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Exhibit No. 10.130
SECURITY AGREEMENT dated October 31, 1997 made by ECOGEN INC.,
a Delaware corporation (the "Company"), ECOGEN INVESTMENTS INC., a Delaware
corporation ("E-Investments"), and ECOGEN-BIO INC., a Delaware corporation
("E-BIO, and together with the Company and E-Investments, the "Debtors" and
individually, a "Debtor") , in favor of UNITED EQUITIES (COMMODITIES) COMPANY, A
New York general partnership ("Secured Party").
R E C I T A L S
A. Debtors are parties to a certain Convertible Note Purchase
Agreement dated October 31, 1997 (the "Purchase Agreement") among Debtors and
Secured Party, under which Debtors have agreed to issue and sell to Secured
Party a $3,037,333.33 on 8% convertible promissory note due October 31, 2002
(the "Note"). The Purchase Agreement, the Note, this Agreement and any PIK Notes
issued from time to time pursuant to the terms of the note and each other
agreement and instrument to be issued to or entered into by Debtors under the
Purchase Agreement are hereinafter collectively referred to as the "Purchase
Documents" and individually as a "Purchase Document."
B. It is a condition precedent of the purchase of the Note by
Secured Party pursuant to the Purchase Agreement that Debtors execute and
deliver this Security Agreement to Secured Party, to secure the obligations of
Debtor to Secured Party under the Purchase Documents.
Accordingly, in consideration of the foregoing Recitals and
the purchase of the Note by Secured Party pursuant to the Purchase Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by Debtors, Debtors hereby, jointly and severally
agree, with Secured Party as follows:
1. DEFINED TERMS.
(a) As used in this Security Agreement, the
following terms shall have the following meanings:
"Accounts" means any "accounts," as such term is
defined in Section 9-106 of the Code, now or hereafter owned, acquired or held
by any Debtor and, in any event, shall mean and include, but not be limited to,
any and all accounts, accounts receivable, contract rights, book debts, notes,
drafts, acceptances and other forms of obligations now owned, acquired or held
or hereafter received or acquired by or belonging or owing to such Debtor
(including under any trade names, styles or divisions thereof), whether arising
out of goods sold, rented or leased and/or services rendered by such
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Debtor or from any other transaction, whether or not the same involves the sale
of goods or services by such Debtor (including, without limitation, any such
obligation which might be characterized as an account or contract right under
the Code in effect in any jurisdiction) and each and all of the rights in, to
and under all purchase orders, instruments, receipts and other documents now
owned, acquired or held or hereafter acquired or received by such Debtor
evidencing obligations for or in respect of goods sold or leased and/or services
rendered, and all of such Debtor's rights in and to any goods represented by any
of the foregoing (including unpaid seller's rights of rescission, replevin,
reclamation and stopping in transit and rights to returned, reclaimed or
repossessed goods), and all monies due or to become due to such Debtor under all
contracts for the sale, rental or lease of goods and/or the performance of
services by such Debtor (whether or not yet earned by performance on the part of
such Debtor) or in connection with any other transaction, now in existence or
hereafter arising, including, without limitation, the right to receive the
Proceeds of such purchase orders and contracts, and all collateral security and
guarantees of any kind given by any person with respect to any of the foregoing.
"Capitalized Equipment" shall mean Equipment subject to a
Capital Lease (as defined in the Note) including, without limitation, Equipment
subject to the Master Equipment Lease Agreement between the Company and FINOVA
Technology Finance Inc. f/k/a Financing for Science International, Inc. dated
April 14, 1995.
"Chattel Paper" means any "chattel paper," as such term is
defined in Section 9-105(1) (b) of the Code, now or hereafter owned, acquired or
held by an Debtor.
"Code" means the Uniform Commercial Code as the same may be in
effect in the State of New York from time to time.
"Collateral" means collectively, (i) all present and after
acquired personal property of any Debtor, including, without limitation, all
money now or hereafter in the possession of such Debtor, all monetary deposit
accounts of Debtor with banks and other Persons at any time established or
maintained and all credit balances at any time outstanding in such accounts, all
insurance policies and contracts now or hereafter owned, acquired or held by
such Debtor and any interest in policies or contracts as owner, insured or
beneficiary at any time owned, acquired or held, all Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments, Inventory and Records
and (ii) all products and Proceeds of or under any of the foregoing; provided,
however, that notwithstanding the foregoing, the term "Collateral" shall not
include the Excluded Assets.
"Designated Technology" shall mean any rights the Debtors may
have with respect to United States Patent Application No. 08/087,388 relating to
the Bacillus thuringiensis Cry 1F gene and its related international
counterparts and any proceedings related to such patent application including,
without limitation, any patent interference proceeding before the United States
Patent and Trademark Office.
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"Documents" means any "documents," as such term is defined in Section
9-105(1) (f) of the Code, now or hereafter owned by an Debtor and, in any event,
shall mean and include, but shall not be limited to, all documents of title now
or hereafter owned, acquired or held by such Debtor.
"Equipment" means any "equipment, " as such term is defined in Section
9-109(2) of the Code, now or hereafter owned by an Debtor and, in any event,
shall mean and include, but shall not be limited to, all machinery, equipment,
furnishings and motor vehicles now or hereafter owned by such Debtor, including,
without limitation, all items or machinery and equipment of any kind, nature and
description, including, without limitation, electronic data processing equipment
and peripheral equipment, laboratory, scientific and analytical equipment,
whether affixed to real property or not, and all office furnishings and
furniture, and any and all additions to, substitutions for, accessions to and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts (including spare parts), equipment and
accessories installed thereon or affixed thereto and all fuel for any thereof.
"Excluded Assets" shall mean the Capitalized Equipment, Designated
Technology, First Union Collateral, and Pheromone Assets.
"First Union Collateral" shall mean the property which is subject to
the Pledge and Security Agreement between Ecogen Investments Inc. and First
Union National Bank dated July 17, 1996.
"General Intangibles" means any "general intangibles," as such term is
defined in Section 9-106 of the Cod, now or hereafter owned by any Debtor and,
in any event, shall mean and include, but not be limited to, all customer lists,
trademarks, service marks, copyrights, computer software and manuals, trade
secrets, proprietary information, microbiological information and data, chemical
formulae and compounds, scientific documents, technology, know-how, research and
development information and data, whether recorded on paper or on electronic
data processing media, biological specimens, the rights of such Debtor as Lessee
under capital and operating leases (but not the obligations or liabilities under
such leases), tax refunds, patents, patent, trademark and copyright
applications, rights in intellectual property, licenses, partnership and other
ownership interests in a general or limited partnership and/or a limited
liability company, limited liability partnership, joint venture or other Person
not represented or evidenced by a certificate, including an uncertificated
security and permits now or hereafter owned, acquired or held by such Debtor.
"Instruments" means any "instrument," as such term is defined in
Section 9-105(i) of the Code, now or hereafter owned, acquired or held by an
Debtor of record and/or beneficially, and, in any event, shall mean and include,
but not be limited to, all checks, drafts, negotiable instruments and securities
(certificated and uncertificated) now or hereafter owned, acquired or held by
any or all of Debtors.
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"Inventory" means any "inventory," as such term is defined in Section
9-109(4) of the Code, now or hereafter owned by an Debtor and, in any event,
shall mean and include, but not be limited to, all inventory, merchandise, goods
and other personal property now or hereafter owned by such Debtor which is held
for sale, rental or lease or is furnished or is to be furnished under a contract
of service or which constitutes raw materials, work in process or materials used
or consumed or to be used or consumed in business of any of Debtors, or the
processing, packaging, delivery or shipping of the same, and all finished goods.
"Obligations" means (i) all liabilities, obligations, covenants,
agreements, representations and warranties of Debtors, jointly and/or severally,
to Secured Party under or pursuant to each and all of the Purchase Documents, as
any such Purchase Document may be, modified, amended, supplemented, extended,
renewed, refunded or refinanced from time to time, whether or not such
liabilities or obligations are now outstanding or are hereafter incurred or
suffered, and whether or not absolute, contingent, due or to become due, matured
or unmatured, liquidated or unliquidated; (ii) all future advances made by
Secured Party for the maintenance, protection, preservation or enforcement of,
or realization upon the Collateral or any portion thereof, together with
interest at the Default Rate accrued thereon; and (iii) any and all reasonable
costs and expenses, including costs and expensed of collection, paid or incurred
by Secured Party in connection with the collection of the liabilities and
obligations referred to in clauses (i) and (ii) above and in connection with the
enforcement of realization upon any or all of the Collateral or the security
interests of Secured Party therein or in connection with the taking of any other
action permitted by this Agreement.
"Pheromone Assets" shall mean all property of the Debtors, including,
without limitation, all Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Instruments, Inventory and Records relating to: (a) the Debtors'
insect pheromone business, operations, products or technology including, without
limitation, the Debtors' (i) NoMate product line and technology, (ii) BeeScent
product line and technology, (iii) Scentry insect trap and lure product line and
technology, and (iv) Compel product line and insect feeding stimulant
technology; and (b) the assets acquired by the Company from Scentry, Inc. on or
about September 16, 1997.
"Proceeds" shall mean all "proceeds," as such term is defined in
Section 9-306(1) of the Code and, in any event, shall mean and include, but not
be limited to, the following at any time whatsoever arising or receivable: (i)
whatever is received upon any collection, exchange, sale, rental, lease, license
or other disposition of any of the Collateral, and any property into which any
of the Collateral is converted, either cash or non-cash proceeds; (ii) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to any or
all of Debtors from time to time with respect to any of the Collateral; (iii)
any and all payments (in any form whatsoever) made or due and payable to Debtors
from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority or any person acting under color of any governmental
authority); (iv) any claim
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of any or all of Debtors against third parties (A) for past, present or future
infringement of or dilution of any patent, copyright or other intellectual
property right or any license of any such rights, or (B) for past, present or
future infringement of or dilution of any trademark or service ▇▇▇▇ or any
trademark or service ▇▇▇▇ license or for injury to the goodwill associated with
any trademark, trademark or service ▇▇▇▇ registration or trademark or service
▇▇▇▇ licensed under any trademark or service ▇▇▇▇ license; and (v) any and all
other amounts from time to time paid or payable under or in connection with any
of the Collateral.
"Records" means all files, books, records and data of Debtors
now existing or hereafter created in any way pertaining to or reflecting
Accounts, Chattel Paper, Documents, Equipment, General Intangibles, Instruments
and Inventory and the products and Proceeds of or under any of the foregoing,
and however recorded or maintained, whether maintained on paper or electronic
data processing media.
(b) Capitalized terms used in this Agreement without
definition will have the definitions assigned to those terms in the Purchase
Agreement or the Note. Any defined terms used herein in the singular shall
include the plural, and vice versa.
2. GRANT OF SECURITY INTEREST. To secure the full and timely
payment, observance and performance when due of the Obligations in accordance
with the terms thereof and of the respective instruments or agreements now or
hereafter evidencing the Obligations or pursuant to which the Obligations are
issued, each Debtor hereby grants, assigns, conveys and transfers to, and
creates in favor of, Secured Party a continuing security interest in, and Lien
upon, all of such Debtor's right, title and interest in, to and under the
Collateral.
3. COVENANTS OF DEBTOR. Debtors hereby, jointly and severally,
covenant with Secured Party, as follows:
(a) This Agreement creates in favor of Secured Party a valid
and enforceable security interest in and to the Collateral. Each Debtor has
executed and delivered to Secured Party one or more financing statements
pursuant to the Code. At the written request of Secured Party one or more
additional financing statements pursuant to the Code to perfect Secured Party's
security interest in the Collateral. Consistent with the foregoing, Secured
Party may prepare and file financing statements and continuation statements
signed only be Secured Party covering the Collateral and, in jurisdictions where
a Debtor's signature is required, may execute such financing statements in the
name of such Debtor. Debtors, jointly and severally, promise to pay to Secured
Party, on demand, all reasonable fees and expenses paid or incurred or to be
incurred by Secured Party in connection with filing such statements, which fees
and expenses until so paid by Debtors shall be part of the Obligations. The
addresses listed on Schedule A are all the locations where Collateral (including
the Records) is located.
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(b) Upon the filing of the financing statements referred to in Section
3(a) in the public offices and jurisdictions set forth in Schedule A, the
security interest created by this Security Agreement will constitute a valid and
continuing perfected security interest in all of right, title and interest of
each and all of the Debtors in all the Collateral located in such jurisdictions
which is of the type for which filing such a financing statement can perfect
such a security interest described in such financing statements in favor of
Secured Party and prior to all other Liens, and is enforceable as such as
against creditors of and purchasers from Debtor and as against any owner of any
real property where any Equipment is located and as against any purchaser of
such real property and any present or future creditor obtaining a Lien on such
real property. All action reasonably necessary or desirable to protect and
perfect such security interest in each item of the Collateral has been or
promptly will be duly taken.
(c) Each Debtor has, and will have, until the Obligations have been
fully and indefeasibly paid and discharged, good and valid title to the
Collateral purported to be owned by it form time to time, free and clear of all
Liens, except for the Liens created hereby and Liens permitted by the Note.
Until the Obligations have been fully and indefeasibly paid and discharged,
Debtors will not create or suffer to exist any further Liens, on or with respect
to any of the Collateral; will execute and deliver any and all such further
instruments and documents and take such further action as Secured Party may
reasonably request to obtain the full benefit of this Security Agreement and of
the rights and powers granted herein; will defend the Collateral against all
claims and demands adverse to Secured Party, and will furnish further assurance
of title and do any other acts reasonably requested by Secured Party to maintain
the security interests created hereby in the Collateral as perfected security
interests therein.
(d) Except for any item of Collateral as to which a security interest
therein may be perfected by only by filing, and prior to the occurrence of an
Event of Default, Debtors may retain possession of the Collateral. Until the
Obligations have been fully paid and discharged, Debtors will not lease, rent,
sell, exchange, assign, loan or otherwise dispose f the Collateral or any part
thereof, without the prior written consent of Secured Party, except for a
disposition which, taken together with all prior dispositions, does not have a
material adverse effect on the value of the Collateral taken as a whole, and
provided, as to any such disposition, that no Event of Default or event which
with the lapse of time or the giving of notice or both would constitute such an
Event has occurred and is continuing prior to such disposition or would result
from the making of such disposition. Debtor will not move the Collateral to a
jurisdiction as to which Secured Party has not previously received, or in which
there is not on file in the appropriate public offices, duly executed and
completed financing statements, without giving Secured Party at least 60 days'
prior written notice thereof, provided that a Debtor may remove Inventory or
Equipment having an aggregate book value not in excess of $200,000 to such a
jurisdiction provided that such Debtor gives Secured Party notice thereof within
10 days after the date of removal and promptly delivers to Secured Party such
documents as Secured Party may reasonably request in order to subject such
removed Collateral to the Lien of this Security Agreement.
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(e) Debtors will not utilize any trade name, or change their respective
corporate names without giving Secured Party at least 60 days' prior written
notice thereof. The executive offices of the Company are located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and the executive offices of the other
Debtors is ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Each Debtor will
give Secured Party at least 60 days' prior written notice of any change in
location of its executive office. The original Records of each Debtor are, and
will continue to be, kept at such executive office, as the same may be changed
from time to time, subject to notification to Secured Party as aforesaid. Each
debtor will keep and maintain, at its own cost and expense, Records in form and
substance reasonably satisfactory to Secured Party, and will include in the
Records, without limitation, a record of all payments received and all credits
granted with respect to the Collateral and all other dealings with the
Collateral. If an Event of Default shall have occurred and be continuing, upon
demand by Secured Party, each Debtor shall turn over a duplicate set of the
Records pertaining to its business to Secured Party or its authorized
representative. Each Debtor shall permit any authorized representative of
Secured Party to inspect the Records during normal business hours and will, if
requested, provide photocopies thereof to Secured Party.
(f) Each Debtor will not (i) amend, modify, terminate or waive any
provision of any Receivable in any manner which could reasonably be expected to
materially adversely affect the value of the Collateral in the aggregate; or
(ii) fail to exercise promptly and diligently each and every material right
which it may have under each Receivable (other then any right of termination)
which could reasonably be expected to materially adversely affect the value of
the Collateral as a whole. If an Event of Default shall have occurred and be
continuing, such Debtor will not, without Secured Party's Prior written consent,
grant any extension of time of payment of any of the Receivables; compromise,
compound or settle the same for less than the full amount thereof; release,
wholly or partly, any Person liable for the payment thereof; or allow any credit
or discount whatsoever thereon, other than discounts, adjustments and allowances
and customary extensions granted in the normal course of business. Secured Party
authorizes each Debtor to collect the Receivables owned by it provided that such
collection is performed in a prudent and businesslike manner, and if a default
or Event of Default shall have occurred and be continuing, Secured Party may
curtail or terminate such authority at any time. Secured Party may at any time
following upon or following the occurrence of an Event of Default which is
continuing, notify account debtors with respect to Receivables and parties
obligated with respect to Instruments, that such Receivables and Instruments
have been assigned to Secured Party and that payments in respect thereof shall
be made directly to Secured Party. Upon the prior written request of Secured
Party upon or following the occurrence of an Event of Default which is
continuing, Debtor will so notify such account debtors and obligated parties.
Secured Party may at any time, in its own name or in the name of others,
communicate with account debtors and parties obligated on Receivables and
Instruments in order to verify with them, to Secured Party's satisfaction, the
existence, amount and terms of such Receivables and Instruments. If an Event of
Default shall have occurred and be continuing, Secured Party may require that
any Proceeds, when collected
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by a Debtor, whether consisting of checks, notes, drafts, bills of exchange,
money orders, commercial paper of any kind whatsoever, of other documents,
received in payment of any Account or in payment for any Instrument, Inventory
or other Collateral, shall be promptly delivered by such Debtor to Secured Party
in precisely the form received, except for such Debtor's endorsement when
required, to be held as additional cash Collateral hereunder or to be applied to
repayment of the Obligations as hereinafter provided, in the discretion of
Secured Party, and until so turned over shall be deemed to be held in trust by
such Debtor for and as Secured Party's property and shall not be commingled with
such Debtor's other funds.
(g) Each Debtor will furnish, in reasonable detail, to Secured
Party, upon prior request of Secured Party from time to time, statements and
schedules further identifying and describing the Collateral and other reports in
connection with the Collateral.
(h) Each Debtor will advise Secured Party promptly after
learning of any of the following, in reasonable detail, (i) of any Lien made or
asserted against any or all of the Collateral; (ii) of any material adverse
change in the composition of the Collateral; and (iii) of the occurrence of any
other event which would have an adverse effect on the aggregate value of the
Collateral or on the security interests created hereunder.
4. POWER OF ATTORNEY. Secured Party shall have the power, upon
and following the occurrence of an Event of Default which is continuing, to take
any action and to execute any instrument which Secured Party may deem necessary
or advisable to accomplish the purposes of this Security Agreement, including
but not limited to the following acts:
(a) To ask, demand, collect, ▇▇▇ for, recover, compromise,
receive and give acquittance and receipts for moneys due and to become due under
or in respect of any of the Collateral; and
(b) To receive, endorse and collect any drafts, checks, notes
or other instruments for the payment of moneys due under any Collateral; and
(c) To file any claims, take any action or institute any
proceedings which Secured Party may deem necessary for the collection of any of
the Collateral or otherwise to enforce the rights of Secured Party with respect
to any of the Collateral.
Each Debtor hereby irrevocably appoints Secured Party, any
each of its officers, as such Debtor's attorney-in-fact, with full power of
substitution, with full authority in the name of such Debtor, in the name of the
Secured Party or otherwise and in the place and stead of such Debtor, from time
to time in Secured Party's discretion, to do any and all things required to be
done to carry out the terms and accomplish the
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purposes of this Security Agreement as fully and effectually as such Debtor
could do, including, but not limited to, (x) the powers set forth above in
clauses (a) through (c), inclusive, of this Section 4 and (y) the power to sign
such Debtor's name to and to file any financing or continuation statements under
the Code with respect to the Collateral. The foregoing power of attorney is
coupled with an interest, shall be irrevocable until all of the Obligations are
indefeasibly paid and performed in full, and shall survive the winding-up,
dissolution, liquidation or other termination of existence of such Debtor. The
powers conferred upon Secured Party and its officers hereunder are solely to
protect its interests and shall not impose any duty upon it to exercise any
liability with respect thereto.
5. DEBTORS' FAILURE TO PERFORM. If any Debtor fails to perform
any covenant or agreement contained herein, Secured Party may, upon notice to
such Debtor, perform or cause performance of such covenant or agreement, but
shall be under no obligation to do so, and the reasonable expenses incurred by
Secured Party, by Debtors, on demand, together with interest thereon at the
Default Rate until full paid, and shall be deemed to be part of the Obligations
until so paid.
6. REMEDIES OF SECURED PARTY. Upon and following the occurrence
of an Event of Default which is continuing, Secured Party shall have the
following rights and remedies (to the extent permitted by applicable Law), in
addition to all rights and remedies of a secured party after default under the
Code, or in any evidence of indebtedness or agreement, whether existing on the
date hereof or hereafter entered into, between such Debtor and Secured Party,
Secured Party may at any time and from time to time, with or without judicial
process or the aid and assistance of others, enter upon any premises in which
any Collateral may be located and without resistance or interference by Debtors
take possession of the Collateral, and/or dispose of any Collateral on any such
premises, and/or require Debtors to assemble and make available to Secured Party
at the expense of Debtors any Collateral at any place and time designated by
Secured Party which is reasonably convenient to all parties, and/or remove any
Collateral from any such premises for the purpose of effecting sales or other
disposition thereof in accordance with the terms of this Agreement, and/or sell,
resell, lease, assign and deliver, grant options for or otherwise dispose of any
Collateral in its then condition or following any commercially reasonable
preparation or processing, at public or private sale or proceedings or otherwise
by one or more contracts, in one or more parcels, at the same or different
times, with or without having the Collateral at the place of sale or other
disposition, for cash and/or credit and upon any terms, at such place(s) and
time(s) and to such person(s), and with respect to each of the foregoing, in a
commercially reasonable manner as Secured Party deems best, all without demand,
notice or advertisement whatsoever, except where an applicable statute requires
commercially reasonable notice of sale or other disposition. Except where an
applicable statute requires a longer notification period, Debtors hereby agree
that the sending of five days' notice to the address of Debtors set forth in
this Security Agreement shall be deemed commercially reasonable notice thereof.
If any Collateral is sold by Secured Party upon credit or for future delivery,
Secured Party shall not be liable for the failure of the purchaser to pay for
same and in such event Secured
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Party may resell such Collateral. Secured Party may buy and Collateral at any
public sale, and if Collateral is of a type customarily sold in a recognized
market or is of a type which is the subject of widely distributed standard price
quotations, Secured Party may buy any Collateral at a private sale, and in each
case may make payment therefor by any means. Secured Party may apply the cash
proceeds actually received from any sale or other disposition of the Collateral
hereunder to the reasonable expenses of taking, holding, preparing for sale,
selling, leasing and the like; to reasonable attorneys' fees and all reasonable
legal, travel and other expenses which may be incurred by Secured Party in
attempting to enforce this Security Agreement; or in the prosecution or defense
of any action or proceeding related to the subject matter of this Security
Agreement; and then to the Obligations in such order and as to principal or
interest as Secured Party may desire. The Debtor shall remain liable for and
will pay Secured Party, on demand, any deficiency remaining, together with
interest thereon (which shall accrue at the Default Rate) and the balance of any
expenses unpaid, with any surplus to be paid to the Person entitled by law to
receive the same.
7. ELECTION OF REMEDIES; WAIVER. Secured Party's prior recourse
to any Collateral shall not constitute a condition of any demand, suit or
proceeding for payment or collection under the Obligations. No single or partial
waiver by Secured Party of any right, power or remedy which Secured Party may
have, shall operate as a waiver of any other right, power or remedy or of the
same right, power or remedy on a future occasion.
8. NO IMPAIRMENT OF OBLIGATIONS BY CERTAIN ACTIONS. Without the
necessity of any reservation of rights against Debtors, and without notice to or
further assent by any or all of the Debtors, the taking of any action referred
to in section 8(a) through (d) below shall not release or otherwise impair the
Obligations or the obligations of any or all of the Debtors hereunder:
(a) any demand for payment of any of the Obligations made by
Secured Party may be rescinded by Secured Party and any of the Obligations
continued;
(b) the Obligations, or the liability of any or all of the
Debtors or any other party upon of for any part thereof, or any collateral
security therefor held other than pursuant to this Security Agreement, or any
guaranty thereof, or right of offset with respect thereto, may, from time to
time, in whole or in part, be renewed, extended, amended, modified, compromised,
waived, surrendered or released by Secured Party;
(c) the Purchase Documents, or any of them, and any other
collateral security documents or guaranties or documents in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, by
Secured Party from time to time in accordance with their respective terms; and
(d) upon and following the occurrence of an Event of Default
which is continuing, any Collateral at any time held by Secured Party for the
payment of
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the Obligations may be sold, exchanged, waived, surrendered or released in
accordance with the terms hereof.
Secured Party shall have no obligation to protect, secure,
perfect or insure any Document, Instrument or Chattel Paper included in the
Collateral or any tangible property subject thereto at any time held as security
for the Obligations, other than the obligation to use reasonable care in the
custody of Collateral in its possession, but in respect of an Instrument or
Chattel Paper, Secured Party shall have no obligation to take any steps to
preserve rights against prior parties and no liability for failure to meet an
obligation imposed by Section 9-207(2) of the Code. Debtors hereby, jointly and
severally, waive any and all notice of the creation, renewal, extension or
accrual of any of the Obligations and notice of or proof of reliance by any
Debtor upon this Security Agreement. The Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Security Agreement. All dealings between Debtors or any of them
(whether direct or indirect), and Secured Party, shall likewise be conclusively
presumed to have been had or consummated in reliance upon this Security
Agreement. Debtors hereby, jointly and severally, waive diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon any
of them (whether direct or indirect) with respect to the Obligations or any of
the Collateral, or to or upon any other Person who is or may be obligated on or
with respect to the Obligations or any of the Collateral, with respect to the
same, except as otherwise specifically provided in the Purchase Documents.
9. AMENDMENT. No amendment, modification or waiver of any
provision of this Security Agreement, nor consent to any departure by Debtors,
or any of them herefrom shall in any event be effective unless the same shall be
in writing and signed by Secured Party and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
10. POSSESSORY LIEN. As additional security for the payment and
performance of the Obligations, each Debtor hereby pledges to Secured Party, and
grants to Secured Party, a continuing security interest in, Lien upon and right
of setoff against, all right, title and interest of Debtor in an to all property
(including cash and securities) and the proceeds thereof, which shall come into
Secured Party's possession, custody or control for any purpose or which shall be
in transit to Secured Party to or for the account of such Debtor, including,
without limitation, for safekeeping, custody, pledge, transmission, collection
or otherwise, and in and to credits of such Debtor with Secured Party, and any
and all other claims, rights and demands of Debtor against Secured Party, now or
at any time hereafter existing. Upon the occurrence of an Event of Default which
is continuing, and at any time and from time to time thereafter so long as the
Event of Default is continuing, Secured Party is hereby expressly authorized,
without notice to Debtor, to setoff, appropriate and apply any and all of the
items described above to payment of all or any of the obligations, in such order
as Secured Party in its sole discretion shall determine.
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11. NOTICES. All notices and other communications given to or made
upon any party hereto in connection with this Security Agreement shall, except
as otherwise expressly herein provided, be in writing (including facsimile
transmission) and mailed, telecopied, sent overnight courier providing next
business day delivery service, or personally delivered to the respective parties
as follows:
if to all or any of the Debtors, to:
c/o Ecogen Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Secured Party, to:
United Equities (Commodities) Company
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or in accordance with any subsequent written direction from the recipient party
to the sending party. All such notices and other communications shall, except as
otherwise expressly herein provided, be effective upon delivery if delivered by
hand, two days after deposit in the mail, postage prepaid, in the case of mail,
and in the case of telecopy, when received, or in the case of an overnight
courier, on the next business day.
12. GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF DEBTOR AND THE SECURED PARTY HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE LAWS OF THE STATE OF NEW
YORK WITHOUT GIVING EFFECT TO THE CHOICE OF LAWS PRINCIPLES THEREOF, EXCEPT
WHERE THE NATURE OR LOCATION OF COLLATERAL REQUIRES THE APPLICATION OF THE LAWS
OF ANY OTHER JURISDICTION, IN WHICH CASE,
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THE LAWS OF SUCH OTHER JURISDICTION SHALL GOVERN TO THE EXTENT APPLICABLE.
13. SEVERABILITY. If any provision hereof or if any of the written
instruments evidencing part or all of the Obligations is invalid or
unenforceable in any jurisdiction, the other provisions hereof or of such
written instruments shall remain in full force and effect in such jurisdiction
and the remaining provisions hereof shall be liberally construed in favor of
Secured Party in order to carry out the provisions hereof. The invalidity or
unenforceability of any provision of this Security Agreement in any jurisdiction
shall not affect the validity or enforceability of any such provision in any
other jurisdiction.
14. REMEDIES CUMULATIVE. Each and every right, power and remedy
herein given to Secured Party hereunder or by law shall be cumulative and not
exclusive, and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised or enforced from time to
time and as often and in such order as may be deemed expedient by Secured party,
and the exercise or the beginning of the exercise of any such right, power or
remedy shall not be deemed a waiver of the right to exercise, at the time or
thereafter, any other right, power or remedy shall impair any such right, power
or remedy then or thereafter existing.
15. CAPTIONS. The headings of the Sections of this Security
Agreement have been inserted solely for convenience of reference and shall not
modify, define or limit the express provisions of this Security Agreement.
16. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) DEBTORS, JOINTLY AND SEVERALLY, AGREE THAT ANY LEGAL
ACTION OR PROCEEDING AGAINST ANY DEBTOR WITH RESPECT TO THIUS SECURITY AGREEMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK (NEW YORK COUNTY), OR THE
FEDERAL COURTS FOR THE SOUTHERN DISTRICT OF NEW YORK, AS SECURED PARTY MAY ELECT
IN ITS SOLE DISCRETION, AND, BY EXECUTION AND DELIVERY OF THIS SECURITY
AGREEMENT, EACH DEBTOR HEREBY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF SUCH COURTS.
DEBTORS, JOINTLY AND SEVERALLY, WAIVE PERSONAL SERVICE OF ANY AND ALL PROCESS
UPON IT, AND IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY OF SUCH
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
EXPRESS, REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH DEBTOR AT ITS
ADDRESS FOR NOTICES AS SPECIFIED HEREIN, SUCH SERVICE TO BECOME EFFECTIVE FIVE
BUSINESS DAYS AFTER SUCH MAILING. EACH DEBTOR WAIVES, AT THE OPTION OF SECURED
PARTY, ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO
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VENUE OF ANY ACTION OR PROCEEDING INSTITUTED UNDER THIS SECURITY AGREEMENT AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE REMEDY AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF SECURED PARTY
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR THE RIGHT OF SECURED
PARTY TO BRING LEGAL ACTION OR PROCEEDING IN ANY OTHER COMPETENT JURISDICTION.
DEBTORS, JOINTLY AND SEVERALLY, AGREE THAT ANY ACTION COMMENCED BY DEBTORS (OR
ANY OF THEM) ASSERTING ANY CLAIM OR COUNTERCLAIM ARISING UNDER OR IN CONNECTION
WITH THIS SECURITY AGREEMENT OR ANY OTHER PURCHASE DOCUMENT SHALL BE BROUGHT IN
THE COURTS OF THE STATE OF NEW YORK (NEW YORK COUNTY), OR IN THE FEDERAL COURTS
FOR THE SOUTHERN DISTRICT OF NEW YORK AND THAT SUCH COURTS SHALL HAVE EXCLUSIVE
JURISDICTION WITH RESPECT TO ANY SUCH ACTION.
(b) DEBTORS AND SECURED PARTY, BY ITS ACCEPTANCE HEREOF,
HEREBY WAIVE TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING OF ANY
NATURE WHATSOEVER ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS SECURITY
AGREEMENT AND IN CONNECTION WITH ANY CLAIM, COUNTERCLAIM, OFFSET OR DEFENSE
ARISING IN CONNECTION WITH SUCH ACTION OR PROCEEDING, WHETHER ARISING UNDER
STATUTE (INCLUDING ANY FEDERAL OR STATE CONSTITUTION) OR UNDER THE LAW OF
CONTRACT, TORT OR OTHERWISE AND INCLUDING, WITHOUT LIMITATION, ANY CHALLENGE TO
THE LEGALITY, VALIDITY, BINDING EFFECT OR ENFORCEABILITY OF THIS PROVISION OR
THIS SECURITY AGREEMENT.
(c) DEBTORS HEREBY, JOINTLY AND SEVERALLY, CONSENT AND AGREE
THAT ANY JUDGMENT ENTERED AGAINST ANY OF THEM IN ANY SUCH ACTION OR PROCEEDING
COMMENCED AGAINST ANY OF THEM (A "NY JUDGMENT") IN ANY SUCH COURT OF THE STATE
OF NEW YORK OR OF THE UNITED STATES OF AMERICA (A "NY COURT") MAY BE ENTERED,
FILED, RECORDED OR DOCKETED IN ANY COURT WHERE THE PRINCIPAL OFFICE OF SUCH
DEBTOR IS LOCATED ("STATE COURT") WITH THE SAME FORCE AND EFFECT AS IF THE NY
JUDGMENT WAS A FINAL JUDGMENT AGAINST DEBTORS OF THE PENNSYLVANIA COURT (A
"RECORDED FOREIGN JUDGMENT") AND, FOR SUCH PURPOSE, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH DEBTOR ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE STATE COURT. EACH DEBTOR
HEREBY IRREVOCABLY (A) WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT
(INCLUDING THE SERVICE OF POST-JUDGMENT SUBPOENAS, INTERROGATORIES, NOTICES OF
DEPOSITION OR ANY OTHER POST-JUDGMENT ORDER OR NOTICE) IN
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CONNECTION WITH ANY ACTION OR PROCEEDING TO ENFORCE OR COLLECT THE NY JUDGMENT
AND/OR THE RECORDED FOREIGN JUDGMENT, AND (B) CONSENTS TO THE SERVICE OF
PROCESS, INCLUDING, WITHOUT LIMITATION, ANY SUCH POST-JUDGMENT SUBPOENAS,
INTERROGATORIES, NOTICES AND ORDERS, OUT OF THE NY COURT OR THE STATE COURT IN
ANY ACTION OR PROCEEDING TO ENFORCE OR COLLECT A NY JUDGMENT OR A RECORDED
FOREIGN JUDGMENT, BY THE MAILING OF COPIES THEREOF BY EXPRESS, REGISTERED OR
CERTIFIED MAIL, POSTAGE PREPAID, TO DEBTORS AT THEIR ADDRESS FOR NOTICES AS
SPECIFIED IN THIS SECURITY AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FIVE
BUSINESS DAYS AFTER SUCH MAILING. EACH DEBTOR HEREBY WAIVES, AT THE OPTION OF
SECURED PARTY, ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO
VENUE OF ANY ACTION OR PROCEEDING INSTITUTED TO ENFORCE OR COLLECT A NY JUDGMENT
OR ANY RECORDED FOREIGN JUDGMENT, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE REMEDY AS IS DEEMED APPROPRIATE BY THE STATE COURT. EACH DEBTOR HEREBY
IRREVOCABLY WAIVES THE RIGHT TO CONTEST THE SUFFICIENCY OF ANY SUCH SERVICE AND
FURTHER AGREES THAT ANY SUCH SUPPLEMENTARY PROCEEDINGS OR POST-JUDGMENT
DEPOSITIONS MAY BE CONDUCTED AT THE OFFICE OF THE SECURED PARTY'S ATTORNEYS IN
NEW YORK CITY OR ELSEWHERE. AS SECURED PARTY MAY ELECT IN ITS SOLE DISCRETION.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF SECURED PARTY TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR THE RIGHT OF SECURED PARTY TO BRING JUDGMENT
ENFORCEMENT OR COLLECTION ACTIONS OR PROCEEDINGS IN ANY OTHER COMPETENT
JURISDICTION. DEBTORS HEREBY, JOINTLY AND SEVERALLY, IRREVOCABLY WAIVE ANY RIGHT
(X) TO INTERPOSE ANY DEFENSE, COUNTERCLAIM, SETOFF OR RECOUPMENT CLAIM AGAINST
SECURED PARTY IN ANY ACTION OR PROCEEDING TO ENTER, FILE, RECORD OR DOCKET THE
NY JUDGMENT IN THE STATE COURT OR TO ENFORCE OR COLLECT THE RECORDED FOREIGN
JUDGMENT AND/OR (Y) TO CHALLENGE, APPEAL, MOVE TO VACATE OR MOVE TO REOPEN ANY
NY JUDGMENT OR ANY RECORDED FOREIGN JUDGMENT.
17. DEFEASANCE. At such time as all Obligations have been
indefeasibly paid in full, the Collateral shall be released from the Lien
created hereby, all without delivery of any instrument or performance of any act
by any party, and all rights to the Collateral shall revert to the Debtors or to
such other person or persons as by law shall be entitled thereto. At the request
of the Debtors following any such termination, Secured Party shall, at the sole
cost and expense of Debtors, promptly assign, transfer and deliver to the
respective Debtors any Collateral held by Secured Party and execute and deliver
to such Debtor such documents as such Debtor shall reasonably request to
evidence such termination, unless another person or persons shall be legally
entitled thereto, in which
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case such Collateral or documents shall be delivered to the person or persons so
entitled thereto or as a court of competent jurisdiction shall direct.
IN WITNESS WHEREOF, Debtor have caused this Security Agreement
to be executed and delivered on its behalf on the date first written above.
Debtors:
ECOGEN INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
----------------------------------------
Title: Chairman & Chief Executive Officer
---------------------------------------
ECOGEN INVESTMENTS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President & Chief
Financial Officer
---------------------------------------
ECOGEN-BIO, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President & Chief
Financial Officer
---------------------------------------
