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EXHIBIT 10.7
[STAMP]
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and entered into as of
April 14, 1999 by SENETEK PLC, a corporation organized under the laws of England
(the "Company"), and each of the undersigned (each a "Guarantor", and
collectively with the Company, the "Grantors") and SILVER CREEK INVESTMENTS,
Ltd., a British Virgin Islands company, as Collateral Agent for the benefit of
the Purchasers under the Purchase Agreement (as defined below) (the "Collateral
Agent"). All capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned thereto in the Purchase Agreement;
WITNESSETH:
WHEREAS, the Company has entered into the Securities Purchase Agreement
dated as of the date hereof between the Company and the Purchasers (as from time
to time amended, revised, modified, supplemented or amended and restated, the
"Purchase Agreement"); and
WHEREAS, as collateral security for payment and performance of its
Obligations, the Company is willing to grant to the Purchasers a security
interest in certain of its personal property and assets pursuant to the terms of
this Agreement; and
WHEREAS, each Guarantor will materially benefit from purchase of the
Securities by the Purchasers pursuant to the Purchase Agreement and each
Guarantor is a party to that certain Guaranty Agreement (the "Guaranty"), dated
as of the date hereof, pursuant to which each Guarantor guaranteed the
Obligations of the Company; and
WHEREAS, as collateral security for payment and performance of its
Obligations (as defined in the Guaranty) under the Guaranty, each Guarantor is
willing to grant to the Collateral Agent for the benefit of the Purchasers a
security interest in certain of its personal property and assets; and
WHEREAS, the Purchasers are unwilling to enter into the Purchase Agreement
unless the Company and the Collateral Agent on behalf of the Purchasers enter
into this Agreement;
NOW, THEREFORE, in order to induce the Purchasers to enter into the
Purchase Agreement, and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration the
receipt of which is hereby acknowledged, the parties hereto agree as follows.
1. Grant of Security Interest. As collateral security for the payment,
performance, and satisfaction of all the Guarantors' Obligations (as defined in
the Guaranty) and all of the
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Company's Obligations under the Purchase Agreement (collectively, the "Secured
Obligations"), each Grantor hereby affirms, grants, pledges and assigns to the
Collateral Agent for the benefit of the Purchasers and grants to the Collateral
Agent for the benefit of the Purchasers a continuing FIRST priority security
interest in and to all of the property of such Grantor, subject to Permitted
Liens, whether now owned or existing or hereafter acquired or arising and
wheresoever located, including without limitation the following:
(a) All accounts, accounts receivable, contracts, notes, bills,
acceptances, choses in action, chattel paper, instruments, documents and other
forms of obligations (other than those generated solely by Receivable Financing
and by the assets set forth on Annex 1 hereto (the "Product Line Assets") at any
time owing to each Grantor arising out of goods sold or leased or for services
rendered by such Grantor, including without limitation accounts receivable and
contract rights arising under agreements to which the Grantor is a party, the
proceeds thereof and all of such Grantor's rights with respect to any goods
represented thereby, whether or not delivered, goods returned by customers and
all rights as an unpaid vendor or lienor, including rights of stoppage in
transit and of recovering possession by proceedings including repletion and
reclamation, together with all customer lists, books and records, ledger and
account cards, computer tapes, software, disks, printouts and records, whether
now in existence or hereafter created, relating thereto (collectively referred
to hereinafter as "Accounts");
(b) All inventory (other than inventory financed by Inventory
Financing and Product Line Assets) of each Grantor wherever located in the
United States of America and any state, district, territory or other political
subdivision thereof or the United Kingdom or in any other foreign country,
including without limitation, all goods manufactured or acquired for sale or
lease, and any piece goods, raw materials, work in process and finished
merchandise, findings or component materials, and all supplies, goods,
incidentals, office supplies, packaging materials and any and all items used or
consumed in the operation of the business of such Grantor or which may
contribute to the finished product or to the sale, promotion and shipment
thereof, in which such Grantor now or at any time hereafter may have an
interest, whether or not the same is in transit or in the constructive, actual
or exclusive occupancy or possession of such Grantor or is held by such Grantor
or by others for such Grantor's account (collectively referred to hereinafter as
"Inventory");
(c) All goods of each Grantor, including without limitation, all
machinery, equipment (except equipment set forth on Schedule 8.8 of the Purchase
Agreement and Product Line Assets), parts, supplies, apparatus, appliances,
tools, patterns, molds, dies, blueprints, fittings, furniture, finishings,
fixtures and articles of tangible personal property of every description now or
hereafter owned by such Grantor or in which such Grantor may have or may
hereafter acquire any interest, at any location (collectively referred to
hereinafter as "Equipment");
(d) All general intangibles (other than Product Line Assets) of each
Grantor in which a Grantor now has or hereafter acquires any rights, including
but not limited to, causes of action, corporate or business records, inventions,
designs, goodwill, trade names, trade secrets, trade processes, patents,
licenses, permits, franchises, customer lists, computer programs, all
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claims under guaranties, tax refund claims, rights and claims against carriers
and shippers, leases, claims under insurance policies, all rights to
indemnification and all other intangible personal property and intellectual
property of every kind and nature (collectively referred to hereinafter as
"Intangibles");
(e) All rights now or hereafter accruing to each Grantor under
contracts, leases, agreements or other instruments to performing services, to
hold and use land and facilities, and to enforce all rights thereunder
(collectively referred to hereinafter as "Contract Rights");
(f) All books and records relating to any of the Collateral (as
hereinafter defined) (including, without limitation, customer data, credit
files, computer programs, printouts, and other computer materials and records of
each Grantor pertaining to any of the foregoing); and
(g) All accessions to, substitutions for and all replacements,
products and proceeds of the foregoing, including without limitation proceeds of
insurance policies insuring the Collateral (as hereinafter defined).
All of the property and interests in property described in
subsections (a) through (g) and all other property and interests in personal
property which shall, from time to time, secure the Secured Obligations are
herein collectively referred to as the "Collateral."
2. Financing Statements. At the time of execution of this Agreement, each
Grantor shall have furnished the Collateral Agent for the benefit of the
Purchasers with properly executed financing statements, registrar's
certificates, amendments and assignments as prescribed by the Uniform Commercial
Code as presently in effect in the states where the Collateral is located,
prepared and approved by the Collateral Agent for the benefit of the Purchasers
in form and number sufficient for filing in each jurisdiction set forth on
Schedule 1 hereto, in order that the Collateral Agent for the benefit of the
Purchasers shall have a duly perfected first priority security interest of
record in the Collateral, to the extent a security interest in such Collateral
can be perfected by filing a financing statement, following the filing of such
financing statements with the appropriate local and state governmental
authorities, subject to no prior Lien or encumbrance or restriction on transfer
(other than as imposed by applicable securities laws) other than Permitted
Liens. Each Grantor shall execute as reasonably required by the Collateral Agent
for the benefit of the Purchasers any additional financing statements or other
documents to effect the same, together with any necessary continuation
statements so long as this Agreement remains in effect.
3. Maintenance of Security Interest. Each Grantor will, from time to time,
upon the request of the Collateral Agent for the benefit of the Purchasers,
deliver specific assignments of Collateral, together with such other instruments
and documents, financing statements, amendments thereto, assignments or other
writings as the Collateral Agent for the benefit of the Purchasers may request
to carry out the terms of this Agreement or to protect or enforce the security
interest of the Collateral Agent for the benefit of the Purchasers in the
Collateral.
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With respect to any and all Collateral to be secured and conveyed under
this Agreement, each Grantor agrees to do and cause to be done all things
necessary to perfect and keep in full force the security interest granted in
favor of the Collateral Agent for the benefit of the Purchasers, including, but
not limited to, the prompt payment of all fees and expenses incurred in
connection with any filings made to perfect or continue a security interest in
the Collateral in favor of the Collateral Agent for the benefit of the
Purchasers.
Each Grantor agrees to make appropriate entries upon its financial
statements and books and records disclosing the security interest granted
hereunder to the Collateral Agent for the benefit of the Purchasers.
4. Receipt of Payment. If an Event of Default shall occur and be
continuing and a Grantor (or any of its affiliates, subsidiaries, stockholders,
directors, officers, employees or agents on behalf of such Grantor) shall
receive any proceeds of Collateral, including without limitation monies, checks,
notes, drafts or any other items of payment, such Grantor shall hold all such
items of payment in trust for the Collateral Agent for the benefit of the
Purchasers and as the property of the Collateral Agent for the benefit of the
Purchasers, separate from the funds of such Grantor, and no later than the
second Business Day following the receipt thereof, at the election of the
Collateral Agent for the benefit of the Purchasers, such Grantor shall cause the
same to be forwarded to the Collateral Agent for the benefit of the Purchasers
for its custody and possession as additional Collateral.
5. Covenants. Each Grantor covenants with the Collateral Agent for the
benefit of the Purchasers that from and after the date of this Agreement until
termination hereof in accordance with Section 28 hereof:
(a) Inspection. The Collateral Agent for the benefit of the
Purchasers (by any of its officers, employees and agents) shall have the right
upon reasonable prior notice to an executive officer of such Grantor, and at any
reasonable times during such Grantor's usual business hours, to inspect the
Collateral, all records related thereto (and to make extracts or copies from
such records), and the premises upon which any of the Collateral is located, so
long as no Event of Default has occurred and is continuing, with the prior
consent of the Grantors (which consent shall not be unreasonably withheld), (a)
to discuss such Grantor's affairs and finances with any Person (other than any
Person obligated to repay, or otherwise liable under any document or instrument
which constitutes, any Account (an "Account Debtor" and, collectively, "Account
Debtors")) and (b) to verify with any Person (other than Account Debtors) the
amount, quality, quantity, value and condition of, or any other matter relating
to, the Collateral and, if an Event of Default has occurred and is continuing,
to discuss such Grantor's affairs and finances with such Grantor's Account
Debtors and to verify the amount, quality, value and condition of, or any other
matter relating to, the Collateral and such Account Debtors. Upon or after the
occurrence and during the continuation of an Event of Default, the Collateral
Agent for the benefit of the Purchasers may at any time and from time to time
employ and maintain on such Grantor's premises a custodian selected by the
Collateral Agent for the benefit of the Purchasers who shall have full authority
to do all acts necessary to protect the interest of the Collateral
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Agent for the benefit of the Purchasers. All expenses incurred by the Collateral
Agent for the benefit of the Purchasers by reason of the employment of such
custodian shall be paid by such Grantor, added to the Secured Obligations and
secured by the Collateral.
(b) Assignments, Records and Schedules of Accounts. Each Grantor
shall keep accurate and complete records of its Accounts ("Account Records") and
from time to time at intervals designated by the Collateral Agent for the
benefit of the Purchasers such Grantor shall provide the Collateral Agent for
the benefit of the Purchasers with a schedule of Accounts in form and substance
reasonably acceptable to the Collateral Agent for the benefit of the Purchasers
describing all Accounts created or acquired by such Grantor ("Schedule of
Accounts"); provided, however, that such Grantor's failure to execute and
deliver any such Schedule of Accounts shall not affect or limit the security
interest or other rights in and to any Accounts of the Collateral Agent for the
benefit of the Purchasers. If requested by the Collateral Agent for the benefit
of the Purchasers, each Grantor shall furnish the Collateral Agent for the
benefit of the Purchasers with copies of proof of delivery and other documents
relating to the Accounts so scheduled, including without limitation repayment
histories and present status reports (collectively, "Account Documents") and
such other matter and information relating to the status of then existing
Accounts as the Collateral Agent for the benefit of the Purchasers shall
reasonably request. No Grantor shall remove any Account Records or Account
Documents or change its chief executive offices from the locations set forth in
Exhibit A hereto without 30 days' prior written notice to the Collateral Agent
for the benefit of the Purchasers as provided in Section 29 hereof and delivery
to the Collateral Agent for the benefit of the Purchasers by the applicable
Grantor prior to such removal of executed financing statements, amendments and
other documents necessary in the determination of the Collateral Agent for the
benefit of the Purchasers to maintain the security interests granted hereunder.
(c) Notice Regarding Disputed Accounts. In the event any amounts due
and owing in excess of $50,000 individually, or $100,000 in the aggregate
amount, are in dispute between any Account Debtor and a Grantor (which shall
include without limitation any dispute in which an offset claim or counterclaim
may result), such Grantor shall provide the Collateral Agent for the benefit of
the Purchasers with written notice thereof as soon as practicable, explaining in
detail the reason for the dispute, all claims related thereto and the amount in
controversy.
(d) Verification of Accounts. If an Event of Default has occurred
and is continuing, any of the Collateral Agent's officers, employees or agents
shall have the right, at any reasonable time or times hereafter, to verify with
Account Debtors the validity, amount or any other matter relating to any
Accounts and, whether or not a Default or Event of Default has occurred, any of
the Collateral Agent's officers, employees or agents shall have the right to
verify the same with any Grantor.
(e) Change of Trade Styles. No Grantor shall change, amend, alter,
terminate, or cease using its material trade names or styles under which it
sells Inventory as of the date of this Agreement ("Trade Styles"), or use
additional Trade Styles, without giving the Collateral Agent at least 30 days'
prior written notice and delivery to the Collateral Agent for the benefit of
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the Purchasers by the applicable Grantor prior to such removal, change,
amendment, alteration, or use, of executed financing statements, amendments and
other documents necessary in the determination of the Collateral Agent for the
benefit of the Purchasers to maintain the security interests granted hereunder.
(f) Safekeeping of Inventory. Each Grantor shall be responsible for
the safekeeping of its Inventory, and in no event shall the Collateral Agent
have any responsibility for the following (unless any of the following results
directly and primarily from the Collateral Agent's gross negligence or willful
misconduct):
(i) Any loss or damage to Inventory or destruction thereof
occurring or arising in any manner or fashion from any cause;
(ii) Any diminution in the value of Inventory; or
(iii) Any act or default of any carrier, warehouseman, bailee
or forwarding agency thereof or other Person in any way dealing with
or handling Inventory.
(g) Location, Records and Schedules of Inventory. Each Grantor shall
keep correct and accurate records itemizing and describing the kind, type,
location and quantity of Inventory, its cost therefor and the selling price of
Inventory held for sale, and the daily withdrawals therefrom and additions
thereto, and shall furnish to the Collateral Agent for the benefit of the
Purchasers from time to time at reasonable intervals designated by the
Collateral Agent for the benefit of the Purchasers, a current schedule of
Inventory ("Schedule of Inventory") based upon its most recent physical
inventory and its daily inventory records. Each Grantor shall conduct a physical
inventory, no less than annually, and shall furnish to the Collateral Agent for
the benefit of the Purchasers such other documents and reports thereof as the
Collateral Agent for the benefit of the Purchasers shall reasonably request with
respect to the Inventory. Subject to compliance at all times with Sections 8(c),
(d) and (e), no Grantor shall, other than in the ordinary course of business in
connection with its sale, remove any material amount of Inventory from the
locations set forth on Exhibit B hereto to a location not also set forth on
Exhibit B hereto, each of such locations being owned by a Grantor unless
otherwise indicated, without 30 days' prior written notice to the Collateral
Agent for the benefit of the Purchasers as provided in Section 29 hereof and
delivery to the Collateral Agent for the benefit of the Purchasers by the
applicable Grantor prior to such removal of executed financing statements,
amendments and other documents necessary in the determination of the Collateral
Agent for the benefit of the Purchasers to maintain the security interests
granted hereunder.
(h) Returns of Inventory. If any Account Debtor returns any
Inventory to a Grantor after shipment thereof, and such return generates a
credit in excess of $50,000 on any individual Account or $100,000 in the
aggregate on any Accounts of such Account Debtor, such Grantor shall notify the
Collateral Agent for the benefit of the Purchasers in writing of the same as
soon as practicable.
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(i) Evidence of Ownership of Equipment. The Grantors, as soon as
practicable following a reasonable request therefor by the Collateral Agent for
the benefit of the Purchasers, shall deliver to the Collateral Agent for the
benefit of the Purchasers any and all evidence of ownership of any of the
Equipment (including without limitation certificates of title and applications
for title).
(j) Location Records and Schedules of Equipment. The Grantors shall
maintain accurate, itemized records itemizing and describing the kind, type,
quality, quantity and value of its Equipment and shall furnish the Collateral
Agent for the benefit of the Purchasers upon request with a current schedule
containing the foregoing information, but, other than during the continuance of
an Event of Default, not more often than once per fiscal quarter. No Grantor
shall remove any material portion of the Equipment from the locations set forth
in Exhibit C hereto to a location not also set forth on Exhibit C hereto without
at least 30 days' prior written notice to the Collateral Agent for the benefit
of the Purchasers as provided in Section 29 hereof and delivery to the
Collateral Agent for the benefit of the Purchasers by the applicable Grantor
prior to such removal of executed financing statements, amendments and other
documents necessary to maintain the security interests granted hereunder.
(k) Sale or Mortgage of Equipment. Other than in the ordinary course
of business with respect to disposition of obsolescent Equipment or replacement
of Equipment with other Equipment performing similar functions and having
similar or better utility and value, no Grantor shall sell, exchange, lease,
mortgage, encumber, pledge or otherwise dispose of or transfer any of the
Equipment or any part thereof without the prior written consent of the
Collateral Agent for the benefit of the Purchasers.
(1) Maintenance of Equipment. Each Grantor shall keep and maintain
its Equipment in good operating condition and repair, ordinary wear and tear
excepted. No Grantor shall permit any such items to become a fixture to real
property (unless such Grantor has granted the Collateral Agent for the benefit
of the Purchasers a lien on such real property) or accessions to other personal
property.
(m) Transfers and Other Liens. Each Grantor shall not (i) sell,
assign (by operation of law or otherwise) or otherwise dispose of any of, or
grant any option with respect to, the Collateral, except for dispositions
permitted under Sections 5(g) and 5(k) hereof, (ii) create or suffer to exist
any Lien, security interest or other charge or encumbrance upon or with respect
to any of the Collateral except for the security interests created by this
Agreement or other Permitted Liens under the Purchase Agreement, or (iii) take
any other action in connection with any of the Collateral that would materially
impair the value of the interest or rights of such Grantor in the Collateral
taken as a whole or that would materially impair the interest or rights of the
Collateral Agent for the benefit of the Purchasers.
6. Warranties and Representations Regarding Collateral Generally. Each
Grantor warrants and represents that:
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(a) It is and, except as permitted by the Purchase Agreement and
Section 5(m) hereof, will continue to be the owner of the Collateral hereunder,
now owned and upon the acquisition of the same, free and clear of all Liens,
claims, encumbrances and security interests other than the security interest in
favor of the Collateral Agent for the benefit of the Purchasers hereunder and
Permitted Liens, and that it will defend such Collateral and any products and
proceeds thereof against all material claims and demands of all Persons (other
than holders of Permitted Liens) at any time claiming the same or any interest
therein adverse to the Collateral Agent for the benefit of the Purchasers.
(b) It has the unqualified right to enter into this Agreement and to
perform its terms.
(c) No authorization, consent, approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body or any
other Person is required either (i) for the grant by such Grantor of the
security interests granted hereby or for the execution, delivery or performance
of this Agreement by such Grantor, or (ii) for the perfection of or the exercise
by the Collateral Agent for the benefit of the Purchasers of its rights and
remedies hereunder, except for the filings required by the Uniform Commercial
Code.
(d) No effective financing statement or other instrument similar in
effect covering all or any part of the Collateral purported to be granted by
such Grantor hereunder is on file in any recording office, except such as may
have been filed in favor of the Collateral Agent for the benefit of the
Purchasers and Permitted Liens.
7. Account Warranties and Representations. With respect to its Accounts,
each Grantor warrants and represents to the Collateral Agent for the benefit of
the Purchasers that the Collateral Agent for the benefit of the Purchasers may
rely on the following representations made by such Grantor and on
representations made on any Schedule of Accounts prepared and delivered by it:
(a) All Account Records and Account Documents are located only at
such Grantor's locations as set forth on Exhibit A attached hereto and
incorporated herein by reference or at such other locations as to which the
Grantor has notified the Collateral Agent for the benefit of the Purchasers in
writing not less than 30 days prior to such relocation;
(b) The Accounts are genuine, are in all material respects what they
purport to be, are not evidenced by an instrument or document or, if evidenced
by an instrument or document, are only evidenced by one original instrument or
document;
(c) The Accounts cover bona fide sales and deliveries of Inventory
usually dealt in by such Grantor, or the rendition by such Grantor of services,
to an Account Debtor in the ordinary course of business;
(d) The amounts of the face value shown on any Schedule of Accounts
or invoice statement delivered to the Collateral Agent for the benefit of the
Purchasers with respect
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to any Account, are actually owing to such Grantor and are not contingent for
any reason; and there are no setoffs, discounts, allowances, claims,
counterclaims or disputes of any kind or description in an amount greater than
$60,000 in the aggregate, or greater than $30,000 individually, existing or
asserted with respect thereto and such Grantor has not made any agreement with
any Account Debtor thereunder for any deduction therefrom, except as may be
stated in the Schedule of Accounts and reflected in the calculation of the face
value of each respective invoice related thereto;
(e) Except for conditions generally applicable to such Grantor's
industry and markets, there are no facts, events, or occurrences currently known
to such Grantor pertaining particularly to any Accounts which are reasonably
expected to materially impair in any way the validity, collectibility or
enforcement of Accounts that would reasonably be likely, in the aggregate, to be
of material economic value to the Grantors taken as a whole, or in the aggregate
materially reduce the amount payable under all Accounts of the Grantors taken as
whole;
(f) The goods or services giving rise thereto are not, and were not
at the time of the sale or performance thereof, subject to any Lien, claim,
encumbrance or security interest, except those of the Collateral Agent for the
benefit of the Purchasers and Permitted Liens;
(g) The Accounts have not been pledged to any Person other than to
the Collateral Agent for the benefit of the Purchasers under this Agreement and
will be owned by such Grantor free and clear of any Liens, claims, encumbrances
or security interests except Permitted Liens;
(h) The security interest of the Collateral Agent for the benefit of
the Purchasers therein will not be subject to any offset, deduction,
counterclaim, Lien or other adverse condition, other than Permitted Liens; and
(i) The location of its chief executive office and any state in
which it (i) has a place of business in only one county of such state or (ii)
resides in such state (within the meaning of the applicable Uniform Commercial
Code) but does not have any place of business in such state, is set forth on
Exhibit A attached hereto and incorporated herein by reference and each Grantor
shall deliver to the Collateral Agent not less than 30 days' written notice
prior to any change of such location or status of places of business or
residency
8. Inventory Warranties and Representations. With respect to its
Inventory, each Grantor warrants and represents to the Collateral Agent for the
benefit of the Purchasers that the Collateral Agent for the benefit of the
Purchasers may rely on the following representations made by such Grantor on or
with respect to any Inventory:
(a) All Inventory, other than Inventory having a value of less than
$30,000 in each location, is located only at such Grantor's locations as set
forth on Exhibit B attached hereto and incorporated herein by reference;
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(b) None of its Inventory is or will be subject to any Lien, claim,
encumbrance or security interest whatsoever, except for the security interest of
the Collateral Agent for the benefit of the Purchasers hereunder and Permitted
Liens;
(c) No Inventory of such Grantor that would reasonably be likely, in
the aggregate with the Inventory of all Grantors, to be of value in excess of
$30,000 is, and shall not at any time or times hereafter be, stored with a
bailee, warehouseman, or similar party without the Collateral Agent's prior
written consent which consent shall not be unreasonably withheld and, if the
Collateral Agent gives such consent, such Grantor will concurrently therewith
cause any such bailee, warehouseman, or similar party to issue and deliver to
the Collateral Agent for the benefit of the Purchasers upon its request
therefor, in form and substance reasonably acceptable to the Collateral Agent
for the benefit of the Purchasers, warehouse receipts therefor in the name of
the Collateral Agent for the benefit of the Purchasers and take such other
action and be party to such document as deemed necessary or prudent by the
Collateral Agent for the benefit of the Purchasers to maintain the security
interest of the Collateral Agent for the benefit of the Purchasers in such
Inventory;
(d) No Inventory is, and shall not at any time or times hereafter
be, under consignment to any Person, the value of which, when aggregated with
all other Inventory under consignment of such Grantor and all Grantors, would
exceed $30,000; and
(e) No Inventory, without the prior written consent of the
Collateral Agent upon 30 days' prior notice to the Collateral Agent, is at or
shall be kept at any location that is leased by such Grantor from any other
Person, the value of which, when aggregated with all other Inventory kept at any
location which is leased by all Grantors, would exceed $30,000, unless such
location and lessee is set forth on Exhibit B hereto and the Grantor has used
its best efforts to have the lessor waive its rights with respect to such
Inventory in form and substance acceptable to the Collateral Agent for the
benefit of the Purchasers and delivered in writing to the Collateral Agent for
the benefit of the Purchasers prior to such amount of Inventory being at such
one or more locations.
9. Equipment Representations and Warranties. With respect to its
Equipment, each Grantor warrants and represents to the Collateral Agent for the
benefit of the Purchasers that the Collateral Agent for the benefit of the
Purchasers may rely on the following representations made by such Grantor on or
with respect to any Equipment:
(a) All Equipment is located only at such Grantor's locations set
forth in Exhibit C hereto or at such other locations as to which such Grantor
has notified the Collateral Agent in writing not less than 30 days prior to such
relocation and has provided to the Collateral Agent for the benefit of the
Purchasers executed financing statements for such location satisfying the
requirements of Section 2 hereof,
(b) None of its Equipment is or will be subject to any Lien, claim,
encumbrance or security interest whatsoever, except for the security interest of
the Collateral Agent for the benefit of the Purchasers hereunder and Permitted
Liens;
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(c) No Equipment, without the prior written consent of the
Collateral Agent upon 30 days' prior notice to the Collateral Agent, of such
Grantor is at or shall be kept at any location that is leased by such Grantor
from any other Person unless such location and lessee is set forth on Exhibit C
hereto and the lessor waives its rights with respect to such Equipment in form
and substance acceptable to the Collateral Agent for the benefit of the
Purchasers; provided, however, the provisions of this Section 9(c) shall not
apply to any Equipment listed on Schedule 8.8 of the Purchase Agreement.
10. Casualty and Liability Insurance Required.
(a) Each Grantor will keep the Collateral continuously insured
against such risks as are customarily insured against by businesses of like size
and type engaged in the same or similar operations including, without limiting
the generality of any other covenant herein contained:
(i) casualty insurance on the Inventory and the Equipment in
an amount not less than the full insurable value thereof, against loss or
damage by theft, fire and lightning and other hazards ordinarily included
under uniform broad form standard extended coverage policies, limited only
as may be provided in the standard broad form of extended coverage
endorsement at the time in use in the states in which the Collateral is
located;
(ii) comprehensive general liability insurance against claims
for bodily injury, death or property damage occurring with or about such
Collateral (such coverage to include provisions waiving subrogation
against the Collateral Agent for the benefit of the Purchasers), with
Collateral Agent for the benefit of the Purchasers as additional insured
parties, in amounts as shall be reasonably satisfactory to Collateral
Agent for the benefit of the Purchasers;
(iii) liability insurance with respect to the operation of its
facilities under the workers' compensation laws of the states in which
such Collateral is located; and
(iv) business interruption insurance.
(b) Each insurance policy obtained in satisfaction of the
requirements of Section 10(a) hereof:
(i) may be provided by blanket policies now or hereafter
maintained by each Grantor or the Company for itself and all Subsidiaries;
(ii) shall be issued by such insurer (or insurers) as shall be
financially responsible, of recognized standing and reasonably acceptable
to the Collateral Agent for the benefit of the Purchasers;
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(iii) shall be in such form and have such provisions
(including without limitation the loss payable clause, the waiver of
subrogation clause, the deductible amount, if any, and the standard
mortgagee endorsement clause), as are generally considered standard
provisions for the type of insurance involved and are reasonably
acceptable in all respects to the Collateral Agent for the benefit of the
Purchasers;
(iv) shall prohibit cancellation or substantial modification,
termination or lapse in coverage by the insurer without at least 30 days'
prior written notice to the Collateral Agent, except for non-payment of
premium, in which case such policies shall provide thirty (30) days' prior
written notice; and
(v) without limiting the generality of the foregoing, all
insurance policies where applicable under Section 10(a)(i) carried on the
Collateral shall name the Collateral Agent for the benefit of the
Purchasers as additional loss payee and the Collateral Agent for the
benefit of the Purchasers as additional party insured thereunder in
respect of any claim for payment.
(c) Prior to expiration of any such policy, such Grantor shall
furnish the Collateral Agent for the benefit of the Purchasers with evidence
satisfactory to the Collateral Agent for the benefit of the Purchasers that the
policy or certificate has been renewed or replaced or is no longer required by
this Agreement.
(d) Each Grantor hereby irrevocably makes, constitutes and appoints
the Collateral Agent for the benefit of the Purchasers (and all officers,
employees or agents designated by the Collateral Agent for the benefit of the
Purchasers), effective upon the occurrence and during the continuance of an
Event of Default, as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of such Grantor on any check, draft, instrument or
other item or payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance. The power of attorney granted in this Section 10(d) shall terminate
upon the termination of this Agreement as set forth in Section 28 hereof.
(e) In the event such Grantor shall fail to maintain, or fail to
cause to be maintained, the full insurance coverage required hereunder or shall
fail to keep any of its Collateral in good repair and good operating condition
subject to ordinary wear and tear, the Collateral Agent for the benefit of the
Purchasers may (but shall be under no obligation to), without waiving or
releasing any Secured Obligation or Event of Default by such Grantor hereunder,
contract for the required policies of insurance and pay the premiums on the same
or make any required repairs, renewals and replacements; and all sums so
disbursed by Collateral Agent for the benefit of the Purchasers, including
reasonable attorneys' fees, court costs, expenses and other charges related
thereto, shall be payable on demand by such Grantor to the Collateral Agent for
the benefit of the Purchasers and shall be additional Secured Obligations
secured by the Collateral.
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(f) Each Grantor agrees that to the extent that it shall not carry
insurance required by Section 10(a) hereof, it shall in the event of any loss or
casualty pay promptly to the Collateral Agent for the benefit of the Purchasers
for application in accordance with the provisions of Section 10(h) hereof, such
amount as would have been received as Net Proceeds (as hereinafter defined) by
the Collateral Agent for the benefit of the Purchasers under the provisions of
Section 10(h) hereof had such insurance been carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 10(a)(ii) and 10(a)(iii) hereof shall be applied by such
Grantor toward extinguishment of the defect or claim or satisfaction of the
liability with respect to which such insurance proceeds may be paid.
(h) The Net Proceeds of the insurance carried with respect to the
Collateral pursuant to the provisions of Section 10(a)(i) hereof shall be paid
to such Grantor and held by such Grantor in a separate account and applied as
follows: (i) as long as no Event of Default shall have occurred and be
continuing, after any loss under any such insurance and payment of the proceeds
of such insurance, each Grantor shall have a period of 30 days after payment of
the insurance proceeds with respect to such loss to elect to either (x) repair
or replace the Collateral so damaged, (y) deliver such Net Proceeds to the
Collateral Agent for the benefit of the Purchasers as additional Collateral or
(z) apply such Net Proceeds to the acquisition of tangible assets used or useful
in the conduct of the business of such Grantor, subject to the provisions of
this Agreement. If such Grantor elects to repair or replace the Collateral so
damaged, such Grantor agrees the Collateral shall be repaired to a condition
substantially similar to its condition prior to damage or replaced with
Collateral in a condition substantially similar to the condition of the
Collateral so replaced prior to damage; and (ii) at all times during which an
Event of Default shall have occurred and be continuing, after any loss under
such insurance and payment of the proceeds of such insurance, such Grantor shall
immediately deliver such Net Proceeds to the Collateral Agent for the benefit of
the Purchasers as additional Collateral.
(i) "Net Proceeds" when used with respect to any insurance proceeds
shall mean the gross proceeds from such proceeds less all taxes, fees and
expenses (including attorneys' fees and disbursements) incurred in the
realization thereof.
(j) In case of any material damage to or destruction of all or any
part of the Collateral pledged hereunder by a Grantor, such Grantor shall give
prompt notice thereof to the Collateral Agent. Each such notice shall describe
generally the nature and extent of such damage, destruction, taking, loss,
proceeding or negotiations. Each Grantor is hereby authorized and empowered to
adjust or compromise any loss under any such insurance.
11. Rights and Remedies Upon Event of Default. Upon and during the
continuance of an Event of Default, the Collateral Agent for the benefit of the
Purchasers shall have the following rights and remedies in addition to any
rights and remedies set forth elsewhere in this Agreement, all of which may be
exercised with or, if allowed by law, without notice to a Grantor:
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(a) All of the rights and remedies of a secured party under the
Uniform Commercial Code of the state where such rights and remedies are
asserted, or under other applicable law, all of which rights and remedies shall
be cumulative, and none of which shall be exclusive, to the extent permitted by
law, in addition to any other rights and remedies contained in this Agreement,
the Guaranty, the Purchase Agreement or any other Transaction Document;
(b) The right to foreclose the Liens and security interests created
under this Agreement by any available judicial procedure or without judicial
process;
(c) The right to (i) enter upon the premises of a Grantor through
self-help and without judicial process, without first obtaining a final judgment
or giving such Grantor notice and opportunity for a hearing on the validity of
the Collateral Agent for the benefit of the Purchasers's claim and without any
obligation to pay rent to such Grantor, or any other place or places where any
Collateral is located and kept, and remove the Collateral therefrom to the
premises of the Collateral Agent for the benefit of the Purchasers or any agent
of the Collateral Agent for the benefit of the Purchasers, for such time as the
Collateral Agent for the benefit of the Purchasers may desire, in order
effectively to collect or liquidate the Collateral, and (ii) require such
Grantor to assemble the Collateral and make it available to the Collateral Agent
for the benefit of the Purchasers at a place to be designated by the Collateral
Agent for the benefit of the Purchasers that is reasonably convenient to both
parties;
(d) The right to (i) demand payment of the Accounts; (ii) enforce
payment of the Accounts, by legal proceedings or otherwise; (iii) exercise all
of a Grantor's rights and remedies with respect to the collection of the
Accounts and General Intangibles; (iv) settle, adjust, compromise, extend or
renew the Accounts, General Intangibles and Contract Rights; (v) settle, adjust
or compromise any legal proceedings brought to collect the Accounts; (vi) if
permitted by applicable law, sell or assign the Accounts, General Intangibles
and Contract Rights upon such terms, for such amounts and at such time or times
as the Collateral Agent for the benefit of the Purchasers deems advisable; (vii)
discharge and release the Accounts; (viii) take control, in any manner, of any
item of payment or proceeds referred to in Section 4 above; (ix) prepare, file
and sign a Grantor's name on a Proof of Claim in bankruptcy or similar document
against any Account Debtor; (x) prepare, file and sign a Grantor's name on any
notice of Lien, assignment or satisfaction of Lien or similar document in
connection with the Accounts; (xi) endorse the name of a Grantor upon any
chattel paper, document, instrument, invoice, freight xxxx, xxxx of lading or
similar document or agreement relating to the Accounts, Inventory or Equipment;
(xii) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to any Collateral to which
a Grantor has access; (xiii) to open such Grantor's mail and collect any and all
amounts due to such Grantor from Account Debtors; (xiv) to take over such
Grantor's post office boxes or make other arrangements as the Collateral Agent
for the benefit of the Purchasers deems necessary to receive such Grantor's
mail, including notifying the post office authorities to change the address for
delivery of such Grantor's mail to such address as the Collateral Agent for the
benefit of the Purchasers may designate; and (xv) to notify any or all Account
Debtors that the Accounts have been assigned to the Collateral Agent for the
benefit of the Purchasers and that Collateral Agent for
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the benefit of the Purchasers has a security interest therein (provided that the
Collateral Agent for the benefit of the Purchasers may at any time give such
notice to an Account Debtor that is a department, agency or authority of the
United States government); each Grantor hereby agrees that any such notice, in
the sole discretion of the Collateral Agent for the benefit of the Purchasers,
may be sent on such Grantor's stationery, in which event such Grantor shall
cosign such notice with the Collateral Agent for the benefit of the Purchasers;
and (xvi) do all acts and things and execute all documents necessary, in the
sole discretion of the Collateral Agent for the benefit of the Purchasers, to
collect the Accounts and General Intangibles; and
(e) The right to sell, assign, lease or to otherwise dispose of all
or any Collateral in its then existing condition, or after any further
manufacturing or processing thereof, at public or private sale or sales, with
such notice as may be required by law, in lots or in bulk, for cash or on
credit, with or without representations and warranties, all as the Collateral
Agent for the benefit of the Purchasers, in its sole discretion, may deem
advisable. The Collateral Agent for the benefit of the Purchasers shall have the
right to conduct such sales on a Grantor's premises or elsewhere and shall have
the right to use a Grantor's premises without charge for such sales for such
time or times as the Collateral Agent for the benefit of the Purchasers may see
fit. The Collateral Agent for the benefit of the Purchasers may, if it deems it
reasonable, postpone or adjourn any sale of the Collateral from time to time by
an announcement at the time and place of such postponed or adjourned sale, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Each Grantor agrees that the Collateral Agent for the benefit
of the Purchasers has no obligation to preserve rights to the Collateral against
prior parties or to xxxxxxxx any Collateral for the benefit of any Person. The
Collateral Agent for the benefit of the Purchasers is hereby granted a license
or other right to use, without charge, each of Grantor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale and selling
any Collateral and a Grantor's rights under any license and any franchise
agreement shall inure to the benefit of the Collateral Agent for the benefit of
the Purchasers. If any of the Collateral shall require repairs, maintenance,
preparation or the like, or is in process or other unfinished state, the
Collateral Agent for the benefit of the Purchasers shall have the right, but
shall not be obligated, to perform such repairs, maintenance, preparation,
processing or completion of manufacturing for the purpose of putting the same in
such salable form as the Collateral Agent for the benefit of the Purchasers
shall deem appropriate, but the Collateral Agent for the benefit of the
Purchasers shall have the right to sell or dispose of the Collateral without
such processing and no Grantor shall have any claim against the Collateral Agent
for the benefit of the Purchasers for the value that may have been added to such
Collateral with such processing. In addition, each Grantor agrees that in the
event notice is necessary under applicable law, written notice mailed to such
Grantor in the manner specified herein ten (10) days prior to the date of public
sale of any of the Collateral or prior to the date after which any private sale
or other disposition of the Collateral will be made shall constitute
commercially reasonable notice to such Grantor. All notice is hereby waived with
respect to any of the Collateral which threatens to decline speedily in value or
is of a type customarily sold on a recognized market. The Collateral Agent for
the benefit of the Purchasers may purchase all or any part of the Collateral at
public or, if permitted by law, private sale, free from any right of redemption
which is hereby expressly waived by such Grantor
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and, in lieu of actual payment of such purchase price, may set off the amount of
such price against the Secured Obligations. The net cash proceeds resulting from
the collection, liquidation, sale, lease or other disposition of the Collateral
shall be applied first to the expenses (including all attorneys' fees and
disbursements) of retaking, holding, storing, processing and preparing for sale,
selling, collecting, liquidating and the like; and then to the satisfaction of
all Secured Obligations as determined by the Collateral Agent for the benefit of
the Purchasers. Any sale or other disposition of the Collateral and the
possession thereof by the Collateral Agent for the benefit of the Purchasers
shall be in compliance with all provisions of applicable law (including
applicable provisions of the Uniform Commercial Code). Each Grantor shall be
liable to the Collateral Agent for the benefit of the Purchasers and shall pay
to the Collateral Agent for the benefit of the Purchasers on demand any
deficiency which may remain after such sale, disposition, collection or
liquidation of the Collateral.
12. Anti-Marshalling Provisions. The right is hereby given by each Grantor
to the Collateral Agent for the benefit of the Purchasers to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Collateral Agent for the benefit of the Purchasers without notice to, or the
consent, approval or agreement of other parties and interests, including junior
lienors, which releases shall not impair in any manner the validity of or
priority of the Liens and security interests in the remaining Collateral
conferred under such documents, nor release such Grantor from liability for the
Secured Obligations hereby secured. Notwithstanding the existence of any other
security interest in the Collateral held by the Collateral Agent for the benefit
of the Purchasers, the Collateral Agent for the benefit of the Purchasers shall
have the right to determine the order in which any or all of the Collateral
shall be subjected to the remedies provided in this Agreement. The proceeds
realized upon the exercise of the remedies provided herein shall be applied by
the Collateral Agent for the benefit of the Purchasers in the manner set forth
herein. Each Grantor hereby waives any and all right to require the marshalling
of assets in connection with the exercise of any of the remedies permitted by
applicable law or provided herein.
13. Indemnity and Expenses.
(a) Each Grantor agrees to indemnifY the Collateral Agent for the
benefit of the Purchasers and each of the Purchasers from and against any and
all claims, losses and liabilities (other than Excluded Expenses (as such term
is defined in Section 1(d) of the Pledge Agreement) growing out of or resulting
from this Agreement that are incurred by the Collateral Agent for the benefit of
the Purchasers on behalf of the Purchasers (including without limitation
enforcement of this Agreement), except claims, losses or liabilities directly
resulting from the gross negligence or willful misconduct of the Collateral
Agent or any Purchaser.
(b) Each Grantor will upon demand pay to the Collateral Agent for
the benefit of the Purchasers the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel and of any
experts and agents (other than Excluded Expenses (as such term is defined in
Section 1(d) of the Pledge Agreement, that the Collateral Agent for the benefit
of the Purchasers may incur in connection with (i) the administration or
amendment of this Agreement, (ii) the custody, preservation, use or operation
of, or the sale of, collection
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from or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Collateral Agent for the benefit of the
Purchasers, or (iv) the failure by such Grantor to perform or observe any of the
provisions hereof.
14. Appointment of Agent as Grantor's Lawful Attorney. Without limitation
of any other provision of this Agreement, each Grantor irrevocably designates,
makes, constitutes and appoints the Collateral Agent for the benefit of the
Purchasers (and all Persons designated by the Collateral Agent for the benefit
of the Purchasers) as the Grantor's true and lawful agent (and attorney-in-fact)
at all times upon the occurrence and during the continuation of an Event of
Default, to take all actions and to do all things required to be taken or done
by the Grantor under this Agreement, including without limitation:
(a) to ask, demand, collect, xxx 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;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) above;
(c) to endorse such Grantor's name on any checks, notes, drafts or
any other payment relating to or constituting proceeds of the Collateral which
comes into the possession or control of the Collateral Agent for the benefit of
the Purchasers, and deposit the same to the account of the Collateral Agent for
the benefit of the Purchasers on account and for payment of the Secured
Obligations;
(d) to file any claims or take any action or institute any
proceedings that the Collateral Agent for the benefit of the Purchasers may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of the Collateral Agent for the benefit of the Purchasers
with respect to any of the Collateral; and
(e) to execute, in connection with the sale provided for in Section
11, any endorsement, assignments, or other instruments of conveyance or transfer
with respect to the Collateral.
All acts of the Collateral Agent for the benefit of the Purchasers or its
designee taken pursuant to this Section 14 are hereby ratified and confirmed by
each Grantor and the Collateral Agent for the benefit of the Purchasers or its
designee shall not be liable for any acts of omission or commission nor for any
error of judgment or mistake of fact or law, other than as a result of its gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable by such Grantor until this Agreement has been terminated. The power
of attorney granted in this Section 14 shall terminate upon the termination of
this Agreement as set forth in Section 28 hereof.
15. Supplemental Documentation. At the request of the Collateral Agent for
the benefit of the Purchasers, each Grantor shall execute and deliver to the
Collateral Agent for the
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benefit of the Purchasers, at any time or times hereafter, all documents,
instruments and other written matter that the Collateral Agent for the benefit
of the Purchasers may request to perfect and maintain perfected the security
interest of the Collateral Agent for the benefit of the Purchasers in the
Collateral, in form and substance acceptable to the Collateral Agent for the
benefit of the Purchasers, and pay all charges, expenses and fees the Collateral
Agent for the benefit of the Purchasers may reasonably incur in filing any of
such documents, and all taxes relating thereto. Each Grantor agrees that a
carbon, photographic, photostatic, or other reproduction of this Agreement or a
financing statement is sufficient as a financing statement and may be filed by
the Collateral Agent for the benefit of the Purchasers in any filing office.
16. Waivers. In addition to the other waivers contained herein, each
Grantor hereby expressly waives, to the extent permitted by law: presentment for
payment, demand, protest, notice of demand, notice of protest, notice of default
or dishonor, notice of payments and nonpayments and all other notices and
consents to any action taken by the Collateral Agent for the benefit of the
Purchasers unless expressly required by this Agreement.
17. Trade Names. Each Grantor represents that the only Trade Names and
Trade Styles used by such Grantor are as set forth on Exhibit D, next to the
name of such Grantor.
18. Absolute Rights and Obligations. All rights of the Collateral Agent
for the benefit of the Purchasers granted hereunder, and each of the Secured
Obligations, shall be absolute and unconditional irrespective of:
(a) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to departure from, the Purchase Agreement or any other
Transaction Document, including, but not limited to, (i) an increase or decrease
in the Secured Obligations and (ii) an amendment of any Transaction Document to
permit the Collateral Agent for the benefit of the Purchasers or any one or more
of them to extend further or additional credit to the Company in any form
including credit by way of loan, purchase of assets, guarantee or otherwise,
which credit shall thereupon be and become subject to the Purchase Agreement and
the other Transaction Documents as a Secured Obligation;
(b) any taking and holding of collateral or guarantees for all or
any of the Secured Obligations; or any amendment, alteration, exchange,
substitution, transfer, enforcement, waiver, subordination, termination or
release of any such collateral or guarantees, or any non-perfection of any such
collateral, or any consent to departure from any such guaranty;
(c) any manner of application of collateral, or proceeds thereof,
securing payment or enforcement of all or any of the Secured Obligations, or the
manner of sale of any such collateral;
(d) any consent by the Purchasers to the change, restructure or
termination of the corporate structure or existence of the Company or any
Grantor and any corresponding
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restructure of the Secured Obligations, or any other restructure or refinancing
of the Secured Obligations or any portion thereof,
(e) any modification, compromise, settlement or release by the
Purchasers, by operation of law or otherwise, collection or other liquidation of
the Secured Obligations or the liability of any Grantor (other than the Grantor
against which this Agreement is to be enforced), or of any collateral for the
Secured Obligation (including without limitation any collateral pledged as
security for the Secured Obligations under the other Transaction Documents), in
whole or in part, and any refusal of payment by the Collateral Agent for the
benefit of the Purchasers in whole or in part, from any Grantor (other than the
Grantor against which this Agreement is sought to be enforced) in connection
with any of the Secured Obligations, whether or not with notice to, or further
assent by, or any reservation of rights against, any Grantor; or
(f) any other circumstance (including without limitation any statute
of limitations) that might otherwise constitute a defense available to, or a
discharge of, any Grantor.
The granting of a security interest in the Collateral shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must otherwise be returned by the
Collateral Agent for the benefit of the Purchasers, upon the insolvency,
bankruptcy or reorganization of the Company or any Grantor or otherwise, all as
though such payment had not been made
19. Definitions. All terms used herein which are not defined herein or in
the Purchase Agreement shall be defined in accordance with the appropriate
definitions appearing in the Uniform Commercial Code as in effect in New York,
and such definitions are hereby incorporated herein by reference and made a part
hereof.
20. Entire Agreement. This Agreement, together with the Purchase
Agreement, the Guaranty and other Transaction Documents, constitutes and
expresses the entire understanding between the parties hereto with respect to
the subject matter hereof, and supersedes all prior agreements and
understandings, inducements, commitments or conditions, express or implied, oral
or written, except as herein contained. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. Neither this Agreement nor any portion or provision hereof
may be changed, altered, modified, supplemented, discharged, canceled,
terminated, or amended orally or in any manner other than by an agreement, in
writing signed by the parties hereto.
21. Further Assurances. Each Grantor agrees at its own expense to do such
further acts and things, and to execute and deliver such additional conveyances,
assignments, financing statements, agreements and instruments, as the Collateral
Agent for the benefit of the Purchasers may at any time reasonably request in
connection with the administration or enforcement of this Agreement or related
to the Collateral or any part thereof or in order better to assure and confirm
unto the Collateral Agent for the benefit of the Purchasers its rights, powers
and remedies hereunder. Each Grantor hereby consents and agrees that the issuers
of or obligors in respect of the Collateral shall be entitled to accept the
provisions hereof as conclusive evidence of the right
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of the Collateral Agent for the benefit of the Purchasers to exercise its rights
hereunder with respect to the Collateral, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by any Grantor or any
other Person to any of such issuers or obligors.
22. Intentionally Omitted.
23. Intentionally Omitted.
24. Severability. The provisions of this Agreement are independent of and
separable from each other. If any provision hereof shall for any reason be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
the validity or enforceability of any other provision hereof, but this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
25. Successors and Assigns. This Agreement shall be binding upon the
successors and assigns of each Grantor, and the right, remedies, powers, and
privileges of the Collateral Agent for the benefit of the Purchasers on behalf
of the Purchasers hereunder shall inure to the benefit of the successors and
assigns of the Collateral Agent on behalf of the Purchasers; provided, however,
that no Grantor shall make any assignment hereof without the prior written
consent of the Collateral Agent for the benefit of the Purchasers.
26. Counterparts. This Agreement may be executed in any number of
counterparts and all the counterparts taken together shall be deemed to
constitute one and the same instrument.
27. Remedies Cumulative. All remedies hereunder are cumulative and are not
exclusive of any other rights and remedies of the Collateral Agent for the
benefit of the Purchasers provided by law or under the Purchase Agreement, the
other Transaction Documents, or other applicable agreements or instruments. The
purchase of the Notes by the Purchasers pursuant to the Purchase Agreement shall
be conclusively presumed to have been made or extended, respectively, in
reliance upon each Grantor's execution and delivery hereof.
28. Termination. This Agreement and all obligations of each Grantor
hereunder shall terminate on the payment in full of the Notes, at which time the
Liens and rights granted to the Collateral Agent for the benefit of the
Purchasers hereunder shall automatically terminate and no longer be in effect,
and the Collateral shall automatically be released from the Liens created
hereby. Upon such termination of this Agreement, the Collateral Agent for the
benefit of the Purchasers shall, at the sole expense of the Grantors, reassign
and redeliver to each applicable Grantor such Collateral then held by or for the
Collateral Agent for the benefit of the Purchasers and execute and deliver to
such Grantor such documents as such Grantor shall reasonably request and take
such further actions as may be reasonably necessary to effect the same.
29. Notices. Any notice required or permitted hereunder shall be given,
(a) with respect to the Company or any Grantor, at the Company's address
indicated in Section 12.9 of the Purchase Agreement and (b) with respect to the
Collateral Agent for the Purchasers, at the
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Collateral Agent for the benefit of the Purchasers's address indicated in
Section 12.9 of the Purchase Agreement. All such notices shall be given and
shall be effective as provided in Section 12.9 of the Purchase Agreement.
30. Governing Law; Service of Process.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED, AND TO
BE FULLY PERFORMED, IN SUCH STATE NOTWITHSTANDING ITS EXECUTION AND DELIVERY
OUTSIDE SUCH STATE.
(b) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY TO THIS
AGREEMENT WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE
OF NEW YORK AND, BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY TO
THIS AGREEMENT ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT FROM
WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. EACH PARTY TO THIS AGREEMENT
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED
IN SECTION 29 HEREOF, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH
MAILING. EACH PARTY TO THIS AGREEMENT HEREBY KNOWINGLY, INTENTIONALLY AND
IRREVOCABLY WAIVE (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND (B) ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON
THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER TRANSACTION DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN
SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
(c) EACH PARTY TO THIS AGREEMENT AGREES THAT SERVICE OF PROCESS MAY
BE MADE BY PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER
LEGAL PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY ANY OTHER METHOD OF
SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN THE STATE OF NEW
YORK.
[Signature pages following]
21
22
IN WITNESS WHEREOF, the parties have duly executed this Security
Agreement the day and year first written above.
GRANTORS:
SENETEK PLC
By: /s/ XXXXX XXXXXXX
-----------------------------------
Name:
Title:
SENETEK DRUG DELIVERY
TECHNOLOGIES, INC.
By: /s/ XXXXX XXXXXXX
-----------------------------------
Name:
Title:
CARME' COSMECEUTICAL
SCIENCES, INC.
By: /s/ XXXXX XXXXXXX
-----------------------------------
Name:
Title:
SECURED PARTY:
SILVER CREEK INVESTMENTS, LTD.
as Collateral Agent for the benefit of
the Purchasers
By:
-----------------------------------
Name:
Title:
[Signature page to Security Agreement]
