SECURITY & GUARANTY AGREEMENT
Exhibit
10.2
SECURITY
& GUARANTY AGREEMENT
SECURITY
& GUARANTY AGREEMENT (this “Agreement”), dated as of January 11, 2007, by
and between Alteon Inc., a Delaware corporation (“Company”), HaptoGuard, Inc., a
Delaware corporation and wholly owned subsidiary of the Company (“HaptoGuard”
and together with the Company, each a “Debtor” and collectively the “Debtors”)
and Xxxxx Bros Advisors LLC as collateral agent for the Secured Parties
(together with its successors and assigns in such capacity, the “Collateral
Agent”).
W
I T N E
S S E T H:
WHEREAS,
pursuant to a Convertible Note and Warrant Purchase Agreement, dated the date
hereof, between Company and the Collateral Agent (the “Purchase Agreement”),
Company has agreed to issue to the Lenders (as defined in the Purchase
Agreement) and the Lenders have each agreed to purchase from Company certain
of
Company’s Convertible Secured Notes (the “Notes”), which are convertible into
shares of Company’s Common Stock, $0.01 par value per share (the “Common
Stock”). In connection therewith, Company shall also issue the Lenders certain
warrants to purchase shares of Common Stock (the “Warrants”); and
WHEREAS,
in order to induce the Lenders to purchase the Notes, the Debtors have agreed
to
execute and deliver to the Collateral Agent this Agreement for the benefit
of
the Collateral Agent and the Lenders and to grant to it a first priority
security interest in certain property of the Debtors to secure the prompt
payment and performance of all of the Obligations (as hereinafter
defined).
NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. Certain
Definitions.
As used
in this Agreement, the following terms shall have the meanings set forth in
this
Section 1. Terms used but not otherwise defined in this Agreement that are
defined in Article 9 of the UCC shall have the respective meanings given such
terms in Article 9 of the UCC.
(a) “Collateral”
means all right, title and interest in and to, whether now owned or hereafter
acquired and wherever located:
(i) all
Receivables;
(ii) all
Equipment;
(iii) all
General Intangibles;
(iv) all
Inventory;
(v) all
Investment Property;
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(vi) all
Intellectual Property
(vii) (a)
without limiting the generality of the foregoing, all contract rights, rights
of
payment which have been earned under a contract right, instruments (including,
without limitation, promissory notes), documents, chattel paper (including,
without limitation, electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit and money; (b) all commercial tort claims (whether
now existing or hereafter arising); (c) all letter of credit rights (whether
or
not the respective letter of credit is evidenced by a writing); (d) all
supporting obligations; (e) all clinical, preclinical and non-clinical data;
(f)
all regulatory filings, applications, approvals and permits whether with or
from
the U.S. Food and Drug Administration or other government agency; (g) clinical
and preclinical trial quantities or commercial inventories of finished product,
active pharmaceutical ingredient and bulk drug supply and (h) to the extent
assignable, as rights to tax credits and tax refunds;
(viii) ledger
sheets, ledger cards, files, correspondence, records, books of account, business
papers, computers, computer software (owned by each Debtor or in which it has
an
interest), computer programs, tapes, disks and documents relating to (i), (ii),
(iii), (iv), (v), (vi) or (vii) of this Section; and
(ix) all
Proceeds and products of (i), (ii), (iii), (iv), (v), (vi) and (vii) in whatever
form, including, without limitation: cash, deposit accounts (whether or not
comprised solely of proceeds), certificates of deposit, insurance proceeds
(including, without limitation, hazard, flood and credit insurance), negotiable
instruments and other instruments for the payment of money, chattel paper,
security agreements, documents, eminent domain proceeds, condemnation proceeds
and tort claim proceeds.
(b) “Copyright
Licenses” means any and all agreements, licenses and covenants providing for the
granting of any right in or to Copyrights or otherwise providing for a covenant
not to xxx (whether the Debtor is licensee or licensor thereunder) including,
without limitation, each agreement referred to in Schedule
C
hereto.
(c) “Copyrights”
mean all United States and foreign copyrights (including, without limitation,
Community designs), including but not limited to copyrights in software and
all
rights in and to databases, and all Mask Works (as defined under 17 U.S.C.
901
of the U.S. Copyright Act), whether registered or unregistered, moral rights,
reversionary interests, termination rights, and, with respect to any and all
of
the foregoing: (i) all registrations and applications therefor including,
without limitation, the registrations and applications required to be listed
in
Schedule
C
hereto,
(ii) all extensions and renewals thereof, (iii) all rights corresponding thereto
throughout the world, (iv) all rights to xxx for past, present and future
infringements thereof, and (v) all Proceeds of the foregoing, including, without
limitation, licenses, royalties, income, payments, claims, damages and proceeds
of suit.
(d) “Equipment”
means goods (other than Inventory) whether now owned or hereafter acquired
and
wherever located including, without limitation, all equipment, machinery,
apparatus, motor vehicles, fittings, furniture, furnishings, fixtures, parts,
accessories and all replacements and substitutions therefor or accessions
thereto.
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(e) “General
Intangibles” means all general intangibles as defined in the UCC, whether now
owned or hereafter acquired, including, without limitation, all payment
intangibles, and without limiting the generality of the foregoing all of the
following whether or not constituting general intangibles as defined in the
UCC:
all choses in action, causes of action, corporate or other business records,
inventions, designs, equipment formulations, manufacturing procedures, quality
control procedures, service marks, trade secrets, goodwill, design rights,
software, computer information, source codes, codes, records and updates,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests
or
other security held or granted to secure payment of any of the Receivables
by a
Customer (other than to the extent covered by Receivables), all rights of
indemnification and all other intangible property of every kind and nature
(other than Receivables).
(f) “Inventory”
means all now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any consignment arrangement,
contract of service or held for sale or lease, all raw materials, work in
process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such party’s business or
used in selling or furnishing such goods, merchandise and other personal
property, and all documents of title or other documents representing
them.
(g) “Intellectual
Property” means all Copyrights, Copyright Licenses, Patents, Patent Licenses,
Trademarks and Trademark Licenses.
(h) “Investment
Property” means all now owned or hereafter acquired securities (whether
certificated or uncertificated), securities entitlements, securities accounts,
commodities contracts and commodities accounts.
(i) “Obligations”
means all of the Company’s obligations under this Agreement, the Warrants and
the Notes, in each case, whether now or hereafter existing, voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, as such obligations may be amended, supplemented, converted,
extended or modified from time to time and all obligations of HaptoGuard
hereunder.
(j) “Patent
Licenses” shall mean all agreements, licenses and covenants providing for the
granting of any right in or to Patents or otherwise providing for a covenant
not
to xxx (whether the Debtor is licensee or licensor thereunder) including,
without limitation, each agreement referred to in Schedule
C.
(k) “Patents”
shall mean all United States and foreign patents and certificates of invention,
or similar industrial property rights, and applications for any of the
foregoing, including, without limitation: (i) each patent and patent application
referred to in Schedule
C
hereto,
(ii) all reissues, divisions, continuations, continuations-in-part, extensions,
renewals, and reexaminations thereof, (iii) all rights corresponding thereto
throughout the world, (iv) all inventions and improvements described therein,
(v) all rights to xxx for past, present and future infringements thereof, (vi)
all licenses, claims, damages, and proceeds of suit arising therefrom, and
(vii)
all Proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit.
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(l) “Permitted
Liens” means any and all of the following: (i) liens existing as of the date of
this Agreement and listed on Schedule
B;
(ii)
liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings; provided, that the Company maintains adequate reserves therefor
in
accordance with GAAP; (iii) liens securing claims or demands of materialmen,
artisans, mechanics, carriers, warehousemen, landlords and other like persons
arising in the ordinary course of the Company’s business and imposed without
action of such parties; provided, that the payment thereof is not yet required;
(iv) liens arising from judgments, decrees or attachments that do not exceed
$250,000 and to the extent applicable are not covered by a policy of insurance;
(v) the following deposits, to the extent made in the ordinary course of
business: deposits under worker’s compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders
or contracts or to secure indemnity, performance or other similar bonds for
the
performance of bids, tenders or contracts (other than for the repayment of
borrowed money) or to secure statutory obligations (other than liens arising
under ERISA or environmental liens) or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds; (vi) purchase money security
interests and liens in connection with financing leases on equipment, and (vii)
liens incurred in connection with the extension, renewal or refinancing of
the
indebtedness secured by liens of the type described in clause (vi)
above.
(m) “Receivables”
means (i) all Accounts (as defined in the UCC), (ii) such contract rights,
instruments, documents, chattel paper (including,
without
limitation, electronic
chattel paper), general intangibles relating to accounts, drafts and
acceptances, credit card receivables and all other forms of obligations owing
arising out of or in connection with the sale or lease of Inventory or the
rendition of services, and (iii) all supporting obligations, guarantees and
other security for any of the foregoing, whether secured or unsecured, now
existing or hereafter created.
(n) “Secured
Parties” means from time to time each person or entity who is at any such time a
Lender (as defined in the Purchase Agreement) or a holder of a Note or a
Warrant.
(o) “Trademark
Licenses” shall mean any and all agreements, licenses and covenants providing
for the granting of any right in or to Trademarks or otherwise providing for
a
covenant not to xxx or permitting co-existence (whether the Debtor is licensee
or licensor thereunder) including, without limitation, each agreement referred
to in Schedule
C.
(p) “Trademarks”
shall mean all United States, and foreign trademarks, trade names, corporate
names, company names, business names, fictitious business names, Internet domain
names, service marks, certification marks, collective marks, logos, other source
or business identifiers, designs and general intangibles of a like nature,
all
registrations and applications for any of the foregoing including, without
limitation: (i) the registrations and applications referred to in Schedule
C,
(ii)
all extensions or renewals of any of the foregoing, (iii) all of the goodwill
of
the business connected with the use of and symbolized by the foregoing, (iv)
the
right to xxx for past, present and future infringement or dilution of any of
the
foregoing or for any injury to goodwill, and (v) all Proceeds of the foregoing,
including, without limitation, licenses, royalties, income, payments, claims,
damages, and proceeds of suit.
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(q) “UCC”
means the Uniform Commercial Code, as currently in effect in the State of New
York.
2. Grant
of Security Interest.
To
secure the payment and performance of all of the Obligations, the Debtors hereby
grants to the Collateral Agent, a continuing security interest in all of the
Debtor’s right, title and interest of whatsoever kind and nature in and to the
Collateral (the “Security Interest”). Notwithstanding any provision of this
Agreement to the contrary, Collateral shall not include (i) any property that
is
subject to a Permitted Lien pursuant to subsection (vi) of such definition
to
the extent that such Permitted Lien prohibits the security interest hereunder
or
(ii) any agreement with a third party existing on the date hereof that prohibits
the grant of a lien on (but not merely the assignment of or of any interest
in)
such agreement or any of the Debtor’s rights thereunder without the consent of
such party or under which a consent to such grant is otherwise required, which
consent has not been obtained, except to the extent any such prohibition is
made
ineffective as a result of Section 9-406(d), 9-407, 9-408, or 9-409 of the
UCC.
3. Representations,
Warranties, Covenants and Agreements of the Debtors.
Each
Debtor represents and warrants to, and covenants and agrees with, the Collateral
Agent as follows:
(a) Each
Debtor
has
the
requisite corporate power and authority to enter into this Agreement and
otherwise to carry out its obligations hereunder. The execution, delivery and
performance by the Debtor of this Agreement and the filings contemplated herein
have been duly authorized by all necessary action on the part of the Debtor
and
no further action is required by the Debtor . This Agreement constitutes a
legal, valid and binding obligation of the Debtor enforceable in accordance
with
its terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor’s rights generally, and provided that (1) the conversion of all of the
Notes may require approval of the Company’s stockholders under applicable rules
of the American Stock Exchange, which approval has not been obtained, and (2)
insofar as any foreclosure on the Collateral under this Agreement would
constitute a sale of all or substantially all of the Debtor’s assets requiring
stockholder approval, such approval has not been obtained.
(b) Each
Debtor represents and warrants that it has no place of business or offices
where
its respective books of account and records are kept (other than temporarily
at
the offices of its attorneys or accountants) or places where Collateral is
stored or located, except as set forth on Schedule
A
attached
hereto.
(c) The
full
legal name of each Debtor is as set forth on the signature pages hereof. Each
Debtor has not done in the last five (5) years, and does not do, business under
any other name (including, without limitation, any trade name or fictitious
business name).
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(d) Without
limiting any prohibitions or restrictions in the Note, a Debtor shall not change
its name, identity, corporate structure (e.g.,
by
merger, consolidation, change in corporate form or otherwise), sole place of
business, chief executive office, type of organization or jurisdiction of
organization or establish any trade names unless it shall have (a) notified
the
Collateral Agent in writing at least ten (10) days prior to any such change
or
establishment, identifying such new proposed name, identity, corporate
structure, sole place of business, chief executive office, jurisdiction of
organization or trade name and providing such other information in connection
therewith as the Collateral Agent may reasonably request and (b) taken all
actions reasonably necessary or advisable to maintain the continuous validity,
perfection and the same priority of the Collateral Agent’s security interest in
the Collateral intended to be granted and agreed to hereby.
(e) Except
for Permitted Liens, each Debtor is the sole owner of the Collateral (except
for
exclusive, semi-exclusive and non-exclusive licenses granted by a Debtor in
the
ordinary course of business which licenses existing as of the date hereof are
identified on Schedule D hereto), free and clear of any liens, security
interests, encumbrances, rights or claims, and is fully authorized to grant
the
Security Interest in and to pledge the Collateral.
(f) This
Agreement creates in favor of the Collateral Agent a valid security interest
in
the Collateral securing the payment and performance of the Obligations and,
upon
making the filings described in the immediately following sentence, a perfected
first priority security interest in such Collateral. Except for the filing
of
financing statements on Form-1 under the UCC with the Secretary of State of
the
State of Delaware, no authorization or approval of or filing with or notice
to
any governmental authority or regulatory body is required either (i) for the
grant by a Debtor of, or the effectiveness of, the Security Interest granted
hereby or for the execution, delivery and performance of this Agreement by
each
Debtor or (ii) for the perfection of or exercise by the Collateral Agent of
its
rights and remedies hereunder.
(g) Other
than Permitted Liens and Permitted Transfers, the Debtors will not transfer,
pledge, hypothecate, encumber, license, sell or otherwise dispose of any of
the
Collateral without the prior written consent of the Collateral Agent. “Permitted
Transfers” means (i) sales of inventory in the normal course of business, (ii)
licenses of technology in the ordinary course of business on commercially
reasonable terms and consistent with the Company's past practices, or (iii)
dispositions of worn-out or obsolete equipment and dispositions of equipment
not
exceeding $250,000 per year.
(h) Each
Debtor shall promptly execute (as applicable) and deliver to the Collateral
Agent such further assignments, security agreements, financing statements or
other instruments, documents, certificates and assurances and take such further
action as the Collateral Agent may from time to time reasonably request and
may
reasonably deem necessary to perfect, protect or enforce its security interest
in the Collateral.
(i) With
respect to any deposit accounts or securities accounts holding cash or
securities in excess of $50,000 individually or $100,000 in the aggregate,
the
Company shall use its commercially reasonable efforts to cause the depositary
bank or securities intermediary holding such account to enter into a control
agreement in form and substance reasonably satisfactory to the Collateral Agent
and establishing the Collateral Agent’s control (within the meaning of Section
9-104 or 8-106 of the UCC, as applicable) over such deposit accounts and
securities accounts. At the request of the Collateral Agent, the Debtors will
move any deposit account or securities account for which they are unable to
obtain such a control agreement to a financial institution that enters into
such
a control agreement.
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(j) Schedule
C
sets
forth a true and complete list of (i) all United States, state and foreign
registrations of and applications for Patents, Trademarks, and Copyrights owned
by or, in the case of Copyrights, exclusively licensed to, each Debtor and
(ii)
all Patent Licenses, Trademark Licenses, Trade Secret Licenses and Copyright
Licenses material to the business of each Debtor or otherwise of material
value.
(k) Each
Debtor shall promptly report to the Collateral Agent (i) the filing of any
application to register any Intellectual Property with the United States Patent
and Trademark Office, the United States Copyright Office, or any state registry
or foreign counterpart of the foregoing (whether such application is filed
by
the Company or through any agent, employee, licensee, or designee thereof)
and
(ii) the registration of any Intellectual Property by any such office. Each
Debtor shall take such step as may be reasonably requested by the Collateral
Agent to ensure that the security interest of the Collateral Agent is registered
with each such recording office.
(l) With
respect to any Collateral that is evidenced by, or constitutes, a Certificated
Security, Chattel Paper or Instrument (other than any Chattel Paper or
Instruments having a value less than $10,000 individually or $50,000 in the
aggregate), each Debtor shall cause each originally executed copy thereof to
be
delivered to the Collateral Agent (or its agent or designee) appropriately
indorsed to the Collateral Agent or indorsed in blank: (i) with respect to
any
such Collateral in existence on the date hereof, on or prior to the date hereof
and (ii) with respect to any such Collateral hereafter arising, within ten
(10)
days of such Debtor acquiring rights therein.
4. Event
of Default.
The
occurrence of an Event of Default (as defined in the Notes) under the Notes
shall constitute an Event of Default hereunder.
5. Duty
To Hold In Trust.
Upon
the occurrence of any Event of Default that remains continuing and at any time
thereafter, following written notice from Collateral Agent the Company shall,
upon receipt by it of any revenue, income or other sums subject to the Security
Interest, whether payable pursuant to the Notes or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an obligation
to
pay any such sum, hold the same in trust for the Collateral Agent and shall
forthwith endorse and transfer any such sums or instruments, or both, to the
Collateral Agent for application to the satisfaction of the
Obligations.
6. Rights
and Remedies Upon Default.
Upon
occurrence of any Event of Default that remains continuing and at any time
thereafter, the Collateral Agent shall have the right to exercise all of the
remedies conferred hereunder, and the Collateral Agent shall have all the rights
and remedies of a Collateral Agent under the UCC and/or any other applicable
law
or in equity (including, without limitation, the Uniform Commercial Code of
any
jurisdiction in which any Collateral is then located). Without limitation,
the
Collateral Agent shall have the following rights and powers:
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(a) The
Collateral Agent shall have the right to take possession of the Collateral
and,
for that purpose, enter, with the aid and assistance of any person, any premises
where the Collateral, or any part thereof, is or may be placed and remove the
same, and the Debtor shall assemble the Collateral and make it available to
the
Collateral Agent at places which the Collateral Agent shall reasonably select,
whether at the Company’s premises or elsewhere, and make available to the
Collateral Agent, without rent, all of the Company’s respective premises and
facilities for the purpose of the Collateral Agent taking possession of,
removing or putting the Collateral in saleable or disposable form.
(b) The
Collateral Agent shall have the right to operate the business of the each Debtor
using the Collateral and shall have the right to assign, sell, lease or
otherwise dispose of and deliver all or any part of the Collateral, at public
or
private sale or otherwise, either with or without special conditions or
stipulations, for cash or on credit or for future delivery, in such parcel
or
parcels and at such time or times and at such place or places, and upon such
terms and conditions as the Collateral Agent may deem commercially reasonable,
all without (except as shall be required by applicable statute and cannot be
waived) advertisement or demand upon or notice to the Company or right of
redemption of the Company, which are hereby expressly waived. Upon each such
sale, lease, assignment or other transfer of Collateral, the Collateral Agent
may, unless prohibited by applicable law which cannot be waived, purchase all
or
any part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of the Company, which are hereby waived
and released.
7. Applications
of Proceeds.
The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder shall be applied first, to the expenses of retaking, holding, storing,
processing and preparing for sale, selling, and the like (including, without
limitation, any taxes, fees and other costs incurred in connection therewith)
of
the Collateral, to the reasonable attorneys’ fees and expenses incurred by the
Collateral Agent in enforcing its rights hereunder and in connection with
collecting, storing and disposing of the Collateral, and then to satisfaction
of
the Obligations, and to the payment of any other amounts required by applicable
law, after which the Collateral Agent shall pay to the Company any surplus
proceeds.
8. Costs
and Expenses.
The
Company agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including without
limitation, any financing statements, continuation statements, partial releases
and/or termination statements related thereto. The Company will also, upon
demand, pay to the Collateral Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its counsel, which
the
Collateral Agent may incur in connection with (i) the enforcement of this
Agreement or (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral.
9. Security
Interest Absolute.
All
rights of the Collateral Agent and all Obligations of each Debtor hereunder,
shall be absolute and unconditional, irrespective of: (a) any lack of validity
or enforceability of this Agreement, the Notes or any agreement entered into
in
connection with the foregoing, or any portion hereof or thereof; (b) any change
in the time, manner or place of payment or performance of, or in any other
term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to any departure from the Notes or any other agreement entered into
in
connection with the foregoing; (c) any exchange, release or nonperfection of
any
of the Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guaranty, or any other security,
for all or any of the Obligations; (d) any action by the Collateral Agent to
obtain, adjust, settle and cancel in its sole discretion any insurance claims
or
matters made or arising in connection with the Collateral; or (e) any other
circumstance which might otherwise constitute any legal or equitable defense
available to a Debtor, or a discharge of all or any part of the Security
Interest granted hereby. Each Debtor expressly waives presentment, protest,
notice of protest, demand, notice of nonpayment and demand for performance.
In
the event that at any time any transfer of any Collateral or any payment
received by the Collateral Agent hereunder shall be deemed by final order of
a
court of competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States, or
shall be deemed to be otherwise due to any party other than the Collateral
Agent, then, in any such event, each Debtor’s obligations hereunder shall
survive cancellation of this Agreement, and shall not be discharged or satisfied
by any prior payment thereof and/or cancellation of this Agreement, but shall
remain a valid and binding obligation enforceable in accordance with the terms
and provisions hereof. Each Debtor waives all right to require the Collateral
Agent to proceed against any other person or to apply any Collateral which
the
Collateral Agent may hold at any time, or to marshal assets, or to pursue any
other remedy. Each Debtor waives any defense arising by reason of the
application of the statute of limitations to any obligation secured
hereby.
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10. Power
of Attorney.
Each
Debtor hereby irrevocably appoints the Collateral Agent (such appointment being
coupled with an interest) as each Debtor’s attorney-in-fact, with full authority
in the place and stead of such Debtor and in the name of such Debtor, the
Collateral Agent or otherwise, from time to time upon the occurrence and during
the continuance of any Event of Default in the Collateral Agent’s discretion to
take any action and to execute any instrument that the Collateral Agent may
deem
reasonably necessary or advisable to accomplish the purposes of this Agreement.
11. Guarantee.
(a)
HaptoGuard hereby unconditionally and irrevocably, guarantees to the Collateral
Agent, for the ratable benefit of the Secured Parties and their respective
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance by the Company when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations of the Company. HaptoGuard hereby
agrees that this Guaranty is an absolute guaranty of payment and performance
and
is not a guaranty of collection
If
and to
the extent required in order for the Obligations of HaptoGuard to be enforceable
under applicable federal, state and other laws relating to the insolvency of
debtors, the maximum liability of HaptoGuard hereunder shall be limited to
the
greatest amount which can lawfully be guaranteed by HaptoGuard under such laws.
HaptoGuard agrees that Obligations may at any time and from time to time be
incurred or permitted in an amount exceeding the maximum liability of HaptoGuard
under the preceding sentence without impairing the guarantee contained in this
Section 11 or affecting the rights and remedies of any Secured Party
hereunder.
The
guarantee contained in this Section 11 shall remain in full force and effect
until payment in full of the Obligations.
No
payment made by the Company, HaptoGuard or any other Person or received or
collected by any Secured Party from the Company, HaptoGuard or any other Person
by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment
of
the Company Obligations shall be deemed to modify, reduce, release or otherwise
affect the liability of any HaptoGuard hereunder which shall, notwithstanding
any such payment (other than any payment made by HaptoGuard in respect of the
Obligations), remain liable for the Obligations up to the maximum liability
of
such HaptoGuard hereunder until the Obligations are paid in full.
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(b)
Rights of Reimbursement, Contribution and Subrogation.
All
rights and claims of HaptoGuard based upon or relating to any right of
reimbursement, indemnification, contribution or subrogation that may at any
time
arise or exist in favor of HaptoGuard as to any payment on account of the
Obligations made by it or received or collected from its property shall be
fully
subordinated in all respects to the prior payment in full of all of the
Obligations. Until payment in full of the Obligations, HaptoGuard shall not
demand or receive any collateral security, payment or distribution whatsoever
(whether in cash, property or securities or otherwise) on account of any such
right or claim. If any such payment or distribution is made or becomes available
to HaptoGuard in any bankruptcy case or receivership, insolvency or liquidation
proceeding, such payment or distribution shall be delivered by the person making
such payment or distribution directly to the Collateral Agent, for application
to the payment of the Obligations. If any such payment or distribution is
received by any Debtor, it shall be held by such Debtor in trust, as trustee
of
an express trust for the benefit of the Secured Parties, and shall forthwith
be
transferred and delivered by such Debtor to the Administrative Agent, in the
exact form received and, if necessary, duly endorsed.
HaptoGuard
shall remain obligated hereunder notwithstanding that, without any reservation
of rights against HaptoGuard and without notice to or further assent by any
HaptoGuard, any demand for payment of any of the Obligations made by any Secured
Party may be rescinded by such Secured Party and any of the Obligations
continued, and the Obligations, or the liability of any other Person upon or
for
any part thereof, or any collateral security or guarantee therefor or right
of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, increased, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by any Secured Party, and the Note, Warrant
and/or Purchase Agreement and any other documents executed and delivered in
connection therewith may be amended, modified, supplemented or terminated,
in
whole or in part, as the Collateral Agent (or the requisite Lenders) may deem
advisable from time to time, and any collateral security, guarantee or right
of
offset at any time held by any Secured Party for the payment of the Obligations
may be sold, exchanged, waived, surrendered or released. No Secured Party shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Company Obligations or for the guarantee
contained in this Section 11 or any property subject thereto.
10
(c)
Guarantee Absolute and Unconditional. HaptoGuard
waives any and all notice of the creation, renewal, extension or accrual of
any
of the Obligations and notice of or proof of reliance by any Secured Party
upon
the guarantee contained in this Section 11 or acceptance of the guarantee
contained in this Section 11; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred, or renewed,
extended, amended or waived, in reliance upon the guarantee contained in this
Section 11; and all dealings between the Company and HaptoGuard, on the one
hand, and the Secured Parties, on the other hand, likewise shall be conclusively
presumed to have been had or consummated in reliance upon the guarantee
contained in this Section 11. HaptoGuard waives diligence, presentment, protest,
demand for payment and notice of default or nonpayment to or upon the Company
or
HaptoGuard with respect to the Obligations. HaptoGuard understands and agrees
that the guarantee contained in this Section 11 shall be construed as a
continuing, absolute and unconditional guarantee of payment and performance
without regard to (a) the validity or enforceability of the Note, Warrant and/or
Purchase Agreement and any other documents executed and delivered in connection
therewith, any of the Obligations or any other collateral security therefor
or
guarantee or right of offset with respect thereto at any time or from time
to
time held by any Secured Party, (b) any defense, set-off or counterclaim (other
than a defense of payment or performance hereunder) which may at any time be
available to or be asserted by the Company or any other Person against any
Secured Party, or (c) any other circumstance whatsoever (with or without notice
to or knowledge of the Company or HaptoGuard) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Company for
the
Obligations, or of HaptoGuard under the guarantee contained in this Section
11,
in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against HaptoGuard, any
Secured Party may, but shall be under no obligation to, make a similar demand
on
or otherwise pursue such rights and remedies as it may have against the Company
or any other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure by
any
Secured Party to make any such demand, to pursue such other rights or remedies
or to collect any payments from the Company or any other Person or to realize
upon any such collateral security or guarantee or to exercise any such right
of
offset, or any release of the Company or any other Person or any such collateral
security, guarantee or right of offset, shall not relieve any HaptoGuard of
any
obligation or liability hereunder, and shall not impair or affect the rights
and
remedies, whether express, implied or available as a matter of law, of any
Secured Party against any HaptoGuard. For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.
(d)
Reinstatement. The
guarantee contained in this Section 11 shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof,
of
any of the Obligations is rescinded or must otherwise be restored or returned
by
any Secured Party upon the insolvency, bankruptcy, dissolution, liquidation
or
reorganization of the Company or HaptoGuard, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or similar
officer for, the Company or HaptoGuard or any substantial part of its property,
or otherwise, all as though such payments had not been made.
12. Access;
Right of Inspection.
The
Collateral Agent shall at all times have full and free access during normal
business hours following reasonable advance notice to all the books,
correspondence and records of each Debtor, and the Collateral Agent and its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and each Debtor agrees to render to the Collateral Agent,
at such Debtor's cost and expense, such clerical and other assistance as may
be
reasonably requested with regard thereto. The Collateral Agent and its
representatives shall at all times also have the right to enter any premises
of
each Debtor and inspect any property of each Debtor where any of the Collateral
of such Debtor granted pursuant to this Agreement is located for the purpose
of
inspecting the same, observing its use or otherwise protecting its interests
therein.
11
13. Further
Assurances
.
Each
Debtor agrees that from time to time, at the expense of such Debtor, that it
shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or desirable, or that the
Collateral Agent may reasonably request, in order to create and/or maintain
the
validity, perfection or priority of and protect any security interest granted
hereby or to enable the Collateral Agent to exercise and enforce its rights
and
remedies hereunder with respect to any Collateral
14. Term
of Agreement.
This
Agreement and the Security Interest shall terminate on the date on which all
payments under the Notes have been made in full. Upon such termination, the
Collateral Agent will promptly file all termination statements with respect
to
any financing statement executed and filed pursuant to this Agreement.
15. Notices.
All
notices, requests, demands and other communications hereunder shall be in
writing and shall be sent in accordance with the provision of Section 11 of
the
Purchase Agreement.
16. Miscellaneous.
(a) No
course
of dealing between the Debtors and the Collateral Agent, nor any failure to
exercise, nor any delay in exercising, on the part of the Collateral Agent,
any
right, power or privilege hereunder or under the Notes shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
(b) All
of
the rights and remedies of the Collateral Agent with respect to the Collateral,
whether established hereby or by the Notes or by any other agreements,
instruments or documents or by law shall be cumulative and may be exercised
singly or concurrently.
(c) This
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and is intended to supersede all prior negotiations,
understandings and agreements with respect thereto. Except as specifically
set
forth in this Agreement, no provision of this Agreement may be modified or
amended except by a written agreement specifically referring to this Agreement
and signed by the parties hereto.
(d) In
the
event that any provision of this Agreement is held to be invalid, prohibited
or
unenforceable in any jurisdiction for any reason, unless such provision is
narrowed by judicial construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision had been more narrowly drawn so as not to be invalid, prohibited
or
unenforceable. If, notwithstanding the foregoing, any provision of this
Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective
to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions
of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other
jurisdiction.
12
(e) No
waiver
of any breach or default or any right under this Agreement shall be considered
valid unless in writing and signed by the party giving such waiver, and no
such
waiver shall be deemed a waiver of any subsequent breach or default or right,
whether of the same or similar nature or otherwise.
(f) This
Agreement shall be binding upon and inure to the benefit of each party hereto
and its successors and assigns.
(g) This
Agreement shall be construed in accordance with the laws of the State of New
York, except to the extent the validity, perfection or enforcement of a security
interest hereunder in respect of any particular Collateral which are pursuant
to
mandatory choice of law rules governed by a jurisdiction other than the State
of
New York in which case such law shall govern.
(h) This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original, and all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
(i) To
the
fullest extent permitted by applicable law, each Debtor shall remain obligated
hereunder notwithstanding that, any demand for payment of any of the Obligations
made by any Secured Party may be rescinded by such Secured Party and any of
the
Obligations continued, and the Obligations or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time
to
time, in whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Collateral Agent or any
Secured Party, and the Note, Warrant and/or Purchase Agreement and any other
documents executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or in part, as the Collateral
Agent (or the requisite Lenders) may deem advisable from time to time, and
any
collateral security, guarantee or right of offset at any time held by any
Secured Party for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
13
IN
WITNESS WHEREOF, the parties hereto have caused this Security & Guaranty
Agreement to be duly executed on the day and year first above
written.
DEBTORS:
ALTEON
INC.
By:
_/s/
Noah Berkowitz___________
Name:
Xxxx Xxxxxxxxx
Title:
President
HAPTOGUARD,
INC.
By:
_/s/
Noah Berkowitz_______________
Name:
Xxxx Xxxxxxxxx
Title:
President
COLLATERAL
AGENT:
XXXXX
BROS. ADVISORS, LLC
By: /s/
Xxxxx Baker__________
Name:
Xxxxx Xxxxx, Ph.D.
Title:
Managing Member
14
SCHEDULE
A
Places
of Business of the Company:
0
Xxxxxx
Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000
Locations
Where Collateral is Located or Stored:
0
Xxxxxx
Xxxxx
Xxxxxxxxxx,
Xxx Xxxxxx 00000
The
Company is currently in negotiations to move its principal place of business
from the Parsippany address to office space located at 000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxx, XX.
15
SCHEDULE
B
Existing
Liens
None.
16
SCHEDULE
C
List
of
Intellectual Property
Copyrights
None.
Copyright
Licenses
None.
Patents
See
attached for list of issued patents and patent applications of Alteon and
HaptoGuard
Patent
Licenses
|
1.
|
Exclusive
License Agreement dated as of September 28, 2004 by and between Oxis
International, a Delaware corporation (“Oxis”) and HaptoGuard, as amended
on March 22, 2005 and further amended on July 19, 2006.
|
|
2.
|
License
and Research Agreement dated as of July 12, 2004 by and between BIO-RAP
Technologies, Ltd., an Israeli corporation on its own behalf and
on behalf
of the Xxxxxxxxx Family Institute for Research in the Medical Sciences
and
HaptoGaurd.
|
Trademarks
See
attached for list of registered trademarks of Alteon.
HaptoGuard
has no trademarks.
Trademark
Licenses
None.
17
SCHEDULE
D
EXISTING
LICENSES WHERE DEBTORS ARE LICENSORS
License
Agreement dated as of June 15, 2005 by and between Alteon and Avon Products,
Inc., a New York Corporation.
18
