EXHIBIT 10.5
MASTER SECURITY AGREEMENT
Lender: Fleet Credit Corporation Customer: Par Pharmaceutical,
a Rhode Island Corporation Inc., a New Jersey
corporation
Address: 50 Kennedy Plaza Address: One Ram Ridge Road
Providence, RI 02903-2305 Spring Valley, NY
10977
1. GRANT OF SECURITY; INTEREST DEFINITIONS
Subject to the terms and conditions set forth herein (the
"Master Security Agreement") and in any Equipment Security
Agreement Schedule incorporating the terms of this Master Security
Agreement (each, an "Equipment Schedule"), Customer hereby grants
to FLEET CREDIT CORPORATION ("Lender") a security interest in and
to all Collateral (hereinafter defined) in order to secure the
payment and performance of all Obligations (hereinafter defined),
including but not limited to any Obligations evidenced by the
Guaranty of this date which specifically refers to an Equipment
Schedule (the "Guaranty").
References to "the Security Agreement", "this Security
Agreement" or "any Security Agreement" shall mean and refer to any
Equipment Schedule which incorporates the terms of this Master
Security Agreement, together with all exhibits, addenda, schedules,
certificates, riders and other documents and instruments executed
and delivered in connection with such Equipment Schedule, all as
the same may be amended or modified from time to time. Each
Equipment Schedule shall constitute a separate, distinct and
independent security agreement and contractual obligation of
Customer. "Affiliate" means, with respect to any person, firm or
entity, any other person, firm or entity controlling, controlled
by, or under common control with such person, firm or entity, and
for this purpose, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of any such person, firm or entity, whether
through the legal or beneficial ownership of voting securities, by
contract or otherwise. "Collateral" means the Equipment and all
present or future additions, attachments, accessions or accessories
thereto and replacements thereof, all tools, manuals, service
records, software and similar information and materials related to
such Equipment, and the products, proceeds, offspring, rents and
profits therefrom or thereof, including proceeds in the form of
goods, accounts, chattel paper, documents, instruments and general
intangibles, insurance proceeds payable in respect of loss or
damage to such Collateral, and all returned or repossessed goods
arising from or relating to any of the Collateral. "Equipment"
means machinery and equipment now owned or hereafter acquired by
Customer, wherever the same may be located, which is described in
one or more Equipment Schedules entered into from time to time by
the parties hereto. "Obligations" means all indebtedness,
obligations and liabilities of Customer or any Affiliate of
Customer owing to Lender of every kind and description, direct or
indirect, secured or unsecured, joint or several, absolute or
contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising, regardless of how
the same arise or by what instrument, agreement or book account
they may be evidenced, or whether evidenced by any instrument,
agreement or book account, including, without limitation, all loans
(including any loan by renewal or extension of existing
indebtedness or liability), all indebtedness, all obligations for
the deferred purchase price or rental of any property or of any of
the Collateral, all undertakings to take or refrain from taking any
action, all indebtedness, liabilities or obligations owing from
Customer to others which may have been obtained by purchase,
negotiation, discount, transfer, assignment or otherwise, and all
interest, taxes, fees, charges, expenses and attorneys fees
chargeable to Customer or incurred by Lender under this Security
Agreement, or any other document or instrument delivered in
connection herewith. As used herein with respect to any Obligation
or item of Equipment or collateral: (a) the following terms shall
have the meanings or values defined or assigned to them in the
applicable Equipment Schedule therefor: "Acceptance Date", "Advance
Payment(s)", "Equipment Location(s)", "Security Deposit"; and (b)
the following terms shall have the meanings or values assigned to
them in the applicable Note therefor: "Payments", "Payment Dates",
"Maturity Date", and "Interest Rate". To the extent not otherwise
specifically defined in this Master Security Agreement, unless the
context otherwise requires, all other terms contained in this
Master Security Agreement shall have the meanings assigned or
referred to them in the Uniform Commercial Code in force in the
State of Connecticut (the "UCC") to the extent the same are used or
defined therein.
2. CUSTOMER REPRESENTATIONS, WARRANTIES, COVENANTS.
Customer hereby represents and warrants to and covenants with
Lender that, as of the date hereof and for so long as any
Obligations shall remain outstanding: (a) Customer is duly
organized and is existing in good standing under the laws of its
jurisdiction of organization and is duly qualified and in good
standing in those jurisdictions where the conduct of its business
or the ownership of its properties requires qualification and where
the failure to so qualify would have a material adverse effect on
the Customer's condition, financial or otherwise; (b) Customer has
the power and authority to own the Collateral, to enter into and
perform this Security Agreement and any other document or
instrument delivered in connection herewith and to incur the
Obligations; (c) Customer's chief executive office is located at
the address set forth above; (d) Customer utilizes no trade names
in the conduct of its business; (e) Customer has not changed its
name, been the surviving entity in a merger, acquired any business;
or changed the location of its chief executive office within the
previous five years, except as may have been specifically disclosed
to Lender in writing prior to the date hereof; (f) the execution
and performance of this Security Agreement, the Guaranty and any
other document or instrument delivered in connection herewith will
not result in the creation or imposition of any lien or encumbrance
upon any of the Collateral, except in favor of Lender pursuant
hereto; (g) this Security Agreement, the Guaranty and any document
or instrument delivered in connection herewith and the transactions
contemplated hereby or thereby are duly authorized, executed and
delivered, and this Security Agreement, the Guaranty and such other
documents and instruments constitute valid and legally binding
obligations of Customer and are enforceable against Customer in
accordance with their respective terms, except as enforcement may
be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and general principles
of equity; (h) Customer has filed all federal, state and local tax
returns and other reports it is required to file and has paid or
made adequate provision for payment of all such taxes, assessments
and other governmental charges; (i) there are no pending or to
Customer's knowledge threatened actions or proceedings before any
court or administrative agency which materially adversely affect
Customer's financial condition or operations; (j) no
representation, warranty or statement by Customer contained herein
or in any certificate or other document furnished or to be
furnished by Customer pursuant hereto contains or at the time of
delivery shall contain any untrue statement of material fact, or
omits, or shall omit at the time of delivery, to state a material
fact necessary to make it not misleading; (k) Customer shall
furnish Lender promptly upon request of Lender, in form
satisfactory to Lender, such information as Lender may reasonably
request from time to time; (l) Allow the Lender by or through any
of its officers, attorneys, accountants or other agents designated
by the Lender, for the purpose of ascertaining whether or not each
and every provision hereof, is being performed, to enter the
offices and plants of the Customer on reasonable prior notice,
during regular business hours to examine or inspect the Collateral
and any of the properties, books and records or extracts therefrom,
to make copies of such books and records or extracts therefrom, and
to discuss the affairs, finance, accounts and Collateral thereof
with the Customer all at such times and as often as the Lender or
any representatives of the Lender may reasonably request, at the
Lender's cost prior to an Event of Default and at the Customer's
cost after an Event of Default; (m) Customer shall promptly inform
Lender of any Defaults (defined below) or any events or changes in
the financial condition of Customer occurring since the date of the
last financial statements of Customer delivered to Lender which,
individually or cumulatively, when viewed in light of prior
financial statements, may result in a material adverse change in
the financial condition of Customer; (n) Customer shall pay or
deposit promptly when due all sales, use, excise, personal
property, income, withholding, corporate, franchise and other
taxes, assessments and governmental charges upon or relating to its
ownership or use of any of the Collateral and submit to Lender
proof satisfactory to Lender that such payments and/or deposits
have been made; (o) if Customer shall now or hereafter maintain an
employee benefit plan covered by Section 4021(a) of the Employee
Retirement Income Security Act of 1974 ("ERISA") relating to plan
termination insurance, Customer is not aware as of the date hereof,
and shall promptly notify Lender hereafter upon notice or knowledge
of: (i) the filing of notice with the Pension Benefit Guaranty
Corporation (the "PBGC") pursuant to Section 4041 of ERISA that
such plan is to be terminated; and (ii) the institution of
proceedings by the PBGC under Section 4042 of ERISA; (p) Customer
shall at any time and from time to time upon request of Lender,
execute and deliver to Lender, in form and substance satisfactory
to Lender, such documents as Lender shall reasonably deem necessary
or desirable to perfect or maintain perfected the security interest
of Lender in the Collateral or which may be necessary to comply
with the provisions of the law of any jurisdiction in which
Customer may then be conducting business or in which any of the
Collateral may be located.
3. COLLATERAL REPRESENTATIONS, WARRANTIES, COVENANTS
Customer hereby further represents and warrants to and
covenants with Lender that, as of the date hereof and for so long
as any Obligations shall remain outstanding: (a) except as set
forth on the attached Schedule "3(a)", Customer is the owner of the
Collateral free and clear of all rights, title, security interests,
encumbrances or liens of any other party, and Customer will defend
the Collateral against all claims and demands of all persons at any
time claiming any interest therein; (b) the Equipment is personal
property even though the Equipment may hereafter become attached or
affixed to real property; (c) the equipment location(s), if not
owned by Customer, are leased by Customer pursuant to valid leases
or rental agreements which permit the possession, use and operation
of the Equipment at said locations; (d) Customer shall provide
Lender with disclaimers and waivers from landlords, mortgagees and
other persons holding any interest or claim in and to any Equipment
location or any Collateral, acceptable in all respects to Lender,
which may be necessary or advisable in the sole discretion of
Lender to confirm that the first priority security interest and
rights of Lender in the Collateral are and will remain valid
against all other parties; (e) the Equipment is in the possession
of Customer at the equipment location(s) specified in the
applicable Equipment Schedules therefor, and shall not be removed
therefrom without the prior written consent of Lender, which
consent shall in any event be conditioned upon Customer having
completed all notifications, filings, recordings, and other actions
in such new location as Lender may require to protect and perfect
Lender's interests in the Collateral; (f) except as set forth in
Section 5 below, Customer shall not, without the prior written
consent of Lender, sell, offer to sell, lease, rent, hire or in any
other manner dispose, transfer or surrender use and possession of
any Equipment; (g) except as set forth on the attached Schedule
"3(a)", Customer will not, directly or indirectly, create, incur or
permit to exist any lien, encumbrance, mortgage, pledge, attachment
or security interest on or with respect to the Equipment except in
favor of Lender under the terms of this Security Agreement; (h)
Customer shall deliver to Lender any and all evidence of ownership
of, and certificates of title to, any and all of the Equipment; (i)
Customer shall permit each item of Equipment to be used only within
the continental United States by qualified personnel solely for
business purposes and the purpose for which it was designed and, at
its sole expense, shall service, repair, overhaul and maintain each
item of Equipment in the same condition as when received, ordinary
wear and tear excepted, in good operating order, consistent with
prudent industry practice (but, in no event less than the same
extent to which Customer maintains other similar equipment in the
prudent management of its assets and properties) and in compliance
with all applicable laws, ordinances, regulations, and conditions
of all insurance policies required to be maintained by Customer
under the Security Agreement and all manuals, orders,
recommendations, instructions and other written requirements as to
the repair and maintenance of such item of Equipment issued at any
time by the vendor and/or manufacturer thereof; (j) Customer shall
furnish to Lender such information concerning the condition,
location, use and operation of the Equipment as Lender may request;
(k) if any item of Equipment does not comply with the requirements
of this Security Agreement, Customer shall, within 30 days of
written notice from Lender, bring such Equipment into compliance
with the provisions hereof; and (l) Customer shall not use any
Equipment, nor allow the same to be used, for any unlawful purpose,
nor in connection with any property or material that would subject
the Lender to any liability under any state or federal statute or
regulation pertaining to the production, transport, storage,
disposal or discharge of hazardous or toxic waste or materials.
4. SELECTION AND USE OF EQUIPMENT; DISCLAIMER OF WARRANTIES
Customer has selected each item of Equipment and the
manufacturer and/or supplier thereof based on its own judgment, and
expressly disclaims any reliance upon any statements or
representations made by Lender. If the Equipment is not delivered,
is not properly installed, does not operate as warranted by the
manufacturer or supplier thereof, becomes obsolete, or is
unsatisfactory for any reason whatsoever, Customer shall make all
claims on account thereof solely against the manufacturer or
supplier thereof and not against Lender. Customer acknowledges that
neither the manufacturer or supplier of the Equipment, nor any
sales representative or agent thereof, is an agent of Lender, and
no agreement or representation as to the Equipment or any other
matter by any such sales representative or agent of the
manufacturer or supplier shall in any way affect any of the Notes
or the Obligations.
LENDER IS NOT THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT,
NOR THE AGENT THEREOF, AND MAKES NO EXPRESS OR IMPLIED
REPRESENTATIONS OR WARRANTIES AS TO ANY MATTER WHATSOEVER,
INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OF THE EQUIPMENT,
ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS
CAPACITY OR DURABILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP
IN THE MANUFACTURE OR ASSEMBLY OF THE EQUIPMENT, OR THE CONFORMITY
OF THE EQUIPMENT TO THE PROVISIONS AND SPECIFICATIONS OF ANY
PURCHASE ORDER RELATING THERETO, OR PATENT INFRINGEMENTS, AND
LENDER HEREBY DISCLAIMS ANY SUCH WARRANTY. LENDER IS NOT
RESPONSIBLE FOR ANY REPAIRS OR SERVICE TO THE EQUIPMENT, DEFECTS
THEREIN OR FAILURES IN THE OPERATION THEREOF.
5. RISK OF LOSS AND DAMAGE; INSURANCE
Customer assumes all risk of loss, damage or destruction to
the Equipment from whatever cause and for whatever reason. If any
item of Equipment shall become lost, stolen, destroyed, damaged
beyond repair or rendered permanently unfit for use for any reason,
or in the event of any condemnation, confiscation, theft or seizure
or requisition of title to or use of such item, Customer shall
immediately pay to Lender or shall cause Pharmaceutical Resources,
Inc. to immediately pay to Lender an amount equal to the fair
market value of such item of Equipment as determined by Lender.
Notwithstanding the foregoing, Customer may replace any item of
Equipment which has been lost, stolen, destroyed, damaged beyond
repair or rendered permanently unfit ("Event of Loss"), with other
Equipment of like kind and having the same or greater value,
utility and useful life. Notwithstanding any such Event of Loss,
in the event of any substitution, immediately upon effectiveness of
such substitution and without further act; such Equipment shall
become Equipment for purposes of this Security Agreement. Upon
substitution of relacement Equipment, the following documents shall
be duly authorized, executed and delivered by the respective party
or parties thereto and shall be in full force and effect when
delivered to the Lender at no cost or expense to the Lender:
(i) a substitution Security Agreement or modification,
in form and substance satisfactory to the Lender;
(ii) evidence satisfactory to the Lender that the
Equipment being substituted is of like kind and has equal to or
greater value, usefull life and utility than the Equipment it
replaces;
(iii) all documentation reasonably requested by Lender
to effectuate a first priority lien and security interest in the
Equipment being substituted; and
(iv) all other documents that Lender reasonably deems
necessary.
For so long as any Obligations shall remain outstanding, Customer
shall procure and maintain insurance in such amounts and with such
coverages, and upon such terms and with such companies, as Lender
may approve, at Customer's expense, provided, however, that in no
event shall such insurance be less than the following coverages and
amounts:
(a) Worker's Compensation and Employer's Liability
Insurance, in the full statutory amounts provided by law;
(b) Comprehensive General Liability Insurance including
product/completed operations and contractual liability coverage,
with minimum limits of the greater of: (i) $1,000,000 each
occurrence, and Combined Single Limit Bodily Injury and Property
Damage, $1,000,000 aggregate, where applicable, or (ii) as
otherwise specified in any Equipment Schedule hereto; and
(c) All Risk Physical Damage Insurance, including
earthquake and flood, on each item of Equipment, in an amount not
less than its full replacement value. On each such policy Lender
will be included as an additional insured and loss payee as its
interest may appear. Such policies shall be endorsed to provide
that the coverage afforded to Lender shall not be rescinded,
impaired or invalidated by any act or neglect of Customer. Customer
agrees to waive Customer's rights and its insurance carrier's
rights of subrogation against Lender for any and all loss or
damage. In addition to the foregoing minimum insurance coverage,
Customer shall procure and maintain such other insurance coverage
as Lender may reasonably require. All policies shall be endorsed or
contain a clause requiring the insurer to furnish Lender with at
least 30 days' prior written notice of any material change,
cancellation or non-renewal of coverage. Upon execution of this
Security Agreement, Customer shall furnish Lender with a
certificate of insurance or other evidence satisfactory to Lender
that such insurance coverages are in effect, provided, however,
that Lender shall be under no duty either to ascertain the
existence of or to examine such insurance coverage or to advise
Customer in the event such insurance coverage should not comply
with the requirements hereof. If Customer shall at any time or
times hereafter fail to obtain and/or maintain any of the policies
of insurance required herein, or fail to pay any premium in whole
or in part relating to any such policies, Lender may, but shall not
be obligated to, obtain and/or cause to be maintained insurance
coverage with respect to the Collateral, including, at Lender's
option, the coverage provided by all or any of the policies of
Customer and pay all or any part of the premium therefor, without
waiving any Event of Default by Customer, and any sums so disbursed
by Lender shall be additional Obligations of Customer to Lender
payable on demand. Lender shall have the right to settle and
compromise any and all claims (i) after an Event of Default; and
(ii) which claims are in excess of $100,000 prior to an Event of
Default under any of the policies required to be maintained by
Customer hereunder and Customer hereby appoints Lender as its
attorney-in-fact, with power to demand, receive and receipt for all
monies payable thereunder, to execute in the name of Customer or
Lender or both any proof of loss, notice, draft or other
instruments in connection with such policies or any loss thereunder
and generally to do and perform any and all acts as Customer, but
for this appointment, might or could perform.
6. EVENTS OF DEFAULT
An "Event of Default" under any Security Agreement shall be
deemed to have occurred upon the occurrence or existence of any one
or more of the following events or conditions (each a "Default")
and after the giving of any required notice or the passage of any
required period of time (or both) specified below with respect to
such Default: (a) Customer shall fail to make any payment due under
the Guaranty; or (b) Customer shall fail to obtain or maintain any
of the insurance required under any Security Agreement; or (c)
Customer shall fail to perform or observe any covenant, condition
or agreement under any Security Agreement; or (d) Customer or any
Affiliate of Customer shall default in the payment or performance
of any Obligation owing to Lender, or any indebtedness or
obligation owing to any Affiliate of Lender, under any note,
security agreement, equipment lease, title retention or conditional
sales agreement or any instrument or agreement evidencing such
indebtedness with Lender or any such Affiliate of Lender; or (e)
any representation or warranty made by Customer herein or in any
certificate, agreement, statement or document hereto or hereafter
furnished Lender, including without limitation any financial
information disclosed to Lender, shall prove to be false or
incorrect in any material respect; or (f) insolvency (failure of
the Customer to pay its debts as they mature or when the fair value
of the Customer's assets is less than its liabilities) of the
Customer or any guarantor or surety for the Obligations,
appointment of a receiver or custodian, or assignment for the
benefit of creditors or the commencement of any proceedings under
any bankruptcy or insolvency law by or against the Customer or any
other guarantor or surety for the Obligations; appointment of a
committee of creditors or liquidating banks, or offering of a
composition or extension to creditors by, for or of the Customer;
however, if an involuntary bankruptcy petition is filed, an Event
of Default shall not occur unless such petition is not dismissed
within sixty (60) days of filing; or (g) the making by Customer of
a general assignment or deed of trust for the benefit of creditors;
or (h) Customer shall default in any payment or other obligation in
excess of $500,000 to any third party and any applicable grace or
cure period with respect thereto has expired; or (i) Customer shall
terminate its existence by merger, consolidation, sale of
substantially all of its assets or otherwise; or (j) if Customer is
a privately held corporation, more than the 50% of Customer's
voting capital stock, or effective control of Customer's voting
capital stock, issued and outstanding from time to time, is not
retained by the holders of such stock on the date of this Security
Agreement; or (k) if Customer is a publicly held corporation, there
shall be a change in the ownership of Customer's stock such that
Customer is no longer subject to the reporting requirements of the
Securities Exchange Act of 1934 or no longer has a class of equity
securities registered under Section 12 of the Securities Act of
1933; or (l) Lender shall determine, in its reasonable discretion
and in good faith, that there has been a material adverse change in
the financial condition of the Customer since the date of this
Master Security Agreement; or (m) any event or condition set forth
in subsections (b) through (l) of this Section 6 shall occur with
respect to any guarantor or other person liable or responsible, in
whole or in part, for payment or performance of any Obligations.
Customer shall promptly notify Lender of the occurrence of any
Event of Default or the occurrence or existence of any event or
condition which, upon the giving of notice of lapse of time, or
both, would constitute an Event of Default.
7. RIGHTS AND REMEDIES
Upon the occurrence of an Event of Default, Lender shall have
all of the rights and remedies enumerated herein (all of which are
cumulative and not exclusive of any other right or remedy available
to Lender): (a) Lender may declare, at its option, all or any part
of the Obligations immediately due and payable, without demand,
notice of intention to accelerate, notice of acceleration, notice
of nonpayment, presentment, protest, notice of dishonor, or any
other notice whatsoever, all of which are hereby waived by Customer
and any endorser, guarantor, surety or other party liable in any
capacity for any of the Obligations; (b) Lender shall have the
right to enter and/or remain upon the Equipment Location(s) without
any obligation to pay rent to Customer or others, or any other
place or places where any of the Collateral is located and kept
and: (i) remove Collateral therefrom to the premises of Lender or
any agent of Lender, for such time as Lender may desire, in order
to maintain, collect, sell and/or liquidate the Collateral; (ii)
use such premises, together with materials, supplies, books and
records of Customer, to maintain possession and/or the condition of
the Collateral, and to prepare the Collateral for selling,
liquidating or collecting; or (iii) without removing the Collateral
from such premises, render the Collateral unusable by the Customer
or by any other party in possession thereof or with an interest
therein; (c) Lender may require Customer to assemble the Collateral
and make it available to Lender at a place to be designated by
Lender; (d) Lender shall have the right to set-off, without notice
to Customer, any and all deposits or other sums at any time or
times credited by or due from Lender, to Customer, whether in a
special account or other account or represented by a certificate of
deposit (whether or not matured) which deposits and other sums
shall at all times constitute additional security for the
Obligations and may be set-off against all or any part of the
Obligations; and (e) Lender shall have, in addition to any other
rights and remedies contained in this Security Agreement and any
other agreements, guarantees, notes, instruments and documents
heretofore, now or at any time or times hereafter executed by
Customer and delivered to Lender, all of the rights and remedies of
a secured party under the UCC. If Lender seeks to take possession
of any or all of the Collateral by court process, Customer hereby
irrevocably waives any bonds and any surety or security relating
thereto required by any statute, court rule or otherwise as an
incident to such possession, and waives any demand for possession
prior to the commencement of any suit or action to recover with
respect thereto. Any notice required to be given by Lender of a
sale or other disposition or other intended action by Lender with
respect to any of the Collateral or otherwise which is made in
accordance with the terms of this Security Agreement at least five
(5) business days prior to such proposed action, shall constitute
fair and reasonable notice to Customer of any such action. Lender
shall be liable to Customer only for its gross negligence or
willful misconduct in failing to comply with any applicable law
imposing duties upon Lender; Lender's liability for any such
failure shall be limited to the actual loss suffered by Customer
directly resulting from such failure; and in no event shall Lender
have any liability to Customer for incidental, consequential,
punitive or exemplary damages. All expenses of retaking, holding,
preparing for sale, selling or the like and any other expenses
incurred by Lender in connection with the exercise of any of its
rights and remedies in hereunder shall constitute additional
Obligations secured by the Collateral hereunder. If Lender shall
employ counsel to commence, defend or intervene, file a petition,
complaint, answer, motion or other pleadings, or to take any other
action in or with respect to any suit or proceeding (bankruptcy or
otherwise) relating to this Agreement, the Collateral or any other
agreement, guaranty, note, instrument or document heretofore, now
or at any time or times hereafter executed by Customer and
delivered to Lender, or to protect, collect, lease, sell, take
possession of or liquidate any of the Collateral, or to attempt to
enforce or to enforce any security interest in any of the
Collateral, or to enforce any rights of Lender hereunder, whether
before or after the occurrence of any Event of Default, or to
collect any of the Obligations, then in any of such events, all of
the reasonable attorneys' fees arising from such services, and any
expenses, costs and charges relating thereto, shall be part of the
Obligations, payable on demand and secured by the Collateral. The
net proceeds realized by Lender upon any sale or other disposition
of Collateral hereunder shall be applied toward satisfaction of all
Obligations until all such Obligations are satisfied and paid in
full. Lender shall account to Customer for any surplus realized
upon such sale or other disposition, and Customer shall remain
liable for any deficiency. The commencement of any action, legal or
equitable, shall not affect the security interest of Lender in the
Collateral until all of the Obligations or any judgment with
respect thereto have been fully paid.
8. ASSIGNMENT
The provisions of this Agreement shall be binding upon and
shall inure to the benefit of the heirs, administrators, successors
and assigns of Lender and Customer, provided, however, Customer may
not assign any of its rights or delegate any of its obligations
hereunder without the prior written consent of Lender. Lender may,
from time to time, without notice to the Customer, sell, assign,
transfer, participate, pledge or otherwise dispose of all or any
part of the Obligations and/or the Collateral therefor. In such
event, each and every immediate and successive purchaser, assignee,
transferee, participant, pledgee, or holder of all or any part of
the Obligations and/or the Collateral (each, a "Holder") shall have
the right to enforce this Agreement, by legal action or otherwise,
for its own benefit as fully as if such Holder were herein by name
specifically given such rights. Customer agrees that the rights of
any such Holder hereunder or with respect to the related
Obligations, shall not be subject to any defense (other than
payment in full), set off or counterclaim (other than mandatory or
compulsory) that Customer may assert or claim against Lender, and
that any such Holder shall have all of the Lender's rights
hereunder but none of the Lender's obligations. Lender shall have
an unimpaired right to enforce this Agreement for its benefit with
respect to that portion of the Obligations Lender has not sold,
assigned, transferred, participated, pledged or otherwise disposed
of.
9. GOVERNING LAW
THIS SECURITY AGREEMENT AND THE LEGAL RELATIONS OF THE PARTIES
HERETO SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CONNECTICUT, WITHOUT
REGARD TO PRINCIPLES REGARDING THE CHOICE OF LAW. CUSTOMER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE
OF CONNECTICUT AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF
CONNECTICUT FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER
PROCEEDING ARISING OUT OF ITS OBLIGATIONS HEREUNDER, AND EXPRESSLY
WAIVES ANY OBJECTIONS THAT IT MAY HAVE TO THE VENUE OF SUCH COURTS.
CUSTOMER HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION BROUGHT ON OR WITH RESPECT TO THIS SECURITY AGREEMENT. Any
action by Customer against Lender for any cause of action under
this Security Agreement shall be brought within one year after any
such cause of action first arises.
10. MISCELLANEOUS, GENERAL PROVISIONS.
Customer agrees to pay on demand all costs and expenses of
Lender (including reasonable attorneys' fees) hereafter incurred in
connection with the amendment or modification of any Security
Agreement, or any other or additional documentation or transactions
concerning the Obligations, or the care, custody, administration,
perfection or protection of any of the Collateral or any of
Lender's rights or interests therein, including, without
limitation, any and all fees and charges for searches of lien
records or other public records, and any filing, stamp and other
taxes or fees payable or determined to be payable in connection
with the execution, delivery, filing, and recording of any UCC
financing statements or other recorded instrument. Customer shall
execute and deliver to Lender upon Lender's request such further
documents, instruments and assurances as Lender deems necessary for
the confirmation, preservation or perfection of the security
interest in the Collateral, this Security Agreement and Lender's
rights hereunder, including, without limitation, such corporate
resolutions and opinions of counsel as Lender may reasonably
request from time to time, and all schedules, forms and other
reports and information as may be required to satisfy obligations
imposed by any governmental authorities. Lender may file or record
this Security Agreement or a memorandum or a photocopy hereof
(which for the purposes hereof shall be effective as a financing
statement) so as to give notice to third parties, and Customer
hereby appoints Lender as its attorney-in-fact to execute, sign,
file and record UCC financing statements and other lien recordation
documents with respect to the Equipment, and Customer agrees to pay
or reimburse Lender for any and all filing, recording or stamp fees
or taxes arising from any such filings. THIS SECURITY AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES CONCERNING
LENDER'S RIGHTS AND SECURITY INTERESTS IN THE COLLATERAL AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. CUSTOMER
ACKNOWLEDGES AND CERTIFIES THAT NO SUCH ORAL AGREEMENTS EXIST. The
Security Agreement may not be amended, nor may any rights under the
Security Agreement be waived, except by an instrument in writing
signed by the party against whom such amendment or waiver is
asserted. The failure of Lender at any time or times hereafter to
require strict performance by Customer of any of the provisions,
warranties, terms and conditions contained in this Security
Agreement or in any other agreement, guaranty, note, instrument or
document now or at any time or times hereafter executed by Customer
and delivered to Lender shall not waive, affect or diminish any
right of Lender at any time or times hereafter to demand strict
performance thereof. No rights of Lender hereunder shall be deemed
to have been waived by any act or knowledge of Lender, its agents,
officers or employees, unless such waiver is contained in an
instrument in writing signed by an officer of Lender and directed
to Customer specifying such waiver. No waiver by Lender of any of
its rights on one occasion shall operate as a waiver of any other
of its rights or any of its rights on a future occasion. This
Master Security Agreement will not be binding on Lender until
accepted and executed by Lender, notice of which is hereby waived
by Customer. Any demand or notice required or permitted to be given
hereunder shall be deemed effective within five (5) days when
deposited in the United States mail, and sent by certified mail,
return receipt requested, postage prepaid, addressed to Lender or
to Customer at the addresses set forth herein, or to such other
address as may be hereafter provided by the party to be notified by
written notice complying with the provisions hereof or within one
(1) day when sent via overnight courier. Wherever possible, each
provision of this Security Agreement shall be interpreted in such
manner as to be effective and valid under applicable law. Should
any portion of this Security Agreement be declared invalid for any
reason in any jurisdiction, such declaration shall have no effect
upon the remaining portions of this Security Agreement;
furthermore, the entirety of this Security Agreement shall continue
in full force and effect in all other jurisdictions and said
remaining portions of this Security Agreement shall continue in
full force and effect in the subject jurisdiction as if this
Security Agreement had been executed with the invalid portions
thereof deleted. This Security Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute but one and
the same instrument. Time is of the essence in the payment and
performance of all of the Obligations. The section headings herein
are included for convenience only and shall not be deemed to be a
part of this Security Agreement. Each reference herein to "Lender"
shall be deemed to include its successors and assigns, and each
reference to "Customer" and any pronouns referring thereto as used
herein shall be construed in the masculine, feminine, neuter,
singular or plural, as the context may require, and shall be deemed
to include the legal representatives, successors and assigns of
Customer, all of whom shall be bound by the provisions hereof. EACH
REFERENCE HEREIN TO "CUSTOMER" SHALL MEAN AND INCLUDE ANY AND ALL
CUSTOMERS WHO SIGN BELOW, EACH OF WHOM SHALL BE JOINTLY AND
SEVERALLY LIABLE UNDER THE SECURITY AGREEMENT.
Executed and delivered by duly authorized representatives of the
parties hereto as of the date set forth below.
Dated as of: December 28, 1995.
FLEET CREDIT CORPORATION PAR PHARMACEUTICAL, INC.
By: _____________________ By: /s/Robert I. Edinger
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Name: ___________________ Name: Robert I. Edinger
Title: __________________ Title: Executive Vice President