Exhibit 10.4
SECURITY AGREEMENT
This Security Agreement ("Agreement") is made and entered into as of February
17, 1998 by and between SANWA BANK CALIFORNIA (the "Bank") and MIRAVANT MEDICAL
TECHNOLOGIES (the "Grantor")
1. Grant of Security Interest. The Grantor hereby grants to the Bank a
security interest in and to all of the following property (hereinafter
collectively referred to as the "Collateral"):
A. Market Value Savings. The following described Market Value Savings:
0734-16600 together with all substitutions thereof and with all
interest accruing thereunder and therefrom.
B. Monies and Other Property in Possession. In addition to the above, all
monies, and property of the Grantor now or hereafter in the possession
of the Bank or the Bank's agents, or any one of them, including, but
not limited to, all deposit accounts, certificates of deposit, stocks,
bonds, indentures, warrants, options and other negotiable and
non-negotiable securities and instruments, together with all stock
rights, rights to subscribe, liquidating dividends, cash dividends,
payments, dividends paid in stock, new securities or other property to
which the Grantor may become entitled to receive on account of such
property.
The Bank's security interest in the Collateral shall be a continuing lien and
shall include all proceeds and products of the Collateral including but not
limited to, the proceeds of any insurance thereon.
2. The Indebtedness. The Collateral secures payment of all obligations and
indebtedness pursuant to that certain Guaranty in favor of the Bank dated
as of February 17, 1998, executed by Miravant Medical Technologies and with
a maximum principal liability of $7,600,000.00 plus interest, fees,
attorneys' fees and other costs and expenses related to the indebtedness
guarantied. The indebtedness and obligations secured hereby (hereinafter
referred to as the "Indebtedness") shall include any and all modifications,
extensions and renewals of such obligations or indebtedness and performance
of all the terms, covenants and agreements contained in this Security
Agreement and in any other document, instrument or agreement evidencing or
related to the Indebtedness or the Collateral.
The Indebtedness secured hereby shall not include any indebtedness incurred for
personal, family or household purposes except to the extent any disclosure
required under any consumer protection law (including but not limited to the
Truth in Lending Act) or any regulation thereto, as now existing or hereafter
amended, is or has been given.
3. Grantor's Representations and Warranties. The Grantor hereby makes the
following representations and warranties to the Bank, which representations
and warranties are continuing:
A. Status. The Grantor is a corporation duly organized and validly
existing under the laws of the State of Delaware and is properly
licensed, qualified to do business and in good standing in, and, where
necessary to maintain the Grantor's rights and privileges, has
complied with the fictitious name statute of every jurisdiction in
which the Grantor is doing business.
B. Authority. The execution, delivery and performance by the Grantor of
this Security Agreement and any instrument, document or agreement
required hereunder have been duly authorized and do not and will not:
(i) violate any provision of any law, rule, regulation, writ, judgment
or injunction presently in effect affecting the Grantor; (ii) require
any consent or approval of the stockholders or violate any provision
of the articles of incorporation or by-laws of the Grantor; or (iii)
result in a breach of or constitute a default under any material
agreement to which the Grantor is a party or by which the Grantor's
properties may be bound or affected.
C. Legal Effect. This Security Agreement constitutes, and any document,
instrument or agreement required hereunder when delivered will
constitute, legal, valid and binding obligations of the Grantor
enforceable against the Grantor in accordance with their respective
terms.
D. Fictitious Trade Styles. The Grantor currently uses no fictitious
trade styles in connection with its business operations. The Grantor
shall notify the Bank within thirty (30) days of the use of any
fictitious trade style at any future date, indicating the trade style
and state(s) of its use.
E. Title to Collateral; Permitted Liens. The Grantor has good and
marketable title to the Collateral and the same is not now and shall
not become subject to any security interest, encumbrance, lien or
claim of any third person other than: (i) liens and security interests
securing the Indebtedness or other indebtedness owed to the Bank; (ii)
liens for taxes, assessments or similar charges either not yet due or
being contested in good faith; (iii) liens of mechanics, materialmen,
warehousemen, carriers or other like liens arising in the ordinary
course of business and securing obligations which are not yet
delinquent; (iv) purchase money liens or purchase money security
interests upon or in any property acquired or held by the Grantor in
the ordinary course of business to secure indebtedness outstanding on
the date hereof or permitted to be incurred hereunder; (v) liens and
security interests which, as of the date hereof, have been disclosed
to and approved by the Bank in writing; and (vi) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of the
Grantor's assets (collectively, the "Permitted Liens").
F. Financial Statements. All financial statements, information and other
data now or hereafter submitted to the Bank by the Grantor in
connection with the transaction with respect to which this Security
Agreement is entered into are true, accurate and correct and have been
or will be prepared in accordance with generally accepted accounting
principles consistently applied. Since the most recent submission of
any such financial statement, information or other data to the Bank,
the Grantor represents and warrants that no material adverse change in
the financial condition or operations as disclosed therein or thereby
has occurred which has not been fully disclosed to the Bank in
writing.
G. Litigation. Except as have been disclosed to the Bank in writing,
there are no actions, suits or proceedings pending or, to the
knowledge of the Grantor, threatened against or affecting the Grantor
or the Grantor's properties before any court or administrative agency
which, if determined adversely to the Grantor, would have a material
adverse effect on the Grantor's financial condition, operations or the
Collateral.
H. Taxes. The Grantor has filed all tax returns required to be filed and
paid all taxes shown thereon to be due, including interest and
penalties, other than taxes which are currently payable without
penalty or interest or those which are being duly contested in good
faith.
4. Grantor's Covenants. The Grantor covenants and agrees that, unless the Bank
otherwise consents in writing, the Grantor shall at all times:
A. Maintenance of Collateral. Except for Permitted Liens, keep and
maintain the Collateral free and clear of all levies, liens,
encumbrances and other security interests (including, but not limited
to, any lien of attachment, judgment or execution) and defend the
Collateral against any such levy, lien, encumbrance or security
interest; comply with all laws, statutes and regulations pertaining to
the Collateral and take such actions and execute such agreements and
other documents necessary to perfect, evidence and continue the Bank's
security interest in the Collateral and the priority thereof.
B. Covenants With Respect to Possessory Collateral. With respect to
Possessory Collateral, (which is defined to mean that portion of the
Collateral which consists of securities, certificates of deposit,
savings or checking accounts, notes and instruments and any other
similar collateral in which a security interest is normally perfected
through possession by the Bank or its agent), the Grantor covenants
and agrees:
(i) The Possessory Collateral shall at all times be of a
character and value acceptable to the Bank, as
determined by the Bank in its sole and absolute
judgment.
(ii) The Grantor shall not withdraw or seek to withdraw any
of the Possessory Collateral now or hereafter in the
possession of the Bank or the Bank's agents.
(iii) The Grantor shall make timely payments of all taxes,
charges, liens and assessments against the Possessory
Collateral.
C. Reporting Requirements. Promptly upon the Bank's request, deliver or
cause to be delivered to the Bank such information pertaining to the
Grantor, the Collateral or such other matters as the Bank may
reasonably request.
D. Payment of Obligations. Pay all of the Grantor's liabilities and
obligations when due.
E. Compensation of Employees. Compensate the Grantor's employees for
services rendered at an hourly rate at least equal to the minimum
hourly rate prescribed by any applicable federal or state law or
regulation.
F. Possessory Collateral Loan-to-Value Ratio. The Grantor covenants and
agrees that so long as all or any part of the Indebtedness shall
remain outstanding, the outstanding principal balance of the
obligations secured by this Agreement shall at no time be greater than
100.00% of the value of the Possessory Collateral at its then current
market value (as determined by the Bank) (the "Loan-to-Value Ratio").
To the extent that such Possessory Collateral Loan-to-Value Ratio is not
maintained, the Grantor shall promptly, upon the Bank's request: (i)
assign and pledge to the Bank such additional assets of a character
satisfactory to the Bank and having a market value sufficient to reinstate
and maintain such Possessory Collateral Loan-to-Value Ratio, or (ii) make
payment to the Bank in an amount sufficient to reduce the outstanding
principal balance of the Indebtedness so that such Possessory Collateral
Loan-to-Value Ratio is reinstated and maintained.
G. Notices. Give the Bank prompt written notice of: (i) any change in the
Grantor's place of business or the acquisition of more than one place
of business; (ii) any proposed or actual change in the Grantor's name,
identity or business nature; (iii) any change in the location of any
Collateral; (iv) any Event of Default; (v) litigation, arbitration or
administrative proceedings to which the Grantor is a party and which
affects the Collateral and in which the claim or liability exceeds
$5,000.00; and (vi) any other matter which has resulted in, or might
result in, a material adverse change in the Collateral or the
financial condition or business operations of the Grantor.
5. Bank's Rights Regarding Possessory Collateral. With respect to the
Possessory Collateral, at its option and without any obligation to do so,
the Bank may, either in the name of the Bank, the Bank's nominee or the
Grantor:
A. Collect, endorse and receive all sums including, but not limited to,
dividends, and interest, now or hereafter payable upon or on account
of the Possessory Collateral.
B. Enter into any agreement relating to or affecting the Possessory
Collateral and, in connection therewith, the Bank may surrender
control of any such Collateral, accept other property in exchange for
such Collateral and do and perform such acts as it deems proper. Any
money or property received in exchange for any such Collateral shall
be subject to and held by the Bank pursuant to the terms of this
Security Agreement.
C. Make any compromise or settlement with respect to the Possessory
Collateral that the Bank, in its sole and absolute discretion, deems
proper.
D. Insure and do such other acts as the Bank deems necessary, in its sole
discretion, to preserve or protect the Possessory Collateral.
E. Cause the Possessory Collateral to be transferred to the Bank's name
or the name of the Bank's nominee.
F. With respect to the Possessory Collateral, exercise all rights, powers
and remedies of an owner but excluding any voting rights.
6. Events of Default. Any one or more of the following described events shall
constitute an event of default ("Event of Default") hereunder:
A. Non-Payment. There shall occur a failure to pay when due any payment
of principal or interest or any other sum referred to in this Security
Agreement or under any other document, instrument or agreement
evidencing or relating to any indebtedness owed by the Grantor to the
Bank or owed to the Bank by any obligor on the Indebtedness.
B. Performance Under This and Other Agreements. The Grantor shall fail in
any material respect to perform or observe any term, covenant or
agreement contained in this Security Agreement or in any document,
instrument or agreement evidencing or relating to any indebtedness of
the Grantor or any indebtedness of any obligor on the Indebtedness
(whether such indebtedness is owed to the Bank or third persons), and
any such failure (exclusive of the payment of money to the Bank, which
failure shall constitute and be an immediate Event of Default if not
paid when due or when demanded to be due) shall continue for more than
30 days after written notice from the Bank to the Grantor or the
obligor on the Indebtedness of the existence and character of such
Event of Default.
C. Representations and Warranties; Financial Statements. Any
representation or warranty made under or in connection with this
Security Agreement or any financial statement or information given in
connection with the transaction with respect to which this Security
Agreement is entered into shall prove to have been incorrect in any
material respect when made or given or when deemed to have been made
or given.
D. Insolvency. The Grantor or any obligor on or any guarantor of the
Indebtedness shall: (i) become insolvent or be unable to pay its debts
as they mature; (ii) make an assignment for the benefit of creditors
or to an agent authorized to liquidate any substantial amount of its
properties or assets; (iii) file a voluntary petition in bankruptcy or
seeking reorganization or to effect a plan or other arrangement with
creditors; (iv) file an answer admitting the material allegations of
an involuntary petition relating to bankruptcy or reorganization or
join in any such petition; (v) become or be adjudicated a bankrupt;
(vi) apply for or consent to the appointment of, or consent that an
order be made appointing, any receiver, custodian or trustee, for
itself or any of its properties, assets or businesses; or (vii) any
receiver, custodian or trustee shall have been appointed for all or a
substantial part of its properties, assets or businesses and shall not
be discharged within 30 days after the date of such appointment.
E. Execution. Any writ of execution or attachment or any judgment lien
shall be issued against the Collateral and shall not be discharged or
bonded against or released within 30 days after the issuance or
attachment of such writ or lien.
F. Impairment of Collateral. There shall occur any deterioration or
impairment of all or any part of the Collateral or any decline or
depreciation in the value or market price of the Collateral which
causes the Collateral, in the sole and absolute judgment of the Bank,
to become unacceptable as to character or value.
G. Revocation or Limitation of Guaranty. Any guaranty given with respect
to the Indebtedness shall be revoked or limited or its enforceability
or validity shall be contested by any guarantor, by operation of law,
legal proceeding or otherwise or any guarantor who is a natural person
shall die.
H. Suspension. The Grantor or any obligor on the Indebtedness shall
voluntarily suspend the transaction of business or allow to be
suspended, terminated, revoked or expired any permit, license or
approval of any federal, state or municipal agency or authority
necessary to conduct such person's business as now conducted.
I. Change in Ownership. There shall occur a sale, transfer, disposition
or encumbrance (whether voluntary or involuntary), or an agreement
shall be entered into to do so, with respect to more than 10% of the
issued and outstanding capital stock of the Grantor or any obligor on
the Indebtedness, if a corporation, or there shall occur a change in
any general partner or a change affecting the control of the Grantor
or any obligor on the Indebtedness, if a partnership.
7. Bank's Rights and Remedies on Default. Upon the occurrence of any Event
of Default, the Bank may, at its sole and absolute election, without
demand and only upon such notice as may be required by law:
A. Acceleration. Declare the Indebtedness and any or all other
indebtedness owing to the Bank by the Grantor or any obligor on the
Indebtedness (however such indebtedness may be evidenced or secured)
immediately due and payable, whether or not otherwise due and payable.
B. Cease Extending Credit. Cease extending credit to or for the account
of the Grantor or any obligor on the Indebtedness under any agreement
now existing or hereafter entered into with the Bank.
C. Termination. Terminate any agreement as to any future obligation of
the Bank without affecting the Grantor's obligations to the Bank or
the Bank's rights and remedies under this Security Agreement or under
any other document, instrument or agreement.
D. Protection of Security Interest in Collateral. Make such payments and
do such acts as the Bank, in its sole judgment, considers necessary
and reasonable to protect its security interest in the Collateral. The
Grantor hereby irrevocably authorizes the Bank to pay, purchase,
contest or compromise any encumbrance, lien or claim which the Bank,
in its sole judgment, deems to be prior or superior to its security
interest. Further, the Grantor hereby agrees to pay to the Bank, upon
demand therefor, all expenses and expenditures (including attorneys'
fees) incurred in connection with the foregoing.
E. Foreclosure. Enforce any security interest or lien given or provided
for under this Security Agreement or under any other document relating
to the Collateral, in such manner and such order, as to all or any
part of the Collateral, as the Bank, in its sole judgment, deems to be
necessary or appropriate and the Grantor hereby waives any and all
rights, obligations or defenses now or hereafter established by law
relating to the foregoing. In the enforcement of its security interest
in the Collateral, the Bank is authorized to enter upon the premises
where any Collateral is located and take possession of the Collateral
or any part thereof, together with the Grantor's records pertaining
thereto, or the Bank may require the Grantor to assemble the
Collateral and records pertaining thereto and make such Collateral and
records available to the Bank at a place designated by the Bank. The
Bank may sell the Collateral or any portions thereof, together with
all additions, accessions and accessories thereto, giving only such
notices and following only such procedures as are required by law, at
either a public or private sale, or both, with or without having the
Collateral present at the time of sale, which sale shall be on such
terms and conditions and conducted in such manner as the Bank
determines in its sole judgment to be commercially reasonable. Any
deficiency which exists after the disposition or liquidation of the
Collateral shall be a continuing liability of any obligor on or any
guarantor of the Indebtedness and shall be immediately paid to the
Bank.
F. Application of Proceeds. All amounts received by the Bank as proceeds
from the disposition or liquidation of the Collateral shall be applied
as follows: first, to the costs and expenses of collection, including
court costs and reasonable attorneys' fees, whether or not suit is
commenced by the Bank; next, to those costs and expenses incurred by
the Bank in protecting, preserving, enforcing, collecting, selling or
disposing of the Collateral; next, to the payment of accrued and
unpaid interest on all of the Indebtedness; next, to the payment of
the outstanding principal balance of the Indebtedness; and last, to
the payment of any other indebtedness owed by the Grantor to the Bank.
Any excess Collateral or excess proceeds existing after the
disposition or liquidation of the Collateral will be returned or paid
by the Bank to the Grantor.
G. Non-Exclusivity of Remedies. Exercise one or more of the Bank's rights
set forth herein or seek such other rights or pursue such other
remedies as may be provided by law, in equity or in any other
agreement now existing or hereafter entered into between the Bank and
the Grantor or any obligor on or guarantor of the Indebtedness, or
otherwise.
8. Miscellaneous Provisions.
A. Amounts Payable Under this Security Agreement. If the Grantor fails to
pay on demand the amount of any obligations referred to in this
Security Agreement, the Bank may pay such amount at its option and
without any obligation to do so and without waiving any default
occasioned by the Grantor's failure to pay such amount. All amounts so
paid by the Bank, together with reasonable attorneys' fees and all
other costs, charges and expenses relating to the Indebtedness, shall
be a part of the Indebtedness and shall bear interest at the highest
rate chargeable on any Indebtedness until paid in full.
B. Other Terms. Terms not otherwise defined in this Security Agreement
shall have the meanings attributed to such terms in the California
Uniform Commercial Code.
C. Reliance. Each warranty, representation, covenant and agreement
contained in this Security Agreement shall be conclusively presumed to
have been relied upon by the Bank regardless of any investigation made
or information possessed by the Bank and shall be cumulative and in
addition to any other warranties, representations, covenants or
agreements which the Grantor shall now or hereafter give, or cause to
be given, to the Bank.
D. Attorneys' Fees. In the event of any action in relation to this
Security Agreement, the Collateral or any document, instrument or
agreement secured hereby or related hereto, the prevailing party, in
addition to all other sums to which it may be entitled, shall be
entitled to reasonable attorneys' fees.
E. Notices. All notices, payments, requests, information and demands
which either party hereto may desire, or be required to give or make
to the other party, shall be given or made to such party by hand
delivery or through deposit in the United States mail, postage
prepaid, or by Western Union telegram, addressed to the address set
forth below such party's signature to this Security Agreement or to
such other address as may be specified from time to time in writing by
either party to the other.
F. Waiver. Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreement
mentioned herein shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder or under any other
document, instrument or agreement mentioned herein preclude other or
further exercise thereof or the exercise of any other right; nor shall
any waiver of any right or default hereunder or under any other
document, instrument or agreement mentioned herein constitute a waiver
of any other right or default or constitute a waiver of any other
default of the same or any other term or provision.
G. Assignment. This Security Agreement shall be binding upon and inure to
the benefit of the Grantor and the Bank and their respective
successors and assigns, except that the Grantor shall not have the
right to assign the Grantor's rights hereunder or any interest herein
without the Bank's prior written consent. The Bank may sell or assign
all or any portion of its rights and benefits hereunder and, in
connection therewith, may deliver to such prospective buyer or
assignee financial statements and other relevant information
pertaining to the Grantor or any obligor on the Indebtedness.
H. Severability. Should any one or more provisions of this Security
Agreement be determined to be illegal or unenforceable, all other
provisions shall remain effective.
I. Jurisdiction. This Security Agreement and the rights of the parties
hereunder to and concerning the Collateral, and any documents,
instruments or agreements mentioned or referred to herein, shall be
governed by and construed according to the laws of the State of
California, to the jurisdiction of whose courts the parties hereby
submit.
IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
executed as of the date first hereinabove written.
BANK:
SANWA BANK CALIFORNIA
By: /s/ Xxxxx Xxxxxx
------------------------------------
Xxxxx Xxxxxx, Authorized Officer
Address:
Santa Xxxxxxx Xxxx Xxxxxx
0000 Xxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
GRANTOR:
MIRAVANT MEDICAL TECHNOLOGIES
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Xxxx X. Xxxxxxx, Chief Executive Officer
Address:
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
