Exhibit 10.3
EXECUTION VERSION
SECURITY AGREEMENT
This S ECURITY A GREEMENT (this “ Agreement ”),
dated as of June 17, 2009, is entered into by A
RENA P HARMACEUTICALS , I NC . (“ Obligor ”) and the
parties identified on Schedule 1 hereto (together, the
“ Secured Party ”).
W I T N E S S E T
H:
W HEREAS , Obligor has entered into a Facility Agreement,
dated as of the date hereof (as, amended, modified, supplemented or
superseded from time to time, “ Facility
Agreement ”), with the Secured Party;
N OW ,
T HEREFORE
, in consideration of the mutual
agreements set forth herein, Obligor and the Secured Party agree as
follows:
1. G RANT OF S ECURITY I NTEREST .
(a) To secure payment and
performance of the Obligations, Obligor hereby grants to Secured
Party a security interest in all property and interests in property
of Obligor, whether now owned or hereafter acquired or existing,
and wherever located (together with all other collateral security
for the Obligations at any time granted to or held or acquired by
Secured Party, collectively, the “ Collateral
”), including, without limitation, the following:
(i) all Accounts;
(ii) all Receivables;
(iii) all Equipment;
(iv) all General
Intangibles;
(v) all Inventory;
(vi) all Investment Property;
and
(vii) all proceeds and products of
(i), (ii), (iii), (iv), (v) and (vi).
(b) Notwithstanding anything to the
contrary contained in Section 1(a) above, the types or
items of Collateral described in such Section 1(a)
shall not include:
(i) more than 65% of the issued and
outstanding voting capital stock of any Subsidiary of Obligor that
is incorporated or organized in a jurisdiction other than the
United States or any state or territory thereof or any lower
threshold of the voting capital stock of such Subsidiary if the
grant by Obligor of a security interest in such stock would result
in adverse U.S. income tax consequences for Obligor;
(ii) deposit accounts of Obligor
listed on Schedule 2 previously pledged or restricted (the
“ Pledged Accounts ”), if the consent of
the secured party is required with respect to further pledges or
restrictions thereof;
1.
(iii) any permit, application,
license, contract or other asset to the extent and only to the
extent that the granting of such security interest is expressly
prohibited by any applicable statute, law or regulation, or would
constitute a default under the permit, application, license,
contract or other asset, as applicable, as in effect on the date
hereof, but only to the extent that such prohibition or default is
enforceable under applicable law (including Sections 9-406, 9-407
and 9-408 of the UCC); provided that upon the termination or
expiration of any such prohibition, such permit, application,
license, contract or other asset, as applicable, shall
automatically be subject to the security interest granted in favor
of Secured Party hereunder and become part of the Collateral;
provided, further, that the foregoing shall not limit, impair or
otherwise affect Secured Party’s unconditional continuing
security interest in upon any rights or interests of Obligor in or
to monies due or to become due under any such permit, application,
license, contract or other asset;
(iv) Equipment owned by Obligor on
the date hereof or hereafter acquired and any proceeds thereof that
is subject to a Lien securing a purchase money obligation or
capital lease permitted to be incurred pursuant to Article V of the
Facility Agreement if the contract or other agreement in which such
Lien is granted (or the documentation providing for such purchase
money obligation or capital lease) validly prohibits the creation
of any other Lien on such Equipment and proceeds;
(v) any intent-to-use trademark
application to the extent and for so long as creation by Obligor of
a security interest therein would result in the loss by Obligor of
any material rights therein;
(vi) any assets sold by Obligor in
compliance with the Facility Agreement;
(vii) any property of a person
existing at the time such person is merged into or consolidated
with Obligor that is subject to a Lien permitted by Article V of
the Facility Agreement to the extent the contract or other
agreement in which such Lien is granted validly prohibits the
creation of any other Lien on such property;
(viii) margin stock (within the
meaning of Regulation U issued by the Federal Reserve Board
(“ FRB ”)) to the extent the creation of
a security interest therein in favor of the Secured Party will
result in a violation of Regulation U issued by the FRB;
and
(ix) motor vehicles and other
equipment covered by certificates of title.
(c) Perfection of Security
Interests.
(i) Obligor authorizes Secured Party
(or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming Secured
Party or its designee as the secured party and Obligor or any
affiliate of Obligor as debtor, as Secured Party may require, and
including any other information with respect to Obligor or
otherwise required by part 5 of Article 9 of the UCC of such
jurisdictions as Secured Party may determine, together with any
amendment and continuations with respect thereto, which
authorization shall apply to all financing statements filed on or
after the Disbursement Date. In no event shall Obligor at any time
file while any Obligations remain outstanding, or cause to be
filed, any correction statement or termination statement with
respect to any financing statement (or amendment or continuation
with respect thereto) naming Secured Party or its designee as
secured party and Obligor or any affiliate of Obligor as
debtor.
2.
(ii) Obligor shall take any other
actions reasonably requested by Secured Party from time to time to
cause the attachment and perfection of, and the ability of Secured
Party to enforce, the security interest of Secured Party in the
Collateral; provided, however, unless an Event of Default shall
have occurred and be continuing, the Obligor shall not be required
to deliver or file any account control agreements, intellectual
property security agreements, mortgages, leasehold mortgages,
fixture filings, bailee letters or collateral access agreements or
physically deliver or otherwise provide control of any Collateral
to the Secured Party.
2. C OVENANTS R ELATING TO C OLLATERAL ; I NDEBTEDNESS ; D IVIDENDS . Obligor covenants that:
(a) it will give Secured Party
twenty (20) days’ prior written notice of any change to
its name;
(b) it will give Secured Party
twenty (20) days’ prior written notice of any change to
its chief executive office or its mailing address; and
(c) it will give Secured Party
twenty (20) days’ prior written notice of any change to
its type of organization, jurisdiction of organization or other
legal structure.
3. R EMEDIES .
(a) Upon the occurrence and during
the continuance of an Event of Default, (i) Secured Party
shall have the right to exercise any right and remedy provided for
herein, under the UCC and at law or equity generally, including,
without limitation, the right to foreclose the security interests
granted herein and to realize upon any Collateral by any available
judicial procedure and/or to take possession of and sell any or all
of the Collateral with or without judicial process; and
(ii) with or without having the Collateral at the time or
place of sale, Secured Party may sell the Collateral, or any part
thereof, at public or private sale, at any time or place, in one or
more sales, at such price or prices, and upon such terms, either
for cash, credit or future delivery, as Secured Party may elect.
Any remedies exercised in respect of Collateral constituting
Intellectual Property shall be subject to the rights of any
licensees thereof under the terms of any licenses in effect at such
time.
4. R EPRESENTATIONS AND W ARRANTIES . Obligor hereby represents and warrants to
Secured Party that:
(a) Obligor is a corporation duly
organized and validly existing under the laws of
Delaware.
(b) the exact legal name of Obligor
is as set forth on the signature page of this Agreement. Obligor
has not, during the past five years, been known by or used any
other composite or fictitious name or been a party to any merger or
consolidation.
3.
(c) the chief executive office and
mailing address of Obligor are located only at the address
identified on the signature page of this Agreement.
(d) Except for the Permitted Liens,
Obligor is the legal and equitable owner of each item of the
Collateral in which it purports to grant a security interest
hereunder.
5. E XPENSES OF O BLIGOR ’ S D UTIES ; S ECURED P ARTY ’ S R IGHT TO P ERFORM ON O BLIGOR ’ S B EHALF .
(a) Obligor’s agreements
hereunder shall be performed by it at its sole cost and
expense.
(b) If Obligor shall fail to do any
act which it has covenanted to do hereunder, Secured Party may (but
shall not be obligated to) do the same or cause it to be done,
either in its name or in the name and on behalf of Obligor, and
Obligor hereby irrevocably authorizes Secured Party so to
act.
6. N O W AIVERS OF R IGHTS HEREUNDER ; R IGHTS C UMULATIVE .
(a) No delay by Secured Party in
exercising any right hereunder, or in enforcing any of the
Obligations, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right preclude other or further
exercises thereof or the exercise of any other right. No waiver of
any of the Obligations shall be enforceable against Secured Party
unless in writing and signed by an officer of Secured Party, and
unless it expressly refers to the provision affected; any such
waiver shall be limited solely to the specific event
waived.
(b) All rights granted Secured Party
hereunder shall be cumulative and shall be supplementary of and in
addition to those granted or available to Secured Party under any
other agreement with respect to the Obligations or under applicable
law and nothing herein shall be construed as limiting any such
other right.
7. C ERTAIN R ELEASES AND T ERMINATION .
(a) In connection with any exclusive
license by the Borrower of any Intellectual Property covered by the
Lenders’ security interest that is permitted under the
Facility Agreement, the Secured Party will release and terminate
the security interest granted under this Agreement with respect to
such Intellectual Property and will promptly, at Obligor’s
expense, execute and deliver to Obligor all releases and other
documents as Obligor shall reasonably request to evidence such
termination and will take such other action as reasonably necessary
for the release of the Liens created hereby on such Collateral;
provided, however, that the Lenders shall have a security interest
in all Accounts, license and royalties fees and other revenues,
proceeds, or income arising out of or relating to such exclusive
license or such Intellectual Property.
(b) In connection with any
transfers, sales or other dispositions of assets permitted under
the
