1
EXHIBIT 10.31
- --------------------------------------------------------------------------------
SECURITY AGREEMENT
among
Intracel Corporation,
Bartels, Inc.,
PerImmune Holdings, Inc.,
PerImmune, Inc.
and
the holders of the 12%
Guaranteed Senior Secured Primary Promissory Notes
due August 25, 2003 of
Intracel Corporation
and
the holders of the 12%
Guaranteed Senior Secured Escrow Promissory Notes
due August 25, 2003 of
Intracel Corporation
-----------------
Dated as of August 25, 1998
-----------------
- --------------------------------------------------------------------------------
2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of August 25, 1998, among
Intracel Corporation, a Delaware corporation (together with its successors and
assigns, the "Company"), the Company's wholly-owned subsidiaries Bartels, Inc.
("Bartels"), PerImmune Holdings, Inc. ("Holdings") and PerImmune, Inc.
("PerImmune" and, together with Bartels and Holdings, the "Subsidiaries") and
the holders (collectively, the "Holders") of the 12% Guaranteed Senior Secured
Primary Promissory Notes (the "Guaranteed Senior Secured Primary Notes") of the
Company and the holders of the 12% Guaranteed Senior Secured Escrow Promissory
Notes (the "Guaranteed Senior Secured Escrow Notes") of the Company
(collectively, the "Notes") issued pursuant to that certain Securities Purchase
Agreement, dated as of the date hereof, by and among the Company and the other
parties thereto (the "Purchase Agreement"). As used herein, all capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Purchase Agreement.
W I T N E S S E T H:
WHEREAS, the Company is to issue 12% Guaranteed Senior Secured
Primary Promissory Notes in the aggregate original principal amount of
$35,000,000 and 12% Guaranteed Senior Secured Escrow Promissory Notes in the
aggregate original principal amount of $6,000,000; and
WHEREAS, in order to secure the performance of the obligations
of the Company under the Purchase Agreement, the Notes and the Ancillary
Agreements (the "Obligations") and the guaranties relating to the Obligations
executed on the date hereof by each of the Subsidiaries, the parties hereto are
entering into this Security Agreement regarding the terms and conditions of the
Company's and Subsidiaries' (together, the "Company Parties") grant of a
security interest in the Collateral (as defined below) to the holders of the
Notes (the "Holders"); and
WHEREAS, the Company and the Holders of the Notes have entered
into the Intellectual Property Security Agreement as of the date hereof (the
"Intellectual Property Security Agreement") to secure the performance of the
Obligations, the representations, warranties, covenants, terms and provisions of
which are hereby incorporated by reference and made a part hereof; and
WHEREAS, the Company and the Holders of the Notes have entered
into an Interest Escrow Security Agreement as of the date hereof relating to the
payment of certain interest due on the Notes (the "Interest Escrow Security
Agreement"), the terms and provisions of which are hereby incorporated herein by
reference and made a part hereof, and the Company has agreed to grant to the
Holders a first priority perfected security interest in the accounts established
pursuant to the Interest Escrow Security Agreement (the "Interest Escrow
Accounts") which comprise a portion of the Collateral (as defined below); and
3
WHEREAS, the Company and the Holders of the Notes have entered
into a Funded Commitment Facility Escrow Agreement as of the date hereof
relating to certain segregated escrowed funds in connection with the issuance of
the Guaranteed Senior Secured Escrow Notes (the "Funded Commitment Facility
Escrow Agreement"), the terms and provisions of which are hereby incorporated
herein by reference and made a part hereof, and the Company has agreed to grant
the Holders a first priority perfected security interest in the accounts
established pursuant to the Funded Commitment Facility Escrow Agreement (the
"Funded Commitment Facility Escrow Accounts") which comprise a portion of the
Collateral (as defined below).
NOW, THEREFORE, in consideration of the premises and other
benefits to the Company Parties, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Section 1. Security Interest.
(a) Grant of Security Interest.
As collateral security for the payment and performance in full
of the Obligations in accordance with their respective terms, the Company
Parties hereby pledge, assign, transfer and grant to the Holders as to all
Collateral, a first priority perfected continuing security interest (except with
respect to certain Collateral listed on Schedule A hereto in which Akzo Nobel
Pharma International, B.V., as Collateral Agent under the Intellectual Property
Security Agreement dated August 8, 1996 (the "Collateral Agent") has a first
priority security interest (the "Akzo Security Interest Collateral") and with
respect to the Akzo Security Interest Collateral, a second priority perfected
security interest until such time as payment in full of the Debt underlying the
Akzo Security Interest Collateral has been made and at such time, a first
priority perfected security interest in the Akzo Security Interest Collateral)
(collectively, the "Security Interests") in all of the right, title and interest
of the Company Parties in and to all of the Assets, real or personal, tangible
or intangible of the Company Parties, now owned or hereafter acquired (the
"After Acquired Collateral"), wherever located, including, without limitation,
the following:
(i) All equipment in all of its forms, wherever
located, now or hereafter existing, and all
parts thereof and all accessions thereto,
with the exception of the Excluded Equipment
(any and all such equipment, parts and
accessions being the "Equipment");
(ii) All inventory in all of its forms, wherever
located, now or hereafter existing,
(including, but not limited to (i) raw
materials and work in process therefor,
finished goods thereof, and materials used
or consumed in the manufacture or
production, (ii) goods in which the Company
has an interest in mass or a joint or other
interest or right of any kind and (iii)
goods which are returned to or repossessed
by the Company, and all accessions thereto
and products thereof (any and all such
inventory, accessions and products being the
"Inventory");
2
4
(iii) All accounts, accounts receivable, contract
rights, chattel paper, instruments,
securities (including, without limitation,
all Investment Property (as such term is
defined in the Uniform Commercial Code (the
"UCC")), general intangibles (as such term
is defined in the UCC) and other obligations
of any kind now or hereafter existing
whether or not arising out of or in
connection with the sale or lease of goods
or the rendering of services, and all rights
now or hereafter existing in and to all
options to acquire real or personal property
("Property Options"), security agreements,
leases and other contracts securing or
otherwise relating to any such accounts,
contract rights, chattel paper, instruments,
general intangibles or obligations (any and
all such accounts, contract rights, chattel
paper, instruments, general intangibles and
obligations being the "Receivables," and any
and all such options, leases, security
agreements and other contracts being the
"Related Contracts");
(iv) All real Assets and interests in real
property, now or hereafter existing wherever
located, together with all buildings,
towers, structures and other improvements
erected, situated or placed thereon and all
attachments used in connection therewith
(collectively, the "Real Property
Collateral");
(v) All Financial Accounts, including, but not
limited to the Interest Escrow Accounts, the
Funded Commitment Facility Escrow Accounts
and the Collateral Account (collectively,
the "Financial Accounts") and all sums of
money, from any source whatsoever, now or
hereafter transferred to and comprising the
Financial Accounts, including, without
limitation, all proceeds of the Collateral
paid into the Financial Accounts and any and
all interest and dividends and other income
dividend from any such moneys and all
certificates and instruments in or
representing the Financial Accounts now or
hereafter existing;
(vi) All documents (as such term is defined in
the UCC) or other receipts covering,
evidencing or representing goods, now owned
or hereafter acquired by the Company; and
(vii) All patents, patent applications and
patentable inventions now or hereafter
existing, including, without limitation,
each patent and patent application
identified in Schedule I to the Intellectual
Property Security Agreement and made a part
hereof, and including without limitation (A)
all inventions and improvements described
and claimed therein, (B) the right to sue or
otherwise recover for any and all past,
present and future infringements and
misappropriations thereof, (C) all income,
royalties, damages and other payments now
and hereafter due and/or payable with
respect
3
5
thereto (including, without limitation,
payments under all licenses entered into in
connection therewith, and damages and
payments for the past and future
infringements thereof), and (D) all rights
corresponding thereto throughout the world
and all reissues, divisions, continuations,
continuations-in-part, provisionals,
substitutes, renewals, and extensions
thereof, all improvements thereon and all
other rights of any kind whatsoever of the
Company accruing thereunder or pertaining
thereto (the "Patents");
(viii) All trademarks, service marks, trade names,
trade dress or other indicia of trade
origin, trademark and service mark
registrations, and applications for
trademark or service mark registrations and
any renewals thereof now or hereafter
existing, including, without limitation,
each registration and application identified
in Schedule II to the Intellectual Property
Security Agreement and made a part hereof,
and including without limitation (A) the
right to sue or otherwise recover for any
and all past, present and future
infringements and misappropriations thereof
(B) all income, royalties, damages and other
payments now and hereafter due and/or
payable with respect thereto (including,
without limitation, payments under all
licenses entered into in connection
therewith, and damages and payments for past
or future infringements thereof), and (C)
all rights corresponding thereto throughout
the world and all other rights of any kind
whatsoever of the Company or accruing
thereunder or pertaining thereto, together
in each cash with the good will of the
business connected with the use of, and
symbolized by, each such trademark, service
mark, trade name, trade dress or other
indicia of trade origin (the "Trademarks");
(ix) All copyrights, whether statutory or common
law, and whether or not the underlying works
of authorship have been published, and all
works of authorship and other intellectual
property rights therein, all copyrights of
works based on, incorporated in, derived
from or relating to works covered by such
copyrights, all right, title and interest to
make and exploit all derivative works based
on or adopted from works covered by such
copyrights, and all copyright registrations
and copyright applications, and any renewals
or extensions thereof, including, without
limitation, each copyright registration and
copyright application, if any, identified in
Schedule I to the Intellectual Property
Security Agreement and made a part hereof,
and including now or hereafter existing,
without limitation, (A) the right to print,
publish and distribute any of the foregoing,
(B) the right to sue or otherwise recover
for any and all past, present and future
infringements and misappropriations thereof,
(C) all income, royalties, damages and other
payments now and hereafter due and/or
payable with respect thereto (including,
without limitation, payments under all
licenses
4
6
entered into in connection therewith, and
damages and payments for past or future
infringements thereof), and (D) all rights
corresponding thereto throughout the world
and all other rights and any kind whatsoever
of the Company accruing thereunder or
pertaining thereto (the "Copyrights");
(x) All license agreements with any other person
in connection with any of the Patents,
Trademarks or Copyrights, or such other
person's patents, trade names, trademarks,
service marks or copyrights, whether the
Company is a licensor or licensee under any
such license agreement, including now or
hereafter existing, without limitation, the
license agreements listed on Schedule II to
the Intellectual Property Agreement Security
attached hereto and made a part hereof,
subject, in each case to the terms of such
license agreements, including, without
limitation, terms requiring consent to a
grant of security interest, and any right to
prepare for sale, sell and advertise for
sale, all Inventory (as defined in the
Security Agreement) now or hereafter owned
by the Company and now or hereafter covered
by such licenses (the "Intangible
Licenses"); and
(xi) All products and proceeds of any and all of
the foregoing Collateral now or hereafter
existing including without limitation,
proceeds which constitute Assets of the type
described in clauses (i) through and
including (x) and to the extent not
otherwise included, all (A) payments under
insurance (whether or not the Secured Party
is the loss payee thereof), or any
indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise
with respect to any of the foregoing
Collateral, license royalties and (B) cash.
(b) The Security Interests and Liens granted hereunder shall
be treated as (i) a first priority perfected security interest in all the
existing and future Assets of the Company, and its Subsidiaries (including but
not limited to the Collateral set forth in Section 1(a) and any Assets or After
Acquired Collateral), other than (A) the Akzo Security Interest Collateral set
forth on Schedule A attached hereto and with respect thereto, a second priority
perfected security interest until such time as payment in full of the Debt
underlying the Akzo Security Interest Collateral has been made and at such time,
a first priority perfected security interest in the Akzo Security Interest
Collateral, (B) the Excluded Equipment subject to (y) the receipt of the consent
(which the Company shall use its best efforts to obtain) of Transamerica
Business Credit Corporation ("Transamerica") to the grant of a second priority
perfected Security Interest therein and (z) upon termination of any Security
Interest by Transamerica, in which case the Holders shall automatically retain a
first priority perfected Security Interest in the Excluded Equipment,, and (C)
the Receivables secured by the Receivables Facility, but only during such time
as the Receivables Facility is existing, and a second priority perfected
Security Interest in all such Receivables, and a first priority perfected
security interest in all other Receivables; and (ii) a pledge of all the issued
and outstanding Capital Stock of the Subsidiaries of the Company. For
5
7
purposes of this Section 1(b) the "Receivables Facility" and "Subsidiaries"
shall have the meanings set forth in the Purchase Agreement.
(c) Until the Obligations shall have been satisfied in full
and this Agreement shall have been terminated, the Company and its Subsidiaries
(as defined in the Purchase Agreement), shall not, without the Holders' prior
written consent, which consent will not be unreasonably withheld, create, incur
or assume any pledge, sale, license or assignment of any of the Collateral or
the After Acquired Collateral, or grant, convey or hypothecate any interest in
the Collateral or the After Acquired Collateral, or take any action the effect
of which is to have created any Lien, encumbrance, claim, charge, preference,
priority or other restriction on the Collateral or the After Acquired
Collateral.
(d) Certain Definitions.
All terms not otherwise defined in this Section 1 or the
Purchase Agreement, or the Notes or any Ancillary Agreement shall have their
respective meanings, if any, in the UCC as in effect in the State of New York.
"Accounts Receivable" has the meaning specified in Section
1(a)(iii) and, to the extent not otherwise described therein, (i) all accounts
(other than accounts generated from the sale or other disposition of any
Collateral of the type described in Section 1(a) clauses (i), (iv), (vi), (vii),
(viii), (ix) and (x)), (ii) all of the rights of the Company Parties to payment
for any goods or services sold by it, whether now in existence or arising from
time to time hereafter, including, without limitation, rights evidenced by an
account, note, contract, security agreement, chattel paper or other evidence of
indebtedness or security (in each case in respect of such goods or services) and
rights to payment of any interest, finance charges or other obligations with
respect thereto (all of the foregoing payments for the purposes of this
paragraph, "Payments"), in each case together with (A) all security pledged,
assigned, hypothecated or granted to or held by the Company Parties (in each
case in respect of such goods or services) to secure Payments, (B) all of the
right, title and interest of the Company Parties in and to any goods, the sale
of which gave rise to Payments to the extent of the Company Parties' interest in
such goods after such sale, (C) all proceeds thereof, (D) all insurance and
claims for insurance effected or held for the Company Parties in respect of
Payments or such goods, (E) all guarantees of any of the foregoing, (F) all
records, ledger cards and invoices of the Company Parties relating to any of the
foregoing, and (G) all credit information, reports and memoranda relating to any
of the foregoing) and (iii) all documents, books, log books, records, ledger
cards, invoices, correspondence, files, tapes, cards, and computer programs,
computer runs, computer stored data, computer print-outs, disks, data processing
software and relating to all Assets and rights of the type described above in
this definition.
"Assets" has the meaning specified in the Purchase Agreement.
"Collateral Account" means a separate custodial account or
accounts maintained by the Holders of the Notes pursuant to this Agreement.
6
8
"Contracts" has the meaning specified in Section 1(a)(iii) and
(vi), and to the extent not otherwise described therein, all those contracts and
agreements (including, without limitation, insurance policies, franchise,
management and employment agreements) to which any Company Party is a party or
is bound or from which any Company Party is a party or is bound or from which
such Company Party derives a benefit, and shall include, without limitation, all
rights to terminate, perform, compel performance, exercise remedies and all
rights to receive Inventory, Equipment, services and proceeds of any insurance,
indemnity, warranty or guaranty.
"Copyrights" has the meaning specified in Section 1(a)(ix) and
includes the items listed under "Copyrights" on Schedule I to the Intellectual
Property Security Agreement.
"Equipment" has the meaning specified in Section 1(a)(i), and
to the extent not otherwise described therein, all goods, other than Inventory,
and, in any event, shall include, but shall not be limited to, all equipment,
machinery, furniture, furnishings, fixtures, aircraft, computer equipment,
computer hardware, tools and vehicles, together with all attachments,
components, parts, accessories and accessions installed thereon or affixed
thereto, but excluding all Excluded Equipment.
"Excluded Equipment" means the equipment listed on Schedule B,
together with all attachments, components, parts, accessories and accessions
installed thereon or affixed thereto.
"Financial Accounts" has the meaning specified in Section
1(a)(v), and to the extent not otherwise described therein, all right, title and
interest of Company Parties in all deposit, investment or other accounts
maintained with any bank, savings and loan association, broker, brokerage, or
any other financial institution, together with all monies and other Assets
deposited or held therein, including, without limitation, any checking account,
NOW account, savings account, escrow account, savings certificate and margin
account, the Interest Escrow Accounts, the Funded Commitment Facility Escrow
Accounts and the Collateral Accounts. The Company Parties hereby grant a lien on
and assigns to the Holders each such Financial Account, whether or not such lien
or assignment is subject to the UCC.
"Funded Commitment Facility Escrow Accounts" means a separate
custodial escrow account or accounts maintained by the Company for the benefit
of the Holders of the Notes pursuant to the Funded Commitment Facility Escrow
Agreement.
"General Intangibles" has the meaning specified in Section
1(a)(iii), (vii), (viii), (ix) and (x) and to the extent not otherwise described
therein, all general intangibles, and, in any event, shall include, but not be
limited to, all rights to receive Inventory or goods that will become Inventory,
all general intangibles arising from the sale, loan, exchange or other
disposition of goods or general intangibles and all general intangibles arising
from the furnishing of services, all rights under or to any franchises, Patents,
Patent applications, know-how, inventions (whether or not patentable), Marks and
the goodwill of the business symbolized thereby, copyrights and any registration
or application relating thereto, all licenses (whether any Company Party is
licensee or licensor thereunder) but only to the extent that such licenses do
not
7
9
prohibit the Company Parties' granting of a security interest therein or a valid
written consent to assignment or pledge has been obtained from the licensor
thereunder, all tax refunds, tax refund claims, guaranty claims, all judgments,
chooses in action and all computer software, computer programs and all general
intangibles which represent the right to receive money and all interests of the
Company Parties in any partnerships in which any of them is a general or limited
partner.
"Interest Escrow Accounts" mean a separate custodial escrow
account or accounts maintained by the Company, for the benefit of the Holders of
the Notes pursuant to the Interest Escrow Security Agreement.
"Inventory" has the meaning specified in Section 1(a)(ii) and
to the extent not otherwise described therein, all inventory of every type or
description (other than inventory subject to purchase money security interests)
and all documents covering such inventory, including, but not limited to, all
goods, merchandise and other personal Assets, held for sale, lease or exchange,
or which are furnished or are to be furnished under contracts of service, in
each case whether such goods, merchandise or other personal Assets are on
consignment, or which constitute raw materials, work in process or materials
used or consumed or to be used or consumed in the Company Parties' businesses,
or in the processing, packaging or shipping of the same, and all finished goods.
"Leases" has the meaning specified in Section 1(a) (iv) and to
the extent not otherwise described therein, any and all leasehold interests of
the Company Parties in real or personal Assets, whether any Company Party is
lessor or lessee thereunder, and any other such leasehold interests created
hereafter.
"Patents" has the meaning specified in Section 1(a)(vii) and
includes the items listed under the heading "patents" on Schedule I to the
Intellectual Property Security Agreement.
"Permitted Lien" means (i) Liens for taxes, assessments or
governmental charges or levies not delinquent or which any Company Party is in
good faith and by appropriate proceedings contesting and for which an adequate
reserve has been established in accordance with GAAP, (ii) deposits, pledges or
other items to secure obligations under workers' compensation, social security
or similar laws, or under employment insurance, (iii) indemnity, performance or
other similar bonds or deposits, pledges or other items to secure bids, tenders,
contracts (other than contracts for the payment of money), statutory
obligations, surety and appeal bonds and other obligations of like nature, in
each case arising in the ordinary course of business, (iv) interests of
landlords or other lessors under leases of real or personal Assets, (v)
statutory Liens of landlords and mechanics', workmen's, materialmen's, carrier's
or warehousemen's or other like Liens arising in the ordinary course of business
with respect to obligations which are not due or which any Company Party is in
good faith and by appropriate proceedings contesting and for which an adequate
reserve has been established in accordance with GAAP, (vi) Liens securing
purchase money Debt incurred to finance the acquisition of the Assets encumbered
by such Liens, (vii) rights of tenants, subtenants, franchisees or parties in
possession (other than a debtor-in-possession, trustee in bankruptcy or
receiver) if such rights were granted in the ordinary course of business and
vested on or before the date hereof or created
8
10
thereafter in the ordinary course of business, (viii) interests of any customer
who has purchased goods that are held by any Company Party until delivery is
requested by such customer, (ix) Liens of any third party in insurance premiums
returned to any Company Party, which Liens secure loans by such third party to
the Company for the purpose of purchasing the insurance to which such premium
relates, (x) extensions, renewals or replacements of any Lien referred to in
paragraphs (i) through (ix) above, provided that any such extension, renewal or
replacement is granted in the ordinary course of business and limited to the
Assets originally encumbered thereby and (xi) Laws with respect to any Company
Parties' Assets and any amendments thereto now or at any time hereafter adopted
by any governmental or quasi-governmental authority having jurisdiction.
"Real Property" has the meaning specified in Section 1(a)(iv).
"Required Holders" has the meaning specified in the Purchase
Agreement.
"Trademarks" has the meaning specified in Section 1(a)(viii),
and to the extent not otherwise described therein, all trademarks, tradenames
and service marks, including, without limitation, those listed on Schedule II to
the Intellectual Property Security Agreement, which are registered in the United
States Patent and Trademark Office, any office of any state or any other
governmental authority, or in any country and all licenses of trademarks,
tradenames and service marks, as well as any unregistered marks used by any
Company Party in the United States and elsewhere, including any logos and/or
designs used in connection with any such trademarks, tradenames or service marks
and all registrations, recordings and applications for registration thereof;
Section 2. Representations, Warranties and Covenants. Each Company
Party hereby represents and warrants, covenants and agrees, with respect to
itself, that:
(a) Each Company Party owns each item of Collateral pledged by
it hereunder, and such Collateral is and shall at all times be free and clear of
any security interest, mortgage, hypothecation, pledge, lien or encumbrance or
restriction on the transfer thereof, except for (i) the Security Interests
created under this Security Agreement and the other Security Documents, (ii) the
Liens and encumbrances listed on Schedule C attached hereto (the "Existing
Liens") and (iii) Permitted Liens. Each Company Party shall pay and discharge,
or cause to be paid and discharged, when due and payable, all amounts secured by
any of the Existing Liens or Permitted Liens. Each Company Party shall maintain,
preserve and protect the security interests granted by it hereunder for as long
as this Security Agreement shall remain in full force and effect.
(b) Schedule D hereto sets forth as of the date hereof each
city, state and county where each Company Party has a place of business
(including each Company Party's chief executive office and principal place of
business) and each additional county and state where any Asset of each Company
Party is located.
(c) The information set forth in Schedules C and D attached
hereto is true, complete and correct as of the date hereof.
9
11
(d) Each Company Party will not (i) keep Collateral or After
Acquired Collateral in any State in which financing statements have not
theretofore been filed in a manner sufficient to perfect under the UCC of such
State the Security Interests in the Collateral and the After Acquired Collateral
granted hereby, or (ii) change its name or change its chief executive office or
places of business from that shown in Schedule D, unless the Company Party (A)
gives notice to the Required Holders of such event, (B) does the appropriate
filing or other action necessary to perfect the Liens of the Holders on the
Collateral and the After Acquired Collateral and (C) delivers an Officers'
Certificate to the Required Holders stating that its obligations under Section
2(d)(B) have been fulfilled and setting forth the actions taken to comply with
such section.
(e) Each Company Party will maintain or cause to be maintained
at its expense, with financially sound and reputable insurers having a claims
paying ability of "A" or better by Standard & Poor's ("S&P") or Moody's Investor
Service, Inc. ("Moody's") insurance with respect to the Collateral and After
Acquired Collateral against loss or damage of the kinds customarily insured
against by corporations of established reputations engaged in the same or
similar business and similarly situated as such Company Party, of such types and
in such amounts as are customarily carried under similar circumstances by such
other corporations and with such deductible amounts as are customary for
companies in similar businesses similarly situated. Each Company Party will
cause the Holders to be named as an additional insured and loss payee, as its
interests may appear, under all present or future policies of insurance that
insure any of the Collateral or After Acquired Collateral. Each Company Party
will cause all policies of insurance to (i) provide that insurance proceeds with
respect to the Collateral or After Acquired Collateral shall be adjusted with
such Company Party (which shall give notice of any such loss to the Holders)
prior to a Default in payment of any Note or an Event of Default, other than an
Event of Default related to the failure to pay principal of any Note, and, on
and after a Default in payment of principal of any Note or an Event of Default,
other than an Event of Default related to the failure to pay principal of any
Note, shall be adjusted with, and payable to, the Holders and (ii) include
waivers by the insurer of all claims for insurance premiums against the Holders.
Each Company Party shall use its best efforts to obtain insurance that provides
that any losses shall be payable to the Holders, notwithstanding any act,
failure to act or negligence of, or violation of warranties, declarations or
conditions contained in such policy by, such Company Party or Holders. Insurance
policies required to be obtained hereunder shall contain an agreement by the
insurer that it will not cancel such policy except after 30 days' prior notice
to the Required Holders. Each Company Party shall deliver to the Holders
originals of such policies of insurance or certificates evidencing such
policies, together with the evidence of payment (which evidence may be an
Officers' Certificate of such Company) of all premiums then due thereon and such
Company Party shall, at least five days prior to the expiration of any such
insurance, deliver other original policies or other certificates of the insurers
evidencing the renewal of such insurances. Should any Company Party fail to
effect, maintain or renew any insurance provided for in this Section, or to pay
the premium therefor, or to deliver to the Holders any of such policies or
certificates, then in any of said events each Holder, at its option, but without
obligation so to do, may, upon 10 days' notice to such Company Party procure
such insurance. Any sums expended by the Holders to procure such insurance shall
be repaid by such Company Party within 10 days following the date on which such
expenditure shall be made by the Holders. Each Company Party annually will
deliver to the Holders a letter from an insurance broker with whom such Company
Party regularly conducts its business with respect to insurance
10
12
setting forth the insurance obtained pursuant to this Section 2(e) and then in
effect and stating whether, as to amounts, coverage and provisions, such
insurance protects such Company Party against any and all risks that are
customarily insured against by companies in similar businesses similarly
situated. Such letter shall also set forth any recommendation of such
independent insurance broker as to additional insurance, if any, required in
order to make insurance coverage of the Collateral consistent with practice
regarding insurance coverage in the Company Party's industry. Upon notice of a
Default in payment of principal of any Note or an Event of Default, other than
an Event of Default in payment of principal of any Note, the Holders, (i) may,
(ii) upon notice from the Required Holders shall and (iii) shall, in any event,
upon acceleration of the Obligations in accordance with Section 6 of the Notes,
send written notice to all insurers for which it has received policies of
insurance or certificates evidencing such policies informing them of the
occurrence of such Default or Event of Default and instructing them to adjust
all claims as set forth above until such insurers are notified to the contrary
by the Required Holders. If such Event of Default is cured or waived prior to
acceleration of any Obligations, the Required Holders shall advise such insurers
to adjust claims with the Company Party.
(f) Each Company Party, at its own expense: (i) will do all
acts and things, and will make, execute, acknowledge and deliver, and file and
record in the proper filing and recording places all such instruments
(including, without limitation, mortgages, assignments, security agreements,
financing statements and continuation statements), required (and any that are
reasonably requested by the Holders) to establish, perfect, maintain and
continue the perfection and priority of the Security Interests of the Holders in
the Collateral and the After Acquired Collateral, in the order of priority as
described in Section 1(b), and, in addition, authorizes the Holders to execute
and file in the name of the Holders any financing or continuation statements
that the Holders may determine to be necessary or advisable to protect their
security interests with respect to the Collateral and the After Acquired
Collateral; (ii) will make all searches necessary (and any deemed necessary by
the Holders) to establish and determine the validity and priority of such
Security Interests of the Holders; provided, however, that, so long as no Event
of Default has occurred and is continuing, the Company Party shall not be
required to make any search in any location more frequently than once a year;
and (iii) will satisfy all claims and charges, other than Permitted Liens and
Existing Liens, that might reasonably be expected to materially prejudice,
imperil or otherwise adversely affect the Collateral or the After Acquired
Collateral or affect the existence, perfection or priority of such Security
Interests. A carbon, photographic or other reproduction of this Security
Agreement or a financing statement shall be sufficient as a financing statement
and may be filed in lieu of the original in any or all jurisdictions which
accept such reproductions. Each Company Party, at its own expense, will cause
any New Subsidiaries (as defined in the Purchase Agreement), to do all acts and
things required to comply with the protection and perfection of the Holders'
Security Interest under this Section 2(f), in accordance with the provisions of
Section 1(b).
(g) Neither the execution and delivery of this Security
Agreement by the Company Party, the consummation of the transactions herein
contemplated nor the fulfillment of the terms hereof violate the terms of any
agreement, indenture, mortgage, deed of trust, equipment lease, instrument or
other document to which any Company Party is a party, or conflict with any Law,
applicable to such Company Party of any court or any government, regulatory body
or administrative agency or other governmental body having jurisdiction over
such Company Party or its Assets, to the extent that such violation or conflict
would have a
11
13
material adverse effect on the financial condition, business, assets,
liabilities or prospects of such Company Party, or on the value of the
Collateral, the After Acquired Collateral or the Security Interests.
(h) No consent or approval that has not been obtained prior to
the date hereof of any governmental body, regulatory authority or securities
exchange was or is necessary as a condition to the validity of the Security
Interests granted hereunder in the Collateral and the After Acquired Collateral
and this Security Agreement is effective to vest in the Holders the rights of
the Holders in the Collateral and the After Acquired Collateral as set forth
herein.
(i) For so long as any of the Notes shall remain outstanding,
the Company Party shall not take any action discharging, canceling,
extinguishing or otherwise impairing the Company Party's right, title and
interest in and to any of the Collateral in contravention of the terms of the
Purchase Agreement, the Notes or any of the Ancillary Agreements.
(j) The Company Party shall pay and discharge any taxes,
assessments and governmental charges and levies against any Collateral and the
After Acquired Collateral prior to delinquency thereof and shall keep all
Collateral and the After Acquired Collateral free of any unpaid charges
whatsoever, unless such charges are being contested in.
Section 3. Administration of the Collateral. The Holders shall
administer the Collateral and the After Acquired Collateral in accordance with
the provisions hereof.
Section 4. Release and Substitution of Collateral. The Collateral and
the After Acquired Collateral shall not be released from the Security Interests
created hereunder and no Assets shall be substituted for any of the Collateral
except in accordance with the provisions of Article V of the Purchase Agreement,
which provisions are hereby incorporated herein by reference.
Section 5. Default; Remedies.
(a) Defined. For purposes of this Security Agreement, the
terms "Default" and "Event of Default" shall have the respective meanings
provided in the Notes and shall include an event that with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
(b) Exercise of Remedies Under the Security Agreement. If a
Default in payment of any Obligations shall have occurred or any Event of
Default shall have occurred and be continuing, or would result therefrom, the
Holders may commence the taking of such actions (or refrain from taking actions)
toward collection or enforcement of this Security Agreement and the Collateral
or After Acquired Collateral (or any portion thereof), including, without
limitation, action toward foreclosure upon any Collateral or After Acquired
Collateral, as it deems appropriate in its sole discretion or as instructed by
the Required Holders. If any such Default or Event of Default that was the basis
for the commencement of such action shall have been cured or waived, and, in the
case where there has been an acceleration, recession of such acceleration shall
have occurred, in each case in accordance with the terms of the Purchase
Agreement, the Notes, or any of the Ancillary Agreements, as applicable, any
direction to the Holders to take
12
14
any action in connection with the aforementioned notice shall be deemed
rescinded upon notification by the Holders of such cure, waiver or rescission of
acceleration, as the case may be.
(c) Remedies Generally. If a Default in the payment of any Obligations shall
have occurred or any Event of Default shall have occurred and be continuing or
would result therefrom, the Holders or by agents or attorneys may exercise in
respect of the Collateral or After Acquired Collateral all of the rights and
remedies set forth herein or otherwise available to a secured party upon Default
under any applicable provision of the UCC or any other applicable jurisdiction
and, in conjunction with or in addition to such rights and remedies, may
themselves or by agents or attorneys retain the Collateral or the After Acquired
Collateral or sell, assign, transfer, or dispose of, endorse and deliver the
whole or, from time to time, any part of the Collateral or the After Acquired
Collateral at public or private sale, for cash, upon credit or for other Assets,
for immediate or future delivery, and for such price or prices and on such other
terms as are satisfactory to the Holders (in their discretion) without liability
for loss or damage. Upon consummation of any such sale, the Holders shall have
the right to assign, transfer, endorse and deliver to the purchaser or
purchasers thereof the Collateral or After Acquired Collateral so sold. Each
such purchaser at any such sale shall hold the Assets sold absolutely free from
any claim or right on the part of any Company Party, and each Company Party
hereby waives (to the full extent permitted by law) all rights of redemption,
stay or appraisal which such Company Party now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
The Holders shall give such Company Party ten days' written notice (which each
Company Party agrees shall be deemed to be reasonable notification within the
meaning of Section 9-504(3) of the relevant UCC) of the Holder's intention to
make any such public or private sale. Any such sale shall be held at such time
or times and at such place or places as the Holders may fix. At any such sale,
the Collateral or After Acquired Collateral, or portion thereof to be sold, may
be sold as an entirety or in separate portions, as the Holders may, in their
discretion, determine. The Holders shall not be obligated to make any sale of
the Collateral or After Acquired Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of the Collateral or After Acquired
Collateral may have been given. The Holders may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same was so
adjourned. In case sale of all or any part of the Collateral or After Acquired
Collateral is made on credit or for future delivery, the Collateral or After
Acquired Collateral so sold may be retained by the Holders until the sale price
is paid by the purchaser or purchasers thereof, but the Holders shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral or After Acquired Collateral so sold and, in case of any
such failure, such Collateral may or After Acquired Collateral be sold again
upon like notice. As an alternative to exercising the power of sale herein
conferred upon it, the Holders may proceed by suit or suits at law or in equity
to foreclose this Security Agreement and sell the Collateral or After Acquired
Collateral or any portion thereof pursuant to judgment or decree of a court or
courts having competent jurisdiction. Any of the Collateral or After Acquired
Collateral may be sold, leased or otherwise disposed of, in the condition in
which the same existed when taken by the Holders or after any overhaul or repair
that the Holders shall determine to be commercially reasonable. If, under
mandatory requirements of applicable law, the Holders shall be required to make
disposition of the Collateral or After Acquired Collateral within a period of
time that does not permit the giving of notice to a Company Party as provided
herein, the Holders need give
13
15
such Company Party only such notice of disposition as shall be reasonably
practicable in view of such mandatory requirements of law.
(d) Remedies; Obtaining the Collateral Upon Default. Each
Company Party agrees that, if a Default or Event of Default shall have occurred
and be continuing, or would result therefrom then and in every such case, and in
addition to the rights and remedies available to a secured party under any
applicable provisions of the Uniform Commercial Code, or any other applicable
law, the Holders, may:
(i) personally, or by agents or attorneys,
immediately take possession of the
Collateral or After Acquired Collateral or
any part thereof from such Company Party or
any other person who then has possession of
any part thereof, with or without notice or
process of law, and for that purpose may
enter upon such Company Party's premises
where any of the Collateral or After
Acquired Collateral is located and remove
the same and use in connection with such
removal any and all services, supplies, aids
and other facilities of such Company Party;
(ii) instruct the obligor or obligors on any
agreement, instrument or other obligation
constituting Collateral or After Acquired
Collateral to make any payment or render any
performance required by the terms of such
agreement, instrument or obligation directly
to the Holders or their designee;
(iii) withdraw all monies, securities and
instruments held by the Holders in any
Financial Account (including but not limited
to the Collateral Account, the Interest
Escrow Accounts or the Funded Commitment
Facility Escrow Accounts), or otherwise for
application to the Obligations;
(iv) sell or otherwise liquidate, or direct such
Company Party to sell or otherwise
liquidate, any or all investments made in
whole or in part with the Collateral or
After Acquired Collateral or any part
thereof, and take possession of the proceeds
of any such sale or liquidation; and
(v) take possession of the Collateral or After
Acquired Collateral or any part thereof by
directing such Company Party in writing to
deliver the same to the Holders at any place
or places designated by the Required
Holders, in which event such Company Party
shall at its own expense:
(A) forthwith cause the same to be
moved to the place or places so
designated by the Agent and there
delivered to the Holders;
14
16
(B) store and keep any Collateral or
After Acquired Collateral so
delivered to the Holders at such
place or places pending further
action by the Required Holders as
provided in this Section 5(d); and
(C) while any such Collateral or After
Acquired Collateral shall be so
stored and kept, provide such guard
and maintenance services as shall
be necessary to protect the same
and to preserve and maintain such
Collateral or After Acquired
Collateral in good condition;
it being understood that such Company Party's obligation so to deliver
the Collateral or the After Acquired Collateral is of the essence of
this Security Agreement and that, accordingly, upon application to a
court of equity having jurisdiction, the Holders shall be entitled to a
decree requiring specific performance by such Company Party of such
obligation.
(e) Collateral Account. The Required Holders shall deposit the
proceeds of any Collateral or the After Acquired Collateral obtained or disposed
of pursuant to this Section 5 in the Collateral Account.
(f) Intellectual Property Collateral. The Holders may exercise
in respect of the Intellectual Property Collateral (as that term is defined in
the Intellectual Property Security Agreement), in addition to other rights and
remedies provided for herein or otherwise available to it, all the rights and
remedies of a secured party upon Default under the N.Y. Uniform Commercial Code,
and may also (i) require the Company or any of its Subsidiaries to, and the
Company and each of its Subsidiaries hereby agree that they will, at their
expense, and upon the request of any Holder forthwith, assemble all or part of
the documents and things embodying all or any part of the Intellectual Property
Collateral as directed by the Holders and make them available to the Holders at
a place and time to be designated by the Holders which is reasonably convenient
to the parties and (ii) without notice, except as specified below, sell the
Intellectual Property Collateral or any part thereof in one or more parcels at
public or private sale, at any of the Holder's offices or elsewhere, for cash,
on credit or for future delivery, and upon such other terms as the Holders may
deem commercially reasonably. In the event of any sale, assignment, or other
disposition of any of the Intellectual Property Collateral of the Companies or
any of its Subsidiaries, the goodwill of the business connected with and
symbolized by any Trademarks subject to such disposition shall be included and
the Company and its Subsidiaries, as the case may be, shall supply to the
Holders the Company's and its Subsidiaries', as the case may be, know-how and
expertise, and documents and things embodying the same, relating to the
manufacture, distribution, advertising and sale of the products or the provision
of services relating to any Intellectual Property Collateral subject to such
disposition, and the Company's and its Subsidiaries', as the case may be,
customer lists and other records and documents relating to the Intellectual
Property Collateral and to the manufacture, distribution, advertising and sale
of such products and services. The Company and its Subsidiaries agree that, to
the extent notice of sale shall be required by law, at least ten days' notice to
the Company and its Subsidiaries, as the case may be, of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Holders shall not be obligated to make
any
15
17
sale of the Intellectual Property Collateral regardless of notice having been
given. The Holders may adjourn the public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
(g) Preventing Impairment of the Collateral. Regardless of
whether there shall have occurred any Default or Event of Default, the Holders
may institute and maintain or cause in the name of each Company Party or of the
Required Holders, or both, to be instituted or maintained, such suits and
proceedings as the Required Holders may be advised by counsel shall be necessary
or expedient to prevent any impairment of the Collateral or After Acquired
Collateral in contravention of the terms hereof or of the Purchase Agreement,
the Notes or any Ancillary Agreements.
Section 6. Holders Appointed Attorney-in-Fact. Each Company Party
hereby constitutes and appoints the Holders their attorney-in-fact for all
Collateral for the purpose of carrying out the provisions, but subject to the
terms and conditions, of this Security Agreement and taking any action and
executing any instrument, including, without limitation, any financing
statements or continuation statements, and taking any other action to maintain
the validity, perfection and enforcement of the Security Interests intended to
be created hereunder, that the Holders may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest.
Section 7. Purchase of Collateral by Required Holders. At any sale of
the Collateral or After Acquired Collateral, whether pursuant to power of sale
or otherwise hereunder, any Holder of the Notes may, to the extent permitted by
applicable law, bid for and purchase, free from any right of redemption, stay or
appraisal (all such rights being hereby waived and released by each Company
Party to the extent permitted by law), the Collateral or After Acquired
Collateral or any party thereof or any interest therein and upon compliance with
the terms of such sale may hold, retain, exploit, resell or otherwise dispose of
such Assets without further accountability to the Company Party for the proceeds
of such sale. Each Company Party will execute and deliver, or cause to be
executed and delivered, such instruments, endorsements, assignments, waivers,
certificates and other documents and take such further action as the Holder of
the Notes shall reasonably request in connection with any such sale.
Section 8. Disposition of Proceeds. The proceeds of any sale or other
disposition of the whole or any part of the Collateral or After Acquired
Collateral by the Holders pursuant to this Security Agreement, together with any
other monies held by the Holders pursuant to this Security Agreement, shall be
applied by the Holders in accordance with the provisions of the Notes.
Section 9. Waiver of Claims. Except as otherwise provided in this
Security Agreement, EACH COMPANY PARTY HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NOTICE OF JUDICIAL HEARING IN CONNECTION WITH THE REQUIRED
HOLDERS' TAKING POSSESSION OR THE REQUIRED HOLDERS' DISPOSITION OF ANY OF THE
COLLATERAL IN ACCORDANCE WITH THE TERMS HEREOF. THE PURCHASE AGREEMENT, THE
NOTES, AND ANY ANCILLARY AGREEMENTS INCLUDING, WITHOUT LIMITATION, ANY AND ALL
PRIOR NOTICES
16
18
AND HEARINGS FOR ANY PREJUDGMENT REMEDY OR REMEDIES AND ANY SUCH RIGHT THAT THE
COMPANY PARTY WOULD OTHERWISE HAVE UNDER THE CONSTITUTION OR ANY STATUTE OF THE
UNITED STATES OR OF ANY STATE, and, to the fullest extent permitted by
applicable law, each Company Party hereby further waives:
(a) all damages occasioned by such taking of possession except
any damages that are the direct result of the Holders' gross negligence, bad
faith or willful misconduct; and
(b) all other requirements as to the time, place and terms of
sale or other requirements with respect to the enforcement of the Holders'
rights and powers hereunder.
Any sale of, or the exercise of any options to purchase, or
any other realization upon, any Collateral or After Acquired Collateral shall
operate to divest all right, title, interest, claim and demand, at law or in
equity, of the Company Party therein and thereto, and shall be a perpetual bar
both at law and in equity against the Company Party and against any and all
persons claiming or attempting to claim the Collateral or After Acquired
Collateral so sold, optioned or realized upon, or any part thereof, through and
under such Company Party.
Section 10. Remedies Cumulative; No Waiver. Each right, power and
remedy of the Holders provided for herein, in the Purchase Agreement, the Notes
and any Ancillary Agreement or in another agreement pursuant to which a Lien is
created in favor of any Holder, or now or hereafter existing at Law or in
equity, by statute or otherwise, shall be cumulative and concurrent and shall be
in addition to every other right, power or remedy of any Holder provided for
herein, in the Purchase Agreement, the Note or in any other Ancillary Agreement
or in another agreement pursuant to which a Lien is created in favor of any
Holder or now or hereafter existing at Law or in equity, by statute or
otherwise. No failure on the part of any Holder to exercise, and no delay in
exercising, any right, power or remedy hereunder or under any such other
agreement or now or hereafter existing at Law or in equity, by statute or
otherwise, shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. No notice
to or demand on any Company Party hereunder shall, of itself, entitle it to any
other or further notice or demand in the same, similar or other circumstances.
Section 11. Additional Collateral. Without notice or consent of any
Company Party and without impairment of the Security Interests and rights
created by this Security Agreement, the Holders may accept from any person or
persons additional Collateral or other security for the Obligations. The
creation of the security interest created hereunder shall not prevent the
Holders from resorting to such additional Collateral or security without
affecting the Holders' rights hereunder. The Holders' acceptance of any such
additional Collateral or security shall not prevent the Holders from resorting
to the Collateral without affecting the Holders' rights in and to such
additional Collateral or the After Acquired Collateral or security.
Section 12. Further Assurances. Each Company Party agrees (a) that it
shall, at its own expense, file or record such notices, financing statements,
continuation statements or other documents as may be necessary to perfect the
Security Interests, and as the Holders may reasonably request, such instruments
to be in form and substance satisfactory to the Holders and (b) that each
Company Party shall, and shall cause all new Subsidiaries (as that term is
defined in
17
19
the Purchase Agreement), at its own expense, do such further acts and things and
execute and deliver to the Holders such additional conveyances, assignments,
agreements and instruments as the Holders may at any time reasonably request in
connection with the administration and enforcement of this Security Agreement or
relative to the Collateral or the After Acquired Collateral or any part thereof
or in order to assure and confirm unto the Holders, their rights, powers and
remedies hereunder.
Section 13. Expenses and Indemnification.
(a) Expenses. The Company Parties agree to pay to the Holders
from time to time upon demand, all reasonable fees, costs and expenses of the
Holders (including, without limitation, the reasonable fees and disbursements of
counsel) (i) arising in connection with the preparation, execution, delivery,
modification or termination of this Security Agreement or the enforcement of any
of the provisions hereof or (ii) incurred or required to be advanced in
connection with the sale or other disposition of any Collateral or After
Acquired Collateral pursuant to this Security Agreement and the preservation,
protection or defense of the Holders' rights under this Security Agreement or in
and to the Collateral or After Acquired Collateral.
(b) Stamp and Other Taxes. The Company Parties hereby agree to
indemnify each Holder for, and hold each of them harmless against, any present
or future claim for liability for any stamp or other similar tax and any
penalties or interest with respect thereto, which may be assessed, levied or
collected by any jurisdiction in connection with this Security Agreement or any
Collateral or After Acquired Collateral.
(c) Filing Fees, Excise Taxes, Etc. The Company Parties hereby
agree to pay or to reimburse the Holders for any and all amounts in respect of
all search, filing, recording and registration fees, taxes, excise taxes and
other similar imposts which may be payable or determined to be payable in
respect of the execution, delivery, performance and enforcement of this Security
Agreement.
(d) Survival of Obligations. The Obligations of the Company
Parties set forth in this Section 13 shall survive the execution, delivery and
termination of this Security Agreement and the payment of all other Obligations.
Section 14. Obligations Absolute. The liability of the Company Parties
under this Security Agreement shall remain in full force and effect without
regard to, and shall not be released, suspended, discharged, terminated or
otherwise affected by (a) any change in the time, place or manner of payment of
all or any of the Obligations, or in any other term of this Agreement or the
Purchase Agreement, any Ancillary Agreement or the Notes, any waiver,
indulgence, renewal, extension, amendment or modification of or addition,
consent or supplement to or deletion from or any other action or inaction under
or in respect of this Agreement or the Purchase Agreement, the Notes or any
Ancillary Agreement or any assignment or transfer thereof; (b) any lack of
validity or enforceability, in whole or in part, of this Agreement or the
Purchase Agreement, any Ancillary Agreement or the Notes; (c) any furnishing of
any additional security for the Obligations or any acceptance thereof or any
release or non-perfection of any Security Interests in the Assets other than the
Collateral or After Acquired Collateral; (d) any limitation on any party's
liability or obligations under this
18
20
Agreement or the Purchase Agreement, any Ancillary Agreement or the Notes; (e)
any bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to any Company Party,
or any action taken with respect to this Security Agreement by any trustee or
receiver, or by any court, in any such proceeding, whether or not the Company
Party shall have notice or knowledge of any of the foregoing; (f) any exchange,
release or amendment or waiver of or consent to departure from this Agreement,
the Purchase Agreement, the Notes, any Ancillary Agreement or any other
agreement pursuant to which a Lien is created in favor of any Holder, pursuant
to which a person other than the respective Company Party has granted a security
interest; or (g) any other circumstance that might otherwise constitute a
defense available to, or discharge of, any Company Party.
Section 15. Waiver. To the extent permitted by applicable law, each
Company Party hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Obligations and this Security Agreement
and any requirement that the Holders protect, secure, perfect or insure any
security interest or any Assets subject thereto or exhaust any right or take any
action against the Company Party or any other person or entity; provided,
however, that the Holders shall in any event take such care in the handling of
any Collateral or After Acquired Collateral in its possession as it takes with
respect to the Assets of a similar nature in its possession.
Section 16. Termination. Upon payment in full and satisfaction of all
of the Obligations, this Security Agreement shall terminate and the Holders
shall reassign and redeliver to each Company Party all Collateral and After
Acquired Collateral hereunder that has not been sold, disposed of, retained or
applied by the Holders in accordance with the terms hereof and the Notes. Such
reassignment and redelivery shall be without warranty by or recourse to the
Holders, and shall be at the expense of such Company Party. At such time, this
Security Agreement shall no longer constitute a Lien upon or grant any Security
Interest in any of the Collateral and After Acquired Collateral; and the Holders
shall, at such Company Party's expense, deliver to the Company Party written
acknowledgment thereof and of cancellation of this Security Agreement in a form
as reasonably requested by the Company Party and adequate for proper filing or
recording in such offices and such jurisdictions as the Company Party reasonably
deems necessary to release the Security Interests granted hereby. This Security
Agreement shall continue to be effective or be reinstated, as the case may be,
if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned upon the insolvency, bankruptcy or reorganization of any
Company Party, all as though such payment had not been made.
Section 17. Notices. Any notices or other communications required or
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery or by registered or certified mail, postage prepaid, return
receipt requested or by nationwide overnight delivery service (with charges
prepaid) addressed as follows:
If to any Company Party:
Intracel Corporation
2005 NW Sammamish Road, Suite 107
Issaquah, Washington 98027
19
21
Attention: Chief Executive Officer
Fax Number: (425) 392-2992
Confirm Number: (425) 557-1894
cc: Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Joseph W. Bartlett, Esq.
If to the Holders:
Northstar High Yield Fund
Northstar High Total Return Fund
Northstar High Total Return Fund II
Northstar Strategic Income Fund
300 First Stamford Place
Stamford, Connecticut 06902
Attention: Mr. Michael A. Graves
Fax Number: (203) 862-8601
Confirm Number: (203) 863-6224
cc: Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, New York 10111
Attention: Karen C. Wiedemann, Esq.
Each party hereto may by notice to the other party designate such additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; and three calendar days after
mailing if sent by registered or certified mail (except that a notice of change
of address shall not be deemed to have been given until actually received by the
addressee) or one day after delivery to an overnight express service for next
day delivery, as the case may be. The Company Parties may give notice to the
Holders at the address set forth above, or any different address as shall be
specified for them in the Company's records.
Section 18. Binding Agreement; Assignment. This Security Agreement
shall be binding upon and inure to the benefit of the Company Parties and the
Holders and their respective successors and permitted assigns. Neither this
Security Agreement nor any Interest herein or in the Collateral or After
Acquired Collateral, or any part thereof, may be assigned by the Company
Parties; provided, however, that this Security Agreement may be assigned by a
Company Party and shall be deemed to be automatically assigned by a Company
Party to any person who succeeds to the Company Party, provided however, that
the Company Parties shall not as a result of such assignment be relieved of any
Obligations hereunder or under the Purchase Agreement, the Notes or any
Ancillary Agreements. This Security Agreement shall be deemed to be
automatically assigned by the Holders to any person who succeeds to or replaces
the
20
22
Holders in accordance with the terms hereof, and its assignee shall have all
rights and powers of, and act as, the Holder hereunder.
Section 19. Governing Law. THE PARTIES HERETO EXPRESSLY ACKNOWLEDGE AND
AGREE THAT, IN ACCORDANCE WITH THE PROVISIONS OF NEW YORK GENERAL OBLIGATIONS
LAW SECTION 5-1401 GOVERNING AGREEMENTS RELATING TO ANY OBLIGATION ARISING OUT
OF A TRANSACTION COVERING IN THE AGGREGATE NOT LESS THAN $250,000, THIS SECURITY
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR THE PERFECTION OF
THE SECURITY INTERESTS HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN NEW
YORK. TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE
PARTIES HERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK
STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN NEW YORK CITY IN RESPECT OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT, AND IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH SUIT,
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE PARTIES
HERETO IRREVOCABLY WAIVE, TO THE FULLEST EXTENT THEY MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
Section 20. Amendments. This Security Agreement may not be amended or
modified except by a written agreement signed by the Company and the required
Holders.
Section 21. Severability. In the event that any provision contained in
this Security Agreement shall for any reason be held to be illegal or invalid
under the Laws of any jurisdiction, such illegality or invalidity shall in no
way impair the effectiveness of any other provision hereof, or of such provision
under the laws of any other jurisdiction; provided, that in the construction and
enforcement of such provision under the laws of the jurisdiction in which such
holding of illegality or invalidity exists, and to the extent only of such
illegality or invalidity, this Security Agreement shall be construed and
enforced as though such illegal or invalid provision had not been contained
herein.
Section 22. Headings. Section headings used herein are inserted for
convenience only and shall not in any way affect the meaning or construction of
this Security Agreement.
Section 23. Counterparts. This Security Agreement may be executed in
any number of counterparts, each of which when so executed and delivered shall
be an original, and all of
21
23
which shall together constitute but one and the same instrument. A complete set
of counterparts shall be lodged with the Holders.
22
24
IN WITNESS WHEREOF, the Company Parties and the Holders have caused
this Security Agreement to be executed and delivered by their respective
officers thereunto duly authorized as of the date first above written.
INTRACEL CORPORATION
By: /s/ SIMON R. McKENZIE
----------------------------------
Name: Simon R. McKenzie
Title: President and Chief
Executive Officer
BARTELS, INC.
By: /s/ SIMON R. McKENZIE
----------------------------------
Name: Simon R. McKenzie
Title: President and Chief
Executive Officer
PERIMMUNE HOLDINGS, INC.
By: /s/ SIMON R. McKENZIE
----------------------------------
Name: Simon R. McKenzie
Title: President and Chief
Executive Officer
PERIMMUNE, INC.
By: /s/ SIMON R. McKENZIE
----------------------------------
Name: Simon R. McKenzie
Title: President and Chief
Executive Officer
NORTHSTAR HIGH YIELD FUND
By: /s/ MICHAEL A. GRAVES
----------------------------------
Name: Michael A. Graves
Title: Vice President
23
25
NORTHSTAR HIGH TOTAL RETURN FUND
By: /s/ MICHAEL A. GRAVES
----------------------------------
Name: Michael A. Graves
Title: Vice President
NORTHSTAR HIGH TOTAL RETURN FUND II
By: /s/ MICHAEL A. GRAVES
----------------------------------
Name: Michael A. Graves
Title: Vice President
NORTHSTAR STRATEGIC INCOME FUND
By: /s/ MICHAEL A. GRAVES
----------------------------------
Name: Michael A. Graves
Title: Vice President
24