Exhibit 10.13
MASTER SECURITY
AGREEMENT
dated as of January 24, 2002
(“Agreement”)
THIS AGREEMENT
is between General Electric
Capital Corporation (together with its successors and assigns,
if any, “ Secured Party ”) and Achillion
Pharmaceuticals, Inc. (“ Debtor ”). Secured
Party has an office at 401 Merritt 7 Suite 23, Norwalk, CT 06851.
Debtor is a corporation organized and existing under the laws of
the state of Delaware. Debtor’s mailing address and chief
place of business is 300 George Street, New Haven, CT
06511.
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1.
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CREATION OF
SECURITY INTEREST.
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Debtor grants to Secured Party, its
successors and assigns, a security interest in and against all
property listed on any collateral schedule now or in the future
annexed to or made a part of this Agreement (“ Collateral
Schedule ”), and in and against all additions,
attachments, accessories and accessions to such property, all
substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is
individually and collectively called the “ Collateral
”). This security interest is given to secure the payment and
performance of all debts, obligations and liabilities of any kind
whatsoever of Debtor to Secured Party, now existing or arising in
the future, including but not limited to the payment and
performance of certain Promissory Notes from time to time
identified on any Collateral Schedule (collectively “
Notes ” and each a “ Note ”), and
any renewals, extensions and modifications of such debts,
obligations and liabilities (such Notes, debts, obligations and
liabilities are called the “ Indebtedness ”).
Unless otherwise provided by applicable law, notwithstanding
anything to the contrary contained in this Agreement, to the extent
that Secured Party asserts a purchase money security interest in
any items of Collateral (“ PMSI Collateral ”):
(i) the PMSI Collateral shall secure only that portion of the
Indebtedness which has been advanced by Secured Party to enable
Debtor to purchase, or acquire rights in or the use of such PMSI
Collateral (the “ PMSI Indebtedness ”), and
(ii) no other Collateral shall secure the PMSI
Indebtedness.
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2.
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF
DEBTOR.
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Debtor represents, warrants and
covenants as of the date of this Agreement and as of the date of
each Collateral Schedule that:
(a) Debtor’s exact legal name
is as set forth in the preamble of this Agreement and Debtor is,
and will remain, duly organized, existing and in good standing
under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location
specified in the preamble, and is, and will remain, duly qualified
and licensed in every jurisdiction wherever necessary to carry on
its business and operations;
(b) Debtor has adequate power and
capacity to enter into, and to perform its obligations under this
Agreement, each Note and any other documents evidencing, or given
in connection with, any of the Indebtedness (all of the foregoing
are called the “ Debt Documents ”);
(c) This Agreement and the other
Debt Documents have been duly authorized, executed and delivered by
Debtor and constitute legal, valid and binding agreements
enforceable
in accordance with their terms, except to the
extent that the enforcement of remedies may be limited under
applicable bankruptcy and insolvency laws;
(d) No approval, consent or
withholding of objections is required from any governmental
authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any
already obtained;
(e) The entry into, and performance
by, Debtor of the Debt Documents will not (i) violate any of
the organizational documents of Debtor or any judgment, order, law
or regulation applicable to Debtor, or (ii) result in any
breach of or constitute a default under any contract to which
Debtor is a party, or result in the creation of any lien, claim or
encumbrance on any of Debtor’s property (except for liens in
favor of Secured Party) pursuant to any indenture, mortgage, deed
of trust, bank loan, credit agreement, or other agreement or
instrument to which Debtor is a party;
(f) There are no suits or
proceedings pending in court or before any commission, board or
other administrative agency against or affecting Debtor which
could, in the aggregate, have a material adverse effect on Debtor,
its business or operations, or its ability to perform its
obligations under the Debt Documents, nor does Debtor have reason
to believe that any such suits or proceedings are
threatened;
(g) All financial statements
delivered to Secured Party in connection with the Indebtedness have
been prepared in accordance with generally accepted accounting
principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors
financial condition;
(h) The Collateral is not, and will
not be, used by Debtor for personal, family or household
purposes;
(i) The Collateral is, and will
remain, in good condition and repair and Debtor will not be
negligent in its care and use;
(j) Debtor is, and will remain, the
sole and lawful owner, and in possession of, the Collateral, and
has the sole right and lawful authority to grant the security
interest described in this Agreement; and
(k) The Collateral is, and will
remain, free and clear of all liens, claims and encumbrances of any
kind whatsoever, except for (i) liens in favor of Secured
Party, (ii) liens for taxes not yet due or for taxes being
contested in good faith and which do not involve, in the judgment
of Secured Party, any risk of the sale, forfeiture or loss of any
of the Collateral, and (iii) inchoate materialmen’s,
mechanic’s, repairmen’s and similar liens arising by
operation of law in the normal course of business for amounts which
are not delinquent (all of such liens are called “
Permitted Liens ”).
(a) Until the declaration of any
default, Debtor shall remain in possession of the Collateral;
except that Secured Party shall have the right to possess
(i) any chattel paper or instrument that constitutes a part of
the Collateral, and (ii) any other Collateral in which Secured
Party’s security interest may be perfected only by
possession. Secured Party may inspect any of the Collateral during
normal business hours after giving Debtor reasonable prior notice.
If Secured Party asks, Debtor will promptly notify Secured Party in
writing of the location of any Collateral.
(b) Debtor shall (i) use the
Collateral only in its trade or business, (ii) maintain all of
the Collateral in good operating order and repair, normal wear and
tear excepted, (iii) use and maintain the Collateral only in
compliance with manufacturers recommendations and all applicable
laws, and (iv) keep all of the Collateral free and clear of
all liens, claims and encumbrances (except for Permitted
Liens).
(c) Secured Party does not authorize
and Debtor agrees it shall not (i) part with possession of any
of the Collateral (except to Secured Party or for maintenance and
repair), (ii) remove any of the Collateral from the
continental United States, or (iii) sell, rent, lease,
mortgage, license, grant a security interest in or otherwise
transfer or encumber (except for Permitted Liens) any of the
Collateral.
(d) Debtor shall pay promptly when
due all taxes, license fees, assessments and public and private
charges levied or assessed on any of the Collateral, on its use, or
on this Agreement or any of the other Debt Documents. At its
option, Secured Party may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the
Collateral and may pay for the maintenance, insurance and
preservation of the Collateral and effect compliance with the terms
of this Agreement or any of the other Debt Documents. Debtor agrees
to reimburse Secured Party, on demand, all costs and expenses
incurred by Secured Party in connection with such payment or
performance and agrees that such reimbursement obligation shall
constitute Indebtedness.
(e) Debtor shall, at all times, keep
accurate and complete records of the Collateral, and Secured Party
shall have the right to inspect and make copies of all of
Debtor’s books and records relating to the Collateral during
normal business hours, after giving Debtor reasonable prior
notice.
(f) Debtor agrees and acknowledges
that any third person who may at any time possess all or any
portion of the Collateral shall be deemed to hold, and shall hold,
the Collateral as the agent of, and as pledge holder for, Secured
Party. Secured Party may at any time give notice to any third
person described in the preceding sentence that such third person
is holding the Collateral as the agent of, and as pledge holder
for, the Secured Party.
(a) Debtor shall at all times bear
the entire risk of any loss, theft, damage to, or destruction of,
any of the Collateral from any cause whatsoever.
(b) Debtor agrees to keep the
Collateral insured against loss or damage by fire and extended
coverage perils, theft, burglary, and for any or all Collateral
which are vehicles, for risk of loss by collision, and if requested
by Secured Party, against such other risks as Secured Party may
reasonably require. The insurance coverage shall be in an amount no
less than the full replacement value of the Collateral, and
deductible amounts, insurers and policies shall be acceptable to
Secured Party. Debtor shall deliver to Secured Party policies or
certificates of insurance evidencing such coverage. Each policy
shall name Secured Party as a loss payee, shall provide for
coverage to Secured Party regardless of the breach by Debtor of any
warranty or representation made therein, shall not be subject to
co-insurance, and shall provide that coverage may not be canceled
or altered by the insurer except upon thirty (30) days prior
written notice to Secured Party. Debtor appoints Secured Party as
its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or
endorse all documents, checks or drafts in connection with
insurance payments. Secured Party shall not act as Debtor’s
attorney-in-fact unless Debtor is in default. Proceeds of insurance
shall be applied, at the option of Secured Party, to repair or
replace the Collateral or to reduce any of the
Indebtedness.
(a) Debtor shall promptly notify
Secured Party of (i) any change in the name of Debtor,
(ii) any change in the state of its incorporation or
registration, (iii) any relocation of its chief executive
offices, (iv) any relocation of any of the Collateral,
(v) any of the Collateral being lost, stolen, missing,
destroyed, materially damaged or worn out, or (vi) any lien,
claim or encumbrance other than Permitted Liens attaching to or
being made against any of the Collateral.
(b) Debtor will deliver to Secured
Party Debtor’s complete financial statements, certified by a
recognized firm of certified public accountants, within
ninety (90) days of the close of each fiscal year of Debtor.
If Secured Party requests, Debtor will deliver to Secured Party
copies of Debtor’s quarterly financial reports certified by
Debtor’s chief financial officer, within ninety (90)
days after the close of each of Debtor’s fiscal quarter.
Debtor will deliver to Secured Party copies of all Forms 10-K and
10-Q, if any, within 30 days after the dates on which they are
filed with the Securities and Exchange Commission.
(a) Debtor shall, upon request of
Secured Party, furnish to Secured Party such further information,
execute and deliver to Secured Party such documents and instruments
(including, without limitation, Uniform Commercial Code financing
statements) and shall do such other acts and things as Secured
Party may at any time reasonably request relating to the perfection
or protection of the security interest created by this Agreement or
for the purpose of carrying out the intent of this Agreement.
Without limiting the foregoing, Debtor shall cooperate and do all
acts deemed necessary or advisable by Secured Party to continue in
Secured Party a perfected first security interest in the
Collateral, and shall obtain and furnish to Secured Party any
subordinations, releases, landlord waivers, lessor waivers,
mortgagee waivers, or control agreements, and similar documents as
may be from time to time requested by, and in form and substance
satisfactory to, Secured Party.
(b) Debtor authorizes Secured Party
to file a financing statement and amendments thereto describing the
Collateral and containing any other information required by the
applicable Uniform Commercial Code. Debtor irrevocably grants to
Secured Party the power to sign Debtor’s name and generally
to act on behalf of Debtor to execute and file applications for
title, transfers of title, financing statements, notices of lien
and other documents pertaining to any or all of the Collateral;
this power is coupled with Secured Party’s interest in the
Collateral. Debtor shall, if any certificate of title be required
or permitted by law for any of the Collateral, obtain and promptly
deliver to Secured Party such certificate showing the lien of this
Agreement with respect to the Collateral. Debtor ratifies its prior
authorization for Secured Party to file financing statements and
amendments thereto describing the Collateral and containing any
other information required by the Uniform Commercial Code if filed
prior to the date hereof.
(c) Debtor shall indemnify and
defend the Secured Party, its successors and assigns, and their
respective directors, officers and employees, from and against all
claims, actions and suits (including, without limitation, related
attorneys’ fees) of any kind whatsoever arising, directly or
indirectly, in connection with any of the Collateral.
(a) Debtor shall be in default under
this Agreement and each of the other Debt Documents if:
(i) Debtor breaches its obligation
to pay when due any installment or other amount due or coming due
under any of the Debt Documents;
(ii) Debtor, without the prior
written consent of Secured Party, attempts to or does sell, rent,
lease, license, mortgage, grant a security interest in, or
otherwise transfer or encumber (except for Permitted Liens) any of
the Collateral;
(iii) Debtor breaches any of its
insurance obligations under Section 4;
(iv) Debtor breaches any of its
other obligations under any of the Debt Documents and fails to cure
that breach within thirty (30) days after written notice from
Secured Party;
(v) Any warranty, representation or
statement made by Debtor in any of the Debt Documents or otherwise
in connection with any of the Indebtedness shall be false or
misleading in any material respect;
(vi) Any of the Collateral is
subjected to attachment, execution, levy, seizure or confiscation
in any legal proceeding or otherwise, or if any legal or
administrative proceeding is commenced against Debtor or any of the
Collateral, which in the good faith judgment of Secured Party
subjects any of the Collateral to a material risk of attachment,
execution, levy, seizure or confiscation and no bond is posted or
protective order obtained to negate such risk;
(vii) Debtor breaches or is in
default under any other agreement between Debtor and Secured
Party;
(viii) Debtor or any guarantor or
other obligor for any of the Indebtedness (collectively “
Guarantor ”) dissolves, terminates its existence,
becomes insolvent or ceases to do business as a going
concern;
(ix) If Debtor or any Guarantor is a
natural person, Debtor or any such Guarantor dies or becomes
incompetent;
(x) A receiver is appointed for all
or of any part of the property of Debtor or any Guarantor, or
Debtor or any Guarantor makes any assignment for the benefit of
creditors;
(xi) Debtor or any Guarantor files a
petition under any bankruptcy, insolvency or similar law, or any
such petition is filed against Debtor or any Guarantor and is not
dismissed within forty-five (45) days; or
(xii) Debtor’s improper filing
of an amendment or termination statement relating to a filed
financing statement describing the Collateral.
(b) If Debtor is in default, the
Secured Party, at its option, may declare any or all of the
Indebtedness to be immediately due and payable, without demand or
notice to Debtor or any Guarantor. The accelerated obligations and
liabilities shall bear interest (both before and after any
judgment) until paid in full at the lower of eighteen
percent (18%) per annum or the maximum rate not prohibited by
applicable law.
(c) After default, Secured Party
shall have all of the rights and remedies of a Secured Party under
the Uniform Commercial Code, and under any other applicable law.
Without limiting the foregoing, Secured Party shall have the right
to (i) notify any account debtor of Debtor or any obligor on
any instrument which constitutes part of the Collateral to make
payment to the Secured Party, (ii) with or without legal
process, enter any premises where the Collateral may be and take
possession of and remove the Collateral from the premises or store
it on the premises, (iii) sell the Collateral at public or
private sale, in whole or in part, and have the right to bid and
purchase at said sale, or (iv) lease or otherwise dispose of
all or part of the Collateral, applying proceeds from such
disposition to the obligations then in default. If requested by
Secured Party, Debtor shall promptly assemble the Collateral and
make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties.
Secured Party may also render any or all of the Collateral unusable
at the Debtor’s premises and may dispose of such Collateral
on such premises without liability for rent or costs. Any notice
that Secured Party is required to give to Debtor under the Uniform
Commercial Code of the time and place of any public sale or the
time after which any private sale or other intended disposition of
the Collateral is to be made shall be deemed to constitute
reasonable notice if such notice is given to the last known address
of Debtor at least five (5) days prior to such
action.
(d) Proceeds from any sale or lease
or other disposition shall be applied: first, to all costs of
repossession, storage, and disposition including without limitation
attorneys’, appraisers’, and auctioneers’ fees;
second, to discharge the obligations then in default; third, to
discharge any other Indebtedness of Debtor to Secured Party,
whether as obligor, endorser, guarantor, surety or indemnitor;
fourth, to expenses incurred in paying or settling liens
and
claims against the Collateral; and lastly, to
Debtor, if there exists any surplus. Debtor shall remain fully
liable for any deficiency.
(e) Debtor agrees to pay all
reasonable attorneys’ fees and other costs incurred by
Secured Party in connection with the enforcement, assertion,
defense or preservation of Secured Party’s rights and
remedies under this Agreement, or if prohibited by law, such lesser
sum as may be permitted. Debtor further agrees that such fees and
costs shall constitute Indebtedness.
(f) Secured Party’s rights and
remedies under this Agreement or otherwise arising are cumulative
and may be exercised singularly or concurrently. Neither the
failure nor any delay on the part of the Secured Party to exercise
any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right,
power or privilege preclude any other or further exercise of that
or any other right, power or privilege. SECURED PARTY SHALL NOT BE
DEEMED TO HAVE WAIVED ANY OF ITS RIGHTS UNDER THIS AGREEMENT OR
UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER SIGNED BY DEBTOR
UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY SECURED
PARTY. A waiver on any one occasion shall not be construed as a bar
to or waiver of any right or remedy on any future
occasion.
(g) DEBTOR AND SECURED PARTY
UNCONDITIONALLY WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF
THE OTHER DEBT DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY,
ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN DEBTOR
AND SECURED PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT. THIS WAIVER IS IRREVOCABLE. THIS WAIVER MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING. THE WAIVER ALSO SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
(a) This Agreement, any Note and/or
any of the other Debt Documents may be assigned, in whole or in
part, by Secured Party without notice to Debtor, and Debtor agrees
not to assert against any such assignee, or assignee’s
assigns, any defense, set-off, recoupment claim or counterclaim
which Debtor has or may at any time have against Secured Party for
any reason whatsoever. Debtor agrees that if Debtor receives
written notice of an assignment from Secured Party, Debtor will pay
all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. Debtor also agrees to
confirm in writing receipt of the notice of assignment as may be
reasonably requested by Secured Party or assignee.
(b) All notices to be given in
connection with this Agreement shall be in writing, shall be
addressed to the parties at their respective addresses set forth in
this Agreement (unless and until a different address may be
specified in a written notice to the other party), and shall be
deemed given (i) on the date of receipt if delivered in hand
or by facsimile transmission, (ii) on the next business day
after being sent by express mail, and (iii) on the fourth
business day after being sent by regular, registered or certified
mail. As used herein, the term “business day” shall
mean and include any day other than Saturdays, Sundays, or other
days on which commercial banks in New York, New York are required
or authorized to be closed.
(c) Secured Party may correct patent
errors and fill in all blanks in this Agreement or in any
Collateral Schedule consistent with the agreement of the
parties.
(d) Time is of the essence of this
Agreement. This Agreement shall be binding, jointly and severally,
upon all parties described as the “Debtor” and their
respective heirs, executors, representatives, successors and
assigns, and shall inure to the benefit of Secured Party, its
successors and assigns.
(e) This Agreement and its
Collateral Schedules constitute the entire agreement between the
parties with respect to the subject matter of this Agreement and
supersede all prior understandings (whether written, verbal or
implied) with respect to such subject matter. THIS AGREEMENT AND
ITS COLLATERAL SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY
OR BY COURSE OF CONDUCT, BUT ONLY BY A WRITING SIGNED BY BOTH
PARTIES. Section headings contained in this Agreement have been
included for convenience only, and shall not affect the
construction or interpretation of this Agreement.
(f) This Agreement shall continue in
full force and effect until all of the Indebtedness has been
indefeasibly paid in full to Secured Party or its assignee. The
surrender, upon payment or otherwise, of any Note or any of the
other documents evidencing any of the Indebtedness shall not affect
the right of Secured Party to retain the Collateral for such other
Indebtedness as may then exist or as it may be reasonably
contemplated will exist in the future. This Agreement shall
automatically be reinstated if Secured Party is ever required to
return or restore the payment of all or any portion of the
Indebtedness (all as though such payment had never been
made).
(g) THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF CONNECTICUT (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
EQUIPMENT.
IN WITNESS WHEREOF, Debtor and
Secured Party, intending to be legally bound hereby, have duly
executed this Agreement one or more counterparts, each of which
shall be deemed to be an original, as of the day and year first
aforesaid.
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SECURED PARTY:
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DEBTOR:
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General
Electric Capital Corporation
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Achillio
Pharmaceuticals, Inc.
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By:
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/ S / D IANE H ERNANDEZ
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By:
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/ S / M ARY K AY
F ENTON
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Name:
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Diane Hernandez
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Name:
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Mary Kay Fenton
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Title:
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Vice President
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Title:
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Sr. Director,
Finance
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CONSENT AND WAIVER
WHEREAS, Achillion Pharmaceuticals,
Inc. (the “Company”) entered into a Loan Agreement (the
“Loan Agreement”), dated as of March 30, 2001,
with Connecticut Innovations, Inc. (“CII”);
and
WHEREAS, pursuant to Section 3
of the Loan Agreement, the Company’s Obligations (as defined
in the Loan Agreement) under the Loan Agreement are secured by,
among other things, furniture, fixtures and equipment located on
the Leased Premises (as defined in the Loan Agreement) not subject
to a security interest at the time of the Term Loan (as defined in
the Loan Agreement); and
WHEREAS, pursuant to
Section 8.1 of the Loan Agreement, the Company may not create,
assume, incur or permit to exist, any mortgage, lien, pledge,
charge, security interest or other encumbrance of any kind in
respect of the Collateral (as defined in the Loan Agreement);
and
WHEREAS, the Company wishes to enter
into a Master Security Agreement (the “Security
Agreement”) with General Electric Capital Corporation
(“GE”), pursuant to which the Company shall grant to GE
a security interest in and against certain property (the “GE
Collateral”) which will be located on the Leased Premises (as
defined in the Loan Agreement); and
WHEREAS, CII wishes to facilitate
the execution of the Security Agreement and the granting of the
security interest to GE contemplated therein.
NOW, THEREFORE,
Pursuant to Section 12.2.1, CII
hereby (i) waives its right to a first priority security
interest in the GE Collateral, and (ii) consents to the
granting to GE of the security interest in the GE Collateral
contemplated by the Security agreement.
This Consent and Waiver may be
executed in several counterparts, each of which shall constitute an
original and all of which, when taken together, shall constitute
one and the same instrument.
[Remainder of page is intentionally left
blank]
IN WITNESS THEREOF, this Consent and
Waiver is dated as of the 20 th day of march 2002.
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CONNECTICUT INNOVATIONS,
INCORPORATED
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By:
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/ S / R ICHARD R.
B ARREDO
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Name:
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Richard R. Barredo
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Title:
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Managing Director/Project
Finance
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Address:
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99 West Street
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Rocky Hill, CT 06067
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2
AMENDMENT
THIS AMENDMENT is made as of the
day of
, 2002, between General Electric Capital Corporation
(“Secured Party”) and Achillion Pharmaceuticals, Inc.
(“Debtor”) in connection with that certain Master
Security Agreement, dated as of January 24, 2002
(“Agreement”). The terms of this Amendment are hereby
incorporated into the Agreement as though fully set forth therein.
Section references below refer to the section numbers of the
Agreement. The Agreement is hereby amended as follows:
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1.
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CREATION
OF SECURITY INTEREST .
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The Section is hereby amended and
replaced with the following:
“Debtor grants to Secured
Party, its successors and assigns, a security interest in and
against all property listed on any collateral schedule now or in
the future annexed to or made a part of this Agreement (“
Collateral Schedule ”), and in and against all
additions, attachments, accessories and accessions to such
property, all substitutions, replacements or exchanges therefor,
and all insurance and/or other proceeds thereof (all such property
is individually and collectively called the “
Collateral ”). This security interest is given to
secure the payment and performance of all debts, obligations and
liabilities of any kind whatsoever of Debtor to Secured Party,
other than any obligations of Debtor to Secured Party in connection
with any agreements executed between Secured Party and Debtor in
connection with Secured Party’s purchase of Debtor’s
Series C Convertible Preferred Stock, now existing or arising in
the future, including but not limited to the payment and
performance of certain Promissory Notes from time to time
identified on any Collateral Schedule (collectively “
Notes ” and each a “ Note ”), and
any renewals, extensions and modifications of such debts,
obligations and liabilities (such Notes, debts, obligations and
liabilities are called the “ Indebtedness ”).
Unless otherwise provided by applicable law, notwithstanding
anything to the contrary contained in this Agreement, to the extent
that Secured Party asserts a purchase money security interest in
any items of Collateral (“ PMSI Collateral ”):
(i) the PMSI Collateral shall secure only that portion of the
Indebtedness which has been advanced by Secured Party to enable
Debtor to purchase, or acquire rights in or the use of such PMSI
Collateral (the “ PMSI Indebtedness ”), and
(ii) no other Collateral shall secure the PMSI
Indebtedness.”
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2.
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF
DEBTOR .
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The first sentence of this Section
is hereby amended and replaced with the following:
“Debtor represents, warrants
and covenants as of the date of this Agreement and as of the date
of each Collateral Schedule, unless specifically otherwise
disclosed, that:”
Subsection (b) is hereby
amended and replaced with the following:
“Debtor has adequate power and
capacity to enter into, and to perform its obligations under this
Agreement, each Note and any other documents evidencing, or given
in connection with, any of the Indebtedness (all of the foregoing,
excluding the Warrant, are called the “ Debt Documents
”);”
Subsection (c) is hereby
amended and replaced with the following:
“This Agreement and the other
Debt Documents have been duly authorized, executed and delivered by
Debtor and constitute legal, valid and binding agreements
enforceable in accordance with their terms, except to the extent
that the enforcement of remedies may be limited under applicable
bankruptcy and insolvency laws and equitable
remedies;”
Subsection (a) is hereby
amended and replaced with the following:
“Until the occurrence and
continuance of any default under Section 7, Debtor shall
remain in possession of the Collateral; except that Secured Party
shall have the right to possess (i) any chattel paper or
instrument that constitutes a part of the Collateral, and
(ii) any other Collateral in which Secured Party’s
security interest may be perfected only by possession. Secured
Party may inspect any of the Collateral during normal business
hours after giving Debtor reasonable prior notice. If Secured Party
asks, Debtor will promptly notify Secured Party in writing of the
location of any Collateral.”
Subsection (d) is hereby
amended and replaced with the following:
“Debtor shall pay promptly
when due all taxes, license fees, assessments and public and
private charges levied or assessed on any of the Collateral, on its
use, or on this Agreement or any of the other Debt Documents. At
its option, Secured Party may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the
Collateral and may pay for the maintenance, insurance and
preservation of the Collateral and effect compliance with the terms
of this Agreement or any of the other Debt Documents. Debtor agrees
to reimburse Secured Party,
on demand, all reasonable costs and
expenses incurred by Secured Party in connection with such payment
or performance and agrees that such reimbursement obligation shall
constitute Indebtedness.”
Section (a) is hereby amended
and replaced with the following:
“Debtor shall be in default
under this Agreement and each of the other Debt Documents if (and
so long as is continuing):”
Section (a)(i) is hereby
amended and replaced with the following:
“Debtor breaches its
obligation to pay when due any installment or other amount due or
coming due under any of the Debt Documents unless such failure to
pay on the required due date is as a result of the error or
malfunction of any electronic payment system or other system
established for the electronic transfer of funds. If the error or
malfunction of any electronic payment system or other system
persists for more than three (3) days, Debtor agrees to
immediately send payment to Secured Party via wire transfer or
overnight mail”
Subsection (a)(v) is hereby
amended and replaced with the following:
“Any warranty, representation
or statement made by Debtor in any of the Debt Documents or
otherwise in connection with any of the Indebtedness shall be false
or misleading in any material respect when made;”
Subsection (a)(xi) is hereby
amended and replaced with the following:
“Debtor or any Guarantor files
a petition under any bankruptcy, insolvency or similar law, or any
such petition is filed against Debtor or any Guarantor and is not
dismissed within sixty (60) days; or”
Subsection (c) is hereby
amended and replaced with the following:
“After default, Secured Party
shall have all of the rights and remedies of a Secured Party under
the Uniform Commercial Code, and under any other applicable law.
Without limiting the foregoing, Secured Party shall have the right
to (i) notify any account debtor of Debtor or any obligor on
any instrument which constitutes part of the Collateral to make
payment to the Secured Party, (ii) with or without legal
process, enter any premises where the Collateral may be and take
possession of and remove the Collateral from the premises or store
it on the premises, (iii) sell
the Collateral at public or private
sale, in whole or in part, and have the right to bid and purchase
at said sale, or (iv) lease or otherwise dispose of all or
part of the Collateral, applying proceeds from such disposition to
the obligations then in default. If requested by Secured Party,
Debtor shall promptly assemble the Collateral and make it available
to Secured Party at a place to be designated by Secured Party
which
