deposit account for which the Company, the depositary bank and the Lender have
entered into a cash collateral agreement specially negotiated among the Company,
the depositary bank and the Lender for the specific purpose set forth therein,
(ii) a deposit account for which the Lender is the depositary bank and is in
automatic control, (iii) deposit
account with
Bank and
deposit
account with Bank
provided however, that these deposit accounts are specially and exclusively used
for the conduct of foreign operations, and (iv) any deposit accounts specially
and exclusively used for payroll, payroll taxes and other employee wage and
benefit payments to or for the benefit of the Company's
employees. The Company represents and warrants that it is the owner
of each such deposit account free and clear of all liens and encumbrances of any
nature whatsoever, other than liens of GSP securing the GSP Subordinated Debt;
that the Company has delivered to the Lender any and all passbook(s) for each
such deposit account, and this Agreement shall constitute a signed order to
transfer such account to the Lender or its nominee; and that the Company has
full power, right and authority to execute and deliver this
assignment. The Company covenants and agrees to take all such steps
deemed reasonable or necessary by the Lender to maintain, to continue and/or to
perfect the interest of the Lender in each such deposit account and any proceeds
thereof and in the event of any erroneous release of said account or proceeds
thereof, to restore and/or redeposit said account and any proceeds thereof and
the security interest of the Lender therein. The Company hereby
covenants and agrees to deliver such additional documents to the Lender as the
Lender may require to perfect its security interest in each such deposit account
and to obtain the full benefit and value from its security
interest. The Company acknowledges and agrees that any security
interest (other than the security interests of GSP securing the GSP Subordinated
Debt) in, or assignment or transfer of, such account without the express
authorization of the Lender will violate the rights of the Lender and the Lender
may note this fact on any financing statement, fixture filing or other record
filed by the Lender.
4.3. Investment
Property. If the Company shall now or at any time hereafter
hold or acquire any certificated securities, the Company shall (except to the
extent such certificated securities are held by GSP in a collateral agency
capacity for the benefit of the Lender and the liens of the Lender pursuant to
the terms of the Subordination Agreement) forthwith endorse, assign and deliver
the same to the Lender, accompanied by such instruments of transfer or
assignment duly executed in blank as the Lender may from time to time
specify. If any securities now or hereafter acquired by the Company
are uncertificated and are issued to the Company or its nominee directly by the
issuer thereof, the Company shall promptly notify the Lender thereof and, at the
Lender's request and option, pursuant to an agreement in form and substance
satisfactory to the Lender, either (a) cause the issuer to agree to comply,
without further consent of the Company or such nominee, at any time with
instructions from the Lender as to such securities, or (b) arrange for the
Lender to become the registered owner of the securities. If any
securities, whether certificated or uncertificated, or other investment property
now or hereafter acquired by the Company are held by the Company or its nominee
through a securities intermediary or commodity intermediary, the Company shall
promptly notify the Lender thereof and, at the Lender's request and option,
pursuant to an agreement in form and substance satisfactory to the Lender,
either (i) cause such securities intermediary or (as the case may be) commodity
intermediary to agree to comply, in each case without further consent of the
Company or such nominee, at any time with entitlement orders or other
instructions from the Lender to such securities intermediary as to such
securities or other investment property, or (as the case may be) to apply any
value distributed on account of any commodity contract as directed by the Lender
to such commodity intermediary, or (ii) in the case of financial assets or other
investment property held through a securities intermediary, arrange for the
Lender to become the entitlement holder with respect to such investment
property, with the Company being permitted, only with the consent of the Lender,
to exercise rights to withdraw or otherwise deal with such investment
property. The Lender agrees with the Company that the Lender shall
not give any such entitlement orders or instructions or directions to any such
issuer, securities intermediary or commodity intermediary, and shall not
withhold its consent to the exercise of any withdrawal or dealing rights by the
Company, unless an Event of Default has occurred and is continuing, or, after
giving effect to any such investment and withdrawal rights not otherwise
permitted by the Loan Documents, would occur. The provisions of this
Section 4.3 shall not apply to any financial assets credited to a securities
account for which the Lender is the securities intermediary.
4.4. Collateral
in the Possession of a Bailee. If any Collateral is now or at
any time hereafter in the possession of a bailee, the Company shall promptly
notify the Lender thereof and, at the Lender's request and option, shall
promptly obtain an acknowledgement from the bailee, in form and substance
satisfactory to the Lender, that the bailee holds such Collateral for the
benefit of the Lender and such bailee's agreement to comply, without further
consent of the Company, at any time with instructions of the Lender as to such
Collateral. The Lender agrees with the Company that the Lender shall
not give any such instructions unless an Event of Default has occurred and is
continuing or would occur after taking into account any action by the Company
with respect to the bailee.
4.5. Electronic
Chattel Paper and Transferable Records. If the Company now or
at any time hereafter holds or acquires an interest in any electronic chattel
paper or any "transferable record," as that term is defined in Section 201 of
the federal Electronic Signatures in Global and National Commerce Act, or in §16
of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, the Company shall promptly notify the Lender thereof and, at the
request and option of the Lender, shall take such action as the Lender may
reasonably request to vest in the Lender control, under §9-105 of the Uniform
Commercial Code, of such electronic chattel paper or control under Section 201
of the federal Electronic Signatures in Global and National Commerce Act or, as
the case may be, §16 of the Uniform Electronic Transactions Act, as so in effect
in such jurisdiction, of such transferable record. The Lender agrees
with the Company that the Lender will arrange, pursuant to procedures
satisfactory to the Lender and so long as such procedures will not result in the
Lender's loss of control, for the Company to make alterations to the electronic
chattel paper or transferable record permitted under UCC §9-105 or, as the case
may be, Section 201 of the federal Electronic Signatures in Global and National
Commerce Xxx xx §00 of the Uniform Electronic Transactions Act for a party in
control to make without loss of control, unless an Event of Default has occurred
and is continuing or would occur after taking into account any action by the
Company with respect to such electronic chattel paper or transferable
record.
4.6. Letter-of-Credit
Rights. If the Company is now or at any time hereafter a
beneficiary under a letter of credit now or hereafter, the Company shall
promptly notify the Lender thereof and, at the request and option of the Lender,
the Company shall, pursuant to an agreement in form and substance satisfactory
to the Lender, either (i) arrange for the issuer and any confirmer or other
nominated person of such letter of credit to consent to an assignment to the
Lender of the proceeds of the letter of credit or (ii) arrange for the Lender to
become the transferee beneficiary of the letter of credit, with the Lender
agreeing, in each case, that the proceeds of the letter of credit are to be
applied as provided in the Loan Agreement.
4.7 Commercial
Tort Claims. If the Company shall now or at any time hereafter
hold or acquire a commercial tort claim, the Company shall immediately notify
the Lender in a writing signed by the Company of the particulars thereof and
grant to the Lender 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 Lender.
4.8. Other
Actions as to any and all Collateral. The Company further
agrees, upon request of the Lender and at the Lender's option, to take any and
all other actions as the Lender may determine to be necessary or useful for the
attachment, perfection and first priority (except as set forth in the Loan
Agreement) of, and the ability of the Lender to enforce, the Lender's security
interest in any and all of the Collateral, including, without limitation, (a)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the Uniform Commercial Code, to the extent, if
any, that the Company's signature thereon is required therefor, (b) causing the
Lender's name to be noted as secured party on any certificate of title for a
titled good if such notation is a condition to attachment, perfection or
priority of, or ability of the Lender to enforce, the Lender's security interest
in such Collateral, (c) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
the Lender to enforce, the Lender's security interest in such Collateral, (d)
using commercially reasonable efforts to obtain governmental and other third
party waivers, consents and approvals in form and substance satisfactory to the
Lender, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, (e) using commercially reasonable efforts
to obtain waivers from mortgagees and landlords in form and substance
satisfactory to the Lender and (f) taking all actions under any earlier versions
of the Uniform Commercial Code or under any other law, as reasonably determined
by the Lender to be applicable in any relevant Uniform Commercial Code or other
jurisdiction, including any foreign jurisdiction.
5. Relation
to Other Security Documents. The provisions of this Agreement
supplement the provisions of any real estate mortgage or deed of trust granted
by the Company to the Lender and which secures the payment or performance of any
of the Obligations. Nothing contained in any such real estate
mortgage or deed of trust shall derogate from any of the rights or remedies of
the Lender hereunder. In addition to the provisions of this Agreement
being so read and construed with any such mortgage or deed of trust, the
provisions of this Agreement shall be read and construed with the other Security
Documents referred to below in the manner so indicated.
6. Representations
and Warranties Concerning Company's Legal Status. The Company represents
and warrants to the Lender as follows: (a) the Company's exact legal
name is that indicated on the signature page hereof, (b) the Company is an
organization of the type, and is organized in the jurisdiction, set forth on the
Perfection Certificates dated October 23, 2009, substantially in the form
attached hereto as Exhibit 1 and Exhibit 2 (each a
“Perfection Certificate”
and collectively, the “Perfection Certificates”), (c)
the Perfection Certificate accurately sets forth the organizational
identification number or accurately states that the Company has none, (d) the
Perfection Certificate accurately sets forth the Company's place of business or,
if more than one, its chief executive office, as well as the Company's mailing
address, if different, and (e) all other information set forth on the Perfection
Certificate pertaining to the Company is accurate and complete in all material
respects.
7. Covenants
Concerning Company's Legal Status. The Company covenants with
the Lender as follows: (a) without providing at least 30 days prior
written notice to the Lender, the Company will not change its name, its place of
business or, if more than one, chief executive office, or its mailing address or
organizational identification number if it has one, (b) if the Company does not
have an organizational identification number and later obtains one, the Company
will promptly notify the Lender of such organizational identification number,
and (c) the Company will not change its type of organization, jurisdiction of
organization or other legal structure without the prior written consent of
Lender.
8. Representations
and Warranties Concerning Collateral Etc. The Company
further represents and warrants to the Lender as follows: (a) the
Company is the owner of or has other rights in or power to transfer the
Collateral, free from any right or claim of any person or any adverse lien,
security interest or other encumbrance, except for the security interest created
by this Agreement and liens permitted by the Loan Agreement, (b) none of the
Collateral constitutes, or is the proceeds of, "farm products" as defined in
§9-102(a)(34) of the Uniform Commercial Code of the State, (c) none of the
account debtors or other persons obligated on any of the Collateral is a
governmental authority covered by the Federal Assignment of Claims Act or like
federal, state or local statute or rule in respect of such Collateral, (d) the
Company holds no commercial tort claim except as indicated on the Perfection
Certificate, (e) the Company has at all times operated its business in
compliance with all applicable provisions of the federal Fair Labor Standards
Act, as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances, except as would not have Material Adverse
Effect and (f) all other information set forth on the Perfection Certificate
pertaining to the Collateral is accurate and complete, in all material
respects.
9. Covenants
Concerning Collateral, Etc. The Company
further covenants with the Lender as follows: (a) except for the
inventory and equipment installed or maintained at customer locations, the
Collateral, to the extent not delivered to the Lender pursuant to §4, will be
kept at those locations listed on the Perfection Certificate and except in the
ordinary course of business, the Company will not remove the Collateral from
such locations, without providing at least 15 days prior written notice to the
Lender, (b) except for the security interest herein granted, the liens permitted
by the Loan Agreement and the liens of GSP securing the GSP Subordinated Debt,
the Company shall be the owner of or have other rights in or power to transfer
the Collateral free from any right or claim of any other person or any lien,
security interest or other encumbrance, and the Company shall defend the same
against all claims and demands of all persons at any time claiming the same or
any interests therein adverse to the Lender, (c) the Company shall not pledge,
mortgage or create, or suffer to exist any right of any person in or claim by
any person to the Collateral, or any security interest, lien or other
encumbrance in the Collateral in favor of any person, other than the Lender
except for liens permitted by the Loan Agreement, (d) the Company will keep the
Collateral in good order and repair (ordinary wear and tear excepted) and will
not use the same in violation of law or any policy of insurance thereon except
as would not have a Material Adverse Effect, (e) the Company will permit the
Lender, or its designee, to inspect the Collateral as and when set forth in the
Loan Agreement, wherever located, (f) the Company will pay promptly when due all
taxes, assessments, governmental charges and levies upon the Collateral or
incurred in connection with the use or operation of the Collateral or incurred
in connection with this Agreement, other than such taxes, assessments, charges
and levies contested in good faith, (g) the Company will continue, in all
material respects to operate its business in compliance with all applicable
provisions of the federal Fair Labor Standards Act, as amended, and with all
applicable provisions of federal, state and local statutes and ordinances
dealing with the control, shipment, storage or disposal of hazardous materials
or substances except as would not have a Material Adverse Effect, (h) the
Company will not sell or otherwise dispose, or offer to sell or otherwise
dispose, of the Collateral or any interest therein other than as set forth in
the Loan Agreement, (i) the Company shall not file a correction statement
relating to the Collateral or to any financing statement or fixture filing filed
by the Lender without the Lender’s prior written consent, (j) if the Company is
a corporation, limited liability company, limited partnership or other
registered organization the Company shall, at its expense, furnish to Lender a
certified copy of the Company’s organization documents verifying its correct
legal name or, at Lender’s election, shall permit the Lender to obtain such
certified copy at the Company’s expense; and (k) from time to time, at Lender’s
election, the Lender may obtain a certified copy of the Company’s organization
documents and a search of such Uniform Commercial Code filing offices as it
shall deem appropriate, at the Company’s expense, to verify the Company’s
compliance with the terms of this Agreement.
10. Insurance.
10.1. Maintenance
of Insurance. The Company will maintain with financially sound
and reputable insurers insurance with respect to its properties and business
against such casualties and contingencies as shall be in accordance with general
practices of businesses engaged in similar activities in similar geographic
areas. Such insurance shall be in such minimum amounts that the
Company will not be deemed a co-insurer under applicable insurance laws,
regulations and policies and otherwise shall be in such amounts, contain such
terms, be in such forms and be for such periods as may be reasonably
satisfactory to the Lender. In addition, all such insurance shall be
payable to the Lender as loss payee under a "standard" or "New York" loss payee
clause. Without limiting the foregoing, the Company will (i) keep all
of its physical property insured with casualty or physical hazard insurance on
an "all risks" basis, with broad form flood and earthquake coverages and
electronic data processing coverage, with a full replacement cost endorsement
and an "agreed amount" clause in an amount equal to 100% of the full replacement
cost of such property, (ii) maintain all such workers' compensation or similar
insurance as may be required by law and (iii) maintain, in amounts and with
deductibles equal to those generally maintained by businesses engaged in similar
activities in similar geographic areas, general public liability insurance
against claims of bodily injury, death or property damage occurring, on, in or
about the properties of the Company; business interruption insurance; and
product liability insurance.
10.2. Insurance
Proceeds. The proceeds of any casualty insurance in respect of
any casualty loss of any of the Collateral shall, subject to the rights, if any,
of other parties with an interest having priority in the property covered
thereby, (i) so long as no Default or Event of Default has occurred and is
continuing to be disbursed to the Company for direct application by
the Company solely to the repair or replacement of the Company's property so
damaged or destroyed and (ii) in all other circumstances, to be held by the
Lender as cash collateral for the Obligations. The Lender may, at its
sole option, disburse from time to time all or any part of such proceeds so held
as cash collateral, upon such terms and conditions as the Lender may reasonably
prescribe, for direct application by the Company solely to the repair or
replacement of the Company's property so damaged or destroyed, or the Lender may
apply all or any part of such proceeds to the Obligations.
10.3. Continuation
of Insurance. All policies of insurance shall provide for at
least 30 days prior written cancellation notice to the Lender. In the
event of failure by the Company to provide and maintain insurance as herein
provided, the Lender may, at its option, and after providing reasonable notice
to the Company, provide such insurance and charge the amount thereof to the
Company. The Company shall furnish the Lender with certificates of
insurance and policies evidencing compliance with the foregoing insurance
provision upon request. Such insurance maintained by the Company
shall include, without limitation, insurance coverage on Collateral in the
possession of the Lender or its agent or contractor. The Company, and
any other obligor by becoming bound by the Obligations, hereby indemnifies the
Lender against any loss or damage incurred by the Lender arising out of the
failure of the Company to insure the Collateral in compliance with Section 10.1,
which indemnification obligation shall constitute part of the
Obligations.
11. Collateral
Protection Expenses: Preservation of Collateral.
11.1. Expenses
Incurred by Lender. In the Lender's discretion, if the Company
fails to do so, after providing reasonable notice to the Company, the Lender may
discharge taxes and other encumbrances at any time levied or placed on any of
the Collateral, make repairs thereto, maintain any of the Collateral, and pay
any necessary filing fees or insurance premiums. The Company agrees
to reimburse the Lender for all expenditures so made. The Lender
shall have no obligation to the Company to make any such expenditures, nor shall
the making thereof be construed as a waiver or cure of any Default or Event of
Default.
11.2. Lender's
Obligations and Duties. Anything herein to the contrary
notwithstanding, the Company shall remain obligated and liable under each
contract or agreement comprised in the Collateral to be observed or performed by
the Company thereunder, except for the termination of agreements in the ordinary
course of business and except as otherwise set forth in the Loan
Agreement. The Lender shall not 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 Lender of any payment relating to any of the
Collateral, nor shall the Lender be obligated in any manner to perform any of
the obligations of the Company under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Lender 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 Lender or to which
the Lender may be entitled at any time or times. The Lender's sole
duty with respect to the custody, safe keeping and physical preservation of the
Collateral in its possession, under §9-207 of the Uniform Commercial Code of the
State or otherwise, shall be to deal with such Collateral in the same manner as
the Lender deals with similar property for its own account.
12. Securities
and Deposits. The Lender may at any time following the
occurrence and during the continuance of an Event of Default, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Whether or not any Obligations are due,
the Lender may following the occurrence and during the continuance of an Event
of Default demand, xxx for, collect, or make any settlement or compromise which
it deems desirable with respect to the Collateral. Regardless of the
adequacy of Collateral or any other security for the Obligations, any deposits
or other sums at any time credited by or due from the Lender to the Company may
at any time be applied to or set off against any of the Obligations then due and
owing.
13. Notification to Account
Debtors and Other Persons Obligated on
Collateral. If
an Event of Default shall have occurred and be continuing, the Company shall, at
the request and option of the Lender, notify account debtors and other persons
obligated on any of the Collateral of the security interest of the Lender in any
account, chattel paper, general intangible, instrument or other Collateral and
that payment thereof is to be made directly to the Lender or to any financial
institution designated by the Lender as the Lender's agent therefor, and the
Lender may itself, if an Event of Default shall have occurred and be continuing,
without notice to or demand upon the Company, so notify account debtors and
other persons obligated on Collateral. After the making of such a
request or the giving of any such notification, the Company shall hold any
proceeds of collection of accounts, chattel paper, general intangibles,
instruments and other Collateral received by the Company as trustee for the
Lender without commingling the same with other funds of the Company and shall
turn the same over to the Lender in the identical form received, together with
any necessary endorsements or assignments. The Lender shall apply the
proceeds of collection of accounts, chattel paper, general intangibles,
instruments and other Collateral received by the Lender to the Obligations in
the order of priority set forth in Section 9 of the Intercreditor Agreement and
as provided under the Loan Agreement, such proceeds to be immediately credited
after final payment in cash or other immediately available funds of the items
giving rise to them.
14. Power of
Attorney.
14.1. Appointment
and Powers of Lender. The Company hereby irrevocably
constitutes and appoints the Lender and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Company or in the
Lender's own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments that may be necessary or useful to accomplish the purposes of this
Agreement and, without limiting the generality of the foregoing, hereby gives
said attorneys the power and right, on behalf of the Company, without further
notice to or assent by the Company, except as set forth herein to do the
following:
(a) upon
the occurrence and during the continuance of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or otherwise dispose
of or deal with any of the Collateral in such manner as is consistent with the
Uniform Commercial Code of the State and as fully and completely as though the
Lender were the absolute owner thereof for all purposes, and to do, at the
Company's expense, at any time, or from time to time, all acts and things which
the Lender deems necessary or useful to protect, preserve or realize upon the
Collateral and the Lender's security interest therein, in order to effect the
intent of this Agreement, all no less fully and effectively as the Company might
do, including, without limitation, (i) the filing and prosecuting of
registration and transfer applications with the appropriate federal, state or
local agencies or authorities with respect to trademarks, copyrights and
patentable inventions and processes, (ii) upon written notice to the Company,
the exercise of voting rights with respect to voting securities, which rights
may be exercised, if the Lender so elects, with a view to causing the
liquidation of assets of the issuer of any such securities and (iii) the
execution, delivery and recording, in connection with any sale or other
disposition of any Collateral, of the endorsements, assignments or other
instruments of conveyance or transfer with respect to such Collateral;
and
(b) to
the extent that the Company's authorization given in §3 is not sufficient, to
file such financing statements with respect hereto, with or without the
Company's signature, or a photocopy of this Agreement in substitution for a
financing statement, as the Lender may deem appropriate and to execute in the
Company's name such financing statements and amendments thereto and continuation
statements which may require the Company's signature.
(c) In
the event that any other security interest or lien attaches to the Collateral,
other than the security interest to the Lender and liens permitted under the
Loan Agreement, the Company hereby grants to Lender a power of attorney to, in
the name of the Company, request and to enforce any right of the Company to
obtain accountings and information from such other secured party or lienor
relating to the obligations secured and collateral securing such security
interest or lien, which power, being coupled with an interest, shall not be
revocable by the Company. The Company agrees to pay or reimburse
Lender upon demand for any charges resulting from such requests for
information.
14.2. Ratification
by Company. To the extent permitted by law, the Company hereby
ratifies all that said attorneys shall lawfully do or cause to be done by virtue
hereof in accordance with this Agreement. This power of attorney is a
power coupled with an interest and is irrevocable.
14.3. No Duty
on Lender. The powers conferred on the Lender hereunder are
solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers. The Lender shall be accountable
only for the amounts that it actually receives as a result of the exercise of
such powers, and neither it nor any of its officers, directors, employees or
agents shall be responsible to the Company for any act or failure to act, except
for the Lender's or agents’ own gross negligence or willful
misconduct.
15. Rights
and Remedies. If an Event of Default shall have occurred and
be continuing, the Lender, without any other notice to (except as set forth
below) or demand upon the Company, shall have in any jurisdiction in which
enforcement hereof is sought, in addition to all other rights and remedies under
the Loan Documents or applicable laws, the rights and remedies of a secured
party under the Uniform Commercial Code of the State and of such jurisdiction
and any additional rights and remedies as may be provided to a secured party in
any jurisdiction in which Collateral is located, including, without limitation,
the right to take possession of the Collateral, and for that purpose the Lender
may, so far as the Company can give authority therefor, enter upon any premises
on which the Collateral may be situated and remove the same
therefrom. The Lender may in its discretion require the Company to
assemble all or any part of the Collateral at such location or locations within
the jurisdiction(s) of the Company's principal office(s) or at such other
locations as the Lender may reasonably designate. Unless the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market (in which case Lender shall provide
such advance notice as may be practicable), the Lender shall give to the Company
at least ten Business Days prior written notice of the time and place of any
public sale of Collateral or of the time after which any private sale or any
other intended disposition is to be made. The Company hereby
acknowledges that ten Business Days prior written notice of such sale or sales
shall be reasonable notice. In addition, the Company waives any and
all rights that it may have to a judicial hearing in advance of the enforcement
of any of the Lender'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.
16. Standards
for Exercising Rights and Remedies. To the extent that
applicable law imposes duties on the Lender to exercise remedies in a
commercially reasonable manner, the Company acknowledges and agrees that it is
not commercially unreasonable for the Lender (a) to fail to incur expenses
reasonably deemed significant by the Lender to prepare Collateral for
disposition or otherwise to fail to complete raw material or work in process
into finished goods or other finished products for disposition, (b) to fail to
obtain third party consents for access to Collateral to be disposed of, or to
obtain or, if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (c) to fail to exercise collection remedies against account
debtors or other persons obligated on Collateral or to fail to remove liens or
encumbrances on or any adverse claims against Collateral, (d) to exercise
collection remedies against account debtors and other persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as the Company, for expressions of interest in acquiring all or
any portion of the Collateral, (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the collateral is of
a specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure the Lender against risks of loss, collection or
disposition of Collateral or to provide to the Lender a guaranteed return from
the collection or disposition of Collateral, or (l) to the extent deemed
appropriate by the Lender, to obtain the services of brokers, investment
bankers, consultants and other professionals to assist the Lender in the
collection or disposition of any of the Collateral. The Company
acknowledges that the purpose of this §16 is to provide non-exhaustive
indications of what actions or omissions by the Lender would fulfill the
Lender's duties under the Uniform Commercial Code of the State or any other
relevant jurisdiction in the Lender's exercise of remedies against the
Collateral and that other actions or omissions by the Lender shall not be deemed
to fail to fulfill such duties solely on account of not being indicated in this
§16. Without limitation upon the foregoing, nothing contained in this
§16 shall be construed to grant any rights to the Company or to impose any
duties on the Lender that would not have been granted or imposed by this
Agreement or by applicable law in the absence of this §16.
17. No Waiver
by Lender, etc. The Lender shall not be deemed to have waived
any of its rights and remedies in respect of the Obligations or the Collateral
unless such waiver shall be in writing and signed by the Lender. No
delay or omission on the part of the Lender in exercising any right or remedy
shall operate as a waiver of such right or remedy or any other right or
remedy. A waiver on any one occasion shall not be construed as a bar
to or waiver of any right or remedy on any future occasion. All
rights and remedies of the Lender with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Lender deems
expedient.
18. Suretyship
Waivers by Company. The Company waives demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made, credit
extended, Collateral received or delivered or other action taken in reliance
hereon and all other demands and notices of any description. With
respect to both the Obligations and the Collateral, the Company assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Lender may deem advisable. The Lender shall
have no duty as to the collection or protection of the Collateral or any income
therefrom, the preservation of rights against prior parties, or the preservation
of any rights pertaining thereto beyond the safe custody thereof as set forth in
§11.2. The Company further waives any and all other suretyship
defenses.
19. Marshalling. The
Lender shall not be required to marshal any present or future collateral
security (including but not limited to the Collateral) for, or other assurances
of payment of, the Obligations or any of them or to resort to such collateral
security or other assurances of payment in any particular order, and all of its
rights and remedies hereunder and in respect of such collateral security and
other assurances of payment shall be cumulative and in addition to all other
rights and remedies, however existing or arising. To the extent that
it lawfully may, the Company hereby agrees that it will not invoke any law
relating to the marshalling of collateral which might cause delay in or impede
the enforcement of the Lender's rights and remedies under this Agreement or
under any other instrument creating or evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Company hereby irrevocably waives the benefits
of all such laws.
20. Proceeds
of Dispositions; Expenses. The Company shall pay to the Lender
on demand amounts equal to any and all expenses, including, without limitation,
reasonable attorneys' fees and disbursements, incurred or paid by the Lender in
protecting, preserving or enforcing the Lender's rights and remedies under or in
respect of any of the Obligations or any of the Collateral. After
deducting all of said expenses, the residue of any proceeds of collection or
sale or other disposition of Collateral shall, to the extent actually received
in cash, be applied to the payment of the Obligations in such order as is
provided in the Loan Agreement, proper allowance and provision being made for
any Obligations not then due. Upon the final payment and satisfaction
in full of all of the Obligations and after making any payments required by
Sections 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the
State, any excess shall, subject to the terms and provisions of the
Subordination Agreement, be returned to the Company. In the absence
of final payment and satisfaction in full of all of the Obligations, the Company
shall remain liable for any deficiency.
21. Overdue
Amounts. Until paid, all amounts due and payable by the
Company hereunder shall be a debt secured by the Collateral and, after the lapse
of any grace period shall bear, whether before or after judgment, interest at
the default rate of interest set forth in the Loan Agreement.
22. Governing
Law; Consent to Jurisdiction. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE. The Company agrees that any
action or claim arising out of any dispute in connection with this Agreement,
any rights or obligations hereunder or the performance or enforcement of such
rights or obligations may be brought in the courts of the State or any federal
court sitting therein and consents to the non-exclusive jurisdiction of such
court and to service of process in any such suit being made upon the Company by
mail at the address specified in the Loan Agreement. The Company
hereby waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an inconvenient
court.
23. Waiver of
Jury Trial. THE PARTIES WAIVE THEIR RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OR
ENFORCEMENT OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited
by law, the parties waive any right which they may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each party (i) certifies that neither the other party
nor any representative, agent or attorney of the other party has represented,
expressly or otherwise, that the other party would not, in the event of
litigation, seek to enforce the foregoing waivers or other waivers contained in
this Agreement and (ii) acknowledges that, in entering into the Loan Agreement
and the other Loan Documents to which it is a party, it is relying upon, among
other things, the waivers and certifications contained in this §23.
24. Prejudgment
Remedy Waiver.
TO INDUCE LENDER
TO ENTER INTO THE COMMERCIAL LOAN TRANSACTION EVIDENCED BY THIS NOTE, THE LOAN
AGREEMENT, AND ANY OTHER LOAN DOCUMENTS EVIDENCING OR SECURING THE SAME,
BORROWER AGREES THAT THIS IS A COMMERCIAL TRANSACTION AND NOT A CONSUMER
TRANSACTION, AND WAIVES ANY RIGHT TO NOTICE AND A HEARING UNDER CHAPTER 903a OF
THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR OTHER STATUTE OR STATUTES
AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZES LENDER’S ATTORNEY TO ISSUE A WRIT
FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED THE COMPLAINT SHALL SET
FORTH A COPY OF THIS WAIVER AND WAIVES ANY CLAIM IN TORT, CONTRACT OR OTHERWISE
AGAINST LENDER’S ATTORNEY WHICH MAY ARISE OUT OF SUCH ISSUANCE OF A WRIT FOR A
PREJUDGMENT REMEDY WITHOUT COURT ORDER. BORROWER ACKNOWELDGES AND
STIPULATES THAT SUCH WAIVER AND AUTHORIZATION GRANTED ABOVE ARE MADE KNOWINGLY
AND FREELY AFTER FULL CONSULTATION WITH COUNSEL. SPECIFICALLY,
BORROWER RECOGNIZES AND UNDERSTANDS THAT THE EXERCISE OF LENDER’S RIGHTS
DESCRIBED ABOVE MAY RESULT IN THE ATTACHMENT OF OR LEVY AGAINST BORROWER’S
PROPERTY, AND SUCH WRIT FOR A PREJUDGMENT REMEDY WILL NOT HAVE THE PRIOR WRITTEN
APPROVAL OR SCRUTINY OF A COURT OF LAW OR OTHER JUDICIAL OFFICER NOR WILL
BORROWER HAVE THE RIGHT TO ANY NOTICE OR PRIOR HEARING WHERE BORROWER MIGHT
CONTEST SUCH A PROCEDURE. THE INTENT OF BORROWER IS TO GRANT TO
LENDER FOR GOOD AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN SUCH A
PREJUDGMENT REMEDY AND TO EXPRESS ITS BELIEF THAT ANY SUCH PREJUDGMENT REMEDY
OBTAINED IS VALID AND CONSTITUTIONAL UNLESS A COURT OF COMPETENT JURISDICTION
DETERMINES OTHERWISE. FURTHER, TO THE EXTENT ALLOWED UNDER APPLICABLE
LAW, BORROWER HEREBY WAIVES DEMAND, PRESENTMENT FOR PAYMENT, PROTEST, NOTICE OF
PROTEST, NOTICE OF DISHONOR, DILIGENCE IN COLLECTION, NOTICE OF NONPAYMENT OF
THIS NOTE AND ANY AND ALL NOTICES OF A LIKE NATURE. FURTHER BORROWER
WAIVES ALL RIGHTS TO REQUEST THAT LENDER POST A BOND, WITH OR WITHOUT SURETY, TO
PROTECT THE COMPANY AGAINST DAMAGES THAT MAY BE CAUSD BY ANY SUCH REMEDY OR
REMEDIES.
25. Electronic
Self-Help Authorization: If an Event of
Default shall have occurred and be continuing, the Lender shall have, in
addition to all other rights and remedies contained in this Agreement, (which
the Company, and, by becoming bound by the Obligations or this Agreement, all
other Obligors, guarantors and any new debtors accept and agree upon), the right
to locate, disable or to take possession of the Collateral by electronic,
digital, magnetic or wireless optical electromagnetic or similar means after
giving any notices required under applicable law.
26. Miscellaneous. The
headings of each section of this Agreement are for convenience only and shall
not define or limit the provisions thereof. This Agreement and all
rights and obligations hereunder shall be binding upon the Company and its
successors and assigns, and shall inure to the benefit of the Lender and its
successors and assigns. If any term of this Agreement shall be held
to be invalid, illegal or unenforceable, the validity of all other terms hereof
shall in no way be affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein. The Company acknowledges receipt of a copy of this
Agreement.
27. Termination. At
such time as all of the Obligations have been fully paid and satisfied in full
(except for any contingent indemnification obligations for which no claim has
been asserted), this Agreement shall terminate and the Lender shall promptly
execute and deliver to the Company such documents and instruments reasonably
requested by the Company as shall be necessary to evidence termination of all
security interests given by the Company to Lender hereunder.
[Signature
page follows.]
IN
WITNESS WHEREOF, intending to be legally bound, the Company has caused this
Agreement to be duly executed as of the date first above written.
By: /s/ Xxxxx X.
Xxxxxx
Xxxxx X.
Xxxxxx
Its Vice
President of Finance and Chief Accounting Officer
MICROFLUIDICS CORPORATION
By: /s/ Xxxxx X.
Xxxxxx
Xxxxx X.
Xxxxxx
Its Vice
President of Finance and Chief Accounting Officer
Accepted:
XXXXXXX
BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxx
Xxxxx
Xxxxx Xxxxx
Its Vice President
CERTIFICATE OF
ACKNOWLEDGMENT
COMMONWEALTH
OF MASSACHUSETTS )
)
ss.
COUNTY OF
MIDDLESEX)
Before
me, the undersigned, a Notary Public in and for the county aforesaid, on this
___ day of, 2009, personally
appeared ______________, to me known personally, and who, being by me duly
sworn, deposes and says that he is the __________________ of Microfluidics
International Corporation, and that said instrument was signed and sealed on
behalf of said corporation by authority of its ___________________, and said
___________________ acknowledged said instrument to be his free act and deed and
the free act and deed of said corporation.
Notary Public
Commissioner of the Superior
Court
My commission expires:
CERTIFICATE OF
ACKNOWLEDGMENT
COMMONWEALTH
OF MASSACHUSETTS )
)
ss.
COUNTY OF
MIDDLESEX)
Before
me, the undersigned, a Notary Public in and for the county aforesaid, on this
___ day of, 2009, personally
appeared ______________, to me known personally, and who, being by me duly
sworn, deposes and says that he is the __________________ of Microfluidics
Corporation, and that said instrument was signed and sealed on behalf of said
corporation by authority of its ___________________, and said
___________________ acknowledged said instrument to be his free act and deed and
the free act and deed of said corporation.
Notary Public
Commissioner of the Superior
Court
My commission
expires:
1231377
