SECOND AMENDED AND RESTATED SECURITY AGREEMENT
Exhibit
10.2
SECOND
AMENDED AND RESTATED
THIS
SECURITY AGREEMENT (this “Agreement”)
is
dated as of December 10, 2001, and amended and restated as of October 25, 2006
(the “Restatement
Date”),
by
and between DISCOVERY LABORATORIES, INC., a Delaware corporation (“Borrower”),
and
PHARMABIO DEVELOPMENT INC., a North Carolina corporation, d/b/a NovaQuest
(“Lender”).
WHEREAS,
Borrower and Lender previously entered into that certain Security Agreement
dated as of December 10, 2001 (the “Original
Security Agreement”),
and
amended and restated by the Amended and Restated Security Agreement dated as
of
November 3, 2004 (the “Amended
and Restated Security Agreement”);
WHEREAS,
Borrower and Lender wish to amend and restate the Amended and Restated Agreement
in its entirety as set forth in this Agreement;
WHEREAS,
Borrower and Lender are parties to the Loan Agreement dated as of December
10,
2001, as amended and restated as of November 3, 2004, and further amended and
restated as of the date hereof (as amended, modified or supplemented from time
to time, the “Loan
Agreement”),
pursuant to which, among other things, Borrower is delivering to Lender the
Note
(as defined in the Loan Agreement); and
WHEREAS,
it is a condition precedent to the performance of Lender under the Loan
Agreement that Borrower enter into this Agreement;
NOW,
THEREFORE, in consideration of the benefits to Borrower, and for other good
and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereby amend and restate the Amended and Restated
Security Agreement in its entirety and hereby agree as follows:
1. Definitions.
The
following terms, as used in this Agreement, shall have the following
meanings:
“Cash
Proceeds”; “Certificated Securities”; “Chattel Paper”; “Consumer Goods”;
“Commercial Tort Claims”; “Commodity Accounts”; “Commodity Contracts”; “Deposit
Accounts”; “Documents”; “Electronic Chattel Paper”; “Equipment”; “Financial
Assets”; “Fixtures”; “General Intangibles”; “Goods”; “Instruments”; “Inventory”;
“Investment Property”; “Letter-of-Credit Rights”; “Letters-of-Credit”;
“Negotiable Instruments”; “Noncash Proceeds”; “Payment Intangibles”; Promissory
Notes”; Securities”; Securities Accounts”; “Securities Entitlements”; Software”;
“Tangible Chattel Paper” and “Uncertificated Securities” shall each have the
meaning set forth in the UCC.
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“Collateral”
shall mean all right, title and interest of Borrower in, to and under any and
all of the following, whether now existing or hereafter existing or acquired
from time to time: (i) any and all Certificated Securities, Chattel Paper,
Consumer Goods, Contracts, Contract Rights, Commercial Tort Claims, Commodity
Accounts, Commodity Contracts, Data, Deposit Accounts, Documents, Electronic
Chattel Paper, Equipment, Financial Assets, Fixtures, General Intangibles,
Goods, Instruments, Intellectual Property, Inventory, Investment Property,
Letter-of-Credit Rights, Letters-of-Credit, Marketing Materials, monies,
Negotiable Instruments, Payment Intangibles, Promissory Notes, Product
Registrations, Receivables, Records, Securities, Securities Accounts, Securities
Entitlements, Software, Tangible Chattel Paper and Uncertificated Securities;
(ii) to the extent not covered by clause (i) of this definition, all other
personal property, whether tangible or intangible, and (iii) any and all
Proceeds, including Cash Proceeds and Noncash Proceeds, of any and all of the
foregoing;
provided,
however,
for the
purposes of this Agreement, the term “Collateral” shall not include, and
Borrower shall not be deemed to have granted a security interest in, any of
Borrower’s rights or interests in (i) any property or equipment acquired by
Borrower pursuant to transactions described in Sections 6.04(d) and 6.04(e)
of
the Loan Agreement; provided, that immediately upon the lapse or termination
of
any Permitted Lien on such property or equipment, the Collateral shall include,
and Borrower shall be deemed to have granted a security interest in, all such
property and equipment, or (ii) any license Contract or agreement to which
Borrower is a party or any of its rights or interests thereunder to the extent,
but only to the extent, that such a grant would, under the terms of such
license, Contract or agreement or otherwise, result in a breach of the terms
of,
or constitute a default under any license, Contract or agreement to which
Borrower is a party (other than to the extent that any such term would be
rendered ineffective pursuant to the UCC or any other applicable law (including
the Bankruptcy Code, 11 U.S.C. Sec. 362(a)) or principles of equity); provided,
that immediately upon the ineffectiveness, lapse or termination of any such
provision, the Collateral shall include, and Borrower shall be deemed to have
granted a security interest in, all such rights and interests as if such
provision had never been in effect.
“Contracts”
shall mean all contracts, agreements, commitments, understandings and
arrangements (including without limitation the Sublicense and any other license
agreement) between Borrower and one or more other parties, or under or with
respect to which Borrower has rights, including, without limitation, those
listed on Schedule
3(e)(ii)
and
Schedule
3(e)(iii)
attached
hereto.
“Contract
Rights” shall mean all rights of Borrower (including, without limitation, all
rights to payment or property) under any Contract.
“Copyrights”
shall mean, collectively, all copyrights (whether such copyrights are statutory
or common law, whether established or registered in the United States or any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished) and all copyright
registrations and applications, and in each case, whether now owned or hereafter
created or acquired, together with any and all (i) rights and privileges
arising under applicable law with respect to the use of such copyrights,
(ii) reissues, renewals, continuations and extensions thereof, (iii)
income, fees, royalties, damages, claims and payments now or hereafter due
or
payable with respect thereto, including, without limitation, damages and
payments for past, present or future infringements thereof, (iv) rights
corresponding thereto throughout the world and (v) rights to xxx for past,
present or future infringements thereof.
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“Data”
shall mean any and all preclinical, clinical and manufacturing data or results
and other similar data.
“Governmental
Authority” means any federal, state, local or foreign court or governmental
agency, authority, instrumentality or regulatory body, including any central
bank.
“IND”
shall mean an “investigational new drug application,” as such term is defined
under the FFDCA.
“Intellectual
Property” shall mean all intellectual property, proprietary rights and similar
property or rights of every kind and nature now owned or hereafter acquired,
including, without limitation, Patents,
Trademarks, Copyrights, domain names, trade
secrets and trade secret rights, inventions, designs, confidential or
proprietary technical and business information, Know-How, show-how or other
data
or information, software and databases and all embodiments or fixations thereof
and related documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used in
connection with, any of the foregoing; provided, however, that “Intellectual
Property” shall not include any “shrink-wrap” or “off-the-shelf” software,
operating programs and “office suites” used by Borrower in its internal
operations and which is generally commercially available.
“Know-How”
shall mean all know-how and other information, including, without limitation,
ideas, discoveries, inventions, data, techniques, specifications, processes,
procedures, manufacturing and technical information, results from experiments
and tests, instructions, methods, formulae, designs, plans, sketches, records,
confidential analyses, interpretations of information, and trade secrets, or
any
similar items, in any media form, whether or not tangible, including, without
limitation, any paper or electronic form.
“Marketing
Materials” shall mean marketing materials, advertising materials, training
materials, product data, price lists, mailing lists, sales materials, market
information (e.g., customer, sales and competitor data), promotional materials,
artwork for the production of packaging components, and other materials, and
in
each case whether now existing or owned or hereafter arising or
acquired.
“Obligations”
shall mean all indebtedness, obligations and liabilities of Borrower to Lender
arising under or in connection with the Note (as defined in the Loan Agreement)
and under or in connection with each of the Loan Agreement and this Agreement,
including any amendment, modification, extension, refinancing or restructuring
thereof.
“Patents”
shall mean all of the following whether now owned or hereafter acquired:
(a) all patents of the United States or any other country, all
registrations and recordings thereof, and all applications for patents of the
United States or any other country, including registrations, recordings and
pending applications in the United States Patent and Trademark Office or any
other country, including, without limitation, those listed on Schedule
3(e)(i)
attached
hereto, (b) all reissues, continuations, divisions, continuations-in-part,
renewals or extensions thereof, and the inventions disclosed or claimed therein,
including the right to make, use or sell the inventions disclosed or claimed
therein and (c) all income, fees, royalties, damages, claims and payments now
or
hereafter due or payable with respect thereto, including, without limitation,
damages and payments for past, present or future infringements
thereof.
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“Proceeds”
shall mean, collectively, all “proceeds,” as such term is defined in the UCC,
and in any event shall include, without limitation, any consideration received
from the sale, exchange, license, lease or other disposition of any asset or
property that constitutes Collateral, any value received as a consequence of
the
possession of any Collateral and any payment received from any insurer or other
person or entity as a result of the destruction, loss, theft, damage or other
involuntary conversion of whatever nature of any asset or property that
constitutes Collateral, and shall include (a) any claim against any third
party for (and the right to xxx and recover for and the rights to damages or
profits due or accrued arising out of or in connection with) (i) past,
present or future infringement of any Patent now or hereafter owned,
(ii) past, present or future infringement or dilution of any Trademark now
or hereafter owned or injury to the goodwill associated with or symbolized
by
any Trademark now or hereafter owned, (iii) past, present or future infringement
of any Copyright now or hereafter owned and (b) any and all other amounts
from time to time paid or payable under or in connection with any of the
Collateral.
“Product”
shall mean the product currently known as Surfaxin, as such name may change
from
time to time, for any and all formulations and delivery mechanisms, and for
any
and all indications.
“Product
Registration” means with respect to any country, the registrations, permits,
licenses, consents, authorizations and other approvals and pending applications
and requests therefor, required by applicable Governmental Authorities
relating
to the
marketing, sale, distribution, pricing and reimbursement of any products in
such
country, including, without limitation, INDs and NDAs, marketing authorizations,
and any supplements or amendments to any of the foregoing, and any other
equivalent of the foregoing, in each case whether now existing or owned or
hereafter arising or acquired, and including all filings and files with respect
thereto, including, without limitation, all documents referred to in the
complete regulatory chronology for any product registration, and including,
without limitation, those listed on Schedule
3(e)(v)
attached
hereto.
“Receivable”
shall mean any “account” as such term is defined in the UCC, and, in any event,
shall include, but shall not be limited to, all of Borrower’s rights to payment
for goods sold, leased or licensed or services performed by Borrower, whether
now in existence or arising from time to time hereafter, including, without
limitation, rights evidenced by an account, note, contract, security agreement,
chattel paper or other evidence of indebtedness or security, together with
(a)
all security pledged, assigned, hypothecated or granted to or held by Borrower
to secure the foregoing, (b) all of Borrower’s right, title and interest in and
to any goods, the sale of which gave rise thereto, (c) all guarantees,
endorsements and indemnifications on, or of, any of the foregoing, (d) all
powers of attorney for the execution of any evidence of indebtedness or security
or other writing in connection therewith, (e) all books, records, ledger cards
and invoices relating thereto, (f) all evidences of the filing of financing
statements and other statements and the registration of other instruments in
connection therewith and amendments thereto, notices to other creditors or
secured parties, and certificates from filing or other registration officers,
(g) all credit information, reports and memoranda relating thereto and (h)
all
other writings related in any way to the foregoing.
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“Records”
shall mean records, documents and files, including files pertaining to Product
Registrations, Intellectual Property, drug master files, correspondence with
the
FDA and other Governmental Authorities, validation documents and data, market
studies, sales histories
and
quality control histories, accounting records, sales records,
suppliers
lists, price lists, forecasts,
market studies,
customer service and inquiry or complaint records, laboratory notebooks, quality
assurance/control procedures and records, product and raw material
specifications, regulatory compliance filings and other regulatory records,
product operation manuals and instructions, standard operating procedures and
written medical records,
and in
each case whether now existing or owned or hereafter arising or acquired, in
any
media form, whether or not tangible, including, without limitation, any paper
or
electronic form; provided,
that,
notwithstanding any provision in this Agreement to the contrary, Borrower shall
not deliver to Lender any Records the delivery of which would violate applicable
patient privacy laws or contractual provisions or written policies or protocols
governing the conduct of clinical trials.
“Sublicense”
shall mean the Sublicense Agreement dated October 28, 1996, between Xxxxxxx
& Xxxxxxx and Ortho Pharmaceutical Corporation, as licensors, and Borrower
(as successor to Acute Therapeutics, Inc.), as licensee (including any
amendment, restatement, replacement, etc., thereof).
“Trademarks”
shall mean all of the following whether now owned or hereafter acquired:
(a) all trademarks, service marks, trade names, corporate names, company
names, business names, fictitious business names,
trade
styles, trade dress, logos, other source or business identifiers, designs and
general intangibles of like nature, all registrations and recordings thereof,
and all registration and recording applications filed in connection therewith,
including registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States or any similar
offices in any other country or any political subdivision thereof, and all
extensions or renewals thereof, including, without limitation, those listed
on
Schedule
3(e)(iv)
attached
hereto, (b) all income, fees, royalties, damages, claims and payments now or
hereafter due or payable with respect thereto, including, without limitation,
damages and payments for past, present or future infringements thereof,
(c) all goodwill associated therewith or symbolized thereby, and
(d) all other assets, rights and interests that uniquely reflect or embody
such goodwill.
“UCC”
shall mean the Uniform Commercial Code as in effect on the date hereof and
as in
effect from time to time in the State of Delaware.
All
capitalized terms not expressly defined herein shall have the meanings set
forth
in the Loan Agreement.
2. Grant
of Security Interests.
As
security for the prompt and complete payment and performance of all of the
Obligations, Borrower does hereby pledge and hypothecate unto Lender, and does
hereby grant to Lender a continuing security interest of first priority (except
as otherwise provided in this Agreement and the Loan Agreement) in, all of
the
right, title, and interest of Borrower in, to, and under the Collateral. For
the
avoidance of doubt, the Collateral described in this Agreement includes the
Collateral as defined in the Amended and Restated Security Agreement (the
“Existing
Collateral”).
This
Agreement shall not constitute a novation and Borrower and Lender acknowledge
that it is the intent of the parties that Lender maintains a continuous
perfected first priority security interest in all Existing Collateral pursuant
to the Original Security Agreement, the Amended and Restated Security Agreement
and this Agreement.
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3. Representations
and Warranties of Borrower.
Borrower represents and warrants to Lender, as of the Restatement Date, as
follows:
(a) The
execution and delivery by Borrower of this Agreement and the financing
statements described herein (collectively, the “Security
Documents”),
and
the performance of the terms and obligations therein, are within Borrower’s
corporate powers and have been duly authorized by all necessary corporate action
on the part of Borrower. The Security Documents have been duly executed and
delivered by Borrower and constitute valid and legally binding obligations
of
Borrower enforceable against Borrower in accordance with their terms except
as
such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting the enforcement of creditors’
rights generally and as to limitations on the enforcement of the remedy of
specific performance and other equitable remedies.
(b) Borrower
is the owner or licensee of the Collateral and has good, valid and marketable
title to the Collateral (or,
in
the case of leased or licensed property, sufficient rights therein to perform
its obligations under this Agreement),
free
and clear of all Liens except for those in favor of Lender and Permitted
Liens.
(c) Except
for the filing of financing statements with the State of Delaware and, only
in
the case of any Patent and Trademark matters, filings with the United States
Patent and Trademark Office (“PTO”)
and,
only in the case of any Copyright matters, filings with the United States
Copyright Office (“Copyright
Office”),
necessary to perfect the security interests created hereunder, no authorization,
approval, or other action by, and no notice to or filing with, any U.S.
Governmental Authority is required either for the grant by Borrower of the
security interest hereunder or for the execution, delivery, or performance
of
this Agreement by Borrower or, assuming compliance by Lender with the
requirements set forth in the UCC or imposed on Lender by the PTO or Copyright
Office with respect to attachment and perfection of security interests, for
the
perfection of such security interest or the exercise by Lender of its rights
hereunder to the Collateral located in the U.S., except for those elements
of
Collateral that constitute monies or Deposit Accounts. Upon the execution of
this Agreement and the completion of such filings in compliance with all
applicable legal requirements, Lender will have a perfected security interest
in
the Collateral located in the U.S. (other than those elements of Collateral
that
constitute monies or Deposit Accounts) prior to all other Liens except Permitted
Liens.
(d) Neither
the execution or delivery by Borrower of the Security Documents, nor the
performance of their respective terms and obligations, will: (i) violate
Borrower’s charter or bylaws; (ii) constitute a material breach or default under
any agreement or instrument to which Borrower is a party or by which Borrower
is
bound; (iii) violate any applicable law, rule or regulation; or (iv) violate
any
order, writ, injunction, decree or judgment of any court or governmental
authority applicable to or binding upon Borrower.
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(e) Set
forth
on Schedule
3(e)(i)
attached
hereto is a true and complete list of all Patents owned by Borrower (including
patent/application number, jurisdiction, and brief description). Set forth
on
Schedule
3(e)(ii)
attached
hereto is a true and complete list of all Patents licensed by Borrower from
any
third party (including patent/application number, owner/licensor, jurisdiction,
and brief description) and a brief description of the license agreement. Set
forth on Schedule
3(e)(iii)
attached
hereto is a true and complete list of any Contracts or agreements to which
Borrower is a party and under which Borrower licenses any Patents, or other
Intellectual Property, to or from any third party, which is not set forth on
Schedule
3(e)(ii).
Set
forth on Schedule
3(e)(iv)
attached
hereto is a true and complete list of Trademarks owned by Borrower (including,
if applicable, trademark/application number, jurisdiction, and a brief
description). Set forth on Schedule
3(e)(v)
attached
hereto is a true and complete list of all material Product Registrations. On
each schedule prepared pursuant to this clause (e), items that constitute
Intellectual Property relating to the Product have been clearly identified
as
such.
(f) The
representations and warranties contained in Article IV of the Loan Agreement
are
true and correct in all material respects.
4. Transfer
of Collateral and Other Liens.
The
provisions of Sections 6.02 and 6.04 of the Loan Agreement are hereby
incorporated herein by reference.
5. Other
Financing Statements.
Borrower represents and warrants with Lender that, except for the financing
statements filed by Borrower in connection with the Original Security Agreement
and the Amended and Restated Security Agreement and as set forth on Schedule
5
attached
hereto, there exists no financing statement (or similar statement or instrument
of registration under the law of any jurisdiction) in the United States or,
to
Borrower’s knowledge, outside the United States covering or purporting to cover
any security interest of any kind in the Collateral. Borrower covenants to
Lender that it will not execute or authorize to be filed in any public office
any financing statement (or similar statement or instrument of registration
under the law of any jurisdiction), or file any amendment to any financing
statement listed on Schedule
5
not
permitted by the Loan Agreement, relating to the Collateral, as applicable,
except financing statements (or similar statements or instruments of
registration under the law of any jurisdiction) filed or to be filed in respect
of Permitted Liens and financing statements covering the security interests
granted to Lender by Borrower.
6. Further
Assurances.
(a) Borrower,
upon reasonable request of Lender, will promptly deliver and execute or cause
to
be delivered and executed, in form and content satisfactory to Lender, any
financing, continuation, termination, or security interest filing statements,
security agreement, assignment, or other document or instrument as Lender may
reasonably request in order to perfect, preserve, maintain, or continue the
perfection of Lender’s security interest in the Collateral, or its priority,
including without limitation any document or instrument necessary to record
Lender’s security interest in any state or county of any state, the United
States Patent and Trademark Office or the United States Copyright Office.
Borrower will pay the reasonable costs of filing any financing, continuation,
termination, or security interest filing statement, assignment or other document
or instrument as well as any recordation or transfer tax required by law to
be
paid in connection with the filing or recording thereof. Without limiting the
foregoing, Lender is hereby authorized to file one or more financing statements,
continuation statements, or other documents for the purpose of perfecting or
continuing the security interest granted by Borrower, without the signature
of
Borrower, and naming Borrower as debtor and Lender as secured party;
provided,
that
Lender shall provide copies of all such documents to Borrower. Lender
acknowledges that it has no present intention to file or record any security
interest financing statements or other documents or instruments in any
jurisdiction outside the United States and agrees to discuss any action
otherwise with Borrower prior to taking such action.
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(b) Borrower
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to Lender from time to time such lists, descriptions and designations
of
its Collateral, documents of title, vouchers, invoices, schedules, confirmatory
assignments, conveyances, financing statements, transfer endorsements, powers
of
attorney, certificates, reports and other assurances or instruments and take
such further steps relating to the Collateral and other property or rights
covered by the security interest hereby granted, as reasonably requested by
Lender or which is necessary to perfect, preserve or protect its security
interest in the Collateral.
(c) (i)
Upon
the irrevocable payment in full of all Obligations, the security interest of
Lender in the Collateral shall terminate. In connection with such termination,
Lender shall, at the request and expense of Borrower, promptly, and in no event
later than ten (10) Business Days thereafter, execute and deliver to Borrower
all UCC termination statements and similar documents that Borrower shall
reasonably request to evidence such termination or release,
including without limitation any document or instrument necessary to record
the
termination or release of Lender’s security interest in any state or county of
any state, the United States Patent and Trademark Office or the United States
Copyright Office.
Any
execution and delivery of UCC termination statements and similar documents
pursuant to this Section 6(c) shall be without recourse to or warranty by
Lender. If Lender shall fail to provide such documents within ten (10) Business
Days following payment of all Obligations, Borrower may file one or more UCC
termination statements in accordance with the UCC or other documents required
by
the PTO or Copyright Office to terminate the security interest granted by
Borrower to Lender under this Agreement, in each case naming Lender as secured
party; provided,
that
Borrower shall provide copies of all such documents to Lender.
(d) Borrower
agrees that it shall use its commercially reasonable best efforts to
negotiate terms of any future license, Contract or agreement to which it is
a
party, including without limitation any Collaboration Arrangement (as defined
in
Section 13(b)), that will not prohibit, or be breached by, the inclusion of
such
future license, Contract or agreement in the Collateral.
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7. Additional
Agreements.
(a) Insurance.
Borrower shall maintain in full force and effect insurance with sound and
reputable insurance companies of the types and in the amounts that Borrower
reasonably believes is adequate for its business, including, but not limited
to,
insurance covering all real and personal property owned or leased by Borrower
against all risks customarily insured against by similarly situated
companies.
(b) Ownership
and Maintenance of the Collateral.
Borrower shall, subject to normal wear and tear, keep all tangible Collateral,
if any, in good condition. Borrower shall defend the Collateral against all
claims and demands of all persons at any time claiming any interest therein
adverse to Lender. Except for Permitted Liens, Borrower shall not make or permit
to be made an assignment for security, pledge, or hypothecation of any of the
Collateral or shall grant any other Lien in respect of the Collateral other
than
the security interest securing the Obligations. Notwithstanding the foregoing,
Borrower
may transfer or otherwise dispose of any of its assets or properties
in
the
ordinary course of business in any transaction permitted by the Loan
Agreement.
(c) Taxes.
Borrower shall pay as and when due and payable all taxes, levies, license fees,
assessments, and other impositions levied on the Collateral or any part thereof
for its use and operations, except for all taxes, levies, license fees,
assessments, and other impositions levied on the Collateral which are being
contested by Borrower in good faith.
(d) Litigation
and Proceedings.
Borrower shall commence and diligently prosecute in its own name, as the real
party in interest, for its own benefit, and at its own expense, such suits,
administrative proceedings, or other actions for infringement or other damages
as are necessary to protect the Collateral,
if
failure to prosecute such proceedings would have a
Material
Adverse Effect. Borrower shall provide to Lender any information with respect
thereto reasonably requested by Lender.
8. Power
of Attorney.
Borrower hereby appoints Lender as Borrower’s true and lawful attorney, with
full power of substitution, to do any or all of the following, in the name,
place, and stead of Borrower, as the case may be: (a) file an abstract of this
Agreement (or, if required by law or regulation, this Agreement) or any other
document describing Lender’s interest in the Collateral with any appropriate
governmental office (including, without limitation, the State of Delaware or
any
political subdivision thereof and the United States Patent and Trademark Office
or the United States Copyright Office); and (b) following an Event of Default
that has occurred and is continuing and not cured prior to the expiration of
any
applicable cure or grace periods set forth in the Loan Agreement, (i) endorse
Borrower’s name on all applications, documents, papers, and instruments
necessary for Lender to use or maintain the Collateral, as applicable; (ii)
ask,
demand, collect, xxx for, recover, impound, receive, and give acquittance and
receipts for money due or to become due under or in respect of any of the
Collateral; (iii) file any claims or take any action or institute any
proceedings that Lender may deem necessary or desirable for the collection
of
any of the Collateral, or otherwise enforce Lender’s rights with respect to any
of the Collateral; (iv) assign, pledge, convey, or otherwise transfer title
in
or dispose of the Collateral, to any person; and (v) take any action and execute
any instrument that Lender may deem necessary or advisable to accomplish the
purposes of this Agreement.
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9. Right
to Inspect.
Section
6.07(b) of the Loan Agreement is hereby incorporated by reference and made
a
part hereof (mutatis
mutandis).
10. Name
of Borrower, Place of Business, and Location of Collateral.
Borrower represents and warrants that its correct legal name is as specified
on
the signature lines of this Agreement, and each legal or trade name of Borrower
for the previous seven (7) years (if different from Borrower’s current legal
name) is as specified below the signature lines of this Agreement. Without
the
prior written notice to Lender of at least fifteen (15) Business Days, Borrower
will not change its name, change its state of incorporation, dissolve, merge,
or
consolidate with any other person; provided,
that
Borrower shall not be required to make any disclosure to Lender hereunder that
constitutes material non-public information. Borrower represents and warrants
that its state of incorporation is as specified in the preamble to this
Agreement and that the address of its chief executive office is as specified
below the signature lines of this Agreement. The Collateral and all books and
records pertaining thereto will be located at Borrower’s chief executive office
specified below or at a location of Borrower set forth on Schedule 10. Borrower
may establish a new location for the Collateral or any part thereof, or the
books and records concerning the Collateral or any part thereof, only if (a)
it
shall have given to Lender prior written notice of its intention so to do,
clearly describing such new location and providing such other information in
connection therewith as Lender may reasonably request, and (b) with respect
to
any such new location, it shall have taken all action necessary to be taken
by
Borrower to maintain the security interest of Lender in the Collateral intended
to be granted hereby at all times in full force and effect and, if such new
location is in the United States, fully perfected; provided,
that
Borrower shall not be required to make any disclosure to Lender hereunder that
constitutes material non-public information.
11. Rights
and Remedies upon Default.
(a) Borrower
agrees that, if any Event of Default (as defined in the Loan Agreement) shall
have occurred and is continuing and not cured prior to the expiration of any
applicable cure or grace periods set forth in the Loan Agreement, then and
in
every such case, Lender, in addition to any rights now or hereafter existing
under applicable law, and upon written notice to Borrower, shall have all rights
as a secured creditor under the UCC in all relevant jurisdictions and
may:
(i)
personally,
or by agents or attorneys, immediately take or retake possession of the
Collateral or any part thereof;
(ii)
instruct
the obligor or obligors on any agreement, instrument or other obligation
constituting the Collateral to make any payment required by the terms of such
agreement, instrument or obligation directly to Lender;
10
(iii)
sell,
assign or otherwise liquidate, or direct Borrower to sell, assign or otherwise
liquidate, any or all of the Collateral or any part thereof, and take possession
of the proceeds of any such sale or liquidation; and
(iv) take
possession of the Collateral or any part thereof by directing Borrower in
writing to deliver the same to Lender at any place or places designated by
Lender; it being understood that Borrower’s obligation so to deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, Lender shall be entitled
to a decree requiring specific performance by Lender of said
obligation.
(b) In
the
event that an Event of Default has occurred and is continuing and not cured
prior to the expiration of any applicable cure or grace periods set forth in
the
Loan Agreement, Borrower shall pay on demand all reasonable costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred
by or on behalf of Lender (i) in enforcing the Obligations, and (ii) in
connection with the taking, holding, preparing for sale or other disposition,
selling, managing, collecting, or otherwise disposing of the Collateral. All
of
such costs and expenses (collectively, the “Liquidation
Costs”)
together with interest thereon at the interest rate specified in the Note,
from
the date of payment until repaid in full, shall be paid by Borrower to Lender
on
demand and shall constitute and become a part of the Obligations secured hereby.
Any proceeds of sale or other disposition of the Collateral will be applied
by
Lender to the payment of Liquidation Costs, and any balance of such proceeds
will be applied by Lender to the payment of the remaining Obligations in such
order and manner of application as Lender may determine. Borrower hereby grants
to Lender, as security for the full and punctual payment and performance of
the
Obligations, a continuing security interest in and lien on all now or hereafter
existing balances, credits, accounts, deposits, and all other sums credited
by,
maintained with, or due from Lender or any affiliate of Lender to Borrower;
and
regardless of the adequacy of any Collateral or other means of obtaining
repayment of the Obligations, Lender may at any time and without notice to
Borrower set off the whole or any portion or portions of any or all such
balances, credits, accounts, deposits, and other sums against any and all of
the
Obligations.
(c) If
the
sale or other disposition of the Collateral fails to satisfy in full the
Obligations, Borrower shall remain liable to Lender for any deficiency.
12. Remedies
Cumulative.
Each
right, power, and remedy of Lender as provided for in this Agreement or now
or
hereafter existing at law or in equity or by statute or otherwise shall be
cumulative and concurrent and shall be in addition to every other right, power,
or remedy provided for in this Agreement or now or hereafter existing at law
or
in equity or by statute or otherwise, and the exercise or beginning of the
exercise by Lender of any one or more of such rights, powers, or remedies shall
not preclude the simultaneous or later exercise by Lender of any or all such
other rights, powers, or remedies.
13. Amendments,
Etc.
(a) No
amendment or waiver of any provision of this Agreement, nor consent to any
departure by Borrower herefrom, shall in any event be effective unless the
same
shall be in writing and signed by Borrower and Lender, and then such waiver
or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
11
(b) In
the
event that Borrower believes that it is necessary to amend the terms of this
Agreement to facilitate a Collaboration Arrangement (as defined below) that
Borrower believes is in the best interests of Borrower, then Borrower may
present in writing to Lender for Lender’s consent (which consent shall not be
unreasonably withheld) (i) a summary of the material terms and conditions of
the
proposed Collaboration Arrangement and (ii) the form of the proposed amendment.
Lender shall respond to Borrower’s request as promptly as reasonably practicable
but in any event within fifteen (15) Business Days. “Collaboration Arrangement”
shall mean any future contract, agreement or other arrangement between Borrower
and any other party whereby Borrower grants or transfers any rights to such
party with respect to development or commercialization of the
Product,
or any
portion or component thereof, or any other similar, comparable, or related
contract, agreement, or arrangement.
14. Notices.
All
notices and other communications provided for hereunder shall be in writing,
shall specifically refer to this Agreement, shall be addressed to the receiving
party’s address set forth below or to such other address as a party may
designate by notice hereunder and shall be deemed to have been sufficiently
given for all purposes if (a) mailed by first class certified or registered
mail, postage prepaid, (b) sent by nationally recognized overnight courier
for
next business day delivery, (c) personally delivered, or (d) made by telecopy
or
facsimile transmission with confirmed receipt.
If
to
Lender:
PharmaBio
Development Inc.
0000
Xxxxxxxxxx Xxxxx
Xxxxxxxxxx
Xxxx., Xxxxx 000
Xxxxxx,
XX 00000
Attention:
President
Facsimile:
(000) 000-0000
with
a
copy to:
Smith,
Anderson, Blount, Dorsett, Xxxxxxxx & Xxxxxxxx, L.L.P.
0000
Xxxxxxxx Xxxxxxx Xxxxxx
Xxxxxxx,
XX 00000
Attention:
Xxxxxxxxxxx X. Xxxxx
Facsimile:
(000) 000-0000
If
to
Borrower:
Discovery
Laboratories, Inc.
0000
Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn:
Chief Executive Officer and General Counsel
Facsimile:
(000) 000-0000
12
with
a
copy to:
Xxxxxxxxx
Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
XX 00000-0000
Attention:
Xxx X. Xxxxx
Facsimile:
(000) 000-0000
15. No
Waiver; Remedies.
No
failure on the part of Lender to exercise, and no delay in exercising, any
right
hereunder or under the Loan Agreement or the Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude
any
other or further exercise thereof or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
16. Binding
Effect; Assignment.
This
Agreement shall be binding upon and inure to the benefit of Borrower and Lender
and their respective successors and permitted assigns, provided that (i)
Borrower may not assign or transfer any or all of its rights or obligations
under the Security Documents, and (ii) Lender may not assign or transfer any
or
all of its rights or obligations under the Security Documents except in
connection with an assignment or transfer of the Loan Agreement pursuant to
the
terms of the Loan Agreement. Any assignment or attempted assignment in violation
of this Section 16 shall be null and void.
17. Severability.
To the
extent any provision of this Agreement is prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
18. Entire
Agreement.
This
Agreement and the other Loan Documents and Security Documents embody the entire
agreement and understanding between the parties hereto and supersede all prior
oral or written agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or agreement of any
kind not expressly set forth in the Loan Documents and Security Documents shall
affect, or be used to interpret, change or restrict, the express terms and
provisions of the Loan Documents and Security Documents.
19. Further
Action.
Each
party shall, without further consideration, take such further action and execute
and deliver such further documents as may be reasonably requested by the other
party to carry out the purposes and provisions of the Security
Documents.
20. Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed to be an original and all of which, when taken together, shall constitute
one and the same instrument. This Agreement may be executed and delivered by
telecopy or facsimile transmission and any execution by such means shall be
deemed an original.
13
21. Governing
Law.
This
Agreement, including, without limitation, the interpretation, performance,
enforcement, breach or termination thereof and any remedies relating thereto,
shall be governed by and construed in accordance with the laws of the State
of
Delaware, United States of America, as applied to agreements executed and
performed entirely in the State of Delaware, without regard to conflicts of
law
rules.
22. Internal
Review.
Section
8.14 of the Loan Agreement is hereby incorporated by reference and made a part
hereof (mutatis
mutandis).
23. Arbitration.
Section
8.15 of the Loan Agreement is hereby incorporated by reference and made a part
hereof (mutatis
mutandis).
[Rest
of page intentionally left blank; signatures on following
page]
14
[Signature
page to
Second Amended and Restated
Security
Agreement]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective duly authorized officers, as of the date first
above written.
| BORROWER: | |
| DISCOVERY LABORATORIES, INC. | |
| By: /s/ Xxxx X Xxxxxx | |
| Name: Xxxx X Xxxxxx | |
| Title: Executive Vice President and Chief Financial Officer |
Address
of chief executive office of Borrower
Discovery
Laboratories, Inc.
0000
Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Attn:
Chief Executive Officer and General Counsel
| LENDER | |
| PHARMABIO DEVELOPMENT INC. | |
| d/b/a NOVAQUEST | |
| By: /s/ Xxx Xxxxxxx | |
| Name: Xxx Xxxxxxx | |
| Title: Senior Vice President, Corporate Development |
15
Schedules
16
