Exhibit 10.27
SECURED PROMISSORY NOTE AND AGREEMENT
("Note and Agreement")
$10,000,000.00 Salt Lake City, Utah
October 1, 1999
FOR VALUE RECEIVED, ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("Borrower"),
hereby promises to pay to the order of Chemdex Corporation, a Delaware
corporation ("Lender"), the principal sum of TEN MILLION DOLLARS
($10,000,000.00) or such lesser amount as shall equal the outstanding principal
amount of all sums advanced to Borrower hereunder and to pay interest on the
outstanding balance of said sum at a rate per annum equal to nine percent (9%),
compounded annually. All then outstanding principal and accrued interest
hereunder shall be due and payable in full upon the earlier of (i) October 1,
2000 in the event that the Agreement and Plan of Merger dated as of September
21, 1999 (the "Merger Agreement") by and among Borrower, Lender and a wholly
owned subsidiary of Lender shall be terminated for any reason pursuant to the
terms of Article IX thereof; (ii) the sale of all or substantially all of the
assets of Borrower to any person or entity other than Lender or an affiliate of
Lender or the acquisition of Borrower by any person or entity other than Lender
or an affiliate of Lender by means of a transaction that results in the
transfer of more than forty percent (40%) of the total outstanding power of
Borrower; or (iii) December 31, 2000 (the "Maturity Date"). The events
described in items (i) through (iii) above are collectively referred to herein
as "Note Termination Events."
In the event that Borrower receives any debt or equity financing in excess
of $500,000 at any time (and from time to time) prior to October 1, 2000,
▇▇▇▇▇▇▇▇ agrees that twenty-five percent (25%) of any amounts so raised shall
be used by Borrower to immediately repay amounts that may be outstanding
hereunder, whether or not such amounts may be due under the immediately
preceding paragraph.
Borrower shall make all payments hereunder for the account of Lender at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or to such other address as Lender
shall notify Borrower, in lawful money of the United States and in same day or
immediately available funds not later than 12:00 noon on the date due, or as
otherwise agreed to by ▇▇▇▇▇▇. Any and all amounts owing under this Note and
Agreement may be prepaid at any time and from time to time by Borrower without
penalty.
All computations of interest under this Note and Agreement shall be based on
a year of 365 or 366 days, as applicable, for actual days elapsed. In the event
that, Borrower pays interest under this Note and Agreement and it is determined
that such interest rate was in excess of the then legal maximum rate, then that
portion of the interest payment representing an amount in excess of the then
legal maximum rate shall be deemed a payment of principal and applied against
the principal then due under this Note and Agreement.
Merger Agreement
This Note and Agreement is being entered into in connection with the Merger
Agreement (as the same may be amended, restated, supplemented or otherwise
modified pursuant to the terms thereof). Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Merger Agreement.
Security Agreement
This Note and Agreement is secured by certain collateral (the "Collateral")
more specifically described in (i) the Security Agreement of even date herewith
between Borrower and Lender, and (ii) the Patent and Trademark Security
Agreement of even date herewith between Borrower and Lender (such two
agreements together, the "Security Agreement").
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Conditions to Advances; Use of Proceeds; Covenants
Amounts shall be advanced to Borrower under this Note and Agreement solely
in accordance with the terms and conditions set forth in this Note and
Agreement, including Schedule A attached hereto and incorporated herein by
reference. Borrower shall use the proceeds of any amount advanced under this
Note and Agreement solely for general corporate purposes, including normal
working capital in the ordinary course of business as presently conducted and
as presently proposed to be conducted. Until the termination of this Note and
Agreement and payment in full by Borrower or forgiveness by Lender of all
amounts outstanding under this Note and Agreement, Borrower agrees that it
shall comply with and duly perform all of its covenants, obligations and
agreements set forth in the Merger Agreement, which are hereby incorporated
herein by reference as if fully set forth herein.
Representations and Warranties
Borrower represents and warrants to Lender that:
(a) Borrower is a corporation duly organized, validly existing and in
good standing under the law of the State of Delaware and has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Note and Agreement.
(b) The execution, delivery and performance by Borrower of this Note and
Agreement have been duly authorized by all necessary corporate action of
Borrower, and this Note and Agreement constitutes the legal, valid and
binding obligation of Borrower, enforceable against Borrower in accordance
with its terms.
(c) No authorization, consent, approval, license, exemption of, or
filing or registration with, any governmental authority or agency, or
approval or consent of any other person or entity, is required for the due
execution, delivery or performance by Borrower of this Note and Agreement.
Events of Default
The occurrence of any one or more of the following events shall constitute
an "Event of Default" hereunder:
(d) Borrower shall fail to pay any then outstanding principal when due
or any interest or other amount payable under this Note and Agreement
within five (5) business days of when due; or
(e) Borrower shall fail in any material respect to perform any of its
other covenants, obligations or agreements contained in this Note and
Agreement or the Merger Agreement and such failure shall continue for ten
(10) business days after written notice thereof by ▇▇▇▇▇▇; or
(f) Any representation, warranty, certificate, or other statement
(financial or otherwise) made or furnished by or on behalf of Borrower in
writing to Lender in connection with this Note and Agreement or the Merger
Agreement, or as an inducement to Lender to advance the sums under this
Note and Agreement or to enter into the Merger Agreement, shall have been
false or incorrect, in any material respect when made or shall become false
or incorrect in any material respect following the date hereof; or
(g) Borrower (i) shall fail to make any payment when due under the terms
of any bond, debenture, note or other evidence of indebtedness, if any,
individually in excess of $500,000 to be paid by ▇▇▇▇▇▇▇▇, and such failure
shall continue beyond any period of grace provided with respect thereto, or
(ii) shall default in the observance or performance of any other agreement,
term or condition contained in any such bond, debenture, note or other
evidence of indebtedness providing for principal payments in excess of
$500,000, and in the case of either clause (i) or (ii) the effect of such
failure or default is to cause the holder or holders thereof to accelerate
the indebtedness to become due prior to its stated date of maturity; or
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(h) Borrower shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or any part
of its property; (ii) admit in writing its inability, to pay its debts
generally as they mature; (iii) make a general assignment for the benefit
of its or any of its creditors; (iv) be dissolved or liquidated in full or
in part; (v) become insolvent (as such term may be defined or interpreted
under any applicable statute); (vi) commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it; or (vii) take
any action for the purpose of affecting any of the foregoing; or
(i) Proceedings for the appointment of a receiver, trustee, liquidator
or custodian of Borrower or of all or any material part of its property, or
an involuntary case or other proceedings seeking liquidation,
reorganization or other relief with respect to Borrower or the debts
thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect, shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within sixty (60) days
of commencement; or
(j) A final judgment or final judgments for the payment of money, which
individually or in the aggregate, exceed $500,000 in excess of the amount
covered by insurance, shall be rendered against Borrower and the same shall
remain undischarged for a period of thirty (30) days during which execution
shall not be effectively stayed; or any judgment, writ, assessment, warrant
of attachment, execution, levy or similar process shall be issued or levied
against any material part of the property of ▇▇▇▇▇▇▇▇ and such judgment,
writ, assessment, warrant of attachment, execution, levy or similar process
shall not be released, stayed, vacated or otherwise dismissed within ten
(10) days after issue or levy; or
(k) This Note and Agreement shall cease to be, or be asserted by
Borrower not to be, a legal, valid and binding obligation of Borrower,
enforceable in accordance with its terms; or
(l) An "Event of Default" (as defined in the Security Agreement) shall
have occurred.
Upon the occurrence or existence of any Event of Default, Lender may (a) at any
time terminate any obligation to make loans or advance sums to Borrower under
this Note and Agreement; (b) at any time declare all unpaid amounts owing or
payable under this Note and Agreement to be immediately due and payable without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by Borrower; and/or (c) exercise all rights and
remedies available to Lender under this Note and Agreement, the Security
Agreement or applicable law; provided, however, that upon the occurrence or
existence of any Event of Default described in clause (h) or (i) above,
immediately and without notice, (i) any obligation to make loans or advance
sums to Borrower under this Note and Agreement shall automatically terminate
and (ii) all unpaid amounts owing or payable under this Note and Agreement
shall automatically become immediately due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by Borrower.
▇▇▇▇▇▇▇▇ agrees to pay on demand all reasonable costs and expenses of
▇▇▇▇▇▇, and the reasonable fees and disbursements of counsel, in connection
with the enforcement or attempted enforcement of, and preservation of any
rights or interests under, this Note and Agreement, including in any out-of-
court workout or other refinancing or restructuring or in any bankruptcy case.
Any amounts payable to Lender pursuant to this paragraph if not paid upon
demand shall bear interest from the date of such demand until paid in full, at
the rate of interest set forth herein in respect of principal outstanding
hereunder.
If at any time any provision of this Note and Agreement is or becomes
illegal, invalid or unenforceable in any respect, neither the legality,
validity nor enforceability of the remaining provisions shall in any way be
affected or impaired thereby.
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Any term, covenant, agreement or condition of this Note and Agreement may be
amended or waived if such amendment or waiver is in writing and is signed by
▇▇▇▇▇▇▇▇ and Lender. No failure or delay by ▇▇▇▇▇▇ in exercising any right or
remedy hereunder shall operate as a waiver thereof or of any other right or
remedy nor shall any single or partial exercise of any such right or remedy
preclude any other further exercise thereof or of any other right or remedy.
The acceptance at any time by ▇▇▇▇▇▇ of any past-due amount hereunder shall not
be deemed to be a waiver of the right to require prompt payment when due of any
other amounts then or thereafter due and payable. Unless otherwise specified in
such waiver or consent, a waiver or consent given hereunder shall be effective
only in the specific instance and for the specific purpose for which given.
This Note and Agreement shall be binding upon and inure to the benefit of
▇▇▇▇▇▇▇▇, Lender, and their respective successors and permitted assigns, except
that Borrower may not assign or transfer any of its rights or obligations under
this Note and Agreement without the prior written consent of Lender. Prior to
the occurrence of any Note Termination Event, Lender may at any time sell,
assign, or otherwise transfer only to any of its affiliates or subsidiaries all
or part of the obligations of Borrower and Lender under this Note and
Agreement. After the occurrence of any Note Termination Event, Lender may at
any time sell, assign, or otherwise transfer to any other person or entity all
or part of the obligations of Borrower and Lender under this Note and
Agreement.
Nothing expressed in or to be implied from this Note and Agreement is
intended to give, or shall be construed to give, any person or entity, other
than the parties hereto and their permitted successors and assigns hereunder,
any benefit or legal or equitable right, remedy or claim under or by virtue of
this Note and Agreement or under or by virtue of any provision herein.
The words "hereof," "herein," "hereunder" and similar words refer to this
Note and Agreement as a whole (including the Schedules attached hereto) and not
to any particular provision of this Note and Agreement.
Borrower hereby waives presentment, demand, protest, notice of dishonor and
all other notices, except as expressly provided herein, any release or
discharge arising from any extension of time, discharge of a prior party, or
other cause of release or discharge other than actual payment in full hereof.
This Note and Agreement shall be construed in accordance with and governed
by the laws of the State of California, excluding conflict of laws principles.
All notices and other communications hereunder shall be given as provided in
Section 11.2 of the Merger Agreement.
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IN WITNESS WHEREOF, the undersigned duly authorized officer of ▇▇▇▇▇▇▇▇ has
executed this Note and Agreement as of the date first set forth above.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: CEO
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Schedule A
CONDITIONS TO ANY ADVANCE
Subject to the terms and conditions set forth herein and in the Note and
Agreement, ▇▇▇▇▇▇ agrees to advance to Borrower from time to time on the
"Advance Dates" set forth below, such loans as Borrower may request hereunder
(each such loan an "Advance" and collectively, the "Advances"); provided,
however, that the aggregate principal amount of all Advances hereunder shall
not exceed Ten Million Dollars ($10,000,000); provided, further, that the
aggregate principal amount of each Advance on any Advance Date shall not exceed
the amount of One Million Six Hundred Sixty Six Thousand Six Hundred Sixty
Seven Dollars ($1,666,667). ▇▇▇▇▇▇▇▇ agrees and acknowledges that upon the
occurrence of any Note Termination Event, ▇▇▇▇▇▇'s obligation to advance any
unadvanced amounts hereunder shall automatically terminate and be of no further
force and effect and all then outstanding principal and accrued interest
hereunder shall be immediately due and payable in full.
a. Advance Dates. Upon the request of the Borrower as provided in paragraph
b. below, provided that no Note Termination Event shall have occurred and
subject to the other terms and conditions set forth herein, Lender shall make
Advances hereunder on each of (1) October 1, 1999, (2) November 1, 1999,
(3) December 1, 1999, (4) January 1, 2000, (5) February 1, 2000 and (6) March
1, 2000 (each such date, and any other date on which Lender makes an Advance,
an "Advance Date", and collectively, the "Advance Dates").
b. Borrowing Request. Borrower shall request each Advance by delivering to
Lender an irrevocable written notice (the "Borrowing Request") which shall
specify (i) the principal amount of the requested Advance, (ii) the applicable
Advance Date, (iii) the account or accounts to which Lender shall disburse the
proceeds of the requested Advance, and (iv) that all conditions set forth in
paragraph c. below have been satisfied in respect of such Advance. Each
Borrowing Request shall be in writing and shall be given to Lender at least
five (5) business days before the applicable Advance Date by delivery of such
notice to Lender to the address and in the manner set forth in Section 11.2 of
the Merger Agreement. Disbursements of any Advance shall be made by wire
transfer to the account(s) of Borrower specified in the Borrowing Request
before the close of business on the applicable Advance Date; provided, however,
that Lender shall not be deemed to be in default hereunder if it fails to make
such Advance provided that it cures such failure within five (5) business days
after written notice thereof by Borrower.
c. Conditions Precedent to Each Advance. The obligation of Lender to make
any Advance is subject to the satisfaction of the following conditions, each in
form and substance reasonably satisfactory to Lender:
(i) The representations and warranties of Borrower set forth in the Note
and Agreement and in the Merger Agreement shall be true and correct in all
material respects on each Advance Date as if made on such date and shall
remain true and correct in all material respects;
(ii) No Event of Default or event which with the giving of notice or
lapse of time, or both, would constitute an Event of Default shall have
occurred or be continuing;
(iii) The Collateral shall be subject to no mortgages, liens, security
interests, pledges, charges or encumbrances of any kind or character,
except (A) liens in favor of ▇▇▇▇▇▇, (B) nonconsensual liens arising in the
ordinary course of business which alone or in the aggregate are not
substantial in amount and which do not materially detract from the value of
the property subject thereto or interfere with the ordinary conduct of the
business of the Borrower or otherwise impair Lender's rights with respect
thereto and (C) Permitted Liens (as defined in the Security Agreement);
(iv) Lender shall have a perfected first priority security interest in
and to all of the Collateral, subject to the Permitted Liens; and
(v) No Note Termination Event shall have occurred.
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The submission by Borrower of each Borrowing Request shall be deemed to be a
representation and warranty by Borrower as of the date thereof and as of the
applicable Advance Date that the conditions in this paragraph c. are satisfied.
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SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of October 1, 1999, is
made by and between ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware corporation ("Debtor"), and
Chemdex Corporation, a Delaware corporation ("Secured Party").
Debtor and Secured Party hereby agree as follows:
Section 1 Definitions; Interpretation.
(a) As used in this Agreement, the following terms shall have the following
meanings:
"Collateral" has the meaning set forth in Section 2.
"Documents" means this Agreement, the Note, the Merger Agreement and all
other certificates, documents, agreements and instruments delivered to
Secured Party under the Note or in connection with the Obligations.
"Event of Default" has the meaning set forth in Section 8.
"Lien" means any mortgage, deed of trust, pledge, security interest,
assignment, deposit arrangement, charge or encumbrance, lien, or other type
of preferential arrangement.
"Merger Agreement" means the Agreement and Plan of Merger, dated as of
September 21, 1999 among Debtor, Secured Party and a wholly owned
subsidiary of Secured Party.
"Note" means that certain Secured Promissory Note and Agreement of even
date herewith made by Debtor in favor of Secured Party, as amended,
modified, renewed, extended or replaced from time to time.
"Obligations" means the indebtedness, liabilities and other obligations
of Debtor to Secured Party under or in connection with this Agreement and
the Note, including, without limitation, all unpaid principal of the Note,
all interest accrued thereon, all fees and all other amounts payable by
Debtor to Secured Party thereunder or in connection therewith, whether now
existing or hereafter arising, and whether due or to become due, absolute
or contingent, liquidated or unliquidated, determined or undetermined.
"Permitted Lien" means (i) any Lien in favor of Secured Party, (ii)
nonconsensual Liens which arise in the ordinary course of business and do
not materially impair Debtor's ownership or use of the Collateral or the
value thereof, (iii) purchase money security interests and liens in
connection with capital leases incurred in the ordinary course of business,
(iv) liens existing on property as of the date of this Agreement, (v) liens
existing on property at the time of its acquisition by the Debtor, (vi)
liens securing the performance of bids, trade contracts, leases, surety
bonds and the like, and (vii) liens in connection with judgments that do
not constitute an Event of Default under the Note.
"Person" means an individual, corporation, partnership, joint venture,
trust, unincorporated organization, governmental agency or authority, or
any other entity of whatever nature.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of Utah; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Utah, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.
(b) Where applicable and except as otherwise defined herein, terms used in
this Agreement shall have the meanings assigned to them in the UCC.
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(c) In this Agreement, (i) the meaning of defined terms shall be equally
applicable to both the singular and plural forms of the terms defined; and (ii)
the captions and headings are for convenience of reference only and shall not
affect the construction of this Agreement.
Section 2 Security Interest.
(a) As security for the payment and performance of the Obligations,
Debtor hereby grants to Secured Party a security interest in, all of
Debtor's right, title and interest in, to and under the following property,
wherever located and whether now existing or owned or hereafter acquired or
arising (collectively, the "Collateral"):
(i) all accounts, accounts receivable, contract rights, rights to
payment, chattel paper, letters of credit, documents, securities, money
and instruments, and investment property, whether held directly or
through a securities intermediary, and other obligations of any kind
owed to Debtor, however evidenced;
(ii) all deposits and deposit accounts with any bank, savings and
loan association, credit union or like organization, and all funds and
amounts therein, and whether or not held in trust, or in custody or
safekeeping, or otherwise restricted or designated for a particular
purpose;
(iii) all inventory, including, without limitation, all materials,
raw materials, parts, components, work in progress, finished goods,
merchandise, supplies, and all other goods which are held for sale,
lease or other disposition or furnished under contracts of service or
consumed in Debtor's business, including, without limitation, those
held for display or demonstration or out on lease or consignment;
(iv) all owned equipment, including, without limitation, all
machinery, furniture, furnishings, fixtures, trade fixtures, tools,
parts and supplies, automobiles, trucks and other vehicles, appliances,
computer and other electronic data processing equipment and other
office equipment, computer programs and related data processing
software, and all additions, substitutions, replacements, parts,
accessories, and accessions to and for the foregoing;
(v) all general intangibles and other personal property of Debtor,
including, without limitation, (A) all tax and other refunds, rebates
or credits of every kind and nature to which Debtor is now or hereafter
may become entitled; (B) all intellectual property and all rights
therein of any type or description, including, without limitation, all
inventions and discoveries, patents and patent applications, copyrights
and applications for copyright (together with the underlying works of
authorship) whether or not registered, together with any renewals and
extensions thereof, trademarks, service marks and trade names, and
applications for registration of such trademarks, service marks and
trade names, trade secrets, trade dress, trade styles, logos, other
source of business identifiers, mask-works, mask-work registrations,
mask-work applications, software, confidential and proprietary
information, customer lists, other license rights, advertising
materials, operating manuals, methods, processes, know-how, algorithms,
formulae, databases, quality control procedures, product, service and
technical specifications, operating, production and quality control
manuals, sales literature, drawings, specifications, blue prints,
descriptions, inventions, name plates and catalogs, and the entire
goodwill of or associated with the businesses now or hereafter
conducted by Debtor connected with and symbolized by any of the
aforementioned properties and assets, and all licenses relating to any
of the foregoing, all reissuance, continuations and continuations-in-
part of the foregoing, all other rights derived from or associated with
the foregoing, including the right to sue and recover for past
infringement, and all income and royalties with respect thereto; (C)
all goodwill, chooses in action and causes of action; (D) all interests
in limited and general partnerships and limited liability companies;
and (E) all indemnity agreements, guaranties, insurance policies,
insurance claims, and other contractual, equitable and legal rights of
whatever kind or nature;
(vi) all books, records and other written, electronic or other
documentation in whatever form maintained by or for Debtor in
connection with the ownership of its assets or the conduct of its
business or evidencing or containing information relating to the
Collateral; and
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(vii) all products and proceeds, including insurance proceeds, of any
and all of the foregoing.
(b) Anything herein to the contrary notwithstanding, (i) Debtor shall
remain liable under any contracts, agreements and other documents included
in the Collateral, to the extent set forth therein, to perform all of its
duties and obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by Secured Party of any of the
rights hereunder shall not release Debtor from any of its duties or
obligations under such contracts, agreements and other documents included
in the Collateral, and (iii) Secured Party shall not have any obligation or
liability under any contracts, agreements and other documents included in
the Collateral by reason of this Agreement, nor shall Secured Party be
obligated to perform any of the obligations or duties of Debtor thereunder
or to take any action to collect or enforce any such contract, agreement or
other document included in the Collateral hereunder.
(c) Notwithstanding the foregoing provisions of this Section 2, the
grant of a security interest as provided herein shall not extend to, and
the term "Collateral" shall not include, any general intangibles of Debtor
(whether owned or held as licensee or lessee, or otherwise), to the extent
that (i) such general intangibles are not assignable or capable of being
encumbered as a matter of law or under the terms of the license, lease or
other agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law), without the consent
of the licensor or lessor thereof or other applicable party thereto and
(ii) such consent has not been obtained; provided, however, that the
foregoing grant of security interest shall extend to, and the term
"Collateral" shall include, (A) any general intangible which is an account
receivable or a proceed of, or otherwise related to the enforcement or
collection of, any account receivable, or goods which are the subject of
any account receivable, (B) any and all proceeds of any general intangibles
which are otherwise excluded to the extent that the assignment or
encumbrance of such proceeds is not so restricted, and (C) upon obtaining
the consent of any such licensor, lessor or other applicable party's
consent with respect to any such otherwise excluded general intangibles,
(but without obligating Debtor to obtain such consent) such general
intangibles as well as any and all proceeds thereof that might have
theretofore have been excluded from such grant of a security interest and
the term "Collateral."
(d) This Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until terminated in accordance with
Section 19 hereof.
Section 3 Financing Statements, Etc. Debtor shall execute and deliver to
Secured Party concurrently with the execution of this Agreement, and at any
time and from time to time thereafter, all financing statements, assignments,
continuation financing statements, termination statements, account control
agreements, and other documents and instruments, in form reasonably
satisfactory to Secured Party, and take all other action, as Secured Party may
reasonably request, to perfect and continue perfected, maintain the priority
of or provide notice of the security interest of Secured Party in the
Collateral and to accomplish the purposes of this Agreement.
Section 4 Representations and Warranties. Debtor represents and warrants to
Secured Party as of the date of this Agreement that:
(a) Debtor is a corporation duly organized, validly existing and in good
standing under the law of the jurisdiction of its incorporation and has all
requisite corporate power and authority to execute, deliver and perform its
obligations under this Agreement.
(b) The execution, delivery and performance by Debtor of this Agreement
have been duly authorized by all necessary corporate action of Debtor, and
this Agreement constitutes the legal, valid and binding obligation of
Debtor, enforceable against Debtor in accordance with its terms.
(c) No authorization, consent, approval, license, exemption of, or
filing or registration with, any governmental authority or agency, or
approval or consent of any other Person, is required for the due execution,
delivery or performance by Debtor of this Agreement.
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(d) ▇▇▇▇▇▇'s chief executive office and principal place of business is
located at the address set forth in Schedule 1; all other locations where
Debtor conducts business or Collateral is kept are set forth in Schedule 1;
and all trade names and fictitious names under which Debtor at any time in
the past has conducted or presently conducts its business operations are
set forth in Schedule 1 or Schedule 2.
(e) Debtor is the sole and complete owner of the Collateral, free from
any Lien other than Permitted Liens.
(f) All of Debtor's U.S. and foreign patents and patent applications,
copyrights (whether or not registered), applications for copyright,
trademarks, service marks and trade names (whether registered or
unregistered), and applications for registration of such trademarks,
service marks and trade names, are set forth in Schedule 2.
Section 5 Covenants. So long as any of the Obligations remain unsatisfied,
or until this Security Agreement has terminated pursuant to Section 19 hereof,
▇▇▇▇▇▇ agrees that Debtor shall not do, cause, or permit any of the following
without the prior consent of Secured Party:
(a) Debtor shall appear in and defend any action, suit or proceeding
which may affect to a material extent its title to, or right or interest
in, or Secured Party's right or interest in any material portion of the
Collateral, and shall do and perform all reasonable acts that may be
necessary and appropriate to maintain, preserve and protect the Collateral
in all material respects.
(b) Debtor shall give prompt written notice to Secured Party (and in any
event not later than 30 days following any change described below in this
subsection) of: (i) any change in the location of Debtor's chief executive
office or principal place of business, (ii) any change in the locations set
forth in Schedule 1; (iii) any change in its name, (iv) any changes in,
additions to or other modifications of its trade names and trade styles set
forth in Schedule 1 or Schedule 2, and (v) any changes in its identity or
structure in any manner which might make any financing statement filed
hereunder incorrect or misleading.
(c) Debtor shall carry and maintain in full force and effect, at its own
expense and with financially sound and reputable insurance companies,
insurance with respect to the Collateral in such amounts, with such
deductibles and covering such risks as is customarily carried by companies
engaged in the same or similar businesses of similar size and owning
similar properties in the localities where Debtor operates.
(d) All insurance policies shall provide that Secured Party shall be a
loan payee. During the continuance of an Event of Default and so long as
the Obligations have been accelerated, in its sole discretion, Secured
Party may apply all or any portion of such insurance proceeds to the
payment of Obligations or may release all or any portion thereof to Debtor.
(e) Debtor shall keep accurate and complete books and records in
accordance with generally accepted accounting principles.
(f) Debtor shall not surrender or lose possession of (other than to
Secured Party), sell, lease, rent, or otherwise dispose of or transfer any
of the Collateral or any right or interest therein, except in the ordinary
course of business and except to the extent obsolete or no longer useful to
its business; provided that no such disposition or transfer of Collateral
consisting of investment property or instruments shall be permitted while
any Event of Default exists.
(g) Debtor shall keep the Collateral free of all Liens except Permitted
Liens.
(h) Debtor shall pay and discharge all material taxes, fees, assessments
and governmental charges or levies imposed upon it with respect to the
Collateral prior to the date on which penalties attach thereto, except to
the extent such taxes, fees, assessments or governmental charges or levies
are being contested in good faith by appropriate proceedings.
(i) Debtor shall maintain and preserve its corporate existence, its
rights to transact business and all other rights, franchises and privileges
necessary or desirable in the normal course of its business and operations
and the ownership of the Collateral, except in connection with any
transactions expressly permitted by the Note or any other Document.
11
(j) Upon the request of Secured Party after the occurrence of an Event
of Default, Debtor shall (1) immediately deliver to Secured Party, or an
agent designated by it, appropriately endorsed or accompanied by
appropriate instruments of transfer or assignment, all documents and
instruments, all certificated securities with respect to any investment
property, all letters of credit and all accounts and other rights to
payment at any time evidenced by promissory notes, trade acceptances or
other instruments, (ii) cause any securities intermediaries to show on
their books that Secured Party is the entitlement holder with respect to
any investment property, and/or obtain account control agreements in favor
of Secured Party from such securities intermediaries, in form and substance
satisfactory to Secured Party, with respect to any investment property, as
requested by Secured Party, (iii) mark all documents and chattel paper with
such legends as Secured Party shall reasonably specify, and (iv) obtain
consents from any letter of credit issuers with respect to the assignment
to Secured Party of any letter of credit proceeds.
(k) Debtor shall (i) notify Secured Party of any material claim made or
asserted against the Collateral by any Person or other event which could
reasonably be expected to materially adversely affect the value of the
Collateral or Secured Party's Lien thereon; (ii) furnish to Secured Party
such statements and schedules further identifying and describing the
Collateral and such other reports and other information in connection with
the Collateral as Secured Party may reasonably request, all in reasonable
detail; and (iii) upon reasonable request of Secured Party make such
demands and requests for information and reports as Debtor is entitled to
make in respect of the Collateral.
(l) If and when Debtor shall obtain rights to any new patents,
trademarks, service marks, trade names or copyrights, or otherwise acquire
or become entitled to the benefit of, or apply for registration of, any of
the foregoing, Debtor (i) shall promptly notify Secured Party thereof and
(ii) hereby authorizes Secured Party to modify, amend, or supplement
Schedule 2 and from time to time to include any of the foregoing and make
all necessary or appropriate filings with respect thereto.
(m) Debtor shall not enter into any material agreement (including any
license or royalty agreement) pertaining to any of its patents, copyrights,
trademarks, service marks and trade names, except for non-exclusive
licenses in the ordinary course of business.
(n) Debtor shall give Secured Party immediate notice of the
establishment of any new deposit account and any new securities account
with respect to any investment property.
Section 6 Collection of Accounts. Until Secured Party exercises its rights
hereunder to collect the accounts and other rights to payment, Debtor shall
endeavor in the first instance diligently to collect all amounts due or to
become due on or with respect to the accounts and other rights to payment. At
the request of Secured Party, upon the occurrence and during the continuance of
any Event of Default, all remittances received by Debtor shall be held in trust
for Secured Party and, in accordance with Secured Party's instructions,
remitted to Secured Party or deposited to an account of Secured Party in the
form received (with any necessary endorsements or instruments of assignment or
transfer). At the request of Secured Party, upon and after the occurrence of
any Event of Default, Secured Party shall be entitled to receive all
distributions and payments of any nature with respect to any investment
property or instruments, and all such distributions or payments received by the
Debtor shall be held in trust for Secured Party and, in accordance with Secured
Party's instructions, remitted to Secured Party or deposited to an account with
Secured Party in the form received (with any necessary endorsements or
instruments of assignment or transfer). Following the occurrence of an Event of
Default any such distributions and payments with respect to any investment
property held in any securities account shall be held and retained in such
securities account, in each case as part of the Collateral hereunder.
Additionally, Secured Party shall have the right, upon the occurrence of an
Event of Default, following prior written notice to the Debtor, to vote and to
give consents, ratifications and waivers with respect to any investment
property and instruments, and to exercise all rights of conversion, exchange,
subscription or any other rights, privileges or options pertaining thereto, as
if Secured Party were the absolute owner thereof; provided that Secured Party
shall have no duty to exercise any of the foregoing rights afforded to it and
shall not be responsible to the Debtor or any other Person for any failure to
do so or delay in doing so.
12
Section 7 Authorization; Secured Party Appointed Attorney-in-Fact. Secured
Party shall have the right to, in the name of Debtor, or in the name of Secured
Party or otherwise, upon notice to but without the requirement of assent by
Debtor, and Debtor hereby constitutes and appoints Secured Party (and any of
Secured Party's officers, employees or agents designated by Secured Party) as
Debtor's true and lawful attorney-in-fact, with full power and authority to:
(i) sign any of the financing statements and other documents and instruments
which must be executed or filed to perfect or continue perfected, maintain the
priority of or provide notice of Secured Party's security interest in the
Collateral (including any notices to or agreements with any securities
intermediary); (ii) assert, adjust, sue for, compromise or release any claims
under any policies of insurance; and (iii) execute any and all such other
documents and instruments, and do any and all acts and things for and on behalf
of Debtor, which Secured Party may deem reasonably necessary or advisable to
maintain, protect, realize upon and preserve the Collateral and Secured Party's
security interest therein and to accomplish the purposes of this Agreement.
Secured Party agrees that, except upon and during the continuance of an Event
of Default, it shall not exercise the power of attorney, or any rights granted
to Secured Party, pursuant to clauses (ii) and (iii). The foregoing power of
attorney is coupled with an interest and irrevocable so long as the Obligations
have not been paid and performed in full. Debtor hereby ratifies, to the extent
permitted by law, all that Secured Party shall lawfully and in good faith do or
cause to be done by virtue of and in compliance with this Section 7.
Section 8 Events of Default. Any of the following events which shall occur
and be continuing shall constitute an "Event of Default":
(a) Any "Event of Default" as defined in the Note shall have occurred.
(b) Any representation or warranty by Debtor under or in connection with
this Agreement, shall prove to have been incorrect in any material respect
when made or shall become incorrect in any material respect following the
date hereof.
(c) Debtor shall fail to perform or observe in any material respect any
other term, covenant or agreement contained in this Agreement, on its part
to be performed or observed and any such failure shall remain unremedied
for a period of 10 days after written notice thereof by Secured Party.
(d) Any loss, theft or substantial damage to, or destruction of, any
material portion of the Collateral (unless within 10 days after the
occurrence of any such event, Debtor furnishes to Secured Party evidence
satisfactory to Secured Party that the amount of any such loss, theft,
damage to or destruction of the Collateral is adequately insured under
policies naming Secured Party as an additional named insured or loss
payee).
Section 9 Remedies.
(a) Prior to termination of this Security Agreement, and upon the
occurrence and continuance of an Event of Default, Secured Party may
declare any of the Obligations to be immediately due and payable and shall
have, in addition to all other rights and remedies granted to it in this
Agreement or the Note, all rights and remedies of a secured party under the
UCC and other applicable laws. Without limiting the generality of the
foregoing, Secured Party may sell, resell, lease, use, assign, license,
sublicense, transfer or otherwise dispose of any or all of the Collateral
in its then condition or following any commercially reasonable preparation
or processing (utilizing in connection therewith any of Debtor's assets,
without charge or liability to Secured Party therefor) at public or private
sale, by one or more contracts, in one or more parcels, at the same or
different times, for cash or credit, or for future delivery without
assumption of any credit risk, all as Secured Party deems advisable;
provided, however, that Debtor shall be credited with the net proceeds of
sale only when such proceeds are finally collected by Secured Party.
Secured Party shall have the right upon any such public sale, and, to the
extent permitted by law, upon any such private sale, to purchase the whole
or any part of the Collateral so sold, free of any right or equity of
redemption, which right or equity of redemption Debtor hereby releases, to
the extent permitted by law. ▇▇▇▇▇▇ hereby agrees that the sending of
notice by ordinary mail, postage prepaid, to the address of Debtor
13
set forth herein, of the place and time of any public sale or of the time
after which any private sale or other intended disposition is to be made,
shall be deemed reasonable notice thereof if such notice is sent ten days
prior to the date of such sale or other disposition or the date on or after
which such sale or other disposition may occur.
(b) For the purpose of enabling Secured Party to exercise its rights and
remedies under this Section 9 or otherwise in connection with this
Agreement, Debtor hereby grants to Secured Party an irrevocable, non-
exclusive and assignable license (exercisable without payment or royalty or
other compensation to Debtor) to use, license or sublicense any
intellectual property Collateral.
(c) The cash proceeds actually received from the sale or other
disposition or collection of Collateral, and any other amounts received in
respect of the Collateral the application of which is not otherwise
provided for herein, shall be applied first, to the payment of the
reasonable costs and expenses of Secured Party in exercising or enforcing
its rights hereunder and in collecting or attempting to collect any of the
Collateral, and to the payment of all other amounts payable to Secured
Party pursuant to Section 13 hereof; and second, to the payment of the
Obligations. Any surplus thereof which exists after payment and performance
in full of the Obligations shall be promptly paid over to Debtor or
otherwise disposed of in accordance with the UCC or other applicable law.
Debtor shall remain liable to Secured Party for any deficiency which exists
after any sale or other disposition or collection of Collateral.
Section 10 Certain Waivers. Debtor waives, to the fullest extent permitted
by law, (i) any right of redemption with respect to the Collateral, whether
before or after sale hereunder, and all rights, if any, of marshalling of the
Collateral or other collateral or security for the Obligations; (ii) any right
to require Secured Party (A) to proceed against any Person, (B) to exhaust any
other collateral or security for any of the Obligations, (C) to pursue any
remedy in Secured Party's power, or (D) to make or give any presentments,
demands for performance, notices of nonperformance, protests, notices of
protests or notices of dishonor in connection with any of the Collateral; and
(iii) all claims, damages, and demands against Secured Party arising out of the
repossession, retention, sale or application of the proceeds of any sale of the
Collateral.
Section 11 Notices. All notices and other communications hereunder shall be
given as provided in Section 11.2 of the Merger Agreement.
Section 12 No Waiver; Cumulative Remedies. No failure on the part of Secured
Party to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers and privileges that may
otherwise be available to Secured Party.
Section 13 Costs and Expenses. Debtor agrees to pay on demand: all
reasonable costs and expenses of Secured Party, and the reasonable fees and
disbursements of counsel, in connection with the enforcement or attempted
enforcement of, and preservation of any rights or interests under, this
Agreement and the Note, including in any out-of-court workout or other
refinancing or restructuring or in any bankruptcy case, and the protection,
sale or collection of, or other realization upon, any of the Collateral,
including all expenses of taking, collecting, holding, sorting, handling,
preparing for sale, selling, or the like, and other such expenses of sales and
collections of Collateral. Any amounts payable to Secured Party under this
Section 13 or otherwise under this Agreement if not paid when due shall bear
interest from the date such payment is due until paid in full, at the rate of
interest set forth in the Note.
Section 14 Binding Effect. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by ▇▇▇▇▇▇, Secured Party and their respective
successors and assigns.
Section 15 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of California, except as required by
mandatory provisions of law and to the extent the validity or perfection of the
security interests hereunder, or the remedies hereunder, in respect of any
Collateral are governed by the law of a jurisdiction other than California.
14
Section 16 Entire Agreement; Amendment. This Agreement contains the entire
agreement of the parties with respect to the subject matter hereof and shall
not be amended except by the written agreement of the parties.
Section 17 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Agreement
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such
provision in any other jurisdiction.
Section 18 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
Section 19 Termination. Upon indefeasible payment and performance in full of
all Obligations, this Agreement shall terminate and Secured Party shall
promptly execute and deliver to Debtor such documents and instruments
reasonably requested by ▇▇▇▇▇▇ as shall be necessary to evidence termination of
all security interests given by Debtor to Secured Party hereunder; provided,
however, that the obligations of Debtor under Section 13 hereof shall survive
such termination.
[Signature page follows.]
15
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as
of the date first above written.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: CEO
CHEMDEX CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO
16
SCHEDULE 1
to the Security Agreement
1. Locations of Chief Executive Office and Other Locations, Including of
Collateral
a. Chief Executive Office and Principal Place of Business:
▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
b. Other locations where Debtor conducts business or Collateral is kept:
▇▇▇▇▇▇▇▇.▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Fulfillment Warehouse
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Note: both locations are part of Pro Med Co., Inc., the
fulfillment business, which is scheduled to be spun-off
2. Trade Names and Trade Styles; Other Corporate, Trade or Fictitious Names,
Etc.
Prior corporate name of ▇▇▇▇▇▇▇▇.▇▇▇ was MCA Healthpages, Inc.
Pro Med Co. Inc.
Pro Med
Pro Med Co.
Promedix
Promedix, Inc.
17
SCHEDULE 2
to the Security Agreement
1. Patents and Patent Applications.
None
2. Copyrights (Registered) and Copyright Applications.
None
3. Trademarks, Service Marks and Trade Names and Trademark, Service Mark and
Trade Name Applications. Promedix's wholly-owned subsidiary Pro Med Co. Inc.,
which is scheduled to be spun-off owns "ProMedix(R)" which is a federally
registered trade mark registered December 7, 1997 and has a license to use the
mark "▇▇▇▇▇▇▇▇(R)," which is federally registered mark.
18
PATENT AND TRADEMARK SECURITY AGREEMENT
THIS PATENT AND TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated as of
October 1, 1999, is made by and between ▇▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation ("Debtor") and Chemdex Corporation, a Delaware corporation
("Secured Party").
Debtor and Secured Party are parties to a Security Agreement of even date
herewith (as amended, modified, renewed or extended from time to time, the
"Security Agreement"), which Security Agreement provides, among other things,
for the grant by Debtor to Secured Party of a security interest in certain of
Debtor's property and assets, including, without limitation, its patents and
patent applications, its trademarks, service marks and trade names, and its
applications for registration of such trademarks, service marks and trade
names. Pursuant to the Security Agreement, Debtor has agreed to execute and
deliver this Agreement to Secured Party for filing with the United States
Patent and Trademark Office (the "PTO") (and any other relevant recording
systems in any domestic or foreign jurisdiction), and as further evidence of
and to effectuate such grant of a security interest in such patents and patent
applications, trademarks, service marks and trade names, and applications for
registration of such trademarks, service marks and trade names, and the other
general intangibles described herein. Accordingly, Debtor and Secured Party
hereby agree as follows:
Section 1 Definitions; Interpretation.
(a) All capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings assigned to them in the Security
Agreement.
(b) In this Agreement, (i) the meaning of defined terms shall be
equally applicable to both the singular and plural forms of the terms
defined; and (ii) the captions and headings are for convenience of
reference only and shall not affect the construction of this Agreement.
Section 2 Security Interest.
(a) As security for the payment and performance of the Obligations (as
defined in the Security Agreement), Debtor hereby grants a security
interest in and mortgage to Secured Party, for security purposes, all of
Debtor's right, title and interest in, to and under the following property,
whether now existing or owned or hereafter acquired, developed or arising
(collectively, the "Intellectual Property Collateral"):
(i) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties
with respect to any licenses (including, without limitation, such
patents and patent applications as described in Schedule A hereto), all
rights to sue for past, present or future infringement thereof, all
rights arising therefrom and pertaining thereto and all reissues,
divisions, continuations, renewals, extensions and continuations-in-
part thereof;
(ii) all state (including common law), federal and foreign
trademarks, service marks and trade names, and applications for
registration of such trademarks, service marks and trade names, all
licenses relating to any of the foregoing and all income and royalties
with respect to any licenses (including, without limitation, such
marks, names and applications as described in Schedule B hereto),
whether registered or unregistered and wherever registered, all rights
to sue for past, present or future infringement or unconsented use
thereof, all rights arising therefrom and pertaining thereto and all
reissues, extensions and renewals thereof;
(iii) the entire goodwill of or associated with the businesses now
or hereafter conducted by Debtor connected with and symbolized by any
of the aforementioned properties and assets;
(iv) all general intangibles (as defined in the UCC) and all
intangible intellectual or other similar property of the Debtor of any
kind or nature, associated with or arising out of any of the
aforementioned properties and assets and not otherwise described above;
and
(v) all products and proceeds of any and all of the foregoing.
19
(b) This Agreement shall create a continuing security interest in the
Intellectual Property Collateral which shall remain in effect until
terminated in accordance with Section 17 hereof.
(c) Notwithstanding the foregoing provisions of this Section 2, the
grant of a security interest as provided herein shall not extend to, and
the term "Collateral" shall not include, any general intangibles of Debtor
(whether owned or held as licensee or lessee, or otherwise), to the extent
that (i) such general intangibles are not assignable or capable of being
encumbered as a matter of law or under the terms of the license, lease or
other agreement applicable thereto (but solely to the extent that any such
restriction shall be enforceable under applicable law), without the consent
of the licensor or lessor thereof or other applicable party thereto and
(ii) such consent has not been obtained; provided, however, that the
foregoing grant of security interest shall extend to, and the term
"Collateral" shall include, (A) any general intangible which is an account
receivable or a proceed of, or otherwise related to the enforcement or
collection of, any account receivable, or goods which are the subject of
any account receivable, (B) any and all proceeds of any general intangibles
which are otherwise excluded to the extent that the assignment or
encumbrance of such proceeds is not so restricted, and (C) upon obtaining
the consent of any such licensor, lessor or other applicable party's
consent with respect to any such otherwise excluded general intangibles,
(but without obligating Debtor to obtain such consent) such general
intangibles as well as any and all proceeds thereof that might have
theretofore have been excluded from such grant of a security interest and
the term "Collateral."
Section 3 Further Assurances; Appointment of Secured Party as Attorney-in-
Fact. Debtor at its expense shall execute and deliver, or cause to be executed
and delivered, to Secured Party any and all documents and instruments, in form
and substance satisfactory to Secured Party, and take any and all action, which
Secured Party may reasonably request from time to time, to perfect and continue
perfected, maintain the priority of or provide notice of Secured Party's
security interest in the Intellectual Property Collateral and to accomplish the
purposes of this Agreement. Secured Party shall have the right to, in the name
of the Debtor, or in the name of Secured Party or otherwise, without notice to
or assent by the Debtor, and the Debtor hereby irrevocably constitutes and
appoints Secured Party (and any of Secured Party's officers or employees or
agents designated by Secured Party) as the Debtor's true and lawful attorney-
in-fact with full power and authority, (i) to sign the name of the Debtor on
all or any of such documents or instruments and perform all other acts that
Secured Party deems necessary or advisable in order to perfect or continue
perfected, maintain the priority or enforceability of or provide notice of
Secured Party's security interest in, the Intellectual Property Collateral, and
(ii) to execute any and all other documents and instruments, and to perform any
and all acts and things for and on behalf of the Debtor, which Secured Party
may deem necessary or advisable to maintain, preserve and protect the
Intellectual Property Collateral and to accomplish the purposes of this
Agreement, including (A) to defend, settle, adjust or (after the occurrence of
any Event of Default) institute any action, suit or proceeding with respect to
the Intellectual Property Collateral, and, after the occurrence of any Event of
Default, (B) to assert or retain any rights under any license agreement for any
of the Intellectual Property Collateral, including without limitation any
rights of the Debtor arising under Section 365(n) of the Bankruptcy Code, and
(C) after the occurrence of any Event of Default, to execute any and all
applications, documents, papers and instruments for Secured Party to use the
Intellectual Property Collateral, to grant or issue any exclusive or non-
exclusive license or sub-license with respect to any Intellectual Property
Collateral, and to assign, convey or otherwise transfer title in or dispose of
the Intellectual Property Collateral; provided, however, that in no event shall
Secured Party have the unilateral power, prior to the occurrence and
continuation of an Event of Default, to assign any of the Intellectual Property
Collateral to any Person, including itself, without the Debtor's written
consent. The foregoing shall in no way limit Secured Party's rights and
remedies upon or after the occurrence of an Event of Default. The power of
attorney set forth in this Section 3, being coupled with an interest, is
irrevocable so long as this Agreement shall not have terminated in accordance
with Section 17.
Section 4 Future Rights. Except as otherwise expressly agreed to in writing
by Secured Party, if and when the Debtor shall obtain rights to any new
patentable inventions or any new trademarks, or become entitled to the benefit
of any of the foregoing, or obtain rights or benefits with respect to any
reissue, division, continuation, renewal, extension or continuation-in-part of
any patents or trademarks, or any improvement of any patent, the provisions of
Section 2 shall automatically apply thereto and the Debtor shall give to
Secured
20
Party prompt notice thereof. Debtor shall do all things deemed necessary or
advisable by Secured Party to ensure the validity, perfection, priority and
enforceability of the security interests of Secured Party in such future
acquired Intellectual Property Collateral; provided, however, that Debtor shall
not be required to register any patents or trademarks with the PTO except to
the extent consistent with Debtor's past practices. Debtor hereby authorizes
Secured Party to modify, amend, or supplement the Schedules hereto and to
reexecute this Agreement from time to time on Debtor's behalf and as its
attorney-in-fact to include any such future Intellectual Property Collateral
and to cause such reexecuted Agreement or such modified, amended or
supplemented Schedules to be filed with PTO.
Section 5 Secured Party's Duties. Notwithstanding any provision contained in
this Agreement, Secured Party shall have no duty to exercise any of the rights,
privileges or powers afforded to it and shall not be responsible to the Debtor
or any other Person for any failure to do so or delay in doing so. Except for
the accounting for moneys actually received by Secured Party hereunder or in
connection herewith, Secured Party shall have no duty or liability to exercise
or preserve any rights, privileges or powers pertaining to the Intellectual
Property Collateral.
Section 6 Representations and Warranties. Debtor represents and warrants to
Secured Party as of the date of this Agreement that:
(a) A true and correct list of all of the existing Intellectual Property
Collateral consisting of U.S. patents and patent applications and/or
registrations owned by the Debtor, in whole or in part, is set forth in
Schedule A.
(b) A true and correct list of all of the existing Intellectual Property
Collateral consisting of U.S. trademarks, trademark registrations and/or
applications owned by the Debtor, in whole or in part, is set forth in
Schedule B.
(c) All patents, trademarks, service marks and trade names of Debtor are
subsisting and have not been adjudged invalid or unenforceable in whole or
in part.
(d) All maintenance fees required to be paid on account of any patents
or trademarks of Debtor have been timely paid for maintaining such patents
and trademarks in force, and, to Debtor's knowledge, each of the patents
and trademarks constituting part of the Intellectual Property Collateral is
valid and enforceable.
(e) To Debtor's knowledge, no material infringement or unauthorized use
presently is being made of any Intellectual Property Collateral by any
Person.
(f) To Debtor's knowledge, Debtor is the sole and exclusive owner of the
Intellectual Property Collateral and the past, present and contemplated
future use of such Intellectual Property Collateral by Debtor has not, does
not and will not infringe or violate any right, privilege or license
agreement of or with any other Person.
Section 7 Covenants. So long as any of the Obligations remain unsatisfied or
until this Agreement has terminated pursuant to Section 17 hereof, ▇▇▇▇▇▇
agrees that Debtor shall not do, cause or permit any of the following without
the prior consent of Secured Party:
(a) Assignor will appear in and defend any action, suit or proceeding
which may affect to a material extent its title to, or Assignee's rights or
interest in, the Intellectual Property Collateral.
(b) To the extent deemed reasonably necessary or appropriate by Secured
Party, Debtor will not allow or suffer any Intellectual Property Collateral
to become abandoned, nor any registration thereof to be terminated,
forfeited, expired or dedicated to the public.
(c) To the extent deemed reasonably necessary or appropriate by Secured
Party, Debtor will diligently prosecute all applications for patents and
trademarks, and file and prosecute any and all continuations,
continuations-in-part, applications for reissue, applications for
certificate of correction and like matters as shall be reasonable and
appropriate in accordance with prudent business practice, and promptly pay
any and all maintenance, license, registration and other fees, taxes and
expenses incurred in connection with any Intellectual Property Collateral.
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Section 8 Secured Party's Rights and Remedies.
(a) Secured Party shall have all rights and remedies available to it
under the Security Agreement, the Note and applicable law with respect to
the security interests in any of the Intellectual Property Collateral or
any other collateral. Debtor agrees that such rights and remedies include,
but are not limited to, the right of Secured Party as a secured party to
sell or otherwise dispose of its collateral after default pursuant to the
UCC. Debtor agrees that Secured Party shall at all times have such royalty
free licenses, to the extent permitted by law, for any Intellectual
Property Collateral that shall be reasonably necessary to permit the
exercise of any of Secured Party's rights or remedies upon or after the
occurrence of an Event of Default and shall additionally have the right to
license and/or sublicense any Intellectual Property Collateral, whether
general, special or otherwise, and whether on an exclusive or a
nonexclusive basis, any of the Intellectual Property Collateral, throughout
the world for such term or terms, on such conditions, and in such manner,
as Secured Party in its sole discretion shall determine in connection with
the exercise of any of such rights or remedies. In addition to and without
limiting any of the foregoing, upon the occurrence and during the
continuance of an Event of Default, Secured Party shall have the right but
shall in no way be obligated to bring suit, or to take such other action as
Secured Party deems necessary or advisable, in the name of the Debtor or
Secured Party, to enforce or protect any of the Intellectual Property
Collateral, in which event the Debtor shall, at the request of Secured
Party, do any and all lawful acts and execute any and all documents
required by Secured Party in aid of such enforcement. To the extent that
Secured Party shall elect not to bring suit to enforce such Intellectual
Property Collateral, Debtor agrees to use all reasonable measures and its
diligent efforts, whether by action, suit, proceeding or otherwise, to
prevent the infringement, misappropriation or violations thereof by others
and for that purpose agrees diligently to maintain any action, suit or
proceeding against any Person necessary to prevent such infringement,
misappropriation or violation.
(b) The cash proceeds actually received from the sale or other
disposition or collection of Intellectual Property Collateral, and any
other amounts received in respect of the Intellectual Property Collateral
the application of which is not otherwise provided for herein, shall be
applied as provided in the Security Agreement.
Section 9 Notices. All notices and other communications hereunder shall be
given as provided in Section 11.2 of the Merger Agreement.
Section 10 No Waiver; Cumulative Remedies. No failure on the part of Secured
Party to exercise, and no delay in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under this Agreement are cumulative
and not exclusive of any rights, remedies, powers and privileges that may
otherwise be available to Secured Party.
Section 11 Costs and Expenses; Indemnity.
(a) ▇▇▇▇▇▇ agrees to pay on demand all of Secured Party's reasonable
costs and expenses, including reasonable attorneys' fees, in connection
with the enforcement or attempted enforcement of, and preservation of any
rights or interests under, this Agreement, and the assignment, sale or
other disposal of any of the Intellectual Property Collateral.
(b) Debtor hereby agrees to indemnify Secured Party, any affiliate
thereof, and their respective directors, officers, employees, agents,
counsel and other advisors (each an "Indemnified Person") against, and hold
each of them harmless from, any and all liabilities, obligations, losses,
claims, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever, including, without
limitation, reasonable attorneys' fees and attorneys' fees incurred
pursuant to 11 U.S.C., which may be imposed on, incurred by, or asserted
against any Indemnified Person, relating to or arising out of this
Agreement, including in connection with any infringement or alleged
infringement with respect to any Intellectual Property Collateral, or any
action taken or omitted to be taken by it hereunder (the
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"Indemnified Liabilities"); provided that Debtor shall not be liable to any
Indemnified Person for any portion of such Indemnified Liabilities to the
extent they are found by a final decision of a court of competent
jurisdiction to have resulted from such Indemnified Person's gross
negligence or willful misconduct. If and to the extent that the foregoing
indemnification is for any reason held unenforceable, ▇▇▇▇▇▇ agrees to make
the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
(c) Any amounts payable to Secured Party under this Section 11 or
otherwise under this Agreement if not paid upon demand shall bear interest
from the date of such demand until paid in full, at the rate of interest
set forth in the Note.
Section 12 Binding Effect. This Agreement shall be binding upon, inure to
the benefit of and be enforceable by ▇▇▇▇▇▇, Secured Party and their respective
successors and assigns.
Section 13 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of California, except to the extent
that the validity or perfection of the security interests hereunder in respect
of any Intellectual Property Collateral are governed by federal law and except
to the extent that Secured Party shall have greater rights or remedies under
federal law, in which case such choice of California law shall not be deemed to
deprive Secured Party of such rights and remedies as may be available under
federal law.
Section 14 Amendment. This Agreement shall not be amended except by the
written agreement of the parties.
Section 15 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Agreement
shall be prohibited by or invalid under any such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such
provision in any other jurisdiction.
Section 16 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
Section 17 Termination. Upon payment and performance in full of all
Obligations, this Agreement shall terminate and Secured Party shall promptly
execute and deliver to Debtor such documents and instruments reasonably
requested by Debtor as shall be necessary to evidence termination of all
security interests given by Debtor to Secured Party hereunder, including
cancellation of this Agreement by written notice from Secured Party to the PTO;
provided, however, that the obligations of Debtor under Section 11 hereof shall
survive such termination.
Section 18 Security Agreement. Debtor acknowledges that the rights and
remedies of Secured Party with respect to the security interests in the
Intellectual Property Collateral granted hereby are more fully set forth in the
Security Agreement and all such rights and remedies are cumulative.
Section 19 No Inconsistent Requirements. Debtor acknowledges that this
Agreement and the Security Agreement may contain covenants and other terms and
provisions variously stated regarding the same or similar matters, and the
Debtor agrees that all such covenants, terms and provisions are cumulative and
all shall be performed and satisfied in accordance with their respective terms.
Section 20 Conflicts. In the event of any conflict or inconsistency between
this Agreement and the Security Agreement, the terms of this Agreement shall
control.
[Signature page follows.]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as
of the date first above written.
▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: CEO
CHEMDEX CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: VP-CFO
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