[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT
HAVE BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION]
AMENDMENT NO. 4
TO
BOVINE VACCINE DISTRIBUTION AGREEMENT
THIS AMENDMENT NO. 4 ("Amendment") is entered into as of the 15th day of
April, 2002, by and between DIAMOND ANIMAL HEALTH, INC., an Iowa corporation
with offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ("Diamond")
and AGRI LABORATORIES, LTD., a Delaware corporation, with offices at ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Distributor").
WHEREAS, Diamond and Distributor are parties to that certain Bovine Vaccine
Distribution Agreement dated as of February 13, 1998 (the "Original Agreement"),
as previously amended by that certain Amendment No. 1 dated July 13, 1998
("Amendment No. 1"), that certain Amendment No. 2 dated as of December 13, 1999
("Amendment No. 2"), and that certain Amendment No. 3 dated as of July 12, 2001
("Amendment No. 3"), true and complete copies of which are annexed hereto as
Appendix I (collectively, the "Prior Agreement"); and
WHEREAS, Diamond and Distributor desire to amend the Prior Agreement in
accordance with the terms and conditions set forth in this Amendment;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Definitions.
a. In General. Capitalized terms used herein shall have the
meanings ascribed to them in the Prior Agreement, unless otherwise defined
herein. Without limiting the generality of the foregoing, the following
capitalized terms shall have the following meanings for purposes of the Prior
Agreement and this Agreement:
b. "Agreement" shall mean this Amendment and the Prior Agreement,
as amended by this Amendment, taken together as a whole.
c. "Contract Year" shall mean each successive 12-month period ending
on December 15 in each calendar year and beginning on December 16 in the
previous calendar year, during the term of this Agreement. For example, Contract
Year 2002 began on December 16, 2001 and ends on December 15, 2002.
d. "Initial Products" shall mean the products that are subject to
this Agreement on the date of this Amendment, all of which are expressly set
forth in Exhibit A attached to this Amendment. Initial Products shall also
include additional products added to this Agreement in accordance with Section
2 of the Original Agreement that consist of one or more antigens set forth on
Exhibit A and Exhibit AA on the date of this Amendment (i) in combination with
antigens not set forth on Exhibit A and Exhibit AA on the date of this Amendment
and/or (ii) for which additional claims are obtained by Diamond or the supplier
of such antigen (including but not limited to the potential additional products
described on Exhibit AA).
1
e. "Initial Product Qualified Revenues" shall mean, for any Contract
Year, an amount equal to (i) the Qualified Revenues attributable to Initial
Products (Exhibit A and AA) for such Contract Year, plus (ii) any amounts paid
by Distributor to Diamond in such Contract Year for Registration Costs and
Support Costs attributable to Products other than Initial Products, plus (iii)
any other amounts paid or advanced by Distributor to Diamond in such Contract
Year for research and development or other services not contemplated by this
Agreement that are attributable to Products other than Initial Products.
f. "Products" shall mean the Initial Products, together with any
additional antigens and new products added to this Agreement pursuant to Section
2.01 of the Original Agreement.
g. "Sterile Filled Facility" shall mean a sterile filled
manufacturing facility meeting the CGMP requirements of the FDA.
h. "Sterile Filled Facility Period" shall mean any period during
which a Sterile Filled Facility is operational at Diamond, beginning on the
later of (i) the 36-month anniversary of the date Diamond notifies Distributor
in writing of its intention to develop a Sterile Filled Facility and (ii) the
18-month anniversary of the date that the first product license is granted by
the FDA for a product produced in such Sterile Filled Facility.
2. Extension of Term of Agreement. The initial term of this Agreement
with respect to all Products shall be extended through the period ending on
December 15, 2011. This Agreement shall automatically renew thereafter for
additional renewal terms of one year each, unless either party gives at least
twelve (12) months prior written notice to the other that it does not wish to
renew this Agreement.
3. Minimums.
a. All Products.
(i) Section 1.04(ii) of the Original Agreement is hereby deleted
and replaced by this Section 3 for the Contract Years specified below. During
the term of this Agreement, Distributor shall cause the Qualified Revenues for
each Contract Year to equal or exceed the following amounts (the "Minimum
Qualified Revenue"):
Contract Year Ending December 15, Minimum Qualified Revenue
--------------------------------- ---------------------------
2002 $[ *** ]
2003 $[ *** ]
2004 $[ *** ]
2005 $[ *** ]
2006 $[ *** ]
2007 $[ *** ]
2008 $[ *** ]
2009 $[ *** ]
2010 $[ *** ]
2011 and thereafter $[ *** ]
***CONFIDENTIAL TREATMENT REQUESTED
2
provided, however, that Distributor may permit the Qualified Revenues to be less
than the Minimum Qualified Revenue in any Contract Year and in lieu thereof pay
to Diamond an amount equal to the difference between such Minimum Qualified
Revenue and the actual Qualified Revenues for such Contract Year (the
"Additional Payment"). If an Additional Payment is due hereunder for any
Contract Year, and not paid by Distributor within (30) days after the end of
such Contract Year, Distributor's exclusivity rights under Section 1.02 of this
Agreement shall automatically terminate with respect to all Products; provided,
however, that nothing in this Agreement shall impair or terminate Distributor's
exclusivity rights with respect to any antigens supplied to Diamond by
Distributor or through Distributor's agreements with third party suppliers of
antigens and included in Products, including but not limited to those included
in the antigens and combination Products listed on Exhibit B to this Amendment.
Distributor's distribution rights shall then continue on a non-exclusive basis
consistent with the terms of this Section, subject to all the remaining terms of
this Agreement not inconsistent therewith, which shall remain in full force and
effect.
(ii) Notwithstanding Section 3(a)(i), however, the Minimum
Qualified Revenue shall be equal to the following amounts during any Sterile
Filled Facility Period for purposes of determining Distributor's exclusivity
rights and applicable Additional Payment amounts under Section 3(a)(i):
Contract Year Ending December 15, Minimum Qualified Revenue
--------------------------------- ---------------------------
2005 $[ *** ]
2006 $[ *** ]
2007 $[ *** ]
2008 $[ *** ]
2009 $[ *** ]
2010 $[ *** ]
2011 and thereafter $[ *** ]
provided, however, that the Minimum Qualified Revenue amount specified in the
foregoing table for the first Contract Year of any Sterile Filled Facility
Period shall be prorated based on the number of days in such Contract Year
remaining after the commencement of the Sterile Filled Facility Period. Diamond
shall have the right, but not the obligation, in its discretion, to develop a
Sterile Filled Facility at any time during the term of this Agreement. This
Section shall not be construed as notice by Diamond to Distributor of its
intention to develop a sterile filled facility under Section 1(h) of this
Amendment.
b. Initial Products. During the term of this Agreement, Distributor
shall cause the Initial Product Qualified Revenues for each Contract Year to
equal or exceed the following amounts ("Minimum Initial Product Revenue"):
***CONFIDENTIAL TREATMENT REQUESTED
3
Contract Year Ending December 15, Minimum Qualified Revenue
--------------------------------- ---------------------------
2002 $[ *** ]
2003 $[ *** ]
2004 $[ *** ]
2005 $[ *** ]
2006 $[ *** ]
2007 $[ *** ]
2008 $[ *** ]
2009 $[ *** ]
2010 $[ *** ]
2011 and thereafter $[ *** ]
Notwithstanding the foregoing, however, Distributor may permit the Initial
Product Qualified Revenues to be less than the Minimum Initial Product Revenue
in any Contract Year and in lieu thereof pay to Diamond an amount equal to the
difference between such Minimum Initial Product Revenue and the actual Initial
Product Qualified Revenues for such Contract Year (the "Additional Initial
Product Payment"). If an Additional Initial Product Payment is due hereunder
for any Contract Year, and not paid by Distributor within thirty (30) days after
the end of such Contract Year, Distributor's exclusivity rights under
Section 1.02 of this Agreement shall automatically terminate with respect to all
Initial Products (but not other Products, subject to Section 3(a) of this
Amendment). Distributor's distribution rights shall then continue with respect
to all Initial Products on a non-exclusive basis consistent with Section 3(a)
subject to all the remaining terms of this Agreement not inconsistent therewith,
which shall remain in full force and effect.
c. Counting Revenues. Qualified Revenues attributable to Initial
Products and counted for purposes of Section 3(b) of this Amendment shall also
count for purposes of determining Minimum Qualified Revenues under Section 3(a)
of this Amendment. Any Additional Initial Product Payment paid for any Contract
Year shall be credited against Distributor's obligation to pay an Additional
Payment pursuant to Section 3(a) of this Amendment for such Contract Year (but
not for any other Contract Year). An example of these calculations is set forth
in Exhibit C to this Amendment.
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***CONFIDENTIAL TREATMENT REQUESTED
4
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***CONFIDENTIAL TREATMENT REQUESTED
5
(E) [ ****** ]
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4. Extension Fee Payable to Diamond. Upon execution and delivery of this
Amendment, Distributor shall pay to Diamond an amount equal to $[ ***
], by wire transfer of immediately available funds, as a non-refundable fee for
extending the term of this Agreement.
5. Distributor Loan to Diamond.
(i) Upon execution and delivery of this Agreement, Distributor
shall advance to Diamond an amount equal to One Million Dollars ($1,000,000.00)
("Loan Proceeds"), by wire transfer of immediately available funds, as a loan on
the terms and conditions of the promissory note attached hereto as Exhibit D
(the "Diamond Note"). The Diamond Note shall be secured by a subordinated
security interest in certain assets of Diamond on the terms and conditions of
the security agreement attached hereto as Exhibit E (the "Security Agreement"),
mortgages attached hereto as Exhibit F ("Mortgages") and the subordination
agreement attached hereto as Exhibit G (the "Subordination Agreement"). Upon
execution and delivery of this Amendment, Diamond shall execute and deliver to
Distributor the Diamond Note, the Security Agreement and the Mortgages, against
Distributor's execution and delivery of the Subordination Agreement, Security
Agreement and Mortgages and its advance of the Loan Proceeds. All costs (other
than Distributor's attorney's fees) associated with registration of any document
necessary to perfect Distributor's security interest shall be paid by Diamond.
(ii) Diamond shall apply the Loan Proceeds toward the uses set
forth on Exhibit H attached hereto. Diamond shall furnish Distributor copies of
receipts or other evidence of each disbursement of the Loan Proceeds in
accordance with Exhibit H within thirty (30) days of each disbursement.
(iii) Diamond agrees to obtain lien releases from all
contractors, subcontractors or vendors who provide services and/or materials in
accordance with Exhibit H. In the event any lien is filed against the property
secured by the Security Agreement and Mortgages, Distributor shall have the
right to pay said lien amount and seek immediate repayment of said amount with
interest at the statutory rate from Diamond. Diamond hereby
***CONFIDENTIAL TREATMENT REQUESTED
6
agrees to indemnify and hold Distributor harmless for any and all claims by
contractors, subcontractors and vendors providing services to Diamond for the
improvements listed on Exhibit H.
6. Confidentiality. Section 9.05 of the Original Agreement is hereby
amended to add the following additional sentence: "If either party ("Disclosing
Party") determines that it is required by law to disclose any provisions of this
Agreement, it will provide reasonable notice to the other party ("Non-Disclosing
Party") and will consult and cooperate with the Non-Disclosing Party, to permit
the Non-Disclosing Party to seek a protective order or other confidential
treatment, to the extent permitted by law."
7. Effect of Amendment. This Amendment is hereby incorporated by
reference into the Prior Agreement as if fully set forth therein, and the Prior
Agreement, as amended by this Amendment shall continue in full force and effect
following execution and delivery hereof, and shall be referred to as "this
Agreement". In the event of any conflict between the terms and conditions of
the Prior Agreement and this Amendment, the terms and conditions of this
Amendment shall control. True and complete copies of the Prior Agreement are
annexed hereto as Appendix I and the Prior Agreement, together with this
Amendment (including the Exhibits thereto and hereto) constitutes the entire
understanding of the parties with respect to the subject matter hereof and
supersedes all prior course of dealing, negotiations or communications, however
given, regarding the subject matter hereof. There are no other understandings,
representations or warranties or any kind, express or implied.
IN WITNESS WHEREOF, the parties have caused this Amendment No. 4 to be
executed by their duly authorized representatives as of the date first written
above.
DIAMOND ANIMAL HEALTH, INC.
By:
Its:
AGRI LABORATORIES, LTD.
By:
Its:
7
EXHIBIT A TO AMENDMENT NO. 4
Initial Products
I. Modified Live Products:
PRICING
------------------
Tradename Antigens [***] [***] [***]
-------------- -------------- ----- ----- -----
Titanium BRSV BRSV $[***] $[***]
Titanium BRSV Vac3 BRSV, PI3, IBR $[***] $[***]
Titanium 5 ▇▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇▇, ▇▇▇▇ $[***] $[***] $[***]
Titanium 5 L5 ▇▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇▇, ▇▇▇▇, $[***] $[***] $[***]
Lepto 5
Titanium 3 + ▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇▇, ▇▇▇▇, $[***] $[***]
L.pomona
Titanium IBR IBR $[***] $[***]
Titanium IBR LP IBR, L.pomona $[***] $[***]
Titanium 3 IBR, BVD1, BVD2 $[***] $[***]
Titanium 4 IBR, PI3, BVD1, BVD2 $[***] $[***]
Titanium 4 L5 IBR, PI3, BVD1, BVD2, Lepto 5 $[***] $[***]
Above Pricing based on Standard Batch Sizes:
[***] dose Large Freeze Dryer- [***] units / [***] Small Freeze Dryer- [***]
doses units / [***] doses
[***] dose Large Freeze Dryer- [***] units / [***] Small Freeze Dryer- [***]
doses units / [***] doses
[***] dose Large Freeze Dryer- [***] units / [***] Small Freeze Dryer- [***]
doses units / [***] doses
Any product combinations of the above antigens not listed above, including but
not limited to previously-produced combinations or other products listed on
Exhibit A of the Original Agreement that are no longer carried by Distributor or
that have never been marketed by Distributor, are not included in the above
price structure. Any combinations not listed above that are desired by
Distributor subsequent to the signing of Amendment No. 4 may be added to this
Exhibit pursuant to Section 2 of the Original Agreement and new pricing will be
established; provided, that such additional Products shall qualify as "Initial
Products" only if they meet the definition of "Initial Products" set forth in
Amendment No. 4.
II. Killed Products:
PRICING
--------------
TRADENAME ANTIGENS [***] [***]
------------------ ------------------------------------------ ------ -------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ $[***] $[***]
▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇, ▇▇ $[***] $[***]
MasterGuard 10 CF KIBR, ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇, ▇▇, $[***] $[***]
*Currently, Intervet will ship to Diamond and ▇▇▇▇ Distributor directly for the
cost of the [***] antigen. Distributor will continue to have responsibility
to provide [***]s component to Diamond for labeling and final packaging at no
cost to Diamond. Final product [***] potency testing will be performed by
Intervet (or any future supplier) and is incorporated into the antigen cost to
Distributor
Above Pricing based on Standard Batch Sizes:
[***] dose [***] units / [***] doses
[***] dose [***] units / [***] doses
***CONFIDENTAIL TREATMENT REQUESTED
EXHIBIT A TO AMENDMENT NO. 4
Initial Products
(Continued)
III. Additional Cattle Products- Titanium 5 + Once PMH (MLV ▇▇▇, ▇▇▇▇, ▇▇▇▇,
▇▇▇▇, ▇▇▇ + Intervet Live avirulent P. haemolytica / multocida):
PRICING
---------------------
PRODUCT FORM [***] [***] [***]
---------------------------------------------------- ----- ----- -------
Intervet, Unlabelled Titanium 5 $[***] $[***] $[***]
AgriLabs, Final Package $[***] $[***] $[***]
Above Pricing based on Standard Batch Sizes:
[***] dose [***] units/ [***] doses
[***] dose [***] units / [***] doses
[***] dose [***] units / [***] doses
All prices include viricidal testing performed at Diamond.
Bactericidal testing is performed by Intervet and is incorporated into the
OncePMH cost to Distributor.
Currently, Intervet will ship to Diamond and ▇▇▇▇ Distributor directly for
the Once PMH component. Distributor will continue to have responsibility to
provide OncePMH component to Diamond for labeling and final packaging at no cost
to Diamond.
IV. Additional Cattle Products (In development pursuant to Amendment No. 1)
TRADENAME ANTIGENS PRICE PER DOSE
--------- ------------------------------------------- --------------
[ *** ] [ *** ] $[***]
Above pricing based on Standard Batch sizes: [***] units/[***] doses
***CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT AA
TO
AMENDMENT NO. 4
Potential Additional Antigens that qualify to be
Classified as "Initial Products" per Section 1(d)
1. [ *** ]
2. [ *** ]
3. [ *** ]
4. [ *** ]
5. [ *** ]
6. [ *** ]*
7. [ *** ]
8. [ *** ]*
9. [ *** ]
* [ *** ]
* [ *** ]
* [ *** ]
* [ *** ]
* [ *** ]
* [ *** ]
* [ *** ]
---------------------
* Supplied by Novartis (Biostar). Novartis has the right to terminate
supply of all Biostar antigens to Diamond after December 31, 2007,
after which Distributor shall have the responsibility to provide such
antigens to Diamond if Distributor desires to add and/or maintain them as
Products under this Agreement.
***CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT B TO AMENDMENT NO. 4
Third Party Antigens and Combination Products
Bovine rotavirus [ *** ], Bovine coronavirus [ *** ] and in
combination with Diamond's Clostridium perfringens type C-Killed Virus
Bacterin-Toxoid and E.coli K99.
Crypto sporidium recombinant antigens [ *** ],Bovine rotavirus [ *** ],
Bovine coronavirus [ *** ] and in combination with Diamond's
Clostridium perfringens type C-Killed Virus Bacterin-Toxoid andE.coli K99.
*
Vibrio (C.fetus) (Intervet) and in combination with MasterGuard 10
Once PMH (Intervet) in combination with Titanium 5
-------------------
* Potential additional products -- See Exhibit AA
***CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT C TO AMENDMENT NO. 4
EXAMPLE CALCULATIONS OF MINIMUMS
EXAMPLE 1
* Example is for Contract Year ending 12/15/04
* Qualified Revenues for all Products total $[ *** ], consisting
of the following components:
A. Product sales, R&D, Support $[ *** ]
& Registration attributable to
Initial Products only (Section
1(e)(i) of Amendment No. 4)
B. Sales of Products other [ *** ]
than Initial Products (Section
13.10(i) of Original Agreement)
C. R&D, Support and [ *** ]
Registration for Products other
than Initial Products (Section
1(e)(ii) and (iii) of Amendment
No. 4)
* $[ *** ] in Qualified Revenue exceeds $[ *** ] Minimum
Qualified Revenue requirement under 3(a)(i): No Additional Payment
required to maintain exclusivity on Products other than Initial
Products for 2004 CY.
* $[ *** ] in Initial Product Qualified Revenue (A + C above) does
not meet $[ *** ] Minimum Initial Product Revenue requirement
under 3(b).
* If Distributor makes timely $[ *** ] Additional Initial Product
Payment, exclusivity is maintained for all Products; if not, Initial
Products become non-exclusive and other Products remain exclusive.
EXAMPLE 2
* Same facts as Example 1, except as follows:
* Sales of Products other than Initial Products (B in Example 1) is
$[ *** ], instead of $[ *** ]
* $[ *** ] in Qualified Revenue does not meet $[ *** ]
Minimum Qualified Revenue requirement under 3(a)(i)
* $[ *** ] in Initial Product Qualified Revenue (A + C above) does
not meet $[ *** ]n Minimum Initial Product Revenue requirement
under 3(b).
* If Distributor makes $[ *** ] Additional Initial Product Payment
under 3(b), such payment will also count as an Additional Payment
under 3(a)(i), and exclusivity is maintained for all Products; if not,
all Products become non-exclusive.
***CONFIDENTIAL TREATMENT REQUESTED
EXHIBIT D TO AMENDMENT NO. 4
Diamond Note
PROMISSORY NOTE
$1,000,000.00 as of April 15, ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
FOR VALUE RECEIVED, the undersigned DIAMOND ANIMAL HEALTH, INC., an Iowa
corporation ("MAKER"), promises to pay to AGRI LABORATORIES, LTD., a Delaware
corporation ("HOLDER"), or order, at such place as the Holder of this Note shall
designate in writing, the sum of One Million Dollars ($1,000,000.00) in lawful
money of the United States of America. Beginning from the date hereof interest
shall accrue on the outstanding principal balance at the "prime rate" plus one
quarter percent (0.25%) per annum. Accrued interest shall be paid quarterly on
each quarterly anniversary of the date of this Note, and shall accrue based upon
a thirty-day month and a 360-day year. Principal under this Note shall be paid
in three (3) equal annual installments on the first, second and third
anniversaries of the date of this Note. All principal and any accrued but
unpaid interest shall be due and payable on the third anniversary of the date of
this Note.
Notwithstanding any provision of this Note to the contrary, all principal
and unpaid accrued interest shall be due and payable on the ninetieth (90th) day
following the date that either (i) Holder's exclusivity rights under that
certain Bovine Vaccine Distribution Agreement dated February 13, 1998, as
amended (the "Distribution Agreement") are terminated due to Distributor's
nonpayment of any Additional Payment under Amendment No. 4 to the Distribution
Agreement or (ii) in the event of a merger, sale or fifty percent (50%) change
in ownership of Maker .
The "prime rate" shall be the annual rate of interest announced from time
to time by ▇▇▇▇▇ Fargo Business Credit, Inc. ("▇▇▇▇▇ FARGO") as its prime rate.
The interest accruing on the principal balance of this Note shall fluctuate from
time to time concurrently with changes in the prime rate, effective as of the
date any change in the prime rate is publicly announced. If ▇▇▇▇▇ Fargo ceases
to announce the prime rate, the prime rate as published in the Wall Street
Journal in its "Money Rates" section or a similar financial publication shall be
used, as reasonably determined by Maker.
Maker shall have the right at any time or from time to time to prepay all
or a portion of the principal or interest without premium or penalty, and such
prepayments shall be applied first to accrued interest and then to principal.
If default be made in the payment of any of the installments of principal,
interest, or other amounts when due under this Note, the entire principal sum
and accrued interest and all other amounts due hereunder shall become due at the
option of Holder if not paid within ten (10) days of written notice to Maker.
In the event garnishment, attachment, levy or execution is issued against
any substantial or material portion of the property or assets of Maker, or any
of them if more than one, or upon the happening of any event which constitutes a
default pursuant to the terms of any agreement or other instrument entered into
or given in connection herewith, or upon the adjudication of Maker, or any of
them if more than one, a bankrupt, such event shall be deemed a default
hereunder and Holder may declare this Note immediately due and payable without
notice to Maker or exercise any of its remedies hereunder or at law or equity.
Should suit be brought to recover on this Note, or should the same be placed in
the hands of an attorney for collection, Maker promises to pay all reasonable
attorneys' fees and costs incurred in connection therewith.
Failure of Holder to exercise any option hereunder shall not constitute a
waiver of the right to exercise the same in the event of any subsequent default,
or in the event of continuance of any existing default.
Maker waives demand, diligence, presentment for payment, protest and notice
of demand, protest, nonpayment and exercise of any option hereunder. Maker
agrees that the granting without notice of any extension or extensions of time
for payment of any sum or sums due hereunder, or for the performance of any
covenant, condition or agreement hereof shall in no way release or discharge the
liability of Maker hereof.
This Note shall be governed by the laws of the State of Iowa.
Time is of the essence of this Note and each and every term and provision
hereof.
This Note is secured by that certain Security Agreement, dated as of even
date herewith, by and between Maker and Holder. Debtor and its affiliates are
parties to that certain Second Amended and Restated Credit and Security
Agreement by and between Debtor and ▇▇▇▇▇ Fargo Business Credit, Inc., fka
Norwest Business Credit, Inc., a Minnesota corporation ("▇▇▇▇▇ FARGO"),
originally dated June 4, 2000, as amended, that certain Loan Agreement dated as
of April 4, 1994 and related Promissory Note between the City of Des Moines,
Iowa and Debtor, as amended, and that certain CEBA Loan Agreement dated January
20, 1994 and related Promissory Notes between Iowa Department of Economic
Development and Debtor, as amended (collectively, the "SENIOR LOAN AGREEMENTS
and the lender parties thereto collectively, the "SENIOR LENDERS"). This Note
and Maker's obligations hereunder shall be junior and subordinated to all any
and all indebtedness and obligations for borrowed money (including, without
limitation, principal, premium (if any), interest, fees, charges, expenses,
costs, professional fees and expenses, and reimbursement obligations)
("INDEBTEDNESS") at any time owing by Debtor to the Senior Lenders, their
successors and assigns under the Senior Loan Agreements or otherwise, and the
extension, renewal or refinancing (including without limitation any additional
advances made in connection therewith) of all or any portion of such
Indebtedness by any of the Senior Lenders or any successor lender and any and
all security interests securing any portion of such Indebtedness and additional
advances from time to time (such Indebtedness, additional advances and security
interests, the "SENIOR INDEBTEDNESS"). Holder hereby agrees to take such
actions, and to execute and deliver such documents and instruments, as shall be
requested from time to time by any holder of Senior Indebtedness to confirm and
further implement such subordination. In addition, this Note is subject to the
terms and conditions of that certain Subordination Agreement dated as of even
date herewith by and among Maker, Holder and ▇▇▇▇▇ Fargo.
THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING
BASED ON OR PERTAINING TO THIS NOTE.
DIAMOND ANIMAL HEALTH, INC., an Iowa
corporation, Maker
By:
Its:
THIS INSTRUMENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AGREEMENT BY AGRI
LABORATORIES, LTD. IN FAVOR OF ▇▇▇▇▇ FARGO BUSINESS CREDIT, INC. DATED AS OF
APRIL 15, 2002.
EXHIBIT E TO AMENDMENT NO. 4
Security Agreement
SECURITY AGREEMENT
This Security Agreement is made and entered into as of this 15th day of
April, 2002, between AGRI LABORATORIES, LTD., a Delaware corporation (the
"SECURED PARTY"), with offices located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇, ▇▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and Diamond Animal Health, Inc., an Iowa corporation (the
"DEBTOR"), having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇. The parties have agreed as follows:
1. RECITALS
Debtor and Secured Party have entered into that certain Amendment No. 4 to
Bovine Vaccine Distribution Agreement of even date herewith (the "DISTRIBUTION
AGREEMENT"), under which Distribution Agreement, Secured Party has agreed to
make a loan to Debtor in the principal amount of One Million Dollars
($1,000,000.00) pursuant to the terms of that certain Promissory Note, a copy of
which is attached hereto as EXHIBIT A (the "NOTE"). The Debtor and the Secured
Party desire to secure the repayment of the Note upon the terms and conditions
set forth herein.
2. GRANT OF SECURITY INTEREST; SUBORDINATION
As security for the payment of the Note and any extensions, renewals or
modifications thereof, and the performance by Debtor of its obligations under
this Security Agreement, and any sums expended by the Secured Party in
connection with this transaction, the Debtor hereby assigns and grants to the
Secured Party a security interest in the Collateral. The term "COLLATERAL" when
used in this Security Agreement shall mean the items of personal property listed
and described in SCHEDULE 1 attached hereto, including any after acquired
property as described in this Section 2, or any proceeds therefrom.
Debtor and its affiliates are parties to that certain Second Amended and
Restated Credit and Security Agreement by and between Debtor and ▇▇▇▇▇ Fargo
Business Credit, Inc., fka Norwest Business Credit, Inc., a Minnesota
corporation ("▇▇▇▇▇ FARGO"), originally dated June 4, 2000, as amended, that
certain Loan Agreement dated as of April 4, 1994 and related Promissory Note
between the City of Des Moines, Iowa and Debtor, as amended, and that certain
CEBA Loan Agreement dated January 20, 1994 and related Promissory Notes between
Iowa Department of Economic Development and Debtor, as amended (collectively,
the "SENIOR LOAN AGREEMENTS and the lender parties thereto collectively, the
"SENIOR LENDERS"). The security interest granted to the Secured Party in this
Security Agreement shall be junior and subordinated to all any and all
indebtedness and obligations for borrowed money (including, without limitation,
principal, premium (if any), interest, fees, charges, expenses, costs,
professional fees and expenses, and reimbursement obligations) ("INDEBTEDNESS")
at any time owing by Debtor to the Senior Lenders, their successors and assigns
under the Senior Loan Agreements or otherwise, and the extension, renewal or
refinancing (including without limitation any additional advances made in
connection therewith) of all or any portion of such Indebtedness by any of the
Senior Lenders or any successor lender and any and all security interests
securing any portion of such Indebtedness and additional advances from time to
time (such Indebtedness, additional advances and security interests, the "SENIOR
INDEBTEDNESS"), but otherwise prior and superior to the rights of all third
parties in the Collateral arising from and after the date of this Security
Agreement. Secured Party hereby agrees to take such actions, and to execute and
deliver such documents and instruments, as shall be requested from time to time
by any holder of Senior Indebtedness to confirm and further implement such
subordination (this Section 2 and such documents and instruments, collectively,
the "SUBORDINATION AGREEMENT").
3. DEBTOR'S WARRANTIES, REPRESENTATIONS AND AGREEMENTS
The Debtor warrants, represents, covenants and agrees as follows:
3.1 Good Standing. Except for the Senior Indebtedness, the Debtor has
full power and authority to own its property and carry on its business as it is
now being and as it is proposed to be conducted. The Debtor is a corporation
duly organized, validly existing and in good standing of the laws of Iowa, and
is duly licensed or qualified to do business to as foreign corporation and is in
good standing in all jurisdictions in which the character of the property and
assets now owned or leased by it or the nature of business now conducted by it
required to be so licensed or qualified and in which the failure to be so
qualified or licensed would have a material adverse effect on its business.
There are no dissolution, liquidation or bankruptcy proceedings pending,
contemplated by or threatened against the Debtor. The Debtor has no subsidiary
or affiliate corporation and owns no interest in any other entity.
3.2 Authority for this Security Agreement. The Debtor has full power and
authority to enter into this Security Agreement and to perform as required
herein. The Debtor has duly and validly taken all necessary corporate action to
authorize the execution, delivery and performance of this Security Agreement by
the Debtor. This Security Agreement constitutes a legal, valid and binding
obligation of the Debtor and (except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law effecting the rights of
creditors generally or general equitable principles) is enforceable as to the
Debtor in accordance with its terms.
3.3 No Violation of Governing Instruments. The execution, delivery and
performance of this Security Agreement by the Debtor and the consummation of the
transactions contemplated herein will not result in a breach or violation of the
terms and provisions of the Articles of Incorporation or the Bylaws of the
Debtor in effect on the date hereof and (i) will not constitute a material
default under any indenture, mortgage, deed of trust or other material agreement
or instrument to which the Debtor is a party or by which the Debtor is bound,
and (ii) will not violate or contravene any governmental statute, rule or
regulation applicable to the Debtor or any order, writ, judgment, injunction,
decree, determination or award which has been entered against the Debtor, the
violation or contravention of which would materially affect the Debtor, its
assets, financial condition or operations.
3.4 Owner of Collateral. Except for the Senior Indebtedness, the Debtor
(i) is and shall be the owner of the Collateral free from any additional lien,
security interest or encumbrance, (ii) has and shall have good title to the
Collateral, subject to the security interest hereunder, and (iii) subject to the
provisions set forth in Subordination Agreement, shall defend the Collateral and
proceeds thereof against all claims and demands of all persons at any time
claiming the same or any interest therein adverse to the Secured Party.
3.5 Financing Statements. Subject to the Subordination Agreement, Debtor
agrees to execute such financing statements and to take whatever other actions
are requested by Secured Party to perfect and continue Secured Party's security
interest in the Collateral. Upon request of Secured Party, Debtor will deliver
to Secured Party any and all of the documents evidencing or constituting the
Collateral, and Debtor will note Secured Party's interest upon any and all
chattel paper if not delivered to Secured Party for possession by Secured Party.
Secured Party may at any time, and without further authorization from Debtor
file a carbon, photographic or other reproduction of any financing statement or
of this Security Agreement for use as a financing statement. Debtor will
reimburse Secured Party for all expenses for the perfection and continuation of
the perfection of Secured Party's security interest in the Collateral. Debtor
will promptly notify Secured Party before any change in Debtor's name including
any change in the assumed business names of Debtor.
3.6 Location of the Collateral. All Collateral presently owned and
hereafter acquired by Debtor is and will be kept at the Debtor's address as
stated above or at Debtor's Animal Health Research Facility at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Debtor will promptly notify Secured Party in writing of any
additions to, changes in, or discontinuance of the Company's place(s) of
business. Except in the ordinary course of business, without the prior written
consent of the Secured Party, which such consent may not be unreasonably
withheld, Debtor will not remove the Collateral from its existing location or
take Collateral out of the State of Iowa, or make any change in: (i) the place
where Debtor keeps its records concerning the Collateral, accounts and contract
rights, or (ii) Debtor's principal place of business. Until such consent is
given, all records of Debtor pertaining to the Collateral, accounts and contract
rights shall be kept at Debtor's address as shown above.
3.7 Maintenance and Inspection of Collateral. Debtor shall maintain all
tangible Collateral in good condition and repair, ordinary wear and tear
excepted. Except in the ordinary course of business, Debtor will not commit or
permit damage to or destruction of the Collateral or any part of the Collateral.
Debtor will not misuse or conceal the Collateral nor use it contrary to the
provisions of any insurance coverage and Debtor will, at its own expense,
properly house the Collateral and promptly pay when due all costs and expenses
incurred or accruing in connection with the custody, care and possession
thereof. Secured Party and its designated representative and agents shall have
the right at all reasonable times to examine, inspect and audit the Collateral
wherever located and may make copies of and extracts from all records and all
other papers in the possession of the Debtor pertaining to the Collateral.
Debtor will, upon request of the Secured Party, deliver to the Secured Party
copies of all such records and papers at the Secured Party's expense.
3.8 Taxes, Assessments and Liens. Debtor will pay, when due, all taxes,
assessments and liens upon the Collateral its use or operation. Debtor may
withhold any such payment or may elect to contest any lien if Debtor is in good
faith conducting an appropriate proceeding, to contest the obligation to pay.
3.9 No Further Encumbrances. Except as permitted under the Senior Loan
Agreement, the Debtor shall not sell, convey or further encumber any of the
Collateral during the term of this Security Agreement, except for the sale and
disposition of items in the normal course of business.
3.9 No Further Encumbrances. Except as permitted under the Senior Loan
Agreement, the Debtor shall not sell, convey or further encumber any of the
Collateral during the term of this Security Agreement, except for the sale and
disposition of items in the normal course of business.
3.10 Maintenance of Casualty Insurance. Debtor shall procure and maintain
all risks insurance, including without limitation, fire, theft and liability
coverage, together with such other insurance as Secured Party may require with
respect to the Collateral, in form, amounts, coverage and basis consistent with
industry practices. In connection with all policies covering assets in which
Secured Party holds or is offered a security interest, Debtor will provide
Secured Party with such loss payable or other endorsement as Secured Party may
reasonably require in the forms provided by such insurers. If Debtor at any
time fails to obtain or maintain any insurance as required under this Security
Agreement, Secured Party may (but shall not be obligated to) obtain such
insurance as it deems appropriate, including if it so chooses "single interest
insurance", which will cover only Secured Party's interest in the Collateral.
4. EXPENDITURES BY SECURED PARTY.
If not discharged, or paid when due and if not cured by Debtor within
thirty (30) days following written notice by Secured Party, Secured Party may
(but shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Debtor under this Security Agreement, including without
limitation, all taxes, liens, security interests, encumbrances and other claims,
at any time levied or placed on the Collateral. Secured Party may also (but
shall not be obligated to) pay all costs of insuring, maintaining and preserving
the Collateral. All such expenditures incurred or paid by Secured Party for
such purposes will then bear interest at the default rate charged under the Note
from the date incurred or paid by the Secured Party to the date of repayment by
Debtor. All such expenses shall become a part of the Note and, at Secured
Party's option, will (a) be payable on demand, (b) be added to the balance of
the Note and be apportioned among and be payable with any installment payments
to become due during the remaining term of the Note, or (b) be treated as a
balloon payment which will be due and payable at the Note's maturity. This
Security Agreement also will secure payment of these amounts. Such right shall
be in addition to all other right and remedies to which Secured Party may be
entitled upon the occurrence of an Event of Default.
5. EVENTS OF DEFAULT
Subject to the terms and conditions of the Subordination Agreement, any one
of the following events shall constitute a "DEFAULT" under this Security
Agreement:
5.1 Failure to Make Payment on Note. The failure of Debtor to make any
payment when due under the Note if not paid within ten (10) days of written
notice to Maker.
5.2 Breach of Warranty. If any warranty, representation or statement made
herein or furnished to Secured Party by or on behalf of Debtor in connection
with this Security Agreement shall not be true and correct in any material
respect when made or furnished.
5.3 Bankruptcy Proceedings. The dissolution or termination of Debtor's
existence as a going business, the insolvency of Debtor, the appointment of a
receiver for any part of Debtor's property, any assignment for the benefit of
creditors, the commencement of any bankruptcy, arrangement, reorganization,
insolvency, receivership or similar proceedings by or against the Debtor, or the
commencement of foreclosure or forfeiture proceedings, whether by judicial
proceedings, self-help, repossession or any other method, by any creditor of
Debtor or by any governmental agency against the Collateral or any other
collateral securing the Note.
5.4 Invalid Security Interest. This Security Agreement ceases to be in
full force and effect (including failure of any collateral documents to create a
valid and perfected security interest or lien) at any time and for any reason.
5.5 Improper Disposition of Collateral. If the Collateral is sold or
disposed of unlawfully or is sold out of Debtor's ordinary course of business;
or if any of the Collateral is levied on or seized under levy, attachment,
garnishment, writ or other legal process; or if any lien shall attach thereto;
or if a security interest is created with respect thereto.
5.6 Default in Obligations and Agreements. If Debtor defaults in
performing any of its obligations, promises, covenants or agreements contained
herein, in the Note made by Debtor or in the Senior Loan Agreements.
5.7 Unlawful Use of Collateral. If Debtor uses the Collateral in
violation of any law, statute or ordinance in a manner that has a material
adverse effect on the business of Debtor.
5.8 Unauthorized Removal of Collateral. If Debtor, except in the ordinary
course of business, removes or permits any of the Collateral or the records
pertaining thereto to be removed from the location herein specified without
prior written consent of Secured Party, which such consent may not be
unreasonably withheld.
5.9 No Possession of Collateral. Subject to the terms and conditions of
this Security Agreement, if Debtor fails to keep and maintain exclusive
possession of and title to the Collateral and all of the records pertaining
thereto.
5.10 Failure to Pay Taxes. Subject to the terms and conditions of this
Security Agreement, if Debtor fails to pay promptly when due all taxes, liens,
fees, charges and assessments upon the Collateral or to fail to keep the
Collateral in good condition and repair, or fail to keep the Collateral properly
insured and with loss payable to Secured Party as its interest may appear at all
times against fire (with extended coverage), theft, physical damage and such
other risks and in such amounts for all risks as provided herein.
6. RIGHTS AND REMEDIES ON DEFAULT.
Subject to the terms and conditions of the Subordination Agreement, if a
Default occurs under this Security Agreement, at any time thereafter, Secured
Party shall have all the rights of a secured party under the Uniform Commercial
Code as in effect on the date of this Security Agreement and as amended from
time to time, of the state or states having jurisdiction with respect to all or
any portion of the Collateral from time to time. In addition and without
limitation, subject to the terms and conditions of the Subordination Agreement,
Secured Party may exercise any one or more of the following rights and remedies:
6.1 Accelerate Note. Secured Party may declare the entire Note
immediately due and payable without notice.
6.2 Assemble Collateral. Secured Party may require Debtor (i) to deliver
to Secured Party all or any portion of the Collateral and any and all
certificates of title and other documents relating to the Collateral, and (ii)
to assemble the Collateral and make it available to Secured Party at a place to
be designated by Secured Party. Subject to the Subordination Agreement, Secured
Party also shall have full power to enter upon the property of Debtor to take
possession of and remove the Collateral. If the Collateral contains other goods
not covered by this Security Agreement at the time of repossession, Debtor
agrees Secured Party may take such other goods, provided that Secured Party
makes reasonable efforts to return them to Debtor after repossession.
6.3 Sell the Collateral. Secured Party shall have the full power to sell,
lease, transfer or otherwise deal with the Collateral or proceeds thereof in its
own name or that of Debtor. Secured Party may sell the Collateral at public
auction or private sale. Unless the Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Secured Party
will give Debtor reasonable notice of the time after which any private sale or
any other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is given at last
ten (10) days before the time of the sale or disposition. All expenses relating
to the disposition of the Collateral, including without limitation the expenses
of retaking, holding, insuring, preparing for sale and selling the Collateral,
shall become a part of the indebtedness secured by this Security Agreement and
shall be payable on demand with interest at the Note rate from the date of
expenditure until repaid.
6.4 Appoint Receiver. To the extent permitted by applicable law, Secured
Party shall have the following right and remedies regarding the appointment of a
receiver; (a) Secured Party may have a receiver appointed as a matter of right,
(b) the receiver may be an employee of Secured Party and may serve without bond,
and (c) all fees of the receiver and his or her attorney shall become part of
the indebtedness secured by this Security Agreement and shall be payable on
demand, with interest at the Note rate from the date of expenditure until
repaid.
6.5 Collect Revenues; Apply Accounts. Secured Party, either itself or
through receiver, may collect the payments, rents, income, and revenues from the
Collateral. Secured Party may at any time in its discretion transfer any
Collateral into its own name or that of its nominee and receive the payments,
rents, income, and revenues therefrom and hold the same as security for the Note
or apply it to payment of the indebtedness in such order of preference as Lender
may determine. Insofar as the Collateral consists of accounts, general
intangibles, insurance policies, instruments, chattel paper, choices in action,
or similar property Secured Party may demand, collect, receipt for, settle,
compromise, adjust, ▇▇▇ for, foreclosure, or realize on the Collateral as
Secured Party may determine, whether or not indebtedness or Collateral is then
due. For these purposes, Secured Party may, on behalf of and in the name of
Debtor, receive, open and dispose of mail addressed to Debtor, change any
address to which mail and payments are to be sent; and endorse notes, checks,
drafts, money orders, documents of title, instruments and items pertaining to
payment, shipment, or storage of any Collateral. To facilitate collection,
Secured Party may notify account debtors and obligers on any Collateral to make
payments directly to Secured Party.
6.6 Obtain Deficiency. If Secured Party chooses to sell any or all of the
Collateral, Secured Party may obtain a judgment against Debtor for any
deficiency remaining on the indebtedness due to the Secured Party after
application of all amounts received from the exercise of the rights provided in
this Security Agreement. Debtor shall be liable for a deficiency even if the
transaction described in this subsection is a sale of accounts or chattel paper.
6.7 Other Rights and Remedies. Secured Party shall have all the rights
and remedies of a secured creditor under the provisions of the Uniform
Commercial Code as may be amended from time to time. In addition, Secured
Party shall have and may exercise any and all other rights and remedies it may
have available at law, in equity, or otherwise.
6.8 Cumulative Remedies. All of Secured Party's right and remedies,
whether evidenced by this Security Agreement or by any other writing, shall be
cumulative and may be exercised singularly or concurrently. Election by Secured
Party to pursue any remedy shall not exclude pursuit of any other remedy, and an
election to make expenditures or to take action to perform an obligation of
Debtor under this Security Agreement, after Debtor's failure to perform, shall
not affect Secured Party's right to declare a default and to exercise its
remedies.
7. GENERAL AND MISCELLANEOUS
7.1 Termination. This Security Agreement and the security interest in the
Collateral created hereby shall terminate when the Note has been paid in full.
Following the termination of this Security Agreement, Secured Party shall
execute and deliver UCC termination statements and other documents reasonably
requested by Debtor to evidence the termination of this Security Agreement and
the cancellation of the security interest in the Collateral created hereby.
7.2 Time is of the Essence. Time is of the essence in the performance of
all provisions of this Security Agreement.
7.3 No Waivers. Any waiver by the Secured Party of a Default or breach
of any provision of this Security Agreement shall not operate as or be construed
to be a waiver of any other Default, breach of that provision or of any breach
of any other provision of this Security Agreement. The failure of Secured Party
to insist upon strict adherence to any term of this Security Agreement on one or
more occasions shall not be considered a waiver or deprive the Secured Party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Security Agreement. Any waiver must be in writing.
7.4 Severability. If one or more provisions of this Security Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Security Agreement and the balance of the Security Agreement
shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
7.5 Counterparts. This Security Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.6 Notices. All notices, requests, demands and other communications
under this Security Agreement shall be in writing and shall be deemed to have
been duly given on the date of delivery if delivered personally or sent by
overnight carrier, facsimile or telex, with acknowledge of receipt, to the party
to whom notice is being given, or on the fifth day after mailing if mailed to
the party to whom notice is being given, by registered or certified mail, return
receipt requested, postage prepaid, to the party at the addresses given above.
Any party may change its address for purposes of this paragraph by giving the
other party written notice of the new address in the manner set forth above.
7.7 Governing Law. This Security Agreement shall be governed by and
construed in accordance with the substantive laws of the State of Iowa without
regard to conflicts of law.
7.8 Entire Agreement. Except for the Note and Subordination Agreement,
this Security Agreement constitutes the entire understanding between the parties
with respect to the subject matter hereof. This Security Agreement can only be
modified by a written agreement duly signed by persons authorized to sign
agreements on behalf of the respective Party. This Security Agreement shall be
binding upon the parties and shall inure to the benefit of the parties hereto
and their respective successors.
7.9 Jury Trial Waiver. THE PARTIES WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED ON OR PERTAINING TO THIS SECURITY AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Security Agreement as of
the date first written above.
SECURED PARTY: DEBTOR:
AGRI LABORATORIES, LTD., a DIAMOND ANIMAL HEALTH, INC.,
Delaware corporation an Iowa corporation
By: /S/ By: /S/
_______________________________ ______________________________
Its: Its:
_______________________________ ______________________________
SCHEDULE 1
"Collateral" means all of Debtor's Equipment, General Intangibles,
Inventory, Accounts, and Investment Property, together with (i) all
substitutions and replacements for and products of any of the foregoing; (ii)
proceeds of any and all of the foregoing; (iii) in the case of all tangible
goods, all accessions; (iv) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection with any
tangible goods; and (v) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods. Notwithstanding the
foregoing, except to the extent necessary for the Secured Party to fully
exercise its rights and remedies hereunder with respect to Inventory and other
tangible collateral of the Debtor, the term "Collateral" shall not include any
intellectual property license to the extent granting a security interest therein
is prohibited by or would constitute a default under any such license (but only
to the extent such prohibition is enforceable under applicable law).
Notwithstanding the foregoing, no security interest is granted in any Collateral
specifically identified in the financing statements filed by the other lenders
providing Equipment financing to Debtor from time to time, where a condition of
such financing is that no other security interests can be granted in such
equipment (other than nonconsensual liens) while the underlying debt is still
outstanding (the "Other Lender"); provided, that the Debtor does grant a
security interest in the Other Lender's Collateral after the related debt on
such specific Other Lender's Collateral has been satisfied, other than through a
secured refinancing of such indebtedness with another Other Lender providing
Equipment financing.
"Collateral" also includes, but is not limited to, the following specific
equipment: table bottle filler, non-sterile liquids capper, tablet press,
powders pouch filler and pilot scale ribbon blender.
EXHIBIT H TO AMENDMENT NO. 4
Uses of Loan Proceeds
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***CONFIDENTIAL TREATMENT REQUESTED