DEBENTURE IMAGENT SECURITY AGREEMENT
DEBENTURE IMAGENT SECURITY AGREEMENT dated as of October 4, 2002, made
by Alliance Pharmaceutical Corp., a New York corporation (the "Grantor") to the
parties signatory hereto (collectively, the "Secured Parties").
WITNESSETH
WHEREAS, the Grantor and certain investors (the "Investors") are
entering into a Convertible Secured Note Purchase Agreement, dated as of the
date hereof (the "Convertible Secured Note Purchase Agreement"), with the
initial closing taking place on the date hereof and subsequent closings taking
place at a later date;
WHEREAS, pursuant to the Convertible Secured Note Purchase Agreement,
the Investors may purchase up to $3,000,000 in aggregate principal amount of the
Grantor's 8% Convertible Secured Promissory Notes (the "Notes");
WHEREAS, the Secured Parties hold an aggregate principal amount of
$11,000,000 of the Grantor's 5% Convertible Debentures Due 2004 (the
"Debentures") issued pursuant to those certain Securities Purchase Agreements
dated as of February 11, 2002 and August 22, 2000 among the Grantor and the
Secured Parties (the "Securities Purchase Agreements");
WHEREAS, in exchange for certain waivers of provisions under the
Debentures in connection with the Convertible Secured Note Purchase Agreement
and the purchase of the Notes, the Grantor has agreed to grant to the Secured
Parties a security interest in certain of the Grantor's property and assets,
junior in priority only to the Prior Liens to secure, among other things, the
performance of the obligations of the Grantor under the Securities Purchase
Agreements and the Debentures; and
WHEREAS, the Grantor is contemporaneously entering into a Debenture
General Collateral Security Agreement with the Secured Parties and a Debenture
Imagent and Oxygent Patent and Trademark Security Agreement with the Secured
Parties.
NOW, THEREFORE, in consideration of the premises set forth above the
Grantor hereby agrees with the Secured Parties as follows:
TERMS
1. DEFINED TERMS. The terms set forth below have the following
meanings:
"ACCOUNTS" shall have the meaning assigned to such term under the
Code.
"CHATTEL PAPER" shall have the meaning assigned to such term under the
Code.
"CODE" means the Uniform Commercial Code as from time to time in
effect in the State of New York.
"COMMERCIAL TORT CLAIMS" shall have the meaning assigned to such term
under the Code.
"DEPOSIT ACCOUNTS" shall have the meaning assigned to such term under
the Code.
"DOCUMENTS" shall have the meaning assigned to such term under the
Code.
"EQUIPMENT" shall have the meaning assigned to such term under the
Code.
"EVENT OF DEFAULT" means:
(1) the failure by the Grantor to perform in any material respect any
obligation of the Grantor under this Security Agreement as and when required by
this Security Agreement; or
(2) any representation or warranty made by the Grantor pursuant to
this Security Agreement is untrue in any material respect when made; or
(3) the failure by the Grantor to perform in any material respect any
obligation of the Grantor under the General Collateral Security Agreement as and
when required by the General Collateral Security Agreement; or
(4) any representation or warranty made by the Grantor pursuant to the
General Collateral Security Agreement is untrue in any material respect when
made; or
(5) the failure by the Grantor to perform in any material respect any
obligation of the Grantor under the Patent and Trademark Security Agreement as
and when required by the Patent and Trademark Security Agreement; or
(6) any representation or warranty made by the Grantor pursuant to the
Patent and Trademark Security Agreement is untrue in any material respect when
made; or
(7) any Event of Default (as defined in the Debentures) specified in
Section 3.1 of the Debentures occurs and is continuing, and has not been waived
in accordance with the terms thereof; or
(8) the security interests granted herein and pursuant to the General
Collateral Agreement and the Patent and Trademark Security Agreement do not
constitute for any reason a perfected security interest in the Collateral
covered thereby (other than as a result of a failure to make the filings
specified in SCHEDULE II of this Security Agreement, SCHEDULE I of the General
Collateral Security Agreement and Exhibits E, F and G of the Patent and
Trademark Security Agreement or the possession of Collateral by or on behalf of
the Prior Lienholders), junior in priority only to the Prior Liens; or
(9) the Grantor shall file a petition under bankruptcy, insolvency or
debtor's relief law or make an assignment for the benefit of its creditors; or
(10) proceedings shall be instituted against the Grantor before a
court of competent jurisdiction under any federal or state bankruptcy law that
(X) is for relief against the Grantor in an involuntary case brought with
respect to the Grantor in such court, (Y) seeks to appoint a custodian, receiver
or other similar official for all or substantially all the Grantor's property or
(Z) seeks to liquidate the Grantor, and such proceedings remain unstayed and in
effect for 60 days; or
(11) the loss or suspension of the Food and Drug Administration
approval relating to the Product; or
(12) failure of the Grantor to pay any Obligation when due; or
(13) the Grantor shall fail to pay when due any principal of, premium
or interest on or any amount payable in respect of any borrowed money
indebtedness.
"EQUIPMENT" shall have the meaning assigned to such term under the
Code.
"GENERAL COLLATERAL SECURITY AGREEMENT" shall mean that certain
Debenture General Collateral Security Agreement dated as of the date hereof
between the Grantor and the Secured Parties, as amended, supplemented or
otherwise modified from time to time.
"GENERAL INTANGIBLES" shall have the meaning assigned to such term
under the Code.
"INSTRUMENT" shall have the meaning assigned to such term under the
Code.
"INVENTORY" shall have the meaning assigned to such term under the
Code, and in any event, including all inventory, merchandise, goods and other
personal property that are held by or on behalf of a person for sale or lease or
to be furnished under a contract of service or which give rise to any Account,
including returned goods.
"INVESTMENT PROPERTY" shall have the meaning assigned to such term
under the Code.
"LEASE" shall mean the lease, between Equity Office Properties Trust
and the Grantor, dated November 7, 1997, for the property located at 0000 Xxxx
Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, as amended in compliance with the terms
of this Security Agreement.
"LETTER-OF-CREDIT RIGHT" shall have the meaning assigned to such term
under the Code.
"LICENSE AGREEMENT" shall mean the amended and restated License
Agreement, dated February 22, 2002, between Schering Aktiengesellschaft and the
Grantor, as amended in compliance with the terms of this Security Agreement.
"LIEN" shall mean any lien, mortgage, security interest, chattel
mortgage, pledge or other encumbrance (statutory or otherwise) of any kind
securing satisfaction or performance of an obligation, including any agreement
to give any of the foregoing, any conditional sales or other title retention
agreement, any lease in the nature thereof, and the filing of or the agreement
to give any financing statement under the Code of any jurisdiction or similar
evidence of any encumbrance, whether within or outside the United States.
"OBLIGATIONS" shall mean:
(1) all obligations and liabilities to the Secured Parties, whether
now existing or hereafter arising, under the Securities Purchase Agreements, the
Debentures, this Security Agreement, the General Collateral Security Agreement,
the Patent and Trademark Security Agreement and/or any document or agreement
related to any of the foregoing and the due performance and compliance with the
terms of the Securities Purchase Agreements, the Debentures, this Security
Agreement, the General Collateral Security Agreement, the Patent and Trademark
Security Agreement and/or any document or agreement related to any of the
foregoing;
(2) any and all sums advanced by the Secured Parties in order to
preserve the Collateral or to preserve the Secured Parties' security interest in
the Collateral; and
(3) in the event of any proceeding for the collection or enforcement
of any obligations or liabilities of the Grantor referred to in the immediately
preceding clauses (1) through (2) in accordance with the terms of the Securities
Purchase Agreements, the Debentures, this Security Agreement, the General
Collateral Security Agreement, the Patent and Trademark Security Agreement
and/or any document or agreement related to the foregoing, the expenses of
re-taking, holding, preparing for sale, selling or otherwise disposing of or
realizing on the Collateral, or of any other exercise by the Secured Parties of
their rights hereunder, together with reasonable attorneys' fees and court
costs.
"PATENT AND TRADEMARK SECURITY AGREEMENT" shall mean that certain
Debenture Imagent and Oxygent Patent and Trademark Security Agreement dated as
of the date hereof between the Grantor and the Secured Parties, as amended,
supplemented or otherwise modified from time to time.
"PRIOR LIENHOLDERS" means the holders of the Prior Liens.
"PRIOR LIENS" means the Liens of the Prior Lienholders created under
the Prior Lienholders Security Agreements.
"PRIOR LIENHOLDERS SECURITY AGREEMENTS" means the (i) Security
Agreement, dated July 23, 2002, made by the Grantor in favor of Xmark Fund, L.P.
and Xmark Fund, Ltd., (ii) Patent and Trademark Security Agreement, dated July
23, 2002 made by the Grantor in favor of Xmark Fund, L.P. and Xmark Fund, Ltd.,
(iii) Imagent Security Agreement, dated October 4, 2002, made by the Grantor in
favor of SDS Merchant Fund, L.P. as Collateral Agent for the benefit of the
holders of the notes issued pursuant to the Convertible Secured Note Purchase
Agreement, (iv) General Collateral Security Agreement, dated October 4, 2002,
made by the Grantor in favor of SDS Merchant Fund, L.P., as Collateral Agent for
the benefit of the holders of the notes issued pursuant to the Convertible
Secured Note Purchase Agreement and, (v) Imagent and Oxygent Patent and
Trademark Security Agreement, dated October 4, 2002, made by the Grantor in
favor of SDS Merchant Fund, L.P., as Collateral Agent for the benefit of the
holders of the notes issued pursuant to the Convertible Secured Note Purchase
Agreement, and (vi) Alliance/PFC Security Agreement, dated as of May 19, 2000,
by and between Alliance and PFC Therapeutics, LLC.
"PROCEEDS" shall have the meaning assigned to such term under the
Code.
"PRODUCT" means IMAGENT(R) a sterile, non-pyrogenic white powder with
a diluted perflexane headspace that, after reconstitution into a suspension of
microspheres, is used for contrast enhancement during the indicated ultrasound
imaging procedures and is indicated for use in patients with suboptimal
echocardiograms to opacify the left ventricular chamber and to improve the
delineation of the left ventricular endocardial border.
"PROPRIETARY INFORMATION" means information generally unavailable to
the public that has been created, discovered, developed or otherwise become
known to the Grantor or in which property rights have been assigned or otherwise
conveyed to the Grantor, which information has economic value or potential
economic value to the marketing, sale and distribution of the Product.
Proprietary Information shall include, but not be limited to, trade secrets,
processes, formulas, writings data, know-how, negative know-how, improvements,
discoveries, developments, designs, inventions, techniques, technical data,
customer and supplier lists, financial information, business plans or
projections and modifications or enhancements to any of the above. Proprietary
Information shall include all information existing on the date hereof and all
information developed or acquired hereafter.
"SECURITY AGREEMENT" means this Debenture Imagent Security Agreement,
as amended, supplemented or otherwise modified from time to time.
"TERRITORY" shall mean the United States of America, its territories
and possessions.
"VENDOR AGREEMENT" means the Vendor Agreement, dated February 28,
2002, between XxxXxx, Inc., an Ohio corporation doing business as Cardinal
Health Sales and Marketing Services, and the Grantor, as amended in compliance
with the terms of this Security Agreement.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt
and complete payment and performance when due of the Obligations, the Grantor
hereby pledges, hypothecates, delivers and assigns to the Secured Parties, and
grants to the Secured Parties a continuing security interest junior in priority
only to the Prior Liens in and to, all of the Grantors right, title and interest
in and to all of the following property now owned or at any time hereafter
acquired by the Grantor or in which the Grantor now has or at any time in the
future may acquire right, title or interest (collectively, the "Collateral"):
(i) the Vendor Agreement, to the extent and only to the extent that
the Vendor Agreement authorizes the marketing and sale of the Product in
the Territory;
(ii) the License Agreement;
(iii) the Lease;
(iv) all Proprietary Information, whether existing on the date hereof
or developed or acquired hereafter;
(v) all other contracts, Documents and General Intangibles developed
or acquired by the Grantor, whether now existing or hereafter arising, to
the extent and only to the extent related to the use, development, sale,
manufacture, marketing or distribution of the Product and all amendments,
modifications and supplements thereto;
(vi) the manufacturing facility described on SCHEDULE I hereto and all
of the Equipment located therein used in connection with the manufacture
and distribution of the Product;
(vii) the approved new drug application NDA #21-191 for the Product,
and all amendments, modifications and supplements thereto;
(viii) all books, records, ledgercards, files, correspondence,
computer programs, tapes, disks and related data processing software (owned
by the Grantor or in which it has an interest) which at any time evidence
or contain information relating to any or all of (i), (ii), (iii), (iv) and
(v) above or are otherwise necessary or helpful in the collection thereof
or realization thereupon;
(ix) documents of title, policies and certificates of insurance,
securities, Chattel Paper, other documents or instruments evidencing or
pertaining to any or all of (i), (ii), (iii), (iv), (v) and (vi) above;
(x) all Supporting Obligations (as defined in the Code) and
guaranties, including letters of credit and guarantees issued in support of
Accounts and Chattel Paper, General Intangibles and Investment Property (as
defined in the Code), Liens on real or personal property, leases, and other
agreements and property which in any way secure or relate to any or all of
(i), (ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix) above, or are
acquired for the purpose of securing and enforcing any item thereof;
(xi) (A) all cash held as cash collateral to the extent not otherwise
constituting Collateral, all other cash or property at any time on deposit
with or held by or on behalf of the Secured Parties for the account of the
Grantor (whether for safekeeping, custody, pledge, transmission or
otherwise), (B) all present or future Deposit Accounts (whether time or
demand or interest or non-interest bearing) of the Grantor with the Secured
Parties or any other individual or entity including those to which any such
cash may at any time and from time to time be credited, (C) all Payment
Intangibles (as defined in the Code), (D) all letter of credit obligations,
(E) all investments and reinvestments (however evidenced) of amounts from
time to time credited to such accounts, and (F) all interest, dividends,
distributions and other proceeds payable on or with respect to (1) such
investments and reinvestments, (2) such accounts, and (3) all Investment
Property; and
(xii) all products and proceeds of (i), (ii), (iii), (iv), (v), (vi),
(vii), (viii), (ix), (x) and (xi) above (including, but not limited to, all
claims to items referred to in (i), (ii), (iii), (iv), (v), (vi), (vii),
(viii), (ix), (x) and (xi) above) and all claims of the Grantor against
third parties (x) for (i) loss of, damage to, or destruction of, and (ii)
payments due or to become due under leases, rentals and hires of any or all
of (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix), (x) and (xi)
above and (y) proceeds payable under, or unearned premiums with respect to
policies of insurance in whatever form; and
(xiii) all Inventory, Equipment, Accounts, Chattel Paper,
Letter-of-Credit Right, Instruments, Commercial Tort Claims, and Investment
Property to the extent it is related to the Product or necessary for the
manufacture and sale of the Product.
3. RIGHTS OF THE SECURED PARTIES; LIMITATIONS ON THE SECURED PARTIES'
OBLIGATIONS.
(a) GRANTOR REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and contracts that constitute part of the Collateral to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise to each such Account and in accordance with and pursuant to the
terms and provisions of each such contract. The Secured Parties shall not have
any obligation or liability under any Account that constitutes part of the
Collateral (or any agreement giving rise thereto) or under any contract that
constitutes part of the Collateral by reason of or arising out of this Security
Agreement or the receipt by the Secured Parties of any payment relating to such
Account or contract pursuant hereto, nor shall the Secured Parties be obligated
in any manner to perform any of the obligations of the Grantor under or pursuant
to any such Account (or any agreement giving rise thereto) or under or pursuant
to any such contract, to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any such Account (or any agreement giving rise
thereto) or under any such contract, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
(b) VERIFICATION AND ANALYSIS OF ACCOUNTS. If an Event of Default has
occurred and is continuing under the Notes, the Secured Parties shall have the
right to communicate with account debtors on the Accounts that constitute part
of the Collateral and parties to the contracts that constitute part of the
Collateral to verify with them to its satisfaction the existence, amount and
terms of any such Accounts or contracts and to make test verifications of such
Accounts in any manner and through any medium that it reasonably considers
advisable, and the Grantor shall furnish all such assistance and information as
the Secured Parties may require in connection therewith. At any time and from
time to time, upon the Secured Parties' reasonable request and at the expense of
the Grantor, the Grantor shall cause independent public accountants or others
satisfactory to the Secured Parties to furnish to the Secured Parties reports
showing reconciliations, aging and test verifications of, and trial balances
for, such Accounts.
4. REPRESENTATIONS AND WARRANTIES. The Grantor hereby represents and
warrants that:
(a) TITLE; NO OTHER LIENS. Except for the Prior Liens and for the Lien
granted to the Secured Parties pursuant to this Security Agreement, the Lien
granted to the Secured Parties pursuant to the General Collateral Security
Agreement and the Lien granted to the Secured Parties pursuant to the Patent and
Trademark Security Agreement, the Grantor solely owns each item of the
Collateral free and clear of any and all Liens or claims of others. No security
agreement, financing statement or other public notice with respect to all or any
part of the Collateral is on file or of record in any public office, except in
respect of the Prior Liens and such as may have been filed in favor of the
Secured Parties pursuant to this Security Agreement, the General Collateral
Security Agreement or the Patent and Trademark Security Agreement.
(b) PERFECTED JUNIOR PRIORITY LIENS. The Liens granted pursuant to
this Security Agreement will constitute upon the completion of all the filings
or notices listed in SCHEDULE II hereto, perfected Liens on all Collateral,
which are in priority to all other Liens on such Collateral, except the Prior
Liens, and which are enforceable as such against all creditors of the Grantor.
(c) ACCOUNTS. No amount payable to the Grantor under or in connection
with any Account that constitutes part of the Collateral is evidenced by any
Instrument (other than checks in the ordinary course of business) or Chattel
Paper which has not been previously delivered to the Prior Lienholders. The
place where the Grantor keeps its records concerning the Accounts that
constitute part of the Collateral is set forth on SCHEDULE III hereto.
(d) CONSENTS. No consent (other than consents that have been obtained
and those set forth in items 7, 8 and 9 on Schedule 2(e) of the Convertible
Secured Note Purchase Agreement) of any party (other than the Grantor) to any
contract that constitutes part of the Collateral is required, or purports to be
required, in connection with the execution, delivery and performance of this
Security Agreement.
(e) INVENTORY AND EQUIPMENT. The Inventory and Equipment that
constitutes part of the Collateral is, as of the date hereof, kept at the
locations listed on SCHEDULE IV hereto and has not been kept at any other
location within the five-year period ending on the date hereof.
(f) CHIEF EXECUTIVE OFFICE. The Grantor's chief executive office and
chief place of business is located at 0000 Xxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000.
(g) POWER AND AUTHORITY; DUE AUTHORIZATION. The Grantor has full power,
authority and legal right to enter into this Security Agreement and to grant the
Secured Parties the Lien on the Collateral pursuant to this Security Agreement
and has taken all necessary corporate and other action to authorize the
execution, delivery and performance of this Security Agreement.
(h) BINDING OBLIGATION. This Security Agreement has been duly executed
and delivered by the Grantor and constitutes a legal, valid and binding
obligation of the Grantor enforceable in accordance with its terms.
(i) NO VIOLATION. The execution, delivery and performance of this
Security Agreement will not violate any provision of the Grantor's Certificate
of Incorporation or Bylaws, or of any applicable law or regulation or of any
order, judgment, writ, award or decree of any court, arbitrator or governmental
authority, domestic or foreign, or of any securities issued by the Grantor, or
of any mortgage, indenture, lease, contract or other agreement (upon receipt of
the consents set forth in items 7, 8 and 9 on Schedule 2(e) of the Convertible
Secured Note Purchase Agreement), instrument or undertaking to which the Grantor
is a party or which purports to be binding upon the Grantor or upon any of its
assets and will not result in the creation or imposition of any Lien on any of
the assets of the Grantor except as contemplated by this Security Agreement, the
General Collateral Security Agreement and the Patent and Trademark Security
Agreement.
(j) CONSENTS. No consent, filing, approval, registration, recording,
or other action is required (x) for the grant by the Grantor of the Lien on the
Collateral pursuant to this Security Agreement or for the execution, delivery or
performance of this Security Agreement by the Grantor, or (y) to perfect the
Lien purported to be created by this Security Agreement, in each case other than
the consents already obtained and except as set forth in items 7, 8 and 9 on
Schedule 2(e) of the Convertible Secured Note Purchase Agreement with respect to
consents to be obtained after the date hereof and as contemplated by section
4(b) above.
(k) VALIDITY OF COLLATERAL. To the knowledge of the Grantor, all of
the Collateral is subsisting and is valid.
(l) ORGANIZATION. The Grantor is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and duly
qualified and in good standing in every other state or jurisdiction in which the
nature of the Grantor's business or the ownership of its assets requires such
qualification. The Grantor's state organizational identification number and
federal employer identification number are as set forth on SCHEDULE V hereto.
(m) NAMES USED BY GRANTOR. (i) The actual corporate name of the
Grantor is the name set forth in the preamble above; (ii) the Grantor has no
trade names; (iii) the Grantor has not used any name other than that stated in
the preamble hereto for the preceding five years; and (iv) no entity has merged
into the Grantor or been acquired by the Grantor within the past five years.
(n) ACCOUNT DEBTORS. None of the account debtors or other persons
obligated on any of the Collateral is a governmental authority covered by the
Federal Assignment of Claims Act or any like federal, state or local statute or
rule in respect of such Collateral.
(o) COLLATERAL. The Collateral includes all of the Grantor's right,
title and interest in and to all of the property necessary for the conduct of
the Grantor's business relating to the Product.
5. FDA REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) COMPLIANCE WITH FDC ACT. The Grantor represents and warrants that
it has at all times prior to the date hereof complied with and, so long as any
Obligations are outstanding, will continue to comply with all provisions of the
Federal Food, Drug, and Cosmetic Act and its implementing regulations, and all
other federal and state regulatory requirements, governing the manufacturing,
holding, processing, sale, and marketing of the Product, including, but not
limited to:
(i) the terms and specifications set forth in the approved new
drug application NDA #00-000 (xxx "XXX") for the Product, and any supplements
and amendments relating thereto;
(ii) postapproval commitments and/or requirements outlined in the
Food and Drug Administration's (the "FDA") NDA approval letter for the Product,
a copy of which is attached hereto as EXHIBIT A;
(iii) FDA's good manufacturing practices regulations that apply
to drugs;
(iv) adverse event reporting;
(v) establishment registration and drug listing;
(vi) submission of all required NDA supplements for changes to
the terms and specifications set forth in the NDA;
(vii) promotional requirements and restrictions, including but
not limited to applicable advertising laws and requirements;
(viii) label and labeling requirements; and
(ix) not making any misrepresentation of fact to the FDA with
regard to the NDA and/or the Product.
(b) TRANSFER OF DOCUMENTATION. Within 5 days following written notice
by the Secured Parties, the Grantor shall provide the Secured Parties with a
copy of all documentation necessary for the Grantor and/or the Secured Parties
to be in and remain in full compliance with the NDA, pursuant to Section 314.72
of Title 21 of the Code of Federal Regulations, including, but not limited to:
the NDA and any amendments and supplements thereto; all correspondence
concerning the NDA between the FDA and Grantor whether written before or after
the NDA was approved; all contracts with suppliers of ingredients and raw
materials for the Product; all batch records regarding the Product; all
validation studies; all stability reports; all standard operating procedures;
all postmarket surveillance files, including adverse event reports; and
postmarket studies. At that same time, Grantor shall also provide the Secured
Parties with a copy of the following additional documentation:
(i) a list of the names, addresses, and job descriptions of all
employees involved in the manufacturing, sale and distribution of the Product;
(ii) a list of the names, addresses and job descriptions of all
employees involved in purchasing ingredients or raw materials for the Product;
(iii) a list of the names, addresses and job descriptions of all
employees involved in quality control and quality assurance for the Product;
(iv) all employment and consulting agreements for any person or
entity involved in the manufacturing, sale and/or distribution of the Product;
(v) all audit and consulting reports done by any person or entity
concerning Grantor's compliance with, or potential failure to comply with,
obligations relating to the Federal Food, Drug, and Cosmetic Act and/or all
other applicable federal and state regulatory requirements; and
(vi) a list of the names and addresses of all customers for (the
"Customers"), and suppliers of, the Product or any of its ingredients.
(c) RECALLS ETC. The Grantor agrees to handle the administration of,
and be responsible for all costs and expenses relating to, all court actions,
claims, governmental investigations or inquiries, recalls, stock recoveries or
market withdrawals of the Product, including but not limited to, making all
necessary and appropriate contacts with federal and state authorities,
notifications to third parties, and Product disposition. The Grantor shall
indemnify and hold the Secured Parties harmless from all claims, actions,
losses, liabilities, damages and expenses arising from such matters, regardless
of whether such claims, actions, losses, liabilities, damages and expenses
relate to the period prior to or after the occurrence of an Event of Default.
(d) WITHDRAWAL OF PRODUCT. Grantor represents that there exists no set
of facts which could furnish a basis for the withdrawal, suspension or
termination of the NDA or any threatened or potential request for the recall or
cessation of sales of the Product covered by that NDA by the FDA or any other
governmental authority.
6. COVENANTS.
(a) The Grantor covenants and agrees with the Secured Parties that
from and after the date of this Security Agreement until the payment and
performance in full by the Grantor of all of its Obligations:
(i) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL
PAPER. At any time and from time to time, upon the written request of the
Secured Parties, and at the sole expense of the Grantor, the Grantor will
promptly and duly execute and deliver such further instruments and documents and
take such further action as the Secured Parties may reasonably request for the
purpose of obtaining or preserving the full benefits of this Security Agreement
and of the rights and powers herein granted, including, without limitation, the
filing of any financing or continuation statements, or amendments thereto, under
the Code in effect in any such jurisdiction with respect to the Liens created
hereby. The Grantor also hereby authorizes the Secured Parties to file any such
financing or continuation statement, or amendment thereto, without the signature
of the Grantor to the extent permitted by applicable law. A carbon, photographic
or other reproduction of this Security Agreement shall be sufficient as a
financing statement for filing in any jurisdiction. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by any
Instrument or Chattel Paper, such Instrument or Chattel Paper shall be
immediately delivered to the Secured Parties, duly endorsed in a manner
satisfactory to the Secured Parties, to be held as Collateral pursuant to this
Security Agreement (except for such Instruments and/or Chattel Paper which are
delivered to the Prior Lienholders provided that the Secured Parties otherwise
has a perfected security interest in such Instruments and/or Chattel Paper and
provided further that the Grantor delivers such Instruments and/or Chattel Paper
to the Secured Parties upon the Prior Lienholders' release of their interest
therein). To the extent that any Collateral consists of electronic Chattel
Paper, the Grantor shall cause the underlying Chattel Paper to be marked within
the meaning of Section 9-105 of the Code (or successor section thereto).
(ii) INDEMNIFICATION. The Grantor agrees to pay, and to save each
Secured Party harmless from, any and all liabilities, costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay by the Grantor in
complying with any law or regulation applicable to any of the Collateral, (iii)
in connection with any action taken by the Secured Parties in exercising its
rights under this Security Agreement, and (iv) in connection with the
preparation and enforcement of this Security Agreement and the related
documents. In any suit, proceeding or action brought by the Secured Parties
under any Account or contract that constitutes part of the Collateral for any
sum owing thereunder, or to enforce any provisions of any such Account or
contract, the Grantor will save, indemnify and keep the Secured Parties harmless
from and against all expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability whatsoever of the
account debtor or obligor thereunder, arising out of a breach by the Grantor of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or obligor or
its successors from the Grantor. The obligations under this section 6(a)(ii)
shall survive termination of this Security Agreement.
(iii) MAINTENANCE OF RECORDS. The Grantor will keep and maintain
at its own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts that constitute part of the Collateral. The
Grantor hereby grants to the Secured Parties access to all of the Grantor's
books and records pertaining to the Collateral, and the Grantor shall turn over
any such books and records for inspection at the office of the Grantor to the
Secured Parties or to their representatives during normal business hours at the
request of the Secured Parties.
(iv) LIMITATION ON LIENS ON COLLATERAL. The Grantor will not
create, incur or permit to exist, will defend at its own expense the Collateral
against, and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the Prior Liens, and will defend the
right, title and interest of the Secured Parties in and to any of the Collateral
against the claims and demands of all persons whomsoever, other than the Prior
Lienholders.
(v) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Grantor will
not sell, transfer, lease or assign any of the Collateral, or attempt, offer or
contract to do so except for sales of Inventory and the collection and use of
cash proceeds in the ordinary course of its business without express, written
agreement by the Secured Parties.
(vi) LIMITATIONS ON PERFORMANCE OF CONTRACTS AND AGREEMENTS
GIVING RISE TO ACCOUNTS. The Grantor will not (i) fail to exercise promptly and
diligently each and every material right or fail to perform each material
obligation which it may have under each contract that constitutes part of the
Collateral and each agreement giving rise to an Account that constitutes part of
the Collateral (other than any right of termination) except where the Grantor
determines in its reasonable business judgment that the failure to exercise such
right or perform such obligation is in the best interest of the Grantor and
consistent with the protection and preservation of the rights and interests of
the Secured Parties in the Collateral or (ii) fail to deliver to the Secured
Parties, upon request, a copy of each material demand, notice or document
received by it relating in any way to any contract that constitutes part of the
Collateral or any agreement giving rise to an Account that constitutes part of
the Collateral. The Grantor will not amend or modify the terms of, or waive any
rights under, any contracts, including, without limitation, the Vendor
Agreement, the License Agreement and the Lease, without the express written
consent of Secured Parties.
(vii) FURTHER IDENTIFICATION OF COLLATERAL. The Grantor will
furnish to the Secured Parties from time to time, upon the request of the
Secured Parties, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Secured Parties may reasonably request, all in reasonable detail.
(viii) NOTICES. The Grantor will advise the Secured Parties
promptly, in reasonable detail, at its address in accordance with section 15,
(i) of any Lien (other than Liens permitted hereunder) on, or claim asserted
against, any of the Collateral and (ii) of the occurrence of any other event
which could reasonably be expected to have a material adverse effect on the
value of any material portion of the Collateral or on the Liens created
hereunder.
(ix) CHANGE OF NAME; LOCATION OF COLLATERAL; RECORDS; PLACE OF
BUSINESS. The Grantor shall not make any change (a) in its name, (b) in the
location of its chief executive office, its principal place of business, any
office in which it maintains books or records relating to Collateral owned by it
or any office facility at which Collateral owned by it is located (including the
establishment of any such new office or facility) from 0000 Xxxx Xxxxxxxxx, Xxx
Xxxxx, Xxxxxxxxxx 00000, (c) in its identity or type of organization or
corporate structure, (d) in its Federal Taxpayer Identification Number or
organizational identification number or (e) in its jurisdiction of organization
unless (i) the Grantor provides the Secured Parties at least 30 days prior
written notice of such change and (ii) all filings have been made under the Code
or otherwise that are required in order for the Secured Parties to continue at
all times following such change to have a valid, legal and perfected security
interest in all the Collateral, junior in priority only to the Prior Liens.
(x) SUBSIDIARIES. This Security Agreement is entered into on
behalf of and for the benefit of the Grantor and its subsidiaries and other
entities controlled by the Grantor which have rights in the Collateral. The
security interest granted by the Grantor hereunder is intended to include all
rights of the Grantor in and to the Collateral, including any rights of its
subsidiaries and such other entities in and to such Collateral, and the Grantor
will not permit such subsidiaries and entities to exercise any of their rights
with respect to the Collateral.
(xi) PAYMENT OF TAXES AND OTHER CLAIMS. The Grantor shall pay or
discharge when due all taxes, assessments and governmental charges or levies
imposed upon it unless same are not delinquent, provided, however, that the
Grantor shall have the right to challenge in good faith by appropriate
proceedings any disputed taxes, assessments or governmental charges or levies
provided that the Grantor establishes appropriate reserves therefor in
accordance with generally accepted accounting principles; and, provided,
further, that notwithstanding any such contest, the Grantor shall pay such
disputed taxes, assessments and governmental charges or levies if nonpayment
would result in the imposition of any Lien on the Grantor's assets or
properties.
(xii) INDEBTEDNESS; DISTRIBUTIONS; INVESTMENTS; CONSOLIDATION AND
MERGER; SUBSIDIARIES; NATURE OF BUSINESS; AFFILIATE TRANSACTIONS; INVOICES. The
Grantor shall not (i) make advances, loans or extensions of credit to any
person; (ii) become either directly or contingently liable upon the obligations
of any person by assumption, endorsement or guaranty thereof or otherwise; (iii)
enter into any merger, consolidation or other reorganization with or into any
other person or acquire all or a portion of the assets or stock of any person or
permit any other person to consolidate with or merge with it; (iv) form any
subsidiary or enter into any partnership, joint venture or similar arrangement;
(v) materially change the nature of the business in which it is presently
engaged; (vi) enter into any transaction with any affiliate, except in ordinary
course on arms-length terms; or (vii) xxxx accounts under any name except the
present name of the Grantor.
(xiii) MAINTAIN OPERATIONS AND MANUFACTURING. Following an Event
of Default, the Grantor shall use commercially reasonable efforts to continue to
maintain and operate the manufacturing facility described on SCHEDULE I hereto
and to manufacture and distribute the Product. In the event that the Grantor for
any reason is unable or unwilling to maintain and operate such manufacturing
facility and manufacture and distribute the Product, the Secured Parties or
their designee shall have the right to maintain and operate such manufacturing
facility and use the Collateral in order to manufacture and distribute the
Product, subject to the terms of the lease of the manufacturing facility and any
applicable Food and Drug Administration requirements and the Grantor shall take
all actions reasonably requested by the Secured Parties (including obtaining any
required consents) in connection therewith.
(xiv) USE AND DISPOSITION OF COLLATERAL. The Grantor shall (i)
not dispose of any of the Collateral whether by sale, lease or otherwise except
for (A) the sale of Inventory in the ordinary course of business, and (B) the
disposition or transfer of obsolete and worn-out Equipment in the ordinary
course of business and (ii) keep and maintain the Equipment in good operating
condition, except for ordinary wear and tear, and shall make all necessary
repairs and replacements thereof so that the value and operating efficiency
shall at all times be maintained and preserved.
(xv) RISK OF LOSS; INSURANCE. The Grantor shall bear the full
risk of loss from any loss of any nature whatsoever with respect to the
Collateral. At it's own cost and expense in amounts and with carriers acceptable
to the Secured Parties, it shall (a) keep all its insurable properties and
properties in which it has an interest insured against the hazards of fire,
flood, sprinkler leakage, those hazards covered by extended coverage insurance
and such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to the Grantor's including, without
limitation, public and product liability insurance, worker's compensation,
insurance against larceny, embezzlement or other criminal misappropriation of
insured's officers and employees and business interruption insurance; (b)
furnish the Secured Parties with (i) copies of all policies and evidence of the
maintenance of such policies at least 30 days before any expiration date, and
(ii) appropriate loss payable endorsements in form and substance satisfactory to
the Secured Parties, naming the Secured Parties as loss payees and providing
that as to the Secured Parties the insurance coverage shall not be impaired or
invalidated by any act or neglect of the Grantor and the insurer will provide
the Secured Parties with at least 30 days notice prior to cancellation. The
Grantor shall instruct the insurance carriers that in the event of any loss
thereunder, the carriers shall make payment for such loss to the Secured Parties
and not to the Grantor and the Secured Parties jointly. If any insurance losses
are paid by check, draft or other instrument payable to the Grantor and the
Secured Parties jointly, the Secured Parties may endorse the Grantor's name
thereon and do such other things as the Secured Parties may deem advisable to
reduce the same to cash. The Secured Parties is hereby authorized to adjust and
compromise claims. All loss recoveries received by the Secured Parties upon any
such insurance may be applied to the Obligations, in such order as the Secured
Parties in its sole discretion shall determine. Any surplus shall be paid by the
Secured Parties to the Grantor or applied as may be otherwise required by law.
Any deficiency thereon shall be paid by the Grantor to the Secured Parties, on
demand.
(xvi) NOTICE OF CERTAIN EVENTS. The Grantor shall promptly inform
the Secured Parties in writing of: (a) the commencement of all proceedings and
investigations by or before and/or the receipt of any notices from, any
governmental or nongovernmental body and all actions and proceedings in any
court or before any arbitrator against or in any way concerning any of the
Grantor's properties, assets or business, which might singly or in the
aggregate, have a materially adverse effect on the Grantor; (b) any amendment of
the Grantor's certificate of incorporation or by-laws; (c) any change in the
Grantor's business, assets, liabilities, condition (financial or otherwise),
results of operations or business prospects which has had or might have a
materially adverse effect on the Grantor; (d) any Event of Default or any event,
circumstance or condition which with the passage of time or giving of notice or
both would constitute an Event of Default; (e) any default or any event,
circumstance or condition which with the passage of time or giving of notice or
both would constitute a default under any agreement for the payment of money to
which the Grantor is a party or by which the Grantor or any of the Grantor's
properties may be bound which would have a material adverse effect on the
Grantor's business, operations, property or condition (financial or otherwise)
or the Collateral; (f) any change in the location of the Grantor's executive
offices; (g) any change in the location of the Grantor's Inventory or Equipment
from the locations listed on SCHEDULE IV attached hereto, (h) any material delay
in the Grantor's performance of any of its obligations to any Customer and of
any assertion of any material claims, offsets or counterclaims by any Customer
and of any allowances, credits and/or other monies granted by it to any
Customer; (i) any material adverse information relating to the financial
condition of any Customer; and (k) any material return of goods.
(xvii) ATTORNEY-IN-FACT. The Grantor hereby irrevocably appoints,
subject to the rights of the Prior Lienholders, the Secured Parties and any
officer or agent thereof, with full power and authority in place and stead of
the Grantor and in the name of the Grantor or in its own name to: (i) endorse
the Grantor's name on any checks, notes, acceptances, money orders, drafts or
other forms of payment or security that may come into the Secured Parties'
possession; (ii) sign the Grantor's name on any invoice or xxxx of lading
relating to any Accounts, drafts against Customers, schedules and assignments of
Accounts, notices of assignment, financing statements and other public records,
verifications of account and notices to or from Customers; (iii) verify the
validity, amount or any other matter relating to any Account Receivable (as
defined in the Code) by mail, telephone, telegraph or otherwise with Customers;
(iv) execute customs declarations and such other documents as may be required to
clear Inventory through United States Customs; (v) do all things necessary to
carry out this Security Agreement and all other documents and agreements related
hereto; (vi) continue any insurance existing pursuant to the terms of this
Security Agreement and pay all or any part of the premium therefor and the cost
thereof; and (vii) on or after the occurrence and continuation of an Event of
Default, notify the post office authorities to change the address for delivery
of the Grantor's mail to an address designated by the Secured Parties, and to
receive, open and dispose of all mail addressed to the Grantor. The Grantor
hereby ratifies and approves all acts of the attorney. The powers conferred on
the Secured Parties hereunder are solely to protect the Secured Parties'
interests in the Collateral and shall not impose any duty upon them to exercise
any such powers. Neither the Secured Parties nor the attorney will be liable for
any acts or omissions or for any error of judgment or mistake of fact or law.
This power, being coupled with an interest, is irrevocable until the Obligations
have been fully satisfied.
(xviii) INVESTMENT PROPERTY AND DEPOSIT ACCOUNTS. If there is any
Investment Property or Deposit Accounts included as Collateral that can be
perfected by "control" through an account control agreement, the Grantor shall
cause such an account control agreement to be entered into and delivered to the
Secured Parties.
(xix) LETTER-OF-CREDIT RIGHTS. To the extent that any Collateral
consists of Letter-of-Credit Rights, the Grantor shall cause the issuer of each
underlying letter of credit to consent to the assignment to the Secured Parties
of the proceeds of such letter of credit.
(xx) COLLATERAL IN POSSESSION OF THIRD PARTIES. To the extent
that any Collateral is in the possession of a third party, the Grantor will join
with the Secured Parties in notifying the third party of the Secured Parties'
security interest and in obtaining an acknowledgement from the third party that
it is holding the Collateral for the benefit of the Secured Parties.
(xxi) COMMERCIAL TORT CLAIMS. If the Grantor shall at any time
hold or acquire a Commercial Tort Claim that is related to the Product, the
Grantor shall immediately notify the Secured Parties in a writing signed by the
Grantor of the brief details thereof and grant to the Secured Parties in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Security Agreement, with such writing to be in form and substance
satisfactory to the Secured Parties.
(b) CONSENT TO LICENSE AGREEMENT. The Secured Parties covenants and
agrees with the Grantor that in the event that the Secured Parties exercises its
rights hereunder and the Collateral is sold to a third party, the Secured
Parties shall use commercially reasonable efforts to (i) ensure that such third
party purchaser of any of the Collateral licensed under the License Agreement
agrees to be bound by the terms and conditions thereof, until the expiration or
termination thereof, and (ii) ensure that such third-party purchaser shall agree
to use commercially reasonable efforts to ensure that all subsequent transferees
of any of the Collateral licensed under the License Agreement shall agree to be
bound by the terms and conditions of the License Agreement, until the expiration
or termination thereof.
(c) FOOD AND DRUG ADMINISTRATION. The Grantor shall comply in all
material respects with all Food and Drug Administration requirements necessary
for the Secured Parties to exercise its rights hereunder and to realize on the
Collateral.
7. THE SECURED PARTIES' APPOINTMENT AS ATTORNEY-IN-FACT.
(a) The Grantor hereby irrevocably constitutes and appoints the
Secured Parties and any agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of the Grantor and in the name of the Grantor or in its own
name, from time to time in the Secured Parties' discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Security Agreement and, without limiting the generality of the foregoing,
hereby gives the Secured Parties the power and right, on behalf of the Grantor,
without notice to or assent by the Grantor to pay or discharge taxes, liens,
security interests or other encumbrances levied or placed on or threatened
against the Collateral to effect any repairs or any insurance called for by the
terms of this Security Agreement and to pay all or any part of the premiums
therefor and the costs thereof.
(b) The power of attorney granted pursuant to this section 7 is a
power coupled with an interest and shall be irrevocable until the Obligations
are indefeasibly paid in full.
(c) The powers conferred on the Secured Parties hereunder are solely
to protect the Secured Parties' interest in the Collateral and shall not impose
any duty upon any of them to exercise any such powers. The Secured Parties shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers and neither it nor any of its respective members,
managers, partners, officers, employees or agents shall be responsible to the
Grantor for any act or failure to act, except for its own gross negligence or
willful misconduct.
(d) The Grantor also authorizes the Secured Parties, at any time and
from time to time upon the occurrence of any Event of Default, to execute any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
8. PERFORMANCE BY SECURED PARTIES OF GRANTOR'S OBLIGATIONS. If the
Grantor fails to perform or comply with any of its agreements contained herein
and the Secured Parties, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreements, the expenses of the Secured Parties incurred
in connection with such performance or compliance shall be payable by the
Grantor to the Secured Parties on demand and shall constitute Obligations
secured hereby.
9. REMEDIES.
(a) If an Event of Default (i) has occurred and has continued for a
period of 30 consecutive days without cure by the Grantor with respect to items
1, 2, 3, and 4 set forth in the definition of Event of Default, or (ii) has
occurred and is continuing with respect to all other items in the definition of
Event of Default, the Secured Parties may exercise, in addition to all other
rights and remedies granted to it in this Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Secured Parties, without demand of performance
or other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below or expressly provided for)
to or upon the Grantor or any other person (all and each of which demands,
defenses, advertisements and notices are, to the extent permitted by applicable
law, hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, license, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), at public or private sale or sales, at any
exchange, broker's board or office of the Secured Parties or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Secured Parties shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Grantor, which right or equity is hereby
waived, to the extent permitted by applicable law, or released.
(b) The Grantor further agrees that, if an Event of Default has
occurred and is continuing, at the Secured Parties' request, to assemble the
Collateral and make it available to the Secured Parties at places which the
Secured Parties shall reasonably select, whether at the Grantor's premises or
elsewhere. The Secured Parties shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Secured Parties for the benefit
of the Secured Parties hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Secured Parties may elect, and only after such
application and after the payment by the Secured Parties of any other amount
required by any provision of law, must the Secured Parties account for the
surplus, if any, to the Grantor. To the extent permitted by applicable law, the
Grantor waives all claims, damages and demands it may acquire against the
Secured Parties arising out of the exercise by it of any rights hereunder,
provided, that nothing contained in this section 9 shall relieve the Secured
Parties from liability arising solely from its gross negligence or willful
misconduct. If any notice of a proposed sale or other disposition of Collateral
shall be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Grantor shall
remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Secured Parties to
collect such deficiency.
(c) For the purpose of enabling the Secured Parties to exercise rights
and remedies under this section 9 at such time as the Secured Parties shall be
lawfully entitled to exercise such rights and remedies, the Grantor hereby
grants to the Secured Parties an irrevocable, non-exclusive license (exercisable
without payment of royalty or other compensation to the Grantor) to use, license
or sublicense any of the Collateral consisting of Intellectual Property (as
defined in the Convertible Secured Note Purchase Agreement) now owned or
hereafter acquired by the Grantor or as to which the Grantor has the right to
use, and wherever the same may be located, and including in such license
reasonable access to all media in which any of the licensed items may be
recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Secured Parties
shall be exercised, at the option of the Secured Parties, upon the occurrence
and during the continuation of an Event of Default; provided that any license,
sublicense or other transaction entered into by the Secured Parties in
accordance herewith shall be binding upon the Grantor notwithstanding any
subsequent cure of an Event of Default.
(d) All rights, powers and remedies provided to the Secured Parties in
this Agreement are subject to the rights, powers and remedies of the Prior
Lienholders as set forth in the Prior Lienholders Security Agreements and to the
terms and provisions of those certain Intercreditor Agreements, dated as of even
date herewith, among the Grantor, the Prior Lienholders signatory thereto, and
the Secured Parties.
10. SEVERABILITY. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11. PARAGRAPH HEADINGS. The paragraph headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
12. CUMULATIVE REMEDIES. The rights and remedies provided herein, in
the General Collateral Security Agreement, in the Patent and Trademark Security
Agreement, in the Securities Purchase Agreements and in the Debentures are
cumulative, may be exercised singly or concurrently and are not exclusive of any
rights or remedies provided by law or in equity or by statute.
13. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the terms
or provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Grantor and
the holders of a majority of the outstanding aggregate principal amount of the
Notes, provided, however, that Section 9(d) hereof may not be waived, amended,
supplemented or otherwise modified, nor may a provision inconsistent with
Section 9(d) hereof be added, unless such written instrument is also executed by
the Prior Lienholders. No course of dealing between the Grantor and the Secured
Parties nor any delay in exercising or failure to exercise any rights, power or
privilege under this Security Agreement shall operate as a waiver. This Security
Agreement shall be binding upon the successors and permitted assigns of the
Grantor and shall inure to the benefit of the Secured Parties and their
successors and assigns. The Grantor may not assign its rights or obligations
under this Security Agreement without the prior written consent of the Secured
Parties.
14. TERMINATION OF SECURITY INTEREST; RELEASE OF COLLATERAL.
(a) Upon the payment and performance in full by the Grantor of its
Obligations, the security interest granted in the Collateral pursuant to this
Security Agreement (the "Security Interest") shall terminate and all rights to
the Collateral shall revert to the Grantor.
(b) Upon any such termination of the Security Interest, the Secured
Parties will, at the expense of the Grantor, execute and deliver to the Grantor
such documents and take such other actions as the Grantor shall reasonably
request to evidence the termination of the Security Interest and deliver to the
Grantor all Collateral so released then in its possession.
15. NOTICES. Any notices required or permitted to be given under the
terms of this Security Agreement shall be in writing and shall be sent by mail,
personal delivery, telephone line facsimile transmission or courier and shall be
effective five days after being placed in the mail, if mailed, or upon receipt,
if delivered personally, by telephone line facsimile transmission or by courier,
in each case addressed to a party at such party's address (or telephone line
facsimile transmission number) shown below or such other address (or telephone
line facsimile transmission number) as a party shall have provided by notice to
the other party in accordance with this provision. In the case of any notice to
the Grantor, such notice shall be addressed to the Grantor at 0000 Xxxx
Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, Attention: President (telephone line
facsimile number (000) 000-0000), and a copy shall also be given to: Stroock &
Stroock & Xxxxx LLP, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxxx Xxxxxxx, Esq. (telephone line facsimile transmission number (212)
806-6006), and in the case of any notice to the Secured Parties, such notice
shall be addressed to.
16. INTEGRATION. This Security Agreement represents the agreement of
the Grantor and the Secured Parties with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Secured Parties relative to subject matter hereof not expressly set forth or
referred to herein.
17. GOVERNING LAW. This Security Agreement and the rights and
obligations of the Grantor hereunder shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York, except to the
extent that under the New York Uniform Commercial Code the laws of another
jurisdiction govern matters of perfection and the effect of perfection or
non-perfection of any security interest granted hereunder.
18. COUNTERPARTS. This Security Agreement may be executed in
counterparts and by the parties hereto on separate counterparts, each of which
shall be deemed to be an original and all of which together shall constitute one
and the same instrument. A telephone line facsimile transmission of this
Security Agreement bearing a signature on behalf of a party hereto shall be
legal and binding on such party.
19. WAIVER OF JURY TRIAL. To the extent permitted by applicable law,
each of the Grantor and the Secured Parties waives any right to have a jury
participate in resolving any dispute, whether sounding in contract, tort, or
otherwise between the parties hereto arising out of, connected with, related to,
or incidental to the relationship between any of them in connection with this
Security Agreement or the transactions contemplated hereby. Instead, any such
dispute resolved in court will be resolved in a bench trial without a jury,
submitted to jurisdiction in the Southern District of New York and New York
State Courts located in the County of New York.
20. CODE TERMS. All terms defined in Article 9 of the Code and used in
this Security Agreement shall have the same definitions herein as specified in
Article 9 of the Code, and such definitions are hereby incorporated herein by
reference and made a part hereof.
IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to
be duly executed and delivered as of the date first above written.
GRANTOR:
ALLIANCE PHARMACEUTICAL CORP.
By:
--------------------------------
Name: Xxxxxxxx X. Xxxx
Title: President and Chief Operating
Officer
ACKNOWLEDGED AND AGREED BY THE SECURED PARTIES:
