EXHIBIT 10.2
 
SECURITY AGREEMENT
 
This Security Agreement (this “Agreement”) is made and entered into as of
__________, 2009, by and between Advaxis, Inc., a Delaware corporation (the
“Grantor”), and the Investors listed on Schedule A hereto (collectively,
“Secured Parties”).
 
RECITALS
 
A.           Pursuant to that certain Note Purchase Agreement dated as of
__________, 2009 by and between the Grantor and the Secured Parties (the “Note
Purchase Agreement”), Secured Parties have agreed to make certain advances of
money to Grantor in the amounts and manner set forth in the Note Purchase
Agreement (collectively, the “Loans”) and as represented by one or more Secured
Convertible Promissory Notes of even date (the “Bridge Notes”) (the Note
Purchase Agreement, Bridge Notes and this Agreement are sometimes collectively
referred to herein as the “Transaction Documents”);
 
B.           Grantor wishes to secure performance and payment of all obligations
under the Note (the “Obligations”) to the Secured Parties pursuant to the Note,
with all of their tangible and intangible assets, including without limitation,
goodwill, intellectual property and Grantor’s contractual rights with third
parties, all as further described on Exhibit A attached hereto.  All terms used
without definition in this Agreement shall have the meaning assigned to them in
the Note Purchase Agreement.  All terms used without definition in this
Agreement or in the Note Purchase Agreement shall have the meaning assigned to
them in Article 1 or Article 9 of the Uniform Commercial Code (“UCC”).
 
C.           Secured Parties are willing to make the Loans to Grantor, but only
upon the condition, among others, that the Grantor shall have executed and
delivered to Secured Parties this Agreement.
 
NOW, THEREFORE, Grantor and the Secured Parties agree as follows:
 
1.           Grant of Security Interest.  To secure all of the Obligations,
Grantor grants to Secured Parties a continuing lien and security interest in,
and hereby assigns to the Secured Parties as collateral security, the property
described in Exhibit A (the “Collateral”).
 
2.           Grantor’s Representations and Warranties.  Grantor represents,
warrants, and covenants as follows:
 
(a)           Authorization.  Grantor has authority and has obtained all
approvals and consents necessary to enter into this Agreement (including the
consent of the Existing Secured Parties), and Grantor’s execution, delivery and
performance of this Agreement will not violate or conflict with the terms of
Grantor’s Certificate of Incorporation or Bylaws or any statute, regulation,
ordinance, rule of law, agreement, contract, mortgage, indenture, bond, bill,
note, or other instrument or writing binding upon Grantor or to which Grantor is
subject.

 

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(b)           Title.  The Collateral is owned by the Grantor and is free of all
liens, encumbrances and other security interests, other than the lien of this
Agreement, and liens attributable to any other agreement entered into by the
Grantor and Secured Parties in connection with the transactions contemplated by
the Note Purchase Agreement (collectively, “Permitted Liens”).
 
(c)           Further Representations.  Grantor further represents, warrants,
and covenants that (i) Grantor is not in default under any agreement under which
Grantor owes any money, or any agreement, the violation or termination of which
could reasonably be expected to have a material adverse effect on the Grantor;
(ii) the information, if any, provided by the Grantor to Secured Parties
pursuant to a request for such information from any Secured Party on or prior to
the date of this Agreement is true and correct in all material respects; (iii)
all financial statements and other information provided to any Secured Party, if
any, fairly present Grantor’s financial condition as at the respective dates
thereof, and there has not been a material adverse change in the financial
condition of the Grantor since the date of the most recent of the financial
statements submitted to any Secured Party; (iv) Grantor is in compliance with
all laws and orders applicable to it where the failure to so comply could
reasonably be expected to have a material adverse effect on the Grantor; (v)
Grantor is not party to any litigation and is not, to its knowledge the subject
of any government investigation, and the Grantor has no knowledge of any pending
litigation or investigation or the existence of circumstances that reasonably
could be expected to give rise to such litigation or investigation; (vi)
Grantor’s principal place of business is located at the address specified in
Section 9; and (vii) the representations and other statements made by the
Grantor to Secured Parties, do not, taken as a whole, contain any untrue
statement of a material fact or omit to state a material fact necessary to make
any statements made to Secured Parties not misleading.
 
3.           Covenants.
 
(a)           Encumbrances.  The Grantor shall not grant a security interest in
any of the Collateral or execute any financing statements covering any of the
Collateral in favor of any person or entity other than Secured Parties.
 
(b)           Use of Collateral.  The Collateral will not be used for any
unlawful purpose or in any way that will void any insurance required to be
carried in connection therewith.  Grantor will keep the Collateral free and
clear of liens (other than Permitted Liens) and, as appropriate and applicable,
will keep it in good condition and repair, and will clean, shelter, and
otherwise care for the Collateral in all such ways as are considered good
practice by owners of like property.
 
(c)           Indemnification.  Grantor shall indemnify Secured Parties against
all losses, claims, demands and liabilities of any kind caused by the
Collateral.
 
(d)           Perfection of Security Interest.  Grantor shall execute and
deliver such documents as any Secured Party reasonably deems necessary to
create, perfect and continue the security interest in the Collateral
contemplated hereby.

 
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(e)           Insurance of Collateral.  Grantor, at its expense, shall keep the
Collateral insured against loss or damage by fire, theft, explosion, sprinklers,
and all other hazards and risks, and in such amounts, as are ordinarily insured
against by other owners in similar businesses conducted in the locations where
Grantor’s business is conducted on the date hereof.  Grantor shall also maintain
insurance relating to Grantor’s ownership and use of the Collateral in amounts
and of a type that are customary to businesses similar to Grantor.
 
(f)           Inventory.  As to Collateral which is Inventory, Grantor agrees
(a) to the extent held in any warehouse or other third party storage facility,
to deliver immediately to Secured Parties or Secured Parties’ nominee all
warehouse receipts or other documents otherwise entitling Grantor to possession
of the Collateral, (b) to execute and deliver to Secured Parties such financing
statements as any Secured Party may request with respect to the Inventory, (c)
to take such other steps as Secured Parties may from time to time reasonably
request to perfect Secured Parties’ security interest in the Inventory under
applicable law, including, with respect to any portion of the Inventory held by,
or in the possession or under the control of any person or entity other than
Grantor, to obtain the agreement of such person or entity that Secured Parties
have a first priority security interest in the Inventory and that Secured
Parties may take or otherwise exercise control over such Inventory, free and
clear of any claims of such person or entity.
 
(g)           Binding Agreement.  Anything herein to the contrary
notwithstanding, (i) Grantor shall remain liable under the contracts and
agreements 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 Parties of any of
the rights granted hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral; and
(iii) Secured Parties shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement,
nor shall Secured Parties be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
 
(h)           Instruments.  Grantor will deliver and pledge to Secured Parties
all certificates or instruments that represent or evidence the Collateral duly
endorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to Secured Parties.
 
(i)           Records.  Grantor shall prepare and keep, in accordance with
generally accepted accounting principles consistently applied, complete and
accurate records regarding the Collateral and, if and when requested by a
Secured Party, shall prepare and deliver a complete and accurate schedule of all
the Collateral in such detail as a Secured Party may reasonably require.
 
(j)           Inspection of Grantor’s Books.  Grantor shall permit Secured
Parties or its designee at reasonable times and from time to time to inspect
Grantor’s books, records and properties and to audit and to make copies of
extracts from such books and records.

 
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(k)           Fees and Costs.  Grantor shall pay all expenses, including
reasonable attorneys’ fees, incurred by Secured Parties in the preservation,
realization, enforcement or exercise of any Secured Party’s rights under this
Agreement.
 
(l)           Further Assurances.  At any time and from time to time, upon the
written request of a Secured Party, and at the sole expense of the Grantor,
Grantor shall promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as a Secured Party may
reasonably deem desirable to obtain the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, (i) to
secure all consents and approvals necessary or appropriate for the grant of a
security interest to Secured Parties in any Collateral held by Grantor or in
which Grantor have any rights not heretofore assigned, (ii) filing any financing
or continuation statements under the UCC with respect to the security interests
granted hereby, (iii) transferring Collateral to Secured Parties’ possession (if
a security interest in such Collateral can be perfected by possession), (iv)
placing the interest of Secured Parties as lienholder on the certificate of
title (or other evidence of ownership) of any vehicle owned by the Grantor or in
or with respect to which the Grantor holds a beneficial interest, (v) using its
best efforts to obtain waivers of liens from landlords and mortgagees, and (vi)
causing each wholly-owned subsidiary which becomes a subsidiary of Grantor after
the effective date hereof to (A) join in the Guaranty as an additional guarantor
and (B) join in this Agreement as a “Subsidiary” and “Grantor” within the
meaning hereof.  Grantor also hereby authorizes Secured Parties to file any such
financing or continuation statement without the signature of Grantor.  If any
amount payable under or in connection with any of the Collateral is or shall
become evidenced by any Instrument, such Instrument, other than checks and notes
received in the ordinary course of business, shall be duly endorsed in a manner
satisfactory to Secured Parties and delivered to Secured Parties promptly upon
Grantor’s receipt thereof.
 
4.           Events of Default.  The occurrence of (i) any material breach or
default of any material covenant or other material term or condition under the
Note Purchase Agreement (or any promissory note or other agreement or instrument
delivered in connection therewith, the Transaction Documents) (after giving
affect to any applicable notice and cure period thereunder) or (ii) the material
breach of any material representation under this Agreement (after notice of any
such breach from any Secured Party and expiration of a fifteen (15) day cure
period without cure of such breach to Secured Parties’ satisfaction), or the
failure to perform any material obligation in any material respect under Section
3 of this Agreement, shall constitute an “Event of Default” under this
Agreement.
 
5.           Remedies on Default.
 
(a)           Upon the occurrence and upon the continuance of any Event of
Default, Secured Parties may declare all amounts outstanding under the Note
Purchase Agreement to be immediately due and payable, and thereupon all such
amounts shall be and become immediately due and payable to the Secured
Parties.  Secured Parties shall have all rights, privileges, powers and remedies
provided by law.
 
i.           Secured Parties may gather, take possession of, and sell or
otherwise dispose of, the Collateral in accordance with applicable law; and

 
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ii.           Secured Parties may use, operate, consume and sell the Collateral
in its possession as appropriate for the purpose of performing Grantor’s
obligations with respect thereto to the extent necessary to satisfy the
obligations of Grantor.
 
(b)           All payments received and amounts realized by Secured Parties
shall be promptly applied and distributed by the Secured Parties in the
following order of priority:
 
i.           first, to the payment of all costs and expenses, including
reasonable legal expenses and attorneys fees, incurred or made hereunder by
Secured Parties, including any such costs and expenses of foreclosure or suit,
if any, and of any sale or the exercise of any other remedy under this Section
5, and of all taxes, assessments or liens superior to the lien granted under
this Agreement;
 
ii.           second, to payment to the Secured Parties (up to the amount then
owing under the Note Purchase Agreement); and
 
iii.           third, to the Grantor (to the extent of any surplus).
 
6.           Power of Attorney.  Following an Event of Default, Grantor hereby
appoints Secured Parties, its attorney-in-fact to prepare, sign and file or
record, for Grantor in Grantor’s name, any financing statements, applications
for registration and like papers and to take any other action deemed by Secured
Parties as necessary or desirable in order to perfect the security interest of
the Secured Parties hereunder, to dispose of any Collateral, and to perform any
obligations of the Grantor hereunder, at Grantor’s expense, but without
obligation to do so.  Any proceeds received from the foregoing actions of
Secured Parties will be distributed in accordance with Section 5(d) of this
Agreement.
 
7.           Remedies Cumulative.  The Secured Parties’ rights and remedies
under this Agreement and all other agreements shall be cumulative and are not
exclusive of any other remedies not inconsistent herewith as provided under the
UCC, by law, or in equity.  No exercise by any Secured Party of one right or
remedy shall be deemed an election, and no waiver by any Secured Party of any
Event of Default shall be deemed a continuing waiver.  No delay by any Secured
Party shall constitute a waiver, election, or acquiescence by it.  No waiver by
any Secured Party shall be effective unless made in a written document signed on
behalf of such Secured Party and then shall be effective only in the specific
instance and for the specific purpose for which it was given.
 
8.           Grantor’s Waivers.  Secured Parties may, at their election,
exercise or decline or fail to exercise any right or remedy it may have against
the Grantor or any security held by Secured Parties, including without
limitation the right to foreclose upon any such security by judicial or
nonjudicial sale, without affecting or impairing in any way the liability of the
Grantor hereunder.  Grantor waives any setoff, defense or counterclaim that the
Grantor may have against any Secured Party.  Grantor waives any defense arising
out of the absence, impairment or loss of any right of reimbursement or
subrogation or any other rights against the Grantor.  Grantor waives all rights
to participate in any security now or hereafter held by Secured
Parties.  Grantor waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Agreement and of the existence, creation, or incurring of
new or additional indebtedness.

 
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9.          Notices.  Unless otherwise provided in this Agreement, all notices
or demands by any party relating to this Agreement or any other agreement
entered into in connection herewith shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by telefacsimile to the Grantor or to Secured Parties, as
the case may be, at its addresses set forth in the Note Purchase Agreement.  The
parties hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other.
 
10.         Choice of Law and Venue; Jury Trial Waiver.
 
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Delaware, without regard to principles of
conflicts of law.  Grantor and Secured Parties each acknowledge that a
substantial portion of negotiations and anticipated performance and execution of
this Agreement occurred or shall occur in the City of New York, Borough of
Manhattan, and that, therefore, without limiting the jurisdiction or venue of
any other federal or state courts, each of the parties irrevocably and
unconditionally (a) agrees that any suit, action or legal proceeding arising out
of or relating to this Agreement may be brought in the courts of record of the
City of New York, Borough of Manhattan or the court of the United States,
Southern District of New York; (b) consents to the jurisdiction of each such
court in any suit, action or proceeding; (c) waives any objection which it may
have to the laying of the venue of any such suit, action or proceeding in any of
such courts; and (d) agrees that service of any court paper may be effected on
such party by mail, as provided in this Agreement, or in such other manner as
may be provided under applicable laws or court rules in said state.  GRANTOR AND
SECURED PARTIES EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT.  EACH
PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
 
11.         General Provisions.
 
(a)           Successors and Assigns.  This Agreement shall bind and inure to
the benefit of the respective successors and permitted assigns of each of the
parties; provided, however, that neither this Agreement nor any rights hereunder
may be assigned by the Grantor without Secured Parties’ prior written consent,
which consent may be granted or withheld in Secured Parties’ sole
discretion.  Each Secured Party shall have the right without the consent of or
notice to the Grantor to sell, transfer, negotiate, or grant participation in
all or any part of, or any interest in, such Secured Party’s obligations, rights
and benefits hereunder.

 
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(b)           Time of Essence.  Time is of the essence for the performance of
all obligations set forth in this Agreement.
 
(c)           Severability of Provisions.  Each provision of this Agreement
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
 
(d)           Amendments in Writing, Integration.  This Agreement cannot be
amended or terminated orally.  All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement.
 
(e)           Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same Agreement.
 
(f)           Survival.  All covenants, representations and warranties made in
this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding or any Secured Party has any obligation to make
Credit Extensions to the Grantor.  The obligations of the Grantor to indemnify
the Secured Parties with respect to the expenses, damages, losses, costs and
liabilities described in Section (b) shall survive until all applicable statute
of limitations periods with respect to actions that may be brought against any
Secured Party have run.
 
12.           Collateral Agent.
 
The Secured Parties executing this Agreement acknowledge and understand that a
collateral agent may be appointed under the this Agreement and the other
Transaction Documents (the "Collateral Agent"), in which case the Collateral
Agent shall be designated to take any and all actions on behalf of the Secured
Parties under the provisions of this Agreement and the other Transaction
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Collateral Agent by the terms of this Agreement and the other
Transaction Documents, together with such other powers as are reasonably
incidental thereto.
 
[SIGNATURES ON THE FOLLOWING PAGE]

 
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date set
forth above.
 
GRANTOR:
 
SECURED PARTIES:
Advaxis, inc.
 
[_________]
         
   
By:
  
 
[_________]
Name:
  
   
Title:
  
   

 
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EXHIBIT A
COLLATERAL DESCRIPTION
ATTACHMENT TO THIS SECURITY AGREEMENT
 
All personal property of Grantor whether presently existing or hereafter created
or acquired, and wherever located, including, but not limited to:
 
(a)           all accounts (including health-care-insurance receivables),
chattel paper (including tangible and electronic chattel paper), deposit
accounts, documents (including negotiable documents), equipment (including all
accessions and additions thereto), general intangibles (including payment
intangibles and software), goods (including fixtures), instruments (including
promissory notes), inventory (including all goods held for sale or lease or to
be furnished under a contract of service, and including returns and
repossessions), investment property (including securities and securities
entitlements), letter of credit rights, money, and all of Grantor’s books and
records with respect to any of the foregoing, and the computers and equipment
containing said books and records;
 
(b)           all common law and statutory copyrights and copyright
registrations, applications for registration, now existing or hereafter arising,
in the United States of America or in any foreign jurisdiction, obtained or to
be obtained on or in connection with any of the forgoing, or any parts thereof
or any underlying or component elements of any of the forgoing, together with
the right to copyright and all rights to renew or extend such copyrights and the
right (but not the obligation) of Secured Parties to sue in their own name
and/or in the name of Grantor for past, present and future infringements of
copyright;
 
(c)           all trademarks, service marks, trade names and service names and
the goodwill associated therewith, together with the right to trademark and all
rights to renew or extend such trademarks and the right (but not the obligation)
of Secured Parties to sue in its own name and/or in the name of Grantor for
past, present and future infringements of trademark;
 
(d)           all (i) patents and patent applications filed in the United States
Patent and Trademark Office or any similar office of any foreign jurisdiction,
and interests under patent license agreements, including, without limitation,
the inventions and improvements described and claimed therein, (ii) licenses
pertaining to any patent whether Grantor is licensor or licensee, (iii) income,
royalties, damages, payments, accounts and accounts receivable now or hereafter
due and/or payable under and with respect thereto, including, without
limitation, damages and payments for past, present or future infringements
thereof, (iv) right (but not the obligation) to sue in the name of Grantor
and/or in the name of Secured Parties for past, present and future infringements
thereof, (v) rights corresponding thereto throughout the world in all
jurisdictions in which such patents have been issued or applied for, and (vi)
reissues, divisions, continuations, renewals, extensions and
continuations-in-part with respect to any of the foregoing; and
 
(e)           any and all cash proceeds and/or noncash proceeds of any of the
foregoing, including, without limitation, insurance proceeds, and all supporting
obligations and the security therefor or for any right to payment.  All terms
above have the meanings given to them in the Florida Uniform Commercial Code, as
amended or supplemented from time to time.

 
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Notwithstanding the foregoing, the term “Collateral” shall not include any
Equipment or rights of the Grantor as a lessee or licensee to the extent the
granting of a security interest therein would be contrary to applicable law.

 
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Schedule A Investors/Secured Parties
 
Name of Purchaser/Address
 
Principal Amount of Note
     
[____________________]
 
$[__________]

 
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