Exhibit 10.11
SECURITY
AGREEMENT
Dated: December 30, 2005
The undersigned Accentia
Biopharmaceuticals, Inc., a Florida corporation (the
”Debtor”), whose address appears below, and Missouri
State Bank and Trust Company, a Missouri banking corporation
(“Secured Party”), hereby agree as follows:
1. In consideration of certain
revolving credit loans to be made by Secured Party to the Debtor in
an amount not to exceed at any one time outstanding Three Million
Dollars ($3,000,000.00) or, if a lesser amount, the Borrowing Base
(as defined in the Credit Agreement described below) at such time,
and Debtor’s execution and delivery to Secured Party of its
Note therefor, and all additional loans, advances and other
financial accommodations at or after the date hereof made or
extended by Secured Party to the Debtor, directly or indirectly, as
principal, guarantor or otherwise, including any of the foregoing
that arises after the filing of a petition by or against the Debtor
under the Bankruptcy Code even if the obligations do not accrue
because of the automatic stay under Bankruptcy Code Section 362 and
also including all of Debtor’s obligations under all interest
rate protection arrangements (interest rate exchange, hedge or
similar agreement including, without limitation, any interest rate
swap, forward or future contract or option, e.g., a call, put, cap,
floor or collar), Debtor hereby grants to Secured Party a security
interest in and lien upon, and assigns to Secured Party, the
Collateral described in Paragraph 2, to secure the payment,
performance and observance of all such indebtedness, obligations
and liabilities of any kind of the Debtor now or in the future owed
to Secured Party, due or not, and whether liquidated or
unliquidated, and of all Credit Agreements, documents and
instruments evidencing any of the foregoing obligations or under
which any of the foregoing obligations may have been issued,
created, assumed or guaranteed, including without limitation the
Debtor’s obligations under that certain Revolving Credit
Agreement (the “Credit Agreement”) dated as of December
30, 2005, between Debtor and Secured Party (all of the foregoing,
together with the Note of even date herewith issued to the order of
Secured Party under the Credit Agreement, being herein referred to
as the “Obligations”).
2. The Collateral is described as
follows and may be supplemented in the future by any separate
schedule at any time furnished by Debtor to Secured Party (all of
which are hereby deemed part of this Security Agreement). Such
Collateral includes all attachments, accessions and equipment now
or hereafter affixed to the Collateral or used in connection
therewith, all substitutions and replacements thereof, and all
items of Collateral now existing and hereafter acquired, created or
arising:
ALL OF DEBTOR’S ACCOUNTS,
CONTRACT RIGHTS, CHATTEL PAPER, INSTRUMENTS, DOCUMENTS, INVESTMENT
PROPERTY, DEPOSIT ACCOUNTS, LETTER-OF-CREDIT RIGHTS, SUPPORTING
OBLIGATIONS, GENERAL INTANGIBLES (INCLUDING PAYMENT INTANGIBLES),
INVENTORY, GOODS, VEHICLES, MACHINERY, EQUIPMENT, FURNITURE AND
FIXTURES, NOW OWNED OR HEREAFTER ACQUIRED, AND WHEREVER LOCATED,
AND ALL PRODUCTS, PROCEEDS, RENTS AND PROFITS OF THE FOREGOING,
INCLUDING, WITHOUT LIMITATION, PROCEEDS
OF INSURANCE POLICIES INSURING ANY OR ALL OF THE
FOREGOING AND ANY INDEMNITY, WARRANTY OR GUARANTY PAYABLE BY REASON
OF LOSS OR DAMAGE TO OR OTHERWISE WITH RESPECT TO ANY OF THE
FOREGOING.
3. The Debtor hereby irrevocably
authorizes the Secured Party at any time and from time to time to
file in any filing office in any Uniform Commercial Code
jurisdiction any initial financing statements and amendments
thereto that (a) indicate the Collateral and (b) provide any other
information required by part 5 of Article 9 of the UCC of the
State, or such other jurisdiction, for the sufficiency or filing
office acceptance of any financing statement or amendment,
including (i) whether the Debtor is an organization, the type of
organization and any organizational identification number issued to
the Debtor and, (ii) in the case of a financing statement filed as
a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of real
property to which the Collateral relates. The Debtor agrees to
furnish any such information to the Secured Party promptly upon the
Secured Party’s request.
4. Debtor warrants, represents and
covenants with respect to the Collateral as follows:
(a) the chief place of business of
Debtor, the books and records relating to the Collateral, and the
Collateral, are all located at the address(es) set forth below and
Debtor will not change any of the same or its name or state where
Debtor is located without prior written notice to and consent of
Secured Party;
(b) the Collateral is now and will
at all times hereafter be owned by Debtor free and clear of all
liens, security interests, encumbrances and rights of others except
for the security interest granted hereby;
(c) Debtor will not assign, sell,
mortgage, lease, transfer, pledge, grant a security interest in,
encumber, or otherwise dispose of or abandon any part or all of the
Collateral without prior written consent of the Secured Party, and
the inclusion of “proceeds” of the Collateral under the
security interest granted herein shall not be deemed a consent by
the Secured Party to any sale or other disposition of any part or
all of the Collateral, other than for sales of Inventory in the
ordinary course of business, except that Debtor may replace
obsolete or worn machinery or equipment in the ordinary course of
business;
(d) Secured Party shall at all times
have free access to and right of inspection of the Collateral and
any records pertaining thereto (and the right to make extracts from
and to receive from Debtor originals or true copies of such records
and any papers and instruments relating to any or all of the
Collateral upon request therefor) and Debtor hereby grants to
Secured Party a security interest in all such records, papers and
instruments to secure payment, performance and observance of the
Obligations;
(e) Debtor will use the Collateral
with all reasonable care and caution and in conformity with all
applicable laws, ordinances and regulations;
(f) Debtor will keep the Collateral
in first class order, repair, running and marketable condition at
Debtor’s own cost and expense;
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(g) Debtor assumes all
responsibility and liability arising from the use of the
Collateral;
(h) Debtor will, at its expense,
perform all acts and execute all documents in a form reasonably
acceptable to Debtor requested by Secured Party at any time to
evidence, perfect, maintain and enforce Secured Party’s
security interest in the Collateral and upon request of Secured
Party, at any time and from time to time, shall deliver to Secured
Party any instrument, document or chattel paper constituting part
of the Collateral, duly endorsed or assigned, Debtor hereby
authorizes Secured Party and grants Secured Party its power of
attorney to file any financing statements or continuation
statements pursuant to the UCC of the State or such other
jurisdiction as is deemed necessary or appropriate by Second Party
to perfect its security interest hereunder, which power of attorney
shall be deemed to be coupled with an interest and is irrevocable,
and shall execute and deliver any other papers, documents or
instruments requested by Secured Party in connection with this
Security Agreement;
(i) the Collateral is now and shall
remain personal property, and Debtor will not permit any of the
Collateral to become a part of or affixed to real property without
prior notice to Secured Party and without first making all
arrangements, and delivering, or causing to be delivered, to
Secured Party all instruments and documents, including, without
limitation, waivers and subordination agreements by any landlords
or mortgagees, requested by and satisfactory to Secured Party, to
protect the security interest granted herein against all
persons;
(j) Debtor, at its own expense, will
insure the Collateral in the name of and with loss or damage
payable to Secured Party, against the risks and in the amounts
required by the Agreement, and will notify Secured Party of any
material loss or damage to any of the Collateral, whether or not
insured;
(k) Debtor assumes all
responsibility and liability arising from the use of the
Collateral;
(l) Secured Party may, in its sole
discretion, release any of the Collateral without notice to or
consent by Debtor and without discharging or otherwise affecting
the Obligations or the security interest granted herein;
(m) Secured Party may in its
discretion, for the account and at the expense of Debtor, pay any
amount or do any act required of Debtor hereunder or requested by
Secured Party to preserve, protect, maintain or enforce the
Obligations or the security interest granted herein and which
Debtor fails to do or pay, and any such payment shall be deemed an
advance by Secured Party to Debtor, shall be payable on demand and
shall be secured hereby;
(n) Debtor will promptly pay Secured
Party any and all sums, costs, and expenses which Secured Party may
pay or incur pursuant to the provisions of this Security Agreement
or in defending, protecting or enforcing the security interest
granted herein or in enforcing payment of the Obligations or
otherwise in connection with the provisions hereof, including but
not limited to all court costs, collection charges, travel
expenses, and reasonable attorney’s fees, all of which,
together with interest at a rate equal to the highest rate then
payable on the Obligations, shall be part of the
Obligations;
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5. (a) The term “Accounts
Receivable” means and includes all accounts receivable owing
to Debtor and arising from sales of merchandise and/or services by
the Debtor in the ordinary course of business, all proceeds thereof
and all of Debtor’s rights to any merchandise which is
represented thereby, and for purposes of this paragraph 5 shall
include documents, instruments and chattel paper. From time to
time, as required by the Agreement, or on request of Secured Party
after the occurrence of any “Event of Default” (as that
term is defined in the Loan Agreement), which has not been cured
within the applicable cure period, Debtor shall provide Secured
Party with schedules describing all Accounts Receivable and shall
execute and deliver written assignments of such Accounts Receivable
to Secured Party, provided, however, that Debtor’s failure to
execute and deliver such schedules and/or assignments shall not
affect or limit Secured Party’s security interest or other
rights in and to Accounts Receivable. Together with each schedule,
Debtor shall furnish copies of customers’ invoices or the
equivalent, and Debtor hereby warrants the genuineness thereof. On
request of Secured Party, Debtor shall furnish to Secured Party the
original shipping or delivery receipts of all merchandise sold.
Each of the Accounts Receivable is enforceable in accordance with
its terms, no payment is past due (or any past due payment is
clearly noted as such), and no partial payment not shown on the
account has been made by anyone.
(b) Debtor shall furnish Secured
Party with an aging of Accounts Receivable in such form and as
often as is required by the Agreement.
(c) Secured Party may, at any time
and from time to time and without notice to Debtor, verify the
validity and amount or any other matter relating to any of the
Accounts Receivable by mail, telephone, telegraph or otherwise, in
the name of Secured Party or Debtor.
(d) Upon the occurrence of an Event
of Default, which has not been cured within the applicable cure
period, Debtor will instruct its account debtors to remit to a lock
box to which Secured Party will have sole access and control. All
deposits to such lock box shall constitute additional Collateral
and shall not be deemed payment of the Obligations.
(e) At any time after the occurrence
of an Event of Default, which has not been cured within the
applicable cure period, Secured Party may, and on Secured
Party’s demand Debtor will, notify customers or account
debtors that the Accounts Receivable have been assigned to Secured
Party or of Secured Party’s security interest therein, and
collect the Accounts Receivable directly and charge the collection
costs and expenses to the Obligations but, unless and until Secured
Party does so notify or gives Debtor other instructions, Debtor
shall make collection of all Accounts Receivable for Secured Party,
receive all payments thereon as Secured Party’s trustee, and
shall immediately deliver them to Secured Party in their original
form. Debtor will deliver to Secured Party, duly endorsed or
assigned, all instruments, chattel paper, guaranties or security
agreements immediately upon receipt by Debtor as evidence of, in
payment of or as security for any of the Collateral. All checks and
other instruments received by Secured Party as proceeds of any of
the Accounts Receivable will be credited (conditional upon final
collection) against the Obligations; provided, however, that for
purposes of calculation of interest, such conditional credit will
be made after allowing five (5) calendar days for
collection.
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(f) All sums credited by or due from
Secured Party to Debtor shall at all times constitute additional
security for the Obligations and may be set off against any
Obligation at any time whether or not other security held by
Secured Party is adequate and whether or not such Obligations are
then due.
(g) If any warranty is breached as
to any of the Accounts Receivable, or if any of the Accounts
Receivable is not paid by the customer or account debtor within 90
days from its due date, or the customer or account debtor disputes
liability or makes any claim with respect thereto, or a petition in
bankruptcy or other application for relief under the Bankruptcy
Code or any other insolvency law, is filed with respect to the
customer or account debtor or the customer or account debtor makes
a general assignment for the benefit of creditors, becomes
insolvent, fails, suspends or goes out of business, then Secured
Party may accelerate the principal of the Obligations to the extent
of any or all of the Accounts Receivable owing by that customer or
account debtor. Any merchandise which is returned by a customer or
account debtor or otherwise recovered shall remain part of the
Collateral. Debtor shall notify Secured Party promptly of all
disputes and claims and settle or adjust them at no expense to
Secured Party but no discount, credit or allowance shall be granted
to any customer or account debtor without Secured Party’s
consent except in accordance with its announced trade terms.
Secured Party may, after the occurrence of an Event of Default,
enforce collection, settle or adjust disputes and claims directly
with customers or account debtors for amounts and upon terms which
Secured Party considers commercially reasonable, and in all cases
Secured Party will credit Debtor with only the n
