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EXHIBIT 10.19
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of December 6, 1996 executed and
delivered by ZYNAXIS, INC., a corporation organized under the laws of
Pennsylvania, with its principal place of business and chief executive office
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ (the
"Debtor"), in favor of CYTRX CORPORATION, with an office located at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Secured Party").
WHEREAS, the Debtor is indebted to the Secured Party and desires to
secure such indebtedness by granting to the Secured Party a security interest
in certain of the Debtor's assets;
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Debtor, the Debtor hereby agrees with the Secured
Party as follows:
SECTION 1. GRANT OF SECURITY. To secure the prompt and complete
payment, observance and performance when due (whether at stated maturity, by
acceleration or otherwise) of all of the Obligations, the Debtor hereby
collaterally assigns and pledges to the Secured Party, and grants to the
Secured Party a security interest in, the Collateral.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Debtor represents and
warrants to the Secured Party as follows:
(a) Name; Taxpayer ID Number. The correct corporate name of the
Debtor is set forth in the first paragraph of this Agreement, and the Debtor
does not conduct and, during the five-year period immediately preceding the
date of this Agreement, has not conducted, business under any trade name or
other fictitious name other than those set forth in Schedule 2.(a) attached
hereto. The taxpayer identification number of the Debtor is ▇▇-▇▇▇▇▇▇▇.
(b) Organization; Power; Qualification. The Debtor is a
corporation, duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania, and has the corporate power and
authority to carry on its business as now conducted and to own, lease and
operate its material Assets. The Debtor is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so qualified
or licensed is not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on the Debtor.
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(c) Authorization. The Debtor has the right and power, and has
taken all necessary action to authorize it to execute, deliver and perform this
Agreement in accordance with its terms. This Agreement, the Financing
Statements and the instruments, agreements and other documents to which the
Debtor is a party and which evidence or relate in any way to the Obligations
have been executed and delivered by the authorized officers of the Debtor and
each is a legal, valid and binding obligation of the Debtor enforceable against
the Debtor in accordance with its terms.
(d) Compliance of Agreement with Laws, etc. Subject to execution
of that certain Preferred Stock and Warrant Agreement by and among the Debtor,
the Secured Party, Vaxcel, Inc., and the holders of the outstanding shares of
the Debtor's Series A Convertible Preferred Stock, the execution, delivery and
performance of this Agreement by the Debtor in accordance with its terms,
including the granting of the Security Interest, do not and will not, by the
passage of time, the giving of notice or otherwise (i) conflict with, result in
a breach of or constitute a default under any indenture, instrument or other
agreement to which the Debtor is a party or by which it or any of its
properties may be bound or (ii) result in, or require the creation or
imposition of, any Lien upon or with respect to any property in which the
Debtor now or may hereafter have rights.
(e) Liens. None of the Collateral is, as of the date hereof,
subject to any Lien, except Permitted Liens set forth in Schedule 2.(e). No
financing statement under the Uniform Commercial Code of any jurisdiction which
names the Debtor as debtor or covers any of the Collateral, or any other notice
filed in the public records indicating the existence of a Lien thereon, has
been filed and is still effective in any jurisdiction, and the Debtor has not
signed any such financing statement or notice or any security agreement
authorizing any Person to file any such financing statement or notice.
(f) Chief Executive Office. The chief executive office and
principal place of business of the Debtor are located at the address set forth
in the first paragraph of this Agreement, and have been located there for the
five-year period immediately preceding the date hereof. Except as listed in
Schedule 2.(f), during such five-year period the Debtor has not changed its
name, identity or corporate structure in any way.
(g) Places of Business. The addresses (including the applicable
counties) of all of the places of business of the Debtor are set forth in
Schedule 2.(g) attached hereto.
(h) Collateral. All Equipment of the Debtor is located on or at
one or more of the places set forth in Schedule 2.(h) hereof.
(i) Security Interest. It is the intent of the Debtor that this
Agreement create a valid and perfected first-priority security interest in the
Collateral, securing the payment of the Obligations, except with respect to the
Collateral subject to the Permitted Liens set forth in Schedule 2.(e), with
respect to which Collateral the Debtor and the Secured Party hereby agree and
acknowledge that this Agreement shall create a valid and perfected
second-priority security interest therein.
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SECTION 3. CONTINUED PRIORITY OF SECURITY INTEREST.
(a) The Security Interest shall at all times be valid, perfected
and of first priority, except as set forth in Section 2.(i) hereof, and
enforceable against the Debtor and all other Persons, in accordance with the
terms of this Agreement, as security for the Obligations. The Debtor shall, at
its sole cost and expense, take all action that may be necessary or desirable,
or that the Secured Party may request, so as at all times to maintain the
validity, perfection, enforceability and priority of the Security Interest in
the Collateral in conformity with the immediately preceding sentence, or to
enable the Secured Party to exercise or enforce its rights hereunder,
including, but not limited to, executing and delivering financing statements,
pledges, designations, hypothecations, notices and assignments, in each case in
form and substance satisfactory to the Secured Party, relating to the creation,
validity, perfection, priority or continuation of the Security Interest under
the Uniform Commercial Code or other Applicable Law.
(b) The Secured Party is hereby authorized to execute and file in
all necessary and appropriate jurisdictions (as determined by the Secured
Party) one or more financing statements (or any other document or instrument
referred to in this Section) in the name of the Debtor and to sign the Debtor's
name thereto. The Debtor authorizes the Secured Party to file any such
financing statement, document or instrument without the signature of the Debtor
to the extent permitted by Applicable Law. Further, to the extent permitted by
Applicable Law, a carbon, photographic, xerographic or other reproduction of
this Agreement or of any Financing Statement is sufficient as a financing
statement.
SECTION 4. COVENANTS REGARDING COLLATERAL GENERALLY.
(a) Delivery of Instruments. In the event any of the Collateral
becomes evidenced by an instrument, the Debtor will immediately thereafter
deliver such instrument to the Secured Party, appropriately endorsed to the
Secured Party.
(b) Defense of Title. The Debtor shall at all times be the sole
owner of each and every item of Collateral and shall defend its title in and
to, and the Secured Party's Security Interest in, the Collateral against the
claims and demands of all Persons.
(c) Maintenance of Collateral. The Debtor shall maintain all
physical property that constitutes Collateral in good and workable condition,
with reasonable allowance for wear and tear, and shall exercise proper custody
over all such property.
(d) Insurance. The Debtor shall at all times maintain insurance
on the Collateral against loss or damage by fire, theft, burglary, pilferage,
loss in transit and such other hazards and risks as the Secured Party shall
specify, in amounts (which shall not be less than the aggregate amount of the
Obligations) and under policies issued by insurers acceptable to the Secured
Party. All premiums on such insurance shall be paid by the Debtor and certified
copies of the policies, or other evidence of insurance acceptable to
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the Secured Party, shall be delivered to the Secured Party promptly upon the
Secured Party's request. The Debtor will not use or permit the Collateral to
be used unlawfully or outside of any insurance coverage. All insurance
policies required under this Section shall contain loss payable clauses on New
York standard loss payee forms or other forms satisfactory to the Secured
Party, naming the Secured Party as loss payee, and providing that no such
insurance shall be affected by any act or neglect of the insured or owner of
the property described in such policy and such policies and loss payable
clauses may not be canceled, amended or terminated with respect to the Secured
Party unless at least thirty days' prior written notice is given to the Secured
Party.
(e) Location of Office. The Debtor's chief executive office,
principal place of business will continue to be kept at the address set forth
in the first paragraph of this Agreement and the Debtor will not change the
location of such office and place of business or such books and records without
giving the Secured Party at least thirty days' prior written notice thereof.
(f) Location of Collateral. All Equipment and all other tangible
Collateral will at all times be kept by the Debtor at the locations set forth
in Schedule 2.(f), and shall not, without the prior written consent of the
Secured Party, be removed therefrom except in connection with sales thereof
made in the ordinary course of business or pursuant to the Liquidation
Agreement.
(g) Inspection. The Secured Party (by any of its officers,
employees or agents) shall have the right, at any time or times during normal
business hours: (i) to inspect the Collateral, all files relating thereto and
the premises upon which any of the Collateral is located, (ii) to discuss the
Debtor's affairs and finances with any Person, to verify the amount, quantity,
value and condition of, or any other matter relating to, any of the Collateral
and (iii) to review, audit and make extracts from all records and files related
to any of the Collateral.
(h) Other Information. The Debtor shall furnish to the Secured
Party such other information with respect to the Collateral as the Secured
Party may reasonably request from time to time.
(i) Payments Directly to Secured Party. The Secured Party may at
any time and from time to time after the occurrence of an Event of Default
notify, or request the Debtor to notify, in writing or otherwise, any account
debtor or other obligor with respect to any one or more of the Receivables to
make payment to the Secured Party or any agent or designee of the Secured Party
directly, at such address as may be specified by the Secured Party. If,
notwithstanding the giving of any notice, any account debtor or other such
obligor shall make payment to the Debtor, the Debtor shall hold all such
payments it receives in trust for the Secured Party, without commingling the
same with other funds or property of or held by the Debtor, and shall promptly
deliver the same to the Secured Party or any such agent or designee immediately
upon receipt by the Debtor in the identical form received, together with any
necessary endorsements.
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(j) Proceeds of Collateral. The Debtor shall account fully and
faithfully for proceeds in whatever form received in disposition in any manner
of any of the Collateral. To the extent practicable, the Debtor shall at all
times keep accurate and complete records of the Collateral and proceeds
thereof.
SECTION 5. DEBTOR'S NAME. So long as any of the Obligations remain
unpaid or unperformed, the Debtor shall not, without giving the Secured Party
at least sixty days' prior written notice, (i) change its name, identity or
structure or (ii) conduct business under any trade name or other fictitious
name other than those set forth in Schedule 2.(a).
SECTION 6. THE SECURED PARTY APPOINTED ATTORNEY-IN-FACT. The Debtor
hereby irrevocably appoints the Secured Party the Debtor's attorney-in-fact,
effective after the occurrence of an Event of Default and for so long
thereafter as there are unsatisfied Obligations, with full authority in the
place and stead of the Debtor and in the name of the Debtor or otherwise, from
time to time in the Secured Party's discretion to take any action and to
execute any instrument or document which the Secured Party may deem necessary
or advisable to accomplish the purposes of this Agreement and to exercise any
rights and remedies the Secured Party may have under this Agreement or
Applicable Law, including, without limitation: (i) to obtain and adjust
insurance required to be maintained pursuant to Section 4.(d) hereof; (ii) to
ask, demand, collect, ▇▇▇ for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in respect
of any of the Collateral, including any Receivable; (iii) to receive, endorse,
and collect any drafts or other instruments, documents and chattel paper, in
connection with clause (i) or (ii) above; (iv) to sell or assign any Receivable
upon such terms, for such amount and at such time or times as the Secured Party
deems advisable, to settle, adjust, compromise, extend or renew any Receivable
or to discharge and release any Receivable; (v) to file any claims or take any
action or institute any proceedings which the Secured Party may deem necessary
or desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Secured Party with respect to any of the Collateral;
and (vi) to execute any document or instrument referred to in Section 3. The
power-of-attorney granted hereby shall be irrevocable and coupled with an
interest.
SECTION 7. THE SECURED PARTY MAY PERFORM. If the Debtor fails to
perform any agreement contained herein, the Secured Party may, without notice
to the Debtor, itself perform, or cause performance of, such agreement, and the
expenses of the Secured Party incurred in connection therewith shall be payable
by the Debtor under Section 11. hereof.
SECTION 8. REMEDIES. The Secured Party may take any or all of the
following actions upon the occurrence of an Event of Default hereunder.
(a) Acceleration. Upon the occurrence of an Event of Default
specified in clauses (f) or (g) of the definition thereof, all of the
Obligations shall become automatically due and payable without presentment,
demand, protest, or other notice of any kind, all of which are expressly
waived, notwithstanding anything in this Agreement or any other
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agreement evidencing any Obligations to the contrary. If any other Event of
Default shall have occurred and be continuing, the Secured Party may declare
all of the Obligations to be forthwith due and payable, whereupon the same
shall immediately become due and payable without presentment, demand, protest
or other notice of any kind, all of which are expressly waived, anything in
this Agreement or any other agreement evidencing any Obligations to the
contrary notwithstanding.
(b) Equipment.
(i) Entry. The Secured Party may enter upon any premises
on which Equipment may be located and, without resistance or
interference by the Debtor, take physical possession of any or all
thereof and maintain such possession on such premises or move the same
or any part thereof to such other place or places as the Secured Party
shall choose, without being liable to the Debtor on account of any
loss, damage or depreciation that may occur as a result thereof, other
than for actions that were not taken in good faith.
(ii) Assembly. The Debtor shall, upon request of and
without charge to the Secured Party, assemble the Equipment and
maintain or deliver it into the possession of the Secured Party or any
agent or representative of the Secured Party at such place or places
as the Secured Party may designate and as are reasonably convenient to
both the Secured Party and the Debtor.
(c) Use of Premises. The Secured Party may without notice, demand
or other process, and without payment of any rent or any other charge enter any
of the Debtor's premises and, without breach of the peace, until the Secured
Party completes the enforcement of its rights in the Collateral, take
possession of such premises or place custodians in exclusive control thereof,
remain on such premises and use the same and any of the Debtor's equipment, for
the purpose of (A) completing any work in process, preparing any Equipment for
disposition and disposing thereof and (B) collecting any Receivable.
(d) Rights as a Secured Creditor. The Secured Party may exercise
all of the rights and remedies of a secured party under the Uniform Commercial
Code and under any other Applicable Law, including, without limitation, the
right, without notice except as specified below and with or without taking
possession thereof, to sell the Collateral or any part thereof in one or more
parcels at public or private sale at any location chosen by the Secured Party,
for cash, on credit or for future delivery, and at such price or prices and
upon such other terms as the Secured Party may deem commercially reasonable.
The Debtor agrees that, to the extent notice of sale shall be required by
Applicable Law, at least ten days' prior notice to the Debtor of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification, but notice given in any other
reasonable manner or at any other reasonable time shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. The Secured Party
may
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adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.
(e) Waiver of Marshaling. The Debtor hereby waives any right to
require any marshaling of assets and any similar right.
(f) Appointment of Receiver. The Secured Party shall be entitled
to the appointment of a receiver, without notice of any kind whatsoever and
without regard to the adequacy of any security for the Obligations or the
solvency of any party bound for its payment, to take possession of all or any
portion of the Collateral and/or the business operations of the Debtor and to
exercise such power as the court shall confer upon such receiver.
SECTION 9. APPLICATION OF PROCEEDS. All proceeds from each sale of,
or other realization upon, all or any part of the Collateral following an Event
of Default shall be applied or paid over as follows:
(a) First: to the payment of all costs and expenses incurred in
connection with such sale or other realization, including reasonable attorneys'
fees if the Secured Party endeavored to collect the Obligations by or through
an attorney at law;
(b) Second: to the payment of the interest due upon any of the
Obligations, in any order which the Secured Party may elect;
(c) Third: to the payment of the principal due upon any of the
Obligations in any order which the Secured Party may elect; and
(d) Fourth: the balance (if any) of such proceeds shall be paid
to the Debtor or to whomsoever may be legally entitled thereto.
The Debtor shall remain liable and shall pay, on demand, any deficiency
remaining in respect of the Obligations, together with interest thereon at a
rate per annum equal to the highest rate then payable hereunder on such
Obligations, which interest shall constitute part of the Obligations.
SECTION 10. RIGHTS CUMULATIVE. The rights and remedies of the
Secured Party under this Agreement and each other document or instrument
evidencing or securing the Obligations shall be cumulative and not exclusive of
any rights or remedies which it would otherwise have. In exercising its rights
and remedies the Secured Party may be selective and no failure or delay by the
Secured Party in exercising any right shall operate as a waiver of it, nor
shall any single or partial exercise of any power or right preclude its other
or further exercise or the exercise of any other power or right.
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SECTION 11. EXPENSES. Upon the occurrence of an Event of Default, the
Debtor will pay, on demand, all out-of-pocket expenses incurred by the Secured
Party in connection with: (a) the collection or enforcement of the Obligations
including the reasonable fees and disbursements of counsel to the Secured
Party, if such collection or enforcement is done through or by an attorney, and
(b) the exercise by the Secured Party of any right or remedy granted to it
under this Agreement, including, without limitation, the expenses incurred by
the Secured Party in connection with the collection of Receivables directly
from account debtors.
SECTION 12. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Debtor herefrom shall in
any event be effective unless the same shall be in writing and signed by the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 13. NOTICES. Unless otherwise provided herein,
communications provided for hereunder shall be in writing and shall be mailed,
whether by first-class United States Post or by any commercial express mail
carrier (including Federal Express and U.P.S.), telecopied or delivered, if to
the Debtor: at its address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, ▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇,
telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇; if to the
Secured Party, at its address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy to ▇▇▇▇▇▇ & Bird, One Atlantic Center, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇., telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇; or, as
to each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and other communications
to the Debtor shall be effective (i) if mailed, when received or three days
after mailing, whichever is earlier; (ii) if telecopied, when transmitted; or
(iii) if hand delivered, when delivered. All such notices or communications to
the Secured Party shall be effective when actually received.
SECTION 14. CONTINUING SECURITY INTEREST. This Agreement shall
create a continuing security interest in the Collateral and shall (i) remain in
full force and effect until indefeasible payment in full of the Obligations,
(ii) be binding upon the Debtor, its successors and assigns and (iii) inure to
the benefit of the Secured Party, and its successors and assigns. The Debtor's
successors and assigns shall include, without limitation, a receiver, trustee
or debtor-in-possession thereof or therefore.
SECTION 15. APPLICABLE LAW; SEVERABILITY. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
GEORGIA. Whenever possible, each provision of this Agreement shall be
interpreted in such a manner as to be effective and valid under Applicable Law,
but if
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any provision of this Agreement shall be prohibited by or invalid under
Applicable Law, such provisions shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Agreement.
SECTION 16. WAIVER. THE DEBTOR WAIVES (i) ANY NOTICE PRIOR TO THE
TAKING POSSESSION OR CONTROL OF THE COLLATERAL OR ANY POSTING OF ANY BOND OR
SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING THE SECURED
PARTY TO EXERCISE ANY OF SECURED PARTY'S REMEDIES SET FORTH HEREIN, INCLUDING
THE ISSUANCE OF AN IMMEDIATE WRIT OF POSSESSION AND (ii) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS.
SECTION 17. INDEMNIFICATION. The Debtor agrees to indemnify and hold
the Secured Party harmless from and against any claim, loss, damage, action,
cause of action, liability, cost and expense or suit of any kind or nature
whatsoever, including reasonable attorneys' fees and expenses, brought against
or incurred by the Secured Party, in any manner arising out of or, directly or
indirectly, related to or connected with any action taken by the Secured Party
pursuant to the terms of this Agreement; provided, however, that the indemnity
set forth in this Section shall not apply to the extent that the claim, loss,
damage, action, cause of action, liability, cost, expense or suit arises
primarily and directly from the gross negligence or willful misconduct of the
Secured Party.
SECTION 18. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which, taken
together, shall constitute but one and the same instrument.
SECTION 19. DEFINITIONS. (a) For the purposes of this Agreement:
"Agreement" means this Security Agreement, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Applicable Law" means all applicable provisions of constitutions,
statutes, laws, rules, regulations and orders of all governmental bodies and
all orders, rulings and decrees of all courts and arbitrators.
"Assets" of a Person means all of the assets, properties, businesses
and rights of such Person of every kind, nature, character and description,
whether real, personal or mixed, tangible or intangible, accrued or contingent,
or otherwise relating to or utilized in such Person's business, directly or
indirectly, in whole or in part, whether or not carried on the books and
records of such Person, and whether or not owned in the name of such Person or
any Subsidiary of such Person and wherever located.
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in
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accordance with GAAP, and the amount of such Indebtedness shall be the
capitalized amount of such obligations determined in accordance with such
principles.
"Collateral" means all of the Debtor's right, title and interest in
and to each of the following, wherever located and whether now or hereafter
existing, or now owned or hereafter acquired or arising:
(a) all Receivables;
(b) all Equipment;
(c) all rights of the Debtor as an unpaid vendor or lienor
(including, without limitation, stoppage in transit, replevin and reclamation)
with respect to any other properties of the Debtor;
(d) all general intangibles of the Debtor including, but not
limited to, all contract rights of the Debtor and all trademarks, trade names,
patents, copyrights and any and all other intellectual property of the Debtor,
but not including the intangibles described on Schedule 19.(a);
(e) all documents of title, policies and certificates of
insurance, chattel paper and instruments of the Debtor;
(f) all books, records, files and correspondence in any way
related to any of the foregoing or otherwise pertaining to the business
operations of the Debtor;
(g) any and all balances, credits, deposits, accounts, items and
monies of the Debtor now or hereafter with the Secured Party or any Subsidiary
of the Secured Party or deposited with the Secured Party or any financial
institution selected by the Secured Party pursuant to any lock box, deposit,
escrow or other collection agreement or otherwise, and all property of the
Debtor of every kind and description now or hereafter in the possession or
control of the Secured Party for any reason; and
(h) any and all products and proceeds of any of the foregoing
(including, but not limited to, any claims to any items referred to in this
definition, and any claims of the Debtor against third parties for loss of,
damage to or destruction of, any or all of the Collateral or for proceeds
payable under, or unearned premiums with respect to, policies of insurance) in
whatever form, including, but not limited to, cash, instruments, general
intangibles, accounts receivable, goods, documents and chattel paper.
"Debtor" has the meaning set forth in the first paragraph hereof.
"Default" means any of the events specified in the definition of Event
of Default, whether or not there has been satisfied any requirement for giving
of notice, lapse of time or the happening of any other condition.
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"Equipment" means all equipment, machinery, apparatus, fittings,
fixtures and other tangible personal property of every kind and description
owned by the Debtor or in which the Debtor has an interest, and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor; provided, however, that the term
"Equipment" shall not be deemed to include items leased by the Debtor as
lessee.
"Event of Default" means any of the following events, whatever the
reason for such event and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment or order of any court
or any order, rule or regulation of any governmental or nongovernmental body:
(a) failure of the Debtor to pay any principal, interest or other
amount with respect to any of the Obligations when due;
(b) the failure of the Debtor to comply with any of the terms and
provisions of this Agreement or any of the documents or instruments evidencing
any of the Obligations;
(c) any written representation or warranty made at any time by the
Debtor to the Secured Party shall prove to have been incorrect or misleading in
any material respect when made;
(d) a default, event of default, or event which with the giving of
notice or the passage of time or both would constitute a default or event of
default, shall have occurred under any other document, instrument, contract or
agreement now or hereafter entered into by the Debtor and Secured Party or
executed by the Debtor in favor of the Secured Party, or the Debtor shall in
any way fail to comply with the terms, covenants or conditions contained in any
such document, instrument, contract or agreement;
(e) a default, event of default, or event which with the giving of
notice or the passage of time or both would constitute a default or event of
default, shall have occurred under any document, instrument, contract or
agreement (i) evidencing or securing indebtedness of the Debtor for borrowed
money or (ii) material to the financial condition of the Debtor; provided,
however, that the Debtor's delinquency in its rent payments under that certain
Agreement of Lease dated August 30, 1988 between ▇▇▇▇▇ & Associates and Zynaxis
Cell Science, as amended, shall not constitute an Event of Default if Debtor
complies with the covenant in Section 8.10 of the Agreement and Plan of Merger
and Contribution dated the date hereof to which the Debtor and the Secured
Party are parties.
(f) the Debtor shall (i) commence a voluntary case under the
Bankruptcy Code of 1978, as amended or other federal bankruptcy law (as now or
hereafter in effect); (ii) file a petition seeking to take advantage of any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts; (iii)
consent to, or fail to contest in a timely and appropriate manner,
- 11 -
12
any petition filed against it in an involuntary case under such bankruptcy laws
or other laws; (iv) apply for or consent to, or fail to contest in a timely and
appropriate manner, the appointment of, or the taking of possession by, a
receiver, custodian, trustee, or liquidator of itself or of a substantial part
of its property, domestic or foreign; (v) be unable to, or admit in writing its
inability to, pay its debts as they become due; (vi) make a general assignment
for the benefit of creditors; or (vii) make a conveyance fraudulent as to
creditors under any state or federal law; or
(g) a case or other proceeding shall be commenced against the
Debtor in any court of competent jurisdiction seeking (i) relief under the
Bankruptcy Code of 1978, as amended or other federal bankruptcy law (as now or
hereafter in effect) or under any other laws, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding up or adjustment of debts or
(ii) the appointment of a trustee, receiver, custodian, liquidator or the like
for the Debtor of all or any substantial part of the assets, domestic or
foreign, of the Debtor.
"Financing Statements" means any and all financing statements executed
and delivered by or on behalf of the Debtor in connection with the perfection
of the Security Interest, together with any amendments thereto and any
continuations thereof.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of 'Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances. Unless otherwise agreed, references to GAAP herein shall
be to GAAP as in effect on the date hereof.
"Guaranty", "Guaranteed" or to "Guarantee" as applied to any
obligation means and includes:
(a) a guaranty (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), directly or
indirectly, in any manner, of any part or all of such obligation, or
(b) an agreement, direct or indirect, contingent or otherwise, and
whether or not constituting a guaranty, the practical effect of which is to
assure the payment or performance (or payment of damages in the event of
nonperformance) of any part or all of such obligation whether by:
(i) the purchase of securities or obligations,
(ii) the purchase, sale or lease (as lessee or lessor) of
property or the purchase or sale of services primarily for the purpose
of enabling the obligor with respect to such obligation to make any
payment or performance (or payment of
- 12 -
13
damages in the event of nonperformance) of or on account of any part
or all of such obligation, or to assure the owner of such obligation
against loss,
(iii) the supplying of funds to or in any other manner
investing in the obligor with respect to such obligation,
(iv) repayment of amounts drawn down by beneficiaries of
letters of credit, or
(v) the supplying of funds to or investing in a Person on
account of all or any part of such Person's obligation under a
Guaranty of any obligation or indemnifying or holding harmless, in any
way, such Person against any part or all of such obligation.
"Indebtedness" as applied to a Person means, without duplication, (a)
all items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined including, without
limitation, all Capitalized Lease Obligations of such Person and all
reimbursement obligations of such Person under letters of credit and
acceptances issued for its account, and (b) all obligations of other Persons
which such Person has Guaranteed.
"Lien" as applied to the property of any Person means: () any
security interest, encumbrance, mortgage, deed to secure debt, deed of trust,
pledge, lien, charge or lease constituting a Capitalized Lease Obligation,
conditional sale or other title retention agreement, or other security title or
encumbrance of any kind in respect of any property of such Person, or upon the
income or profits therefrom; () any arrangement, express or implied, under
which any property of such Person is transferred, sequestered or otherwise
identified for the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in priority to the payment
of the general, unsecured creditors of such Person; and () the filing of, or
any agreement to give, any financing statement under the Uniform Commercial
Code or its equivalent in any jurisdiction.
"Liquidation Agreement" means that certain letter agreement dated the
date hereof by and between the Debtor and the Secured Party regarding the sale
of Assets and the settlement of liabilities of Debtor.
"Material Adverse Effect" on a Person means an event, change or
occurrence which, individually or together with any other event, change or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Person and its Subsidiaries, taken
as a whole, or (ii) the ability of such Person to perform its obligations under
this Agreement or to consummate the Contribution or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" shall
not be deemed to include the impact of (a) changes in laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in generally
- 13 -
14
accepted accounting principles or regulatory accounting principles, and (c)
actions and omissions of a Person (or any of its Subsidiaries) taken with the
prior informed written consent of the other Person in contemplation of the
transactions contemplated hereby.
"Note" means that certain Senior Secured Note dated the date hereof in
a principal amount equal to $2,000,000 and executed by the Debtor in favor of
the Secured Party.
"Obligations" means, individually and collectively: (a) all
obligations and indebtedness owing by the Debtor to the Secured Party and all
future advances made to the Debtor by the Secured Party, however and whenever
created, arising or evidenced, whether direct or indirect, through assignment
from third parties, whether absolute or contingent, or otherwise, now or
hereafter existing, or due or to become due, including, without limitation,
obligations under all guaranties, letters of credit and overdrafts; and (b) all
renewals, modifications, extensions and supplements to any of the foregoing,
including, but not limited to, any and all Obligations arising under and with
respect to the Note and the Liquidation Agreement.
"Permitted Liens" means: (a) Liens securing taxes, assessments and
other governmental charges or levies not yet due and payable or the claims of,
or obligations owing to, materialmen, mechanics, carriers, warehousemen or
landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business but not yet due and payable; (b) Liens consisting of
deposits or pledges made, in the ordinary course of business, in connection
with, or to secure payment of, obligations under workmen's compensation,
unemployment insurance or similar legislation; (c) Liens consisting of
encumbrances in the nature of zoning restrictions, easements, and rights or
restrictions of record on the use of real property, which in the sole judgment
of the Secured Party do not materially detract from the value of such property
or impair the use thereof in the business of the Debtor; (d) Liens in favor of
the Secured Party; and (e) Liens identified in Schedule 2.(E) hereto.
"Person" means an individual, corporation, partnership, association,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
"Receivables" means all accounts and any and all rights to the payment
of money or other forms of consideration of any kind (whether classified under
the Uniform Commercial Code as accounts, chattel paper, general intangibles, or
otherwise) for goods sold or leased or for services rendered including, but not
limited to, accounts receivable, proceeds of any letters of credit naming the
Debtor as beneficiary, chattel paper, tax refunds, insurance proceeds, contract
rights, notes, drafts, instruments, documents, acceptances, and all other
debts, obligations and liabilities in whatever form from any Person.
"Secured Party" has the meaning set forth in the first paragraph
hereof.
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15
"Security Interest" means the Lien of the Secured Party upon, and the
collateral assignments to the Secured Party of, the Collateral effected hereby
or pursuant to the terms hereof.
"Subsidiaries" shall mean all those corporations, associations, or
other business entities of which the entity in question either (i) owns or
controls 50% or more of the outstanding equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its parent
(provided, there shall not be included any such entity the equity securities of
which are owned or controlled in a fiduciary capacity), (ii) in the case of
partnerships, serves as a general partner, (iii) in the case of a limited
liability company, serves as a managing member, or (iv) otherwise has the
ability to elect a majority of the directors, trustees or managing members
thereof.
"Uniform Commercial Code" shall mean the Uniform Commercial Code as in
effect in the State of Georgia, as the same may be amended from time to time.
(b) Unless otherwise set forth herein to the contrary, all terms
not otherwise defined herein and which are defined in the Uniform Commercial
Code are used herein with the meanings ascribed to them in the Uniform
Commercial Code.
- 15 -
16
ZYNAXIS, INC.
DISCLOSURE SCHEDULE
TO THE SECURITY AGREEMENT BY AND BETWEEN ZYNAXIS, INC., AND CYTRX
CORPORATION DATED NOVEMBER 25, 1996
GENERAL TERMS:
1. Any terms used in this schedule but not defined herein shall have the same
meanings ascribed thereto in the Security Agreement executed the date
hereof, by and between Zynaxis, Inc., a Pennsylvania corporation (the
"Company" or "Zynaxis"), and CytRx Corporation, a Delaware corporation.
2. Any disclosures contained in this schedule which refer to a document are
qualified in their entirety by reference to the text of such document.
3. No disclosure of any matter contained in this schedule shall create an
implication that such matter meets any standard of materiality.
4. The headings contained in this schedule are for reference only and shall not
affect in any way the meaning or interpretation of this schedule.
17
Zynaxis, Inc.
Disclosure Schedule
to the Security Agreement by and between Zynaxis, Inc., and CytRx
Corporation dated November 25, 1996
Section 2(a) and (f): Name, Taxpayer ID number, Chief Executive Office
Zynaxis has the following subsidiaries:
Zynaxis Holdings, Ltd. A Delaware corporation and a
wholly-owned subsidiary of Zynaxis
Zynaxis Vaccine A Pennsylvania corporation and a
Technologies, Inc. wholly-owned subsidiary of Zynaxis.
Zynaxis holds all 100 shares of Common
stock of this entity
Zynaxis has filed with the Commonwealth of Pennsylvania a fictitious name
registration for its Process Chemistry operations. The Company markets and
operates these activities as Cauldron Process Chemistry.
Zynaxis has no other subsidiaries and no stock or other equity or ownership
interest, whether controlling or not in any corporation, association,
partnership, joint venture, or other entity.
Prior to January 1994, the Company had two additional subsidiaries:
Zynaxis Technologies, Ltd. A Delaware corporation and a wholly-owned
subsidiary of Zynaxis
Zynaxis Cell Science, Inc. A Pennsylvania corporation and a wholly-
owned subsidiary of Zynaxis
On December 31, 1993, these subsidiaries were merged into Zynaxis, Inc.
18
Zynaxis, Inc.
Disclosure Schedule
to the Security Agreement by and between Zynaxis, Inc., and CytRx
Corporation dated November 25, 1996
SECTION 2(E); LIENS
The Company possesses certain assets which are under capital or operating
leases. The following table summarized the leased assets, the lease term and
payment information:
---------------------------------------------------------------------------------------------------------------------
Annual
Expenses,
Lease
Fixed Cost or payment
Lease Commitment or other Lease/Commitment
Commitment To: payment Expiration Date Comments
---------------------------------------------------------------------------------------------------------------------
Autoclave Colonial Pacific $ 7,600 5 year lease expiring
Leasing Corp. 10/1/99
---------------------------------------------------------------------------------------------------------------------
Nitrogen Generator Colonial Pacific $ 3,200 5 year lease expiring To be shared by
Leasing Corp. 7/1/2000 Cauldron & Zynaxis
---------------------------------------------------------------------------------------------------------------------
Plate Reader & UV- Colonial Pacific $ 8,020 5 year lease expiring UV-VIS to be shared
VIS system Leasing Corp. 6/30/2001 by Cauldron & Zynaxis
---------------------------------------------------------------------------------------------------------------------
Office Photo-Copier ▇▇▇▇▇▇ $ 8,400 4 year lease expires operating lease
Worldwide 7/31/99
---------------------------------------------------------------------------------------------------------------------
Various equipment Comdisco $10,380 Final operating lease
leases expires March 1997
---------------------------------------------------------------------------------------------------------------------
On September 24, 1996, the Company executed an exclusive License Agreement with
purchase option to sell its Zyn-linker technology. This agreement was with
Phanos Technologies Inc. Pursuant to the terms of the Agreement, the Company is
to receive option fees and exclusive license fees aggregating up to $725,000.
To date, the Company has received a non-refundable option fee of $5,000, and
$195,000 Exclusive license fee.
SECTION 2(G) AND (H): PLACE OF BUSINESS AND LOCATION OF EQUIPMENT
Zynaxis, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
19
SCHEDULE 19(a)
Certain Intangibles
None.