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Exhibit 10.50
[Amended and Restated General Security Agreement dated December 2, 1998
between the Company and Xxxxx Partners III, L.P., as Agent]
Execution Copy
AMENDED AND RESTATED GENERAL SECURITY AGREEMENT
THIS AMENDED AND RESTATED GENERAL SECURITY AGREEMENT (together with the
Schedules and Exhibits hereto, and, as amended, extended, modified, restated or
supplemented, from time to time, the "Agreement") is made and entered into as of
December 2, 1998, by and between XXXXXX DRUG CO., INC., a New York corporation
(the "Debtor"), with its principal place of business at 000 X. Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxxxxxxx 00000, and XXXXX PARTNERS III, L.P. (the "Xxxxx"), a Delaware
limited partnership, with its principal place of business at 000 Xxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, acting in its capacity as agent on behalf
of certain lenders (in such capacity, the "Agent"), including Xxxxx (each a
"Lender" or a "Secured Party", collectively, the "Lenders" or the "Secured
Parties") pursuant to and in connection with a certain Amended, Restated and
Consolidated Bridge Loan Agreement (the "Consolidated Bridge Loan Agreement")
dated the date hereof and executed simultaneously herewith. Terms that are
capitalized herein and not otherwise defined, shall have the meanings ascribed
to them in the Consolidated Bridge Loan Agreement.
W I T N E S S E T H
WHEREAS, the Debtor and certain Lenders have entered into a Bridge Loan
Agreement and a General Security Agreement dated as of August 12, 1998 (each as
amended through the date hereof, the "Original Bridge Loan Agreement" and the
"Original Security Agreement", and, together with all documents, agreements,
instruments and certificates relating thereto, the "Original Bridge Loan
Documents").
WHEREAS, concurrently with the execution of this Agreement, the Debtor,
the Secured Parties and the Agent are entering into the Consolidated Bridge Loan
Agreement pursuant to which the Debtor and each Secured Party have agreed to
amend and restate the Original Bridge Loan Agreement and, each secured party has
agreed to (i) fund its Additional Bridge Loan Commitment and (ii) consolidate
its Additional Bridge Loan into the Original Bridge Loan pursuant to the terms
and conditions of the Consolidated Bridge Loan Agreement.
WHEREAS, as a condition precedent to the effectiveness of the Consolidated
Bridge Loan Agreement, the Secured Parties have required that the Debtor enter
into this Agreement in order to: (i) reaffirm the lien on and security interest
in and to the "Collateral" (as defined in the Original Security Agreement, the
"Original Collateral") in order to secure the payment and performance by the
Debtor of all of the "Obligations" (as defined in the Original Bridge Loan
Agreement, the
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"Original Obligations") arising under the Original Bridge Loan Agreement and
(ii) grant to the Agent, on behalf of the Secured Parties, a lien on and a
security interest in and to all of the Collateral (as defined in Section II
below), in order to secure the Obligations (as defined in Section 1.1 of the
Consolidated Bridge Loan Agreement), to the extent that such Obligations have
been amended and restated, and, to the extent that such Obligations reflect the
consolidation of the Additional Bridge Loan into the Original Bridge Loan, as
more fully set forth herein and therein; and
NOW, THEREFORE, in consideration of the premises and to induce the Secured
Parties to enter into and perform the Consolidated Bridge Loan Agreement, the
Debtor and the Agent hereby agree as follows:
SECTION 1. CONFIRMATION OF EXISTING SECURITY INTEREST AND CREATION OF
SECURITY INTEREST.
The Debtor hereby confirms and reaffirms that the liens and security
interests granted by the Debtor pursuant to the Original Security Agreement
continue to be perfected liens of record and in full force and effect, and, that
the date of perfection of such liens and security interests continues to relate
back to the date of recordation of the financing statements as executed by the
Debtor on form UCC-1 in connection with the Original Security Agreement. Without
in any way modifying the foregoing confirmation by the Debtor, or, in any way
altering the priority of the lien in favor of the Secured Parties in and to the
Original Collateral, the Debtor hereby pledges, assigns and grants to the Agent,
for the ratable benefit of the Secured Parties, a continuing perfected lien on
and security interest in all of the Debtor's right, title, and interest in and
to the Collateral (as defined in Section II below) to secure the payment and
performance of all Obligations (as defined in Section 1.1 of the Consolidated
Bridge Loan Agreement) owing by the Debtor.
SECTION 2. COLLATERAL.
For purposes of this Agreement, the term "Collateral" shall mean all of
the kinds and types of property described in subsections A. through E. hereof,
whether now owned or hereafter at any time arising, acquired or created by the
Debtor and wherever located, and includes all replacements, additions,
accessions, substitutions, repairs, proceeds and products relating thereto or
therefrom, and all documents, ledger sheets and files of the Debtor relating
thereto. "Proceeds" hereunder include (i) whatever is now or hereafter received
by the Debtor upon the sale, exchange, collection or other disposition of any
item of Collateral, whether such proceeds constitute inventory, accounts,
accounts receivable, general intangibles, instruments, securities (including,
without limitation, United States of America Treasury Bills), credits, claims,
demands, documents, letters of credit and letter of credit proceeds, chattel
paper, documents of title, certificates of title, certificates of deposit,
warehouse receipts, bills of lading, leases, deposit ac counts, money, tax
refund claims, contract rights, goods or equipment and (ii) any such items which
are now or hereafter acquired by the Debtor with any proceeds of Collateral
hereunder:
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a. Accounts. All of the Debtor's accounts, whether now existing or
existing in the future, including without limitation (i) all
accounts receivable (whether or not specifically listed on schedules
furnished to Agent or the Secured Parties), including, without
limitation, all accounts created by or arising from all of the
Debtor's sales of goods or rendition of services made under any of
Debtor's trade names, or through any of its divisions, (ii) all
unpaid seller's rights (including rescission, replevin, reclamation
and stoppage in transit) relating to the foregoing or arising
therefrom, (iii) all rights to any goods represented by any of the
foregoing, including returned or repossessed goods, (iv) all
reserves and credit balances held by the Debtor with respect to any
such accounts receivable or account debtors and (v) all guarantees
or collateral for any of the foregoing (all of the foregoing
property and similar property being hereinafter referred to as
"Accounts");
b. Inventory. All of the Debtor's inventory, including without
limitation (i) all raw materials, work in process, parts,
components, assemblies, supplies and materials used or consumed in
the Debtor's businesses, wherever located and whether in the
possession of the Debtor or any other Person (for the purposes of
this Agreement, the term "Person" means any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, entity, party
or government (including any division, agency or department
thereof), and its successors, heirs and assigns); (ii) all goods,
wares and merchandise, finished or unfinished, held for sale or
lease or leased or furnished or to be furnished under contracts of
service, wherever located and whether in the possession of the
Debtor or any other Person or entity; and (iii) all goods returned
to or repossessed by the Debtor (all of the foregoing property being
hereinafter referred to as "Inventory");
c. Equipment. All of the equipment owned or leased by the Debtor,
including, without limitation, machinery, equipment, office
equipment and supplies, computers and related equipment, furniture,
furnishings, tools, tooling, jigs, dies, fixtures, manufacturing
implements, fork lifts, trucks, trailers, motor vehicles, and other
equipment (all of the foregoing property being hereinafter referred
to as "Equipment");
d. Intangibles. All of the Debtor's general intangibles, instruments,
securities (including, without limitation, United States of America
Treasury Bills), credits, claims, demands, documents, letters of
credit and letter of credit proceeds, chattel paper, documents of
title, certificates of title, certificates of deposit, warehouse
receipts, bills of lading, leases which are permitted to be assigned
or pledged, deposit accounts, money, tax refund claims, contract
rights which are permitted to be assigned or pledged (all of the
foregoing property being hereinafter referred to as "Intangibles");
and
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e. Intellectual Property. All of the Debtor's intellectual property,
including, without limitation, New Drug Applications, Investigatory
New Drug Applications, Abbreviated New Drug Applications,
Alternative New Drug Applications, registrations and quotas as
issued by the Drug Enforcement Administration and/or the Attorney
General of the United States pursuant to the Controlled Substances
Act, certifications, permits and approvals of federal and state
governmental agencies, patents, patent applications, trademarks,
trademark applications, service marks, service xxxx applications,
trade names, technical knowledge and processes, formal or informal
licensing arrangements which are permitted to be assigned or
pledged, blueprints, technical specifications, computer software,
copyrights, copyright applications and other trade secrets, and all
embodiments thereof, and rights thereto, including, without
limitation, all of the Debtor' rights to use the patents,
trademarks, copyrights, service marks, or other property of the
aforesaid nature of other Persons now or hereafter licensed to the
Debtor, together with the goodwill of the business symbolized by or
connected with the Debtor's trademarks, copyrights, service marks,
licenses and the other rights included in this section II(E).
SECTION 3. THE DEBTOR'S REPRESENTATIONS AND WARRANTIES.
a. Places of Business. The Debtor has no other place of business, or
warehouses in which it leases space, other than those set forth on
Section IIIA of Schedule A, a copy of which is attached hereto and
made a part hereof ("Schedule A").
b. Location of Collateral. Except for the movement of Collateral from
time to time from one place of business or warehouse listed on
Section IIIA of Schedule A, to another place of business or
warehouse listed on Section IIIA of such Schedule A, the Collateral
is located at the Debtor's chief executive office or other places of
business or warehouses listed on such Section IIIA of Schedule A,
and not at any other location.
c. Restrictions on Collateral Disposition. Except as may otherwise be
provided in the Debenture and Warrant Purchase Agreement dated March
10, 1998 between the Debtor and the Signatories thereto
(the"Existing Credit Facility") none of the Collateral is subject to
contractual obligations that may restrict or inhibit the Agent's
right or ability to sell or dispose of the Collateral or any part
thereof after the occurrence of an Event of Default.
d. Status of Accounts. Each Account is based on an actual and bona fide
rendition of services to customers, made by the Debtor in the
ordinary course of its business; the Accounts created are its
exclusive property and are not and shall not be subject to any lien,
consignment arrangement, encumbrance, security interest or financing
statement whatsoever, except as otherwise provided in Section
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IIID of Schedule A, and to the best knowledge of the Debtor, the
Debtor's customers have accepted the services, and owe and are
obligated to pay the full amounts stated in the invoices according
to their terms, without any dispute, offset, defense or
counterclaim.
SECTION 4. COVENANTS OF THE DEBTOR.
a. Defend Against Claims. The Debtor will defend the Collateral against
all claims and demands of all persons at any time claiming the same
or any interest therein unless the Agent determines that the claim
or demand is not material and that, consequently, such defense would
not be consistent with good business judgment. The Debtor will not
permit any lien notices with respect to the Collateral or any
portion thereof to exist or be on file in any public office except
for those in favor of Agent and those permitted under the terms of
the Consolidated Bridge Loan Agreement.
b. Change in Collateral Location. The Debtor will not (i) change its
corporate name, (ii) change the location of its chief executive
office or establish any place of business other than those specified
in Section IIIA of Schedule A, or (iii) move or permit movement of
the Collateral from the locations specified therein except from one
such location to another such location, unless in each case the
Debtor shall have given the Agent at least thirty (30) days prior
written notice thereof, and shall have, in advance, executed and
caused to be filed and/or delivered to Agent any financing
statements or other documents required by Agent to perfect the
security interest of the Secured Parties in the Collateral in
accordance with Section IVC hereof, all in form and substance
satisfactory to the Agent.
c. Additional Financing Statements. Promptly upon the reasonable
request of Agent, the Debtor will execute and deliver or use its
reasonable efforts to procure any document, give any notices,
execute and file any financing statements, mortgages or other
documents, all in form and substance satisfactory to Agent, xxxx any
chattel paper, deliver any chattel paper or instruments to Agent and
take any other actions that are necessary or, in the opinion of
Agent, desirable to perfect or continue the perfection and the first
priority of the Secured Parties' security interest in the
Collateral, to protect the Collateral against the rights, claims, or
interests of third persons, or to effect the purposes of this
Agreement. The Debtor will pay the costs incurred in connection with
any of the foregoing.
d. Additional Liens; Transfers. Without the prior written consent of
the Agent, the Debtor will not, in any way, hypothecate or create or
permit to exist any lien, security interest, charge or encumbrance
on or other interest in the Collateral, other than those permitted
under the terms of the Consolidated Bridge Loan Agreement, and the
Debtor will not sell, transfer, assign, pledge, collaterally assign,
exchange or otherwise dispose of the Collateral, other than the sale
of Inventory in the ordinary course of business and the sale of
obsolete or worn out
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Equipment. Notwithstanding the foregoing, if the proceeds of any
such sale consist of notes, instruments, documents of title, letters
of credit or chattel paper, such proceeds shall be promptly
delivered to Agent to be held as Collateral hereunder. If the
Collateral, or any part thereof, is sold, transferred, assigned,
exchanged, or otherwise disposed of in violation of these
provisions, the security interest of the Agent shall continue in
such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and the Debtor will hold
the proceeds thereof for the ratable benefit of the Secured Parties,
and promptly transfer such proceeds to the Secured Parties in kind.
e. Contractual Obligations. The Debtor will not enter into any
contractual obligations which may restrict or inhibit the Agent's
rights or ability to sell or otherwise dispose of the Collateral or
any part thereof after the occurrence or during the continuance of
an Event of Default.
f. Agent's Right to Protect Collateral. Upon the occurrence or
continuance of an Event of Default, Agent shall have the right at
any time to make any payments and do any other acts Agent may deem
necessary to protect the security interests of the Secured Parties
in the Collateral, including, without limitation, the right to pay,
purchase, contest or compromise any encumbrance, charge or lien
which, in the reasonable judgment of Agent, appears to be prior to
or superior to the security interests granted hereunder, and appear
in and defend any action or proceeding purporting to affect its
security interests in, and/or the value of, the Collateral. The
Debtor hereby agrees to reimburse Agent for all payments made and
expenses incurred under this Agreement including reasonable fees,
expenses and disbursements of attorneys and paralegals acting for
Agent, including any of the foregoing payments under, or acts taken
to protect its security interests in the Collateral, which amounts
shall be secured under this Agreement, and agrees it shall be bound
by any payment made or act taken by Agent hereunder absent Agent's
gross negligence or willful misconduct. Agent shall have no
obligation to make any of the foregoing payments or perform any of
the foregoing acts.
g. Further Obligations With Respect to Accounts. In furtherance of the
continuing assignment and security interest in the Accounts of the
Debtor granted pursuant to this Agreement, upon the creation of
Accounts, upon the Agent's request, the Debtor will execute and
deliver to Agent in such form and manner as the Agent may require,
solely for its convenience in maintaining records of Collateral,
such confirmatory schedules of Accounts, and other appropriate
reports designating, identifying and describing the Accounts as the
Agent may reasonably require. In addition, upon the Agent's request,
the Debtor shall provide the Agent with copies of agreements with,
or purchase orders from the customers of the Debtor and copies of
invoices to customers, proof of shipment or delivery and such other
documentation and information relating to said Accounts and other
Collateral as the Agent may reasonably require. Furthermore, upon
the Agent's request, the Debtor shall deliver to the Agent any
documents or certificates of title issued with
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respect to any property included in the Collateral, and any
promissory notes, letters of credit or instruments related to or
otherwise in connection with any property included in the
Collateral, which in any such case came into the possession of the
Debtor, or shall cause the issuer thereof to deliver any of the same
directly to the Agent, in each case with any necessary endorsements
in favor of Agent. Failure to provide the Agent with any of the
foregoing shall in no way affect, diminish, modify or otherwise
limit the security interests granted herein. The Debtor hereby
authorizes Agent to regard the Debtor's printed name or rubber stamp
signature on assignment schedules or invoices as the equivalent of a
manual signature by the Debtor's authorized officers or agents.
h. Insurance. The Debtor agrees to maintain public liability insurance,
third party property damage insurance and replacement value
insurance on the Collateral under such policies of insurance, with
such insurance companies, in such amounts and covering such risks as
are at all times satisfactory to the Agent in its commercially
reasonable judgment. All policies covering the Collateral are to
name Agent as an additional insured and the loss payee in case of
loss, and are to contain such other provisions as the Agent may
reasonably require to fully protect the Secured Parties' interest in
the Collateral and to any payments to be made under such policies.
i. Taxes. The Debtor agrees to pay, when due, all taxes lawfully levied
or assessed against the Debtor or any of the Collateral before any
penalty or interest accrues thereon; provided, however, that, unless
such taxes have become a Federal tax or Employment Retirement
Security Income Act lien on any of the assets of the Debtor, no such
tax need be paid if the same is being contested, in good faith, by
appropriate proceedings promptly instituted and diligently conducted
and if an adequate reserve or other appropriate provision shall have
been made therefor as required in order to be in conformity with
generally accepted accounting principles and procedures in effect in
the United States of America.
j. Compliance with Laws. The Debtor agrees to comply in all material
respects with all requirements of law applicable to the Collateral
or any part thereof, or to the operation of its business or its
assets generally, unless the Debtor contests any such requirements
of law in a reasonable manner and in good faith. The Debtor agrees
to maintain in full force and effect, its respective licenses and
permits granted by any governmental authority as may be necessary or
advisable for the Debtor to conduct its business in all material
respects.
k. Maintenance of Property. The Debtor agrees to keep all property
useful and necessary to its business in good working order and
condition (ordinary wear and tear excepted) and not to commit or
suffer any waste with respect to any of its properties.
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l. Environmental and Other Matters. The Debtor will conduct its
business so as to comply in all material respects with all
environmental, land use, occupational, safety or health laws,
regulations, directions, ordinances, criteria and guidelines in all
jurisdictions in which it is or may at any time be doing business,
except to the extent that the Debtor is contesting, in good faith by
appropriate legal, administrative or other proceedings, any such
law, regulation, direction, ordinance, criteria, guideline, or
interpretation thereof or application thereof; provided, further,
that the Debtor shall comply with the order of any court or other
governmental authority relating to such laws unless the Debtor shall
currently be prosecuting an appeal, proceedings for review or
administrative proceedings and shall have secured a stay of
enforcement or execution or other arrangement postponing enforcement
or execution pending such appeal, proceedings for review or
administrative proceedings.
m. Further Assurances. The Debtor shall take all such further actions
and execute all such further documents and instruments (including,
but not limited to, collateral assignments of Intellectual Property
and Intangibles or any portion thereof) as the Agent may at any time
reasonably determine in its sole discretion to be necessary or
desirable to further carry out and consummate the transactions
contemplated by the Consolidated Bridge Loan Agreement and the
documentation relating thereto, including this Agreement, and to
perfect or protect the liens (and the priority status thereof) of
the Secured Parties in the Collateral.
SECTION 5. REMEDIES.
a. Obtaining the Collateral Upon Default. If any Event of Default shall
have occurred and be continuing, then and in every such case,
subject to any mandatory requirements of applicable law then in
effect, the Agent, in addition to any rights now or hereafter
existing under applicable law, shall have all rights as a secured
creditor under the Uniform Commercial Code in all relevant
jurisdictions and may, without limitation:
(i) personally, or by agents or attorneys,
immediately retake possession of the
Collateral or any part thereof, from the
Debtor or any other Person who then has
possession of any part thereof, with or
without notice or process of law, and for
that purpose may enter upon the Debtor's
premises where any of the Collateral is
located and remove the same, and, use in
connection with such removal, any and all
services, supplies, aids or other facilities
of the Debtor;
(ii) instruct the obligor or obligors on any
agreement, instrument or other obligation
(including,
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without limitation, the Accounts)
constituting the Collateral to make any
payment required by the terms of such
instrument or agreement directly to the
Agent;
(iii) withdraw all monies, securities and
instruments held pursuant to any pledge
arrangement for application to the
Obligations;
(iv) sell, assign or otherwise liquidate, or
direct the Debtor 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;
(v) take possession of the Collateral or any
part thereof, by directing the Debtor in
writing to deliver the same to the Agent at
any place or places designated by Agent, in
which event the Debtor shall at its own
expense:
(1) forthwith cause the same to be moved to the place or
places so designated by the Agent and there delivered to
the Agent,
(2) store and keep any Collateral so delivered to the Agent
at such place or places pending further action by the
Agent as provided in Section VB, and
(3) while the Collateral shall be so stored and kept,
provide such guards and maintenance services as shall be
necessary to protect the same and to preserve and
maintain the Collateral in good condition;
it being understood that the Debtor's obligation to so deliver the
Collateral is of the essence of this Agreement and that, accordingly, upon
application to a court of equity having jurisdiction, the Agent shall be
entitled to a decree requiring specific performance by the Debtor of said
obligation.
b. Disposition of the Collateral. Any collateral repossessed by the
Agent under or pursuant to Section VA and any other Collateral
whether or not so repossessed by the Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an
entirety, and without the necessity of gathering at the place of
sale the property to be sold, and in general, in such manner, at
such time or times, at such place or places and on such terms as the
Agent may, in compliance with any mandatory requirements of
applicable law, determine to be commercially reasonable. Any of the
Collateral may be sold,
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leased or otherwise disposed of, in the condition in which the same
existed when taken by Agent or after any overhaul or repair which
the Agent shall determine to be commercially reasonable. Any such
disposition which shall be a private sale or other private
proceedings permitted by such requirements, shall be made upon not
less than ten (10) days' written notice to the Debtor specifying the
time at which such disposition is to be made and the intended sale
price or other consideration therefor, and shall be subject, for the
ten (10) days after the giving of such notice, to the right of the
Debtor or any nominee of the Debtor to acquire the Collateral
involved at a price or for such other consideration at least equal
to the intended sale price or other consideration so specified. Any
such disposition which shall be a public sale permitted by such
requirements, shall be made upon not less than ten (10) days'
written notice to the Debtor specifying the time and place of such
sale and, in the absence of applicable requirements of law, shall be
by public auction (which may, at the option of the Secured Parties,
after publication of notice of such auction not less than ten (10)
days prior thereto in two (2) newspapers in general circulation in
the City of New York, as the Agent may determine. To the extent
permitted by any such requirement of law, Agent may bid for and
become the purchaser of the Collateral or any item thereof, offered
for sale in accordance with this Section without accountability to
the Debtor (except to the extent of surplus money received). If,
under mandatory requirements of applicable law, Agent shall be
required to make disposition of the Collateral within a period of
time which does not permit the giving of notice to the Debtor as
hereinabove specified, Agent need give the Debtor only such notice
of disposition as shall be reasonably practicable in view of such
mandatory requirements of applicable law.
c. Power of Attorney. The Debtor hereby irrevocably authorizes and
appoints Agent, or any Person or agent that the Secured Parties may
designate, as the Debtor's attorney-in-fact, at the Debtor's cost
and expense, to exercise all of the following powers upon and at any
time after the occurrence and during the continuance of an Event of
Default, which powers, being coupled with an interest, shall be
irrevocable until all of the Obligations owing by the Debtor shall
have been paid and satisfied in full:
(i) accelerate or extend the time of payment,
compromise, issue credits, bring suit or
administer and otherwise collect Accounts or
proceeds of any Collateral;
(ii) receive, open and dispose of all mail
addressed to the Debtor and notify postal
authorities to change the address for
delivery thereof to such address as Agent
may designate;
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(iii) give customers indebted on Accounts notice
of Secured Parties' interest therein, and/or
to instruct such customers to make payment
directly to Agent for the Debtor's account;
(iv) convey any item of Collateral to any
purchaser thereof;
(v) give any notices or record any liens under
Section IVC hereof; and
(vi) make any payments or take any acts under
Section IVF hereof.
Agent's authority under this section VC shall include, without limitation, the
authority to execute and give a receipt for any certificate of ownership or any
document, transfer title to any item of Collateral, sign the Debtor's name on
all financing statements or any other documents deemed necessary or appropriate
to preserve, protect or perfect the security interest in the Collateral and to
file the same, prepare, file and sign the Debtor's name on any notice of lien,
assignment or satisfaction of lien or similar document in connection with any
Account and prepare, file and sign Debtor's name on a proof of claim in
bankruptcy or similar document against any customer of the Debtor, and to take
any other actions arising from or incident to the rights, powers and remedies
granted to the Agent in this Agreement. This power of attorney is coupled with
an interest and is irrevocable by the Debtor.
d. Waiver of Claims. Except as otherwise provided in this Agreement,
the DEBTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
NOTICE AND JUDICIAL HEARING IN CONNECTION WITH AGENT'S TAKING
POSSESSION OF OR DISPOSING OF ANY OF THE COLLATERAL, INCLUDING,
WITHOUT LIMITATION, ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY
PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT WHICH THE DEBTOR
WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE
UNITED STATES OR OF ANY STATE, and the Debtor hereby further waives,
to the extent permitted by law:
(i) all damages occasioned by such taking of
possession except any damages which are the
direct result of Agent's gross negligence or
willful misconduct;
(ii) all other requirements as to the time, place
and terms of sale or other requirements with
respect to the enforcement of the Agent's
rights hereunder, except as expressly
provided herein; and
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(iii) all rights of redemption, appraisement,
valuation, stay, extension or moratorium now
or hereafter in force under any applicable
law in order to prevent or delay the
enforcement of this Agreement or the
absolute sale of the Collateral or any
portion thereof, and the Debtor, for itself
and all who may claim under it, insofar as
it or they now or hereafter lawfully may,
hereby waives the benefit of all such laws.
Any sale of, or the grant of options to purchase, or any other realization upon
any Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the Debtor therein and thereto, and shall
be a perpetual bar both at law and in equity against the Debtor and against any
and all persons claiming or attempting to claim the Collateral so sold, optioned
or realized upon, or any part thereof, from, through and under the Debtor.
e. Remedies Cumulative. Each and every right, power and remedy hereby
specifically given to Agent shall be in addition to every other
right, power and remedy specifically given under this Agreement,
under the Consolidated Bridge Loan Agreement or under other
documentation relating thereto or now or hereafter existing at law
or in equity, or by statute, and each and every right, power and
remedy whether specifically herein given or otherwise existing may
be exercised from time to time or simultaneously and as often and in
such order as may be deemed expedient by Agent. All such rights,
powers and remedies shall be cumulative and the exercise or the
beginning of exercise of one shall not be deemed a waiver of the
right to exercise of any other or others. No delay or omission of
Agent in the exercise of any such right, power or remedy and no
renewal or extension of any of the Obligations shall impair any such
right, power or remedy or shall be construed to be a waiver of any
default or Event of Default or any acquiescence therein.
SECTION 6. MISCELLANEOUS PROVISIONS.
a. Notices. All notices, approvals, consents or other communications
required or desired to be given hereunder shall be delivered in
person, by facsimile transmission followed promptly by first class
mail or by overnight mail, and delivered if to the Debtor, then to
the attention of Xx. Xxxxxxx Xxxxxxx, c/x Xxxxxx Drug Co., Inc., 000
X. Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000. fax no. (815)
399-9710, with a copy to Xxxx X. Xxxxxx, Esq., c/o St. Xxxx & Xxxxx,
0 Xxxx Xxxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000, fax no. (000) 000-0000,
and if to the Agent, then to the attention of Xx. Xxxxx Xxxxxxxxxxx
c/o Xxxxx Partners III, L.P., Rockefeller Center, 000 Xxxxx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, fax no. (000) 000-0000, with a
copy to Xxxxxx X. Xxxxxxxx, Esq. x/x Xxxx,
00
Xxxxx, Xxxxxx and Xxxxx-Xxxxx LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, fax no. (000) 000-0000.
b. Headings. The headings in this Agreement are for purposes of
reference only and shall not affect the meaning or construction of
any provision of this Agreement.
c. Severability. The provisions of this Agreement are severable, and if
any clause or provision shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect, in that jurisdiction only, such
clause or provision, or part thereof, and shall not in any manner
affect such clause or provision in any other jurisdiction or any
other clause or provision of this Agreement in any jurisdiction.
d. Amendments, Waivers and Consents. Any amendment or waiver of any
provision of this Agreement and any consent to any departure by the
Debtor from any provision of this Agreement shall be effective only
if made or given in writing signed by the Agent.
e. Interpretation of Agreement. Time is of the essence in each
provision of this Agreement of which time is an element. All terms
not defined herein shall have the meaning set forth in the
applicable Uniform Commercial Code. Acceptance of or acquiescence in
a course of performance rendered under this Agreement shall not be
relevant in determining the meaning of this Agreement even though
the accepting or acquiescing party had knowledge of the nature of
the performance and opportunity for objection.
f. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Collateral, and shall (i) remain
in full force and effect until indefeasible payment in full of the
Obligations owing by the Debtor, (ii) be binding upon the Debtor,
and its successors and assigns and (iii) inure to the benefit of the
Secured Parties and their successors and assigns.
g. Reinstatement. To the extent permitted by law, this Agreement shall
continue to be effective or be reinstated if at any time any amount
received by Agent or the Secured Parties in respect of the
Obligations owing by the Debtor is rescinded or must otherwise be
restored or returned by Agent or the Secured Parties upon the
occurrence or during the pendency of any Event of Default, all as
though such payments had not been made.
h. Survival of Provisions. All representations, warranties and
covenants of the Debtor contained herein shall survive the execution
and delivery of this Agreement, and shall terminate only upon the
full and final indefeasible payment and performance by the Debtor of
the Obligations secured hereby.
14
i. Setoff. The Secured Parties shall have all rights of setoff
available at law or in equity.
j. Power of Attorney. In addition to the powers granted to the Secured
Parties under Section VC, the Debtor hereby irrevocably authorizes
and appoints Agent, or any Person or agent that the Secured Parties
may designate, as the Debtor's attorney-in-fact, at the Debtor's
cost and expense, to exercise all of the following powers, which
being coupled with an interest, shall be irrevocable until all of
the Obligations shall have been indefeasibly paid and satisfied in
full:
(i) after the occurrence of an Event of Default,
to receive, take, endorse, sign, assign and
deliver, all in the name of Agent or the
Debtor, any and all checks, notes, drafts,
and other documents or instruments relating
to the Collateral; and
(ii) to request, at any time from customers
indebted on Accounts, verification of
information concerning the Accounts and the
amounts owing thereon.
k. Indemnification; Authority of Agent. Neither Agent or the Secured
Parties nor any partner, director, officer, employee, attorney or
agent of Agent or the Secured Parties shall be liable to the Debtor
for any action taken or omitted to be taken by it or them hereunder,
except for its or their own gross negligence or willful misconduct,
nor shall Agent or the Secured Parties be responsible for the
validity, effectiveness or sufficiency of this Agreement or of any
document or security furnished pursuant hereto. Agent or the Secured
Parties and its partners, directors, officers, employees, attorneys
and agents shall be entitled to rely on any communication,
instrument or document reasonably believed by it or them to be
genuine and correct and to have been signed or sent by the proper
person or persons. The Debtor agrees to indemnify and hold Agent or
the Secured Parties and any other person harmless from and against
any and all costs, expenses (including reasonable fees, expenses and
disbursements of attorneys and paralegals (including, without
duplication, reasonable charges of inside counsel)), claims or
liability incurred by Agent or the Secured Parties or such person
hereunder, unless such claim or liability shall be due to willful
misconduct or gross negligence on the part of Agent or the Secured
Parties or such person.
l. Release; Termination of Agreement. Subject to the provisions of
Section VIG hereof, this Agreement shall terminate upon full and
final indefeasible payment and performance of all the Obligations
owing by the Debtor. At such time, Agent shall, at the request of
the Debtor, reassign and redeliver to the Debtor all of the
Collateral hereunder which has not been sold, disposed of, retained
or applied by Agent in accordance with the terms hereof. Such
reassignment and
15
redelivery shall be without warranty by or recourse to Agent or the
Secured Parties, except as to the absence of any prior assignments
by Agent of its interest in the Collateral, and shall be at the
expense of the Debtor.
m. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of
which shall together constitute one and the same agreement.
n. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS
AGREEMENT AND ANY DISPUTE ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE,
SHALL BE GOVERNED BY THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS
OF LAWS PROVISIONS) AND DECISIONS OF THE STATE OF NEW YORK.
o. SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN THE DEBTOR AND
AGENT OR THE SECURED PARTIES, WHETHER SOUNDING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL
COURTS LOCATED IN NEW YORK, NEW YORK, AND THE COURTS TO WHICH AN
APPEAL THEREFROM MAY BE TAKEN; PROVIDED, HOWEVER, THAT AGENT OR THE
SECURED PARTIES SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, TO PROCEED AGAINST THE DEBTOR OR ITS PROPERTY IN ANY
LOCATION REASONABLY SELECTED BY AGENT OR THE SECURED PARTIES IN GOOD
FAITH TO ENABLE AGENT OR THE SECURED PARTIES TO REALIZE ON SUCH
PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
AGENT OR THE SECURED PARTIES. THE DEBTOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY
PROCEEDING BROUGHT BY AGENT OR THE SECURED PARTIES. THE DEBTOR
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT
IN WHICH AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON FORUM
NON CONVENIENS.
p. SERVICE OF PROCESS. THE DEBTOR HEREBY IRREVOCABLY AGREES THAT
SERVICE OF PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT MAY BE EFFECTED BY MAILING A COPY THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE DEBTOR AT ITS
ADDRESS SET FORTH IN SECTION VIA HEREOF.
16
q. JURY TRIAL. THE DEBTOR, AGENT AND EACH OF THE SECURED PARTIES EACH
HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY.
r. LIMITATION OF LIABILITY. NEITHER AGENT NOR THE SECURED PARTIES SHALL
HAVE ANY LIABILITY TO THE DEBTOR (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY THE DEBTOR IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO THE
TRANSACTIONS OR RELATIONSHIPS CONTEMPLATED BY THIS AGREEMENT, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT
IS DETERMINED BY A FINAL AND NON APPEALABLE JUDGMENT OR COURT ORDER
BINDING ON AGENT OR THE SECURED PARTIES, THAT THE LOSSES WERE THE
RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
s. Delays; Partial Exercise of Remedies. No delay or omission of Agent
or the Secured Parties to exercise any right or remedy hereunder,
whether before or after the happening of any Event of Default, shall
impair any such right or shall operate as a waiver thereof or as a
waiver of any such Event of Default. No single or partial exercise
by Agent or the Secured Parties of any right or remedy shall
preclude any other or further exercise thereof, or preclude any
other right or remedy.
T. No Novation. This Agreement amends and restates in its entirety the
Original Security Agreement, and similarly, the Consolidated Bridge Loan
Agreement amends and restates in its entirety the Original Bridge Loan
Agreement. However, no novation of the Original Obligations has occurred, and
such Original Obligations continue to be owing by the Debtor in accordance with
the terms of the Consolidated Bridge Loan Agreement. Similarly, the liens and
security interests granted by the Debtor pursuant to the Original Security
Agreement continue to be perfected liens of record and in full force and effect,
the Debtor hereby confirms and reaffirms the same, and the date of perfection of
such liens and security interests continues to relate back to the date of
recordation of the financing statements on form UCC-1 executed by the Debtor in
connection therewith.
[SIGNATURE PAGES FOLLOW]
17
IN WITNESS WHEREOF, the Debtor has caused this Agreement to be duly
executed and delivered as of the day and year first above written.
XXXXXX DRUG CO., INC.
By:/s/
-----------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
General Security Agreement
18
By its acceptance hereof, as of the day and year first above written,
Agent, on behalf of the Secured Parties, agrees to be bound by the provisions
hereof applicable to it.
XXXXX PARTNERS III, L.P., as Agent on behalf of
the Secured Parties
By: Claudius, L.L.C., General Partner
By:/s/
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Member
General Security Agreement
19
SCHEDULE A
IIIA. Locations of Collateral
1. 0000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx
2. 000 X. Xxxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx
IIID. Liens
1. Liens permitted under the Existing Credit
Facility.
2. Liens described on Schedule 10.4 to
the Existing Credit Facility.
General Security Agreement
