Exhibit 10.21

 

 

EXECUTION VERSION

 

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FORM OF

SECURITY AGREEMENT

 

among

 

SNC HOLDINGS CORP.,

 

VERITEQ ACQUISITION CORPORATION (d/b/a VERITEQ CORPORATION)

 

and

 

VTQ IP HOLDING CORPORATION

     

Dated as of November 28, 2012

                                 

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TABLE OF CONTENTS

Page

 

 

ARTICLE I DEFINITIONS AND INTERPRETATION

1

   

SECTION 1.1

Definitions

1

SECTION 1.2

Resolution of Drafting Ambiguities

4

     

ARTICLE II GRANT OF SECURITY AND SECURED OBLIGATIONS

4

   

SECTION 2.1

Grant of Security Interest

4

SECTION 2.2

Filings

5

     

ARTICLE III REPRESENTATIONS AND WARRANTIES

5

   

SECTION 3.1

Authority

5

SECTION 3.2

No Default or Lien

5

SECTION 3.3

Enforceability

5

SECTION 3.4

Ownership of Collateral

6

SECTION 3.5

Priority

6

     

ARTICLE IV COVENANTS AND AGREEMENTS OF THE DEBTOR AND IP HOLDCO

6

   

SECTION 4.1

Preservation of Collateral

6

SECTION 4.2

Use of Collateral

6

SECTION 4.3

Payment of Taxes, etc

6

SECTION 4.4

Possession of Pledged Collateral

6

SECTION 4.5

Possession of Pledged Collateral

6

SECTION 4.6

Maintenance of Purchased IP

6

SECTION 4.7

Compliance with Law

7

SECTION 4.8

Use in the Ordinary Course

7

     

ARTICLE V DEFAULT

7

   

ARTICLE VI REMEDIES

7

   

SECTION 6.1

General Enforcement

8

SECTION 6.2

Sale, etc

8

SECTION 6.3

Costs of Remedies

8

SECTION 6.4

Cumulative Rights

8

     

ARTICLE VII MISCELLANEOUS

8

   

SECTION 7.1

Termination

8

SECTION 7.2

Expenses

8

SECTION 7.3

Notices

8

SECTION 7.4

Headings

9

SECTION 7.5

Severability

9

SECTION 7.6

Entire Agreement

9

SECTION 7.7

Successors and Assigns

10

 

 
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SECTION 7.8

No Third-Party Beneficiaries

10

SECTION 7.9

Amendment and Modification

10

SECTION 7.10

Waiver; Remedies

10

SECTION 7.11

Governing Law

10

SECTION 7.12

Submission to Jurisdiction

10

SECTION 7.13

Waiver of Jury Trial

10

SECTION 7.14

Specific Performance

11

SECTION 7.15

Counterparts

11

SECTION 7.16

Further Assurances  

 

Exhibit A: Specified Collateral

 

 
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FORM OF
SECURITY AGREEMENT

 

SECURITY AGREEMENT (this “Agreement”) dated as of November 28, 2012, by and
among SNC Holdings Corp., a Delaware corporation (the “Secured Party”); VeriTeQ
Acquisition Corporation (d/b/a VeriTeQ Corporation), a Florida corporation (the
“Debtor”); and VTQ IP Holdings Corporation, a Delaware corporation (“IP
Holdco”).

 

RECITALS

 

WHEREAS, the Secured Party has agreed to extend credit to the Debtor in
connection with the acquisition of certain assets of the Secured Party by the
Debtor pursuant to an Asset Purchase Agreement, dated as of the date hereof,
between the Secured Party and the Debtor (the “APA”) and evidenced by a
Non-Negotiable Secured Convertible Subordinated Promissory Note (the “Note”),
dated as of the date hereof, between the Secured Party and the Debtor.

 

WHEREAS, pursuant to the APA, certain assets acquired by the Debtor were
transferred to IP Holdco, a wholly-owned subsidiary of the Debtor; and

 

WHEREAS, to induce the Secured Party to extend such credit in connection with
the APA, the Debtor has agreed to pledge and to grant to the Secured Party a
security interest in, and Lien upon, certain property of the Debtor described
more particularly herein, and enter into a certain Royalty Agreement, dated as
of the date hereof (the “Royalty Agreement”), and IP Holdco has agreed to pledge
and to grant to the Secured Party a security interest in, and Lien upon, all
property of IP Holdco, as described more particularly herein.

 

NOW, THEREFORE, in consideration of the above Recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties to this Agreement hereby agrees as follows:

 

ARTICLE I

DEFINITIONS AND INTERPRETATION

 

SECTION 1.1     Definitions.

 

(a)     Unless otherwise defined herein or in the Note, capitalized terms used
herein that are defined in the UCC shall have the meanings assigned to them in
the UCC; provided that, in any event, the following terms shall have the
meanings assigned to them in the UCC:

 

“Accounts”; “Bank”; “Chattel Paper”; “Commercial Tort Claims” “Commodity
Contract”; “Deposit Account”; “Documents”; “Electronic Chattel Paper”;
“Equipment”; “General Intangibles”; “Instruments”; “Inventory”;
“Letter-of-Credit Rights”; “Letters of Credit”; “Money”; “Payment Intangibles”;
“Proceeds”; “Records”; “Securities Intermediary”; “Supporting Obligations”; and
“Tangible Chattel Paper.”

 

 
 

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(b)     Terms used but not otherwise defined herein that are defined in the Note
shall have the meanings given to them in the Note.

 

(c)     The following terms shall have the following meanings:

 

“APA” shall have the meaning assigned to such term in the Recitals hereto.

 

“Agreement” shall have the meaning assigned to such term in the preamble hereto.

 

“Cash Equivalents” shall mean: (i) U.S. dollar denominated securities issued,
directly and fully guaranteed, or insured, by the United States government or
any agency thereof, provided that the full faith and credit of the United States
is pledged in support thereof; (ii) U.S. dollar denominated certificates of
deposit, demand deposits, overnight bank deposits and bankers’ acceptances, in
each case, of (a) any commercial bank organized under the laws of the United
States, any state thereof or the District of Columbia, or (b) any of such
commercial bank’s branches or agencies that (1) is a member of the Federal
Reserve System, (2) issues commercial paper, rated at least “A-1” by S&P or
“P-1” by Moody’s and (3) has combined capital and surplus of at least
$50,000,000; (iii) U.S. dollar denominated commercial paper of an issuer rated
at least “A-1” by S&P or “P-1” by Moody’s; and (iv) U.S. dollar denominated
shares of any money market fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (ii) and (iii)
above, (b) has net assets of not less than $50,000,000 and (c) is rated at least
“A-1” by S&P or “P-1” by Moody’s; provided, however, that the maturities of all
obligations of the type specified in clauses (ii) through (iv) above, inclusive,
shall not exceed one hundred eighty (180) days.

 

“Debtor” shall have the meaning assigned to such term in the preamble hereto.

 

“Event of Default” shall have the meaning assigned to such term in Article V.

 

“Excluded Property” shall mean any assets, the granting or perfection of a Lien
on which is prohibited by any Requirement of Law.

 

“GAAP” shall mean generally accepted United States accounting principles,
applied on a consistent basis.

 

“IP Holdco” shall have the meaning assigned to such term in the preamble hereto.

 

“Lien” shall mean (i) any mortgage, deed of trust, lien, pledge, hypothecation,
encumbrance, charge or security interest of any kind in, on, or of, any
property, (ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease
having substantially the same economic effect as any of the foregoing) relating
to any property, (iii) in the case of securities, any purchase option, call or
similar right of a third party with respect to such securities, (iv) any right
of set off, recoupment, combination of accounts or similar rights, in each case
whether by contract, operation of law or otherwise and (v) any agreement to give
any interest described in clauses (i) through (iv).

 

“Minimum Royalties” shall have the meaning set forth in the Royalty Agreement.

 

 
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“Moody’s” shall mean Moody’s Investors Service, Inc., Moody’s Analytics, Inc.
and/or their affiliates and licensors.

 

“Note” shall have the meaning assigned to such term in the Recitals hereto.

 

“Permitted Lien” shall mean (i) Liens in favor of the Secured Party created
under the this Agreement; (ii) Liens in connection with workmen’s compensation,
unemployment insurance or other social security or pension obligations; (iii)
mechanics’, workmen’s, materialmen’s, suppliers’, construction or like Liens, in
each case (a) for amounts not yet due and payable or (b) for amounts due and
payable with respect to ordinary course claims being contested in good faith and
for which adequate reserves (in accordance with GAAP) have been established or
bond has been posted; (iv) servitudes, easements (including utility easements),
rights-of-way, restrictions, minor defects or irregularities in title and such
other encumbrances or charges against real property or intents therein as are of
a nature generally existing with respect to properties of a similar character
and which do not in any way materially interfere with the use thereof; (v) Liens
for taxes not yet delinquent or, if delinquent, which are being contested in
good faith and for which adequate reserves (in accordance with GAAP) have been
established; (vi) attachment or judgment Liens provided that such Liens are
discharged within 60 days of the creation thereof; and (vii) from and after the
Subordination Date (as defined in the Note), Liens in favor of the holders of
any Senior Indebtedness; provided, however, that until this Agreement shall
terminate in accordance with Section 7.1 hereof, the Liens created under this
Agreement shall not be subordinated to any other Liens, including, without
limitation, Liens in favor of the holders of any Senior Indebtedness, with
respect to Seller’s IP Diligence Obligation or Seller’s obligation to pay the
Minimum Royalties.

 

“Pledged Collateral” shall have the meaning assigned to such term in
Section 2.1.

 

“Requirement of Law” shall mean, collectively, any and all applicable
requirements of any governmental authority including any and all treaties, laws,
constitutions, licenses, directives, policies, legally binding requirements,
restrictions, writs, injunctions, permits, compliance requirements, judgments,
administrative decisions, orders, executive orders, decrees, ordinances, rules,
regulations, statutes, case law and common law.

 

“Royalty Agreement” shall have the meaning ascribed to such term in the Recitals
hereto.

 

“S&P” shall mean Standard & Poor’s Financial Services LLC.

 

“Secured Obligations” shall mean the obligations of the Debtor under the Note,
the obligations of the Debtor to pay the Minimum Royalties and the Seller’s IP
Diligence Obligation.

 

“Secured Party” shall have the meaning assigned to such term in the preamble
hereto.

 

“Seller’s IP Diligence Obligation” shall have the meaning assigned to such term
in the APA.

 

 
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“Senior Indebtedness” shall mean any indebtedness of the Company permitted to be
incurred pursuant to the provisions of Section 7 of the Note.

 

“Specified Collateral” shall have the meaning assigned to such term in
Section 2.1.

 

“Sublicense Agreement” shall have the meaning assigned to such term in the APA.

 

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in
the State of New York; provided, however, that, at any time, if by reason of
mandatory provisions of law, any or all of the perfection or priority of the
Secured Party’s Lien on any item or portion of the Pledged Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect, at such time, in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or priority and for purposes of
definitions relating to such provisions.

 

“Unauthorized Issuance” shall mean the issuance of any equity interest, or
related right thereto, in IP Holdco, or the issuance of any other interest
granting any rights to influence the management or policies of IP Holdco,
whether by contract or any other means, except for those interests issued to the
Debtor and included in the Specified Collateral.

 

SECTION 1.2     Resolution of Drafting Ambiguities. Each of the parties
acknowledges and agrees that it was represented by counsel in connection with
the execution and delivery hereof, that it and its counsel reviewed and
participated in the preparation and negotiation hereof and that it shall not
cite to any rule of construction, or make any claim or argument, to the effect
that ambiguities should be resolved against the drafting party in the
interpretation of this Agreement.

 

ARTICLE II

GRANT OF SECURITY AND SECURED OBLIGATIONS

 

SECTION 2.1     Grant of Security Interest. (a) As collateral security for the
payment and performance in full of all of the Secured Obligations, the Debtor
and IP Holdco hereby each pledge and grant to the Secured Party, a Lien on all
of their respective right, title and interest in, to, and under, the following
property, wherever located, and whether now existing or hereafter arising or
acquired from time to time (collectively, and in each case excluding any
Excluded Property, the “Pledged Collateral”):

 

(i)       all assets specified on Exhibit A hereto (the “Specified Collateral”);

 

(ii)      all of the following: (a) to the extent evidencing Specified
Collateral, Documents; (b) to the extent evidencing Specified Collateral,
Instruments, (c) to the extent related to the Specified Collateral, Inventory;
(d) to the extent related to Specified Collateral, General Intangibles; (e) to
the extent related to Specified Collateral, Commercial Tort Claims; and (f) to
the extent related to Specified Collateral, Supporting Obligations and all other
forms of obligations owing to the Debtor or IP Holdco or in which the Debtor or
IP Holdco may have any interest, however created or arising and whether or not
earned by performance;

 

 
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(iii)     all Letters of Credit and Letter-of-Credit Rights supporting payment
of any Specified Collateral;

 

(iv)     to the extent not otherwise included above, all Records evidencing any
of the foregoing; and

 

(v)      (a)(1) all Proceeds, products, rents and profits of, (2) all accessions
to, and (3) all substitutions and replacements for, each of the foregoing, and
(b) any and all Proceeds of any insurance, indemnity, warranty or guaranty
payable to the Debtor or IP Holdco from time to time with respect to any of the
foregoing.

 

(b)     Notwithstanding anything to the contrary contained in clauses (i)
through (v) above, inclusive, the security interest created by this Agreement
shall not extend to, and the term “Pledged Collateral” shall not include, any
Excluded Property.

 

SECTION 2.2     Filings. The Debtor and IP Holdco each hereby irrevocably
authorize the Secured Party and its counsel and representatives at any time and
from time to time to file in any relevant jurisdiction any financing statements
(including fixture filings) and amendments thereto that contain the information
required by Article 9 of the UCC of each applicable jurisdiction for the filing
of any financing statement or amendment relating to the Pledged Collateral,
including (i) the type of organization and any organizational identification
number issued to the Debtor or IP Holdco and (ii) any financing or continuation
statements or other documents without the signature of the Debtor or IP Holdco
where permitted by law. The Debtor and IP Holdco shall provide all information
described in the immediately preceding sentence to the Secured Party promptly
upon request by the Secured Party.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

The Debtor and IP Holdco each hereby represent and warrant that:

 

SECTION 3.1     Authority. It has authority, and has completed all proceedings
and obtained all approvals and consents necessary, to execute, deliver, and
perform this Agreement and the transactions contemplated hereby.

 

SECTION 3.2     No Default or Lien. Such execution, delivery, and performance
will not contravene, constitute a default under or result in a Lien upon, any
property of the Debtor or IP Holco (other than the Lien created hereby) pursuant
to any applicable law or regulation or any contract, agreement, judgment, order,
decree, or other instrument binding upon or affecting the Debtor or IP Holdco.

 

SECTION 3.3     Enforceability. This Agreement constitutes a legal, valid, and
binding obligation of each of the Debtor and IP Holdco, enforceable in
accordance with its terms (except as enforceability may be affected by
bankruptcy, insolvency, or other similar laws affecting the enforcement of the
Secured Party’s rights), and this Agreement grants to the Secured Party a valid,
first priority perfected and enforceable Lien on the Pledged Collateral.

 

 
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SECTION 3.4     Ownership of Collateral. The Debtor and IP Holdco are (or, in
the case of after-acquired Pledged Collateral, at the time the Debtor or IP
Holdco acquire rights in the Pledged Collateral, will be) each the sole owner,
as applicable, of, and have good and marketable title to, the Pledged Collateral
being pledged by it hereunder.

 

SECTION 3.5     Priority. Except for Permitted Liens and security interests in
favor of the Secured Party, no person has (or, in the case of after-acquired
Pledged Collateral, at the time the Debtor or IP Holdco acquire rights therein,
will have) any right, title, claim, or interest (by way of security interest or
other Lien or charge) in, against or to the Pledged Collateral.

 

ARTICLE IV

COVENANTS AND AGREEMENTS OF THE DEBTOR AND IP HOLDCO

 

The Debtor and IP Holdco each hereby agree:

 

SECTION 4.1     Preservation of Collateral. To do all acts that may be
reasonably necessary to maintain, preserve, and protect in all material respects
the Pledged Collateral.

 

SECTION 4.2     Use of Collateral. Not to use, or permit to be used, any Pledged
Collateral, in violation in any material respects of (i) this Agreement, (ii)
any other agreement with the Secured Party related hereto, (iii) any applicable
statute, regulation or ordinance or (iv) any policy of insurance covering the
Pledged Collateral.

 

SECTION 4.3     Payment of Taxes, etc. To pay promptly when due all taxes,
assessments, charges, encumbrances and Liens (other than Permitted Liens) now or
hereafter imposed upon or affecting any Pledged Collateral, other than those
being contested in good faith and for which adequate reserves (in accordance
with GAAP) have been established.

 

SECTION 4.4     Possession of Pledged Collateral. Not to encumber, lease, sell
or otherwise dispose of or transfer any Pledged Collateral and to keep the
Pledged Collateral free of all levies, security interests or other Liens or
charges other than those approved in writing by the Secured Party or Permitted
Liens.

 

SECTION 4.5     Possession of Pledged Collateral. To keep the Pledged Collateral
free of all levies, security interests or other Liens or charges other than (i)
Liens approved in writing by the Secured Party, (ii) Permitted Liens, or (iii)
the Liens created under this Agreement.

 

SECTION 4.6     Maintenance of Purchased IP. The Debtor and IP Holdco shall, in
connection with patents, pending patent applications, trademarks and pending
trademark applications that are included within the Pledged Collateral, the
absence of which would have a material adverse effect on the business of the
Debtor: (i) prosecute before the U.S. Patent and Trademark Office and foreign
patent and trademark offices such pending patent and trademark applications;
(ii) pay maintenance and annuity fees due for such patents, pending patent
applications, trademarks and pending trademark applications; and (iii) to appear
in and defend any action or proceeding that may affect the title to or the
Secured Party’s interest in any patent, patent application, trademark or
trademark application. In the event the Debtor or IP Holdco does not believe it
is required to prosecute or maintain or defend such an action or proceeding
relating to a patent, patent application, trademark or trademark application
included within the Pledged Collateral, the Debtor shall provide Secured Party
with reasonable advanced notice, in no event less than sixty (60) days, prior to
the abandonment or lapse of such application, patent or trademark or within
sixty (60) days of receiving notice of such an action or proceeding, and Secured
Party shall have the right, exercisable at its expense and upon written notice,
to take such action so the patent, trademark or application does not lapse or
become abandoned, defend such action or proceeding and to require IP Holdco and
the Debtor to take any and all actions required to immediately assign any and
all right, title and interest in such application, patent or trademark to
Secured Party.

 

 
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SECTION 4.7     Compliance with Law. Subject to Section 4.7, to comply in all
material respects with all laws, regulations, and ordinances relating to the
possession, operation, maintenance, and control of the Pledged Collateral.

 

SECTION 4.8     Use in the Ordinary Course. Notwithstanding the foregoing
provisions of this Article IV, nothing contained herein shall prevent the Debtor
or IP Holdco from granting non-exclusive licenses (i) to each other, and (ii) in
connection with the manufacture or sale of products or the provision of
services, in each case in the ordinary course of business.

 

ARTICLE V

DEFAULT

 

An “Event of Default” under this Agreement shall be deemed to exist upon (a) the
occurrence of any Event of Default under the Note; (b) the failure of the Debtor
to pay any of the Minimum Royalties due under the Royalty Agreement, (c) the
failure of the Debtor to perform the Seller’s IP Diligence Obligation in any
material respect, or (d) the occurrence of an Unauthorized Issuance.

 

ARTICLE VI

REMEDIES

 

Upon the occurrence of an Event of Default, but subject to Section 7 of the Note
and any subordination agreements entered into by the Secured Party in favor of
any holder of Senior Indebtedness as provided for therein, the Secured Party
may, at its option, and without notice to or demand on the Debtor and in
addition to all rights and remedies available to the Secured Party, at law, in
equity, or otherwise, do any one or more of the following:

 

 
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SECTION 6.1     General Enforcement. Foreclose or otherwise enforce the Secured
Party’s security interest in any manner permitted by law or provided for in this
Agreement.

 

SECTION 6.2     Sale, etc. Sell, lease or otherwise dispose of any Pledged
Collateral at one or more public or private sales at the Secured Party’s place
of business or any other place or places, including, without limitation, any
broker’s board or securities exchange, whether or not such Pledged Collateral is
present at the place of sale, for cash or credit or future delivery, on such
terms and in such manner as the Secured Party may determine.

 

SECTION 6.3     Costs of Remedies. Recover from the Debtor all costs and
expenses, including, without limitation, reasonable attorney fees, incurred or
paid by the Secured Party in exercising any right, power, or remedy provided by
this Agreement.

 

SECTION 6.4     Cumulative Rights. The rights, powers, and remedies of the
Secured Party under this Agreement shall be in addition to all rights, powers,
and remedies given to the Secured Party by virtue of any statute or rule of law,
the Note or any other agreement, all of which rights, powers, and remedies shall
be cumulative and may be exercised successively or concurrently without
impairing the Secured Party’s security interest in the Pledged Collateral.

 

ARTICLE VII
MISCELLANEOUS

 

SECTION 7.1     Termination. This Agreement and the Liens created hereby shall
terminate upon the later of (i) repayment in full of the Note or conversion of
any amounts not yet repaid under the Note into Shares (as defined in the Note),
and (ii) Buyer having earned one million dollars ($1,000,000) from sales of
products incorporating the Purchased IP and/or the Intellectual Property
licensed under the Sublicense Agreement. Upon such termination of this Agreement
and the Liens created hereby, Debtor is authorized to file a UCC-3 termination
statement and such other appropriate documents and instruments to evidence such
termination.

 

SECTION 7.2     Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.

 

SECTION 7.3     Notices. All notices, requests, consents, claims, demands,
waivers and other communications hereunder shall be in writing and shall be
deemed to have been given: (i) when delivered by hand (with written confirmation
of receipt); (ii) when received by the addressee if sent by a nationally
recognized overnight courier (receipt requested); (iii) on the date sent by
facsimile or e-mail of a PDF document (with confirmation of transmission) if
sent during normal business hours of the recipient, and on the next business day
if sent after normal business hours of the recipient; or (iv) on the fifth day
after the date mailed, by certified or registered mail, return receipt
requested, postage prepaid. Such communications must be sent to the respective
parties at the following addresses (or at such other address for a party as
shall be specified in a notice given in accordance with this Section 7.2):

 

 
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If to the Secured Party:

c/o Nexsen Pruet LLC

 

701 Green Valley Road

 

Suite 100

 

Greensboro, NC 27408

 

Facsimile: (336) 387-8923

 

E-mail: cmyatt@nexsenpruet.com

 

Attention: Christy Myatt

   

with a copy to:

Greenberg Traurig, LLP

3333 Piedmont Road NE

Suite 2500

Atlanta, GA 30305

 

Facsimile: (678) 553-2453

 

E-mail: elowew@gtlaw.com

 

Attention: Wayne Elowe

   

If to the Debtor or IP Holdco:

c/o VeriTeQ Corporation

 

Congress Office Park

 

220 Congress Park Drive, Suite 200

 

Delray Beach, FL 33445

 

Facsimile:

 

E-mail: ssilverman@veriteqcorp.com

 

Attention: Scott R. Silverman, Chairman and CEO

   

with a copy to:

Stroock & Stroock & Lavan LLP

 

180 Maiden Lane

 

New York, New York 10038

 

Facsimile: (212) 806-7793

 

E-mail: tlenson@stroock.com

 

Attention: Todd E. Lenson, Esq.

 

SECTION 7.4     Headings. The headings in this Agreement are for reference only
and shall not affect the interpretation of this Agreement.

 

SECTION 7.5     Severability. If any term or provision of this Agreement is
invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction.

 

SECTION 7.6     Entire Agreement. This Agreement, the exhibits and schedules
hereto and the other documents to be delivered hereunder constitute the sole and
entire agreement of the parties to this Agreement with respect to the subject
matter contained herein, and supersede all prior and contemporaneous
understandings and agreements, both written and oral, with respect to such
subject matter. In the event of any inconsistency between the statements in the
body of this Agreement and the documents to be delivered hereunder and the
Exhibits, the statements in the body of this Agreement will control.

 

 
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SECTION 7.7     Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither party may assign its rights or obligations
hereunder without the prior written consent of the other party, which consent
shall not be unreasonably withheld or delayed. No assignment shall relieve the
assigning party of any of its obligations hereunder.

 

SECTION 7.8     No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the parties hereto and their respective successors and permitted
assigns and nothing herein, express or implied, is intended to or shall confer
upon any other person or entity any legal or equitable right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.

 

SECTION 7.9     Amendment and Modification. This Agreement may only be amended,
modified or supplemented by an agreement in writing signed by each party hereto.

 

SECTION 7.10     Waiver; Remedies. No waiver by any party of any of the
provisions hereof shall be effective unless explicitly set forth in writing and
signed by the party so waiving. No waiver by any party shall operate or be
construed as a waiver in respect of any failure, breach or default not expressly
identified by such written waiver, whether of a similar or different character,
and whether occurring before or after that waiver. No failure to exercise, or
delay in exercising, any right, remedy, power or privilege arising from this
Agreement shall operate or be construed as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights and remedies provided in this
Agreement are cumulative and are in addition to and not in substitution for any
other rights and remedies available at law or in equity or otherwise.

 

SECTION 7.11     Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws principles thereof, except for Section 5-1401 and
Section 5-1402 of the General Obligations Law of the State of New York.

 

SECTION 7.12     Submission to Jurisdiction. Any legal suit, action or
proceeding arising out of or based upon this Agreement or the transactions
contemplated hereby may be instituted in the federal courts of the United States
of America or the courts of the State of New York in each case located in the
city of New York, borough of Manhattan, and each party irrevocably submits to
the exclusive jurisdiction of such courts in any such suit, action or
proceeding.

 

SECTION 7.13     Waiver of Jury Trial. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO
INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.

  

 
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SECTION 7.14     Specific Performance. The parties agree that irreparable damage
would occur if any provision of this Agreement were not performed in accordance
with the terms hereof and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy to which they
are entitled at law or in equity.

 

SECTION 7.15     Further Assurances. The Debtor and IP Holdco agree, at Secured
Party’s expense, to promptly execute and deliver from time to time, upon the
reasonable request of Secured Party, any additional statements or other
instruments in order for Secured Party to perfect the security interests granted
under this Agreement.

 

SECTION 7.16     Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall be
deemed to be one and the same agreement. A signed copy of this Agreement
delivered by facsimile, e-mail or other means of electronic transmission shall
be deemed to have the same legal effect as delivery of an original signed copy
of this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above by their respective officers thereunto duly
authorized.

 

SNC HOLDINGS CORP.

     

By

/s/ J. Gelles  

Name: J. Gelles

 

Title: President

       

VERITEQ ACQUISITION CORPORATION

     

By

/s/ Scott Silverman  

Name: Scott Silverman

 

Title: CEO

       

VTQ IP HOLDING CORPORATION

     

By

/s/ Scott Silverman  

Name: Scott Silverman

 

Title: CEO

 

 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

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EXHIBIT A

 

SPECIFIED COLLATERAL

 

1.     The Purchased Assets (as such term is defined in the APA).

 

2.     100 shares of common stock of IP Holdco, par value $0.001 per share,
which, as of the Closing Date, shall constitute 100% of the capital stock of IP
Holdco.

 

 

 

 

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