Exhibit 10.31

SECURITY AGREEMENT

 

To:

    LV Administrative Services, Inc., as Administrative and Collateral Agent
(“Agent”)

  

    875 Third Avenue, 3rd Floor

  

    New York, NY 10022

Date: November 17, 2010

To Whom It May Concern:

1.        To secure the payment of all of the Assignor Obligations (as defined
below), Analytica International, Inc., a Florida corporation (the “Assignor”),
hereby assigns and grants to the Agent, for the ratable benefit of the Lenders,
a continuing security interest in and to all of the following property now owned
or at any time hereafter acquired by Assignor, or in which Assignor now has or
at any time in the future may acquire any right, title or interest (the
“Collateral”): all cash, cash equivalents, accounts, accounts receivable,
deposit accounts, inventory, equipment, goods, fixtures, documents, instruments
(including, without limitation, promissory notes), contract rights, commercial
tort claims set forth on Schedule B attached hereto, general intangibles
(including, without limitation, payment intangibles and an absolute right to
license on terms no less favorable than those currently in effect among
Assignor’s affiliates), chattel paper, supporting obligations, investment
property (including, without limitation, all partnership interests, limited
liability company membership interests and all other equity interests owned by
Assignor), letter-of-credit rights, trademarks, trademark applications,
tradestyles, patents, patent applications, copyrights, copyright applications
and other intellectual property in which Assignor now has or hereafter may
acquire any right, title or interest, all proceeds and products thereof
(including, without limitation, proceeds of insurance) and all additions,
accessions and substitutions thereto or therefor.

2.        Except as otherwise defined herein, all capitalized terms used herein
shall have the meanings provided such terms in the Term Loan and Security
Agreement dated as of November 17, 2010 by and among Accentia
Biopharmaceuticals, Inc. (“Accentia”) and the Creditor Parties (as amended,
modified or supplemented from time to time, the “Security Agreement”), as
applicable. All items of Collateral which are defined in the UCC shall have the
meanings set forth in the UCC. For purposes hereof, the term “UCC” means the
Uniform Commercial Code as the same may, from time to time, be in effect in the
State of New York; provided, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, the Agent’s security interest in any 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 in such other jurisdiction for purposes of the provisions of
this Agreement relating to such attachment, perfection, priority or remedies and
for purposes of definitions related to such provisions; provided further, that
to the extent that the UCC is used to define any term herein and such term is
defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern.

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3.        The term “Assignor Obligations” as used herein shall mean and include
all debts, liabilities and obligations owing by Assignor to any Lender arising
under, out of, or in connection with the Analytica Guaranty (and any documents
entered into in connection therewith, as each may be amended, modified, restated
or supplemented from time to time, collectively, the “Documents”), and in
connection with any documents, instruments or agreements relating to or executed
in connection with the Documents or any documents, instruments or agreements
referred to therein or otherwise, and in connection with any other indebtedness,
obligations or liabilities of Assignor to any Creditor Party, whether now
existing or hereafter arising, direct or indirect, liquidated or unliquidated,
absolute or contingent, due or not due and whether under, pursuant to or
evidenced by a note, agreement, guaranty, instrument or otherwise, including,
without limitation, obligations and liabilities of Assignor for post-petition
interest, fees, costs and charges that accrue after the commencement of any case
by or against Assignor under any bankruptcy, insolvency, reorganization or like
proceeding (collectively, the “Debtor Relief Laws”) in each case, irrespective
of the genuineness, validity, regularity or enforceability of such Assignor
Obligations, or of any instrument evidencing any of the Assignor Obligations or
of any collateral therefor or of the existence or extent of such collateral, and
irrespective of the allowability, allowance or disallowance of any or all of the
Assignor Obligations in any case commenced by or against Assignor under any
Debtor Relief Law.

4.        Assignor hereby represents, warrants and covenants to Agent, for
itself and for the benefit of each Lender, that:

 

   (a)

its legal name is as set forth in its Articles of Incorporation or other
organizational document (as applicable) as amended through the date hereof and
as set forth on Schedule A attached hereto, and it will provide the Agent thirty
(30) days’ prior written notice of any change in its legal name;

 

   (b)

its organizational identification number (if applicable) is as set forth on
Schedule A hereto, and it will provide the Agent thirty (30) days’ prior written
notice of any change in its organizational identification number;

 

   (c)

Assignor hereby indemnifies and saves the Agent and each Lender harmless from
all loss, costs, damage, liability and/or expense, including reasonable
attorneys’ fees, that the Agent and each Lender may sustain or incur to enforce
payment, performance or fulfillment of any of the Assignor Obligations and/or in
the enforcement of this Agreement or in the prosecution or defense of any action
or proceeding either against the Agent, any Lender or Assignor concerning any
matter growing out of or in connection with this Agreement, and/or any of the
Assignor Obligations and/or any of the Collateral except to the extent caused by
the Agent’s or any Lender’s own gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable
decision); and

 

   (d)

all commercial tort claims (as defined in the UCC as in effect in the State of
New York) held by Assignor are set forth on Schedule B to this

 

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Agreement; Assignor hereby agrees that it shall promptly, and in any event
within five (5) Business Days after the same is acquired by it, notify the Agent
of any commercial tort claim acquired by it and unless otherwise consented to in
writing by the Agent, it shall enter into a supplement to this Agreement
granting to the Agent a security interest for the ratable benefit of the Agent
and the Lenders in such commercial tort claim, securing the Assignor
Obligations.

5.        Upon the occurrence of any Event of Default, the Agent shall have the
remedies of a secured party provided under the UCC as in effect in the State of
New York, this Agreement, the Security Agreement, the Ancillary Agreements and
other applicable law. Upon the occurrence of any Event of Default and at any
time thereafter, the Agent will have the right to take possession of the
Collateral and to maintain such possession on Assignor’s premises or to remove
the Collateral or any part thereof to such other premises as the Agent may
desire. Upon the Agent’s request, Assignor shall assemble or cause the
Collateral to be assembled and make it available to the Agent at a place
designated by the Agent. The Agent may, if it so elects, seek the appointment of
a receiver or keeper to take possession of the Collateral and to enforce any of
the Agent’s remedies (for the benefit of the Agent and the Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment. If any notification of intended disposition of any Collateral is
required by law, such notification, if mailed, shall be deemed properly and
reasonably given if mailed at least ten (10) days before such disposition,
postage prepaid, addressed to the Assignor either at Assignor’s address shown
herein or at any address appearing on the Agent’s records for Assignor. Any
proceeds of any disposition of any of the Collateral shall be applied by the
Agent to the payment of all expenses in connection with the sale of the
Collateral, including reasonable attorneys’ fees and other legal expenses and
disbursements and the reasonable expenses of retaking, holding, preparing for
sale, selling, and the like, and any balance of such proceeds may be applied by
the Agent toward the payment of the Assignor Obligations in such order of
application as the Agent may elect, and Assignor shall be liable for any
deficiency. For the avoidance of doubt, following the occurrence and during the
continuance of an Event of Default, the Agent shall have the immediate right to
withdraw any and all monies contained in any deposit account in the name of
Assignor and controlled by the Agent and apply same to the repayment of the
Assignor Obligations (in such order of application as the Agent may elect). The
parties hereto each hereby agree that the exercise by any party hereto of any
right granted to it or the exercise by any party hereto of any remedy available
to it (including, without limitation, the issuance of a notice of redemption, a
borrowing request and/or a notice of default), in each case, hereunder, under
the Security Agreement or under any other Ancillary Agreement shall not
constitute confidential information and no party shall have any duty to the
other party to maintain such information as confidential.

6.        If Assignor defaults in the performance or fulfillment of any of the
terms, conditions, promises, covenants, provisions or warranties on Assignor’s
part to be performed or fulfilled under or pursuant to this Agreement, the Agent
may, at its option without waiving its right to enforce this Agreement according
to its terms, immediately or at any time thereafter and without notice to
Assignor, perform or fulfill the same or cause the performance or fulfillment of
the same for Assignor’s account and at Assignor’s cost and expense, and the cost
and expense thereof (including reasonable attorneys’ fees) shall be added to the
Assignor Obligations and shall be payable on demand with interest thereon at the
highest rate permitted by law, or, at the

 

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Agent’s option, debited by the Agent from any other deposit accounts in the name
of Assignor and controlled by the Agent.

7.        Assignor hereby appoints the Agent, or any other Person whom the Agent
may designate as Assignor’s attorney, with power to: (a)(i) execute any security
related documentation on Assignor’s behalf and to supply any omitted information
and correct patent errors in any documents executed by Assignor or on Assignor’s
behalf; (ii) file financing statements against Assignor covering the Collateral
(and, in connection with the filing of any such financing statements, describe
the Collateral as “all assets and all personal property, whether now owned
and/or hereafter acquired” (or any substantially similar variation thereof));
(iii) during the continuance of an Event of Default, sign Assignor’s name on any
invoice or bill of lading relating to any accounts receivable, drafts against
account debtors, schedules and assignments of accounts receivable, notices of
assignment, financing statements and other public records, verifications of
accounts receivable and notices to or from account debtors; and (iv) during the
continuance of an Event of Default, do all other things the Agent deems
necessary to carry out the terms of Section 1 of this Agreement and (b) upon the
occurrence and during the continuance of an Event of Default: (i) endorse
Assignor’s name on any checks, notes, acceptances, money orders, drafts or other
forms of payment or security that may come into the Agent’s possession;
(ii) sign Assignor’s name on any invoice or bill of lading relating to any
accounts receivable, drafts against account debtors, schedules and assignments
of accounts receivable, notices of assignment, financing statements and other
public records, verifications of accounts receivable and notices to or from
account debtors; (iii) verify the validity, amount or any other matter relating
to any accounts receivable by mail, telephone, telegraph or otherwise with
account debtors; (iv) do all other things necessary to carry out this Agreement,
the Security Agreement, any other Ancillary Agreement and all other related
documents; and (v) notify the post office authorities to change the address for
delivery of Assignor’s mail to an address designated by the Agent, and to
receive, open and dispose of all mail addressed to Assignor. Assignor hereby
ratifies and approves all acts of the attorney and neither the Agent nor the
attorney will be liable for any acts of commission or omission, nor for any
error of judgment or mistake of fact or law other than gross negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final and non-appealable decision). This power, being coupled with an interest,
is irrevocable so long as any Assignor Obligations remain unpaid. Assignor
agrees to promptly execute any and all documents and to take any and all actions
as reasonably requested by Agent to confirm the grant or perfection of the
security interest granted herein.

8.        No delay or failure on the Agent’s part in exercising any right,
privilege or option hereunder shall operate as a waiver of such or of any other
right, privilege, remedy or option, and no waiver whatever shall be valid unless
in writing, signed by the Agent with the consent of Lenders and then only to the
extent therein set forth, and no waiver by the Agent of any default shall
operate as a waiver of any other default or of the same default on a future
occasion. The books and records of the Agent containing entries with respect to
the Assignor Obligations shall be admissible in evidence in any action or
proceeding, shall be binding upon Assignor for the purpose of establishing the
items therein set forth and shall constitute prima facie proof thereof. The
Agent, at the direction of the Lenders, shall have the sole right to enforce
this Agreement and to enforce any one or more of the remedies available to the
Agent, successively, alternately or concurrently. Assignor agrees to join with
the Agent in executing such documents or other

 

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instruments to the extent required by the UCC in form satisfactory to the Agent
and in executing such other documents or instruments as may be required or
deemed necessary by the Agent for purposes of effecting or continuing the
Agent’s security interest in the Collateral.

9.        The Assignor shall pay all of the Agent’s and each Lender’s
out-of-pocket costs and expenses, including reasonable fees and disbursements of
in-house or outside counsel and appraisers, in connection with the prosecution
or defense of any action, contest, dispute, suit or proceeding concerning any
matter in any way arising out of, related to or connected with any Document. The
Assignor shall also pay all of the Agent’s and each Lender’s reasonable fees,
charges, out-of-pocket costs and expenses, including fees and disbursements of
counsel and appraisers, in connection with (a) the preparation, execution and
delivery of any waiver, any amendment thereto or consent proposed or executed in
connection with the transactions contemplated by the Documents, (b) the Agent’s
obtaining performance of the Assignor Obligations under the Documents,
including, but not limited to, the enforcement or defense of the Agent’s
security interests, assignments of rights and liens hereunder as valid perfected
security interests, (c) any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any Collateral, (d) any appraisals or
re-appraisals of any property (real or personal) pledged to the Agent by
Assignor as Collateral for, or any other Person as security for, the Assignor
Obligations hereunder and (e) any consultations in connection with any of the
foregoing. The Assignor shall also pay the Agent’s and each Lender’s customary
bank charges for all bank services (including wire transfers) performed or
caused to be performed by the Agent or any Lender for Assignor at Assignor’s
request or in connection with Assignor’s loan account (if any) with the Agent or
any Lender. All such costs and expenses together with all filing, recording and
search fees, taxes and interest payable by the Assignor to the Agent shall be
payable on demand and shall be secured by the Collateral. If any tax by any
nation or government, any state or other political subdivision thereof, and any
agency, department or other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government (each, a
“Governmental Authority”) is or may be imposed on or as a result of any
transaction between Assignor, on the one hand, and the Agent and/or any Lender,
on the other hand, which the Agent and/or any Lender is or may be required to
withhold or pay, the Assignor hereby indemnifies and holds the Agent and each
Lender harmless in respect of such taxes, and the Assignor will repay to the
Agent or such Lender the amount of any such taxes which shall be charged to the
Assignor’s account; and until the Assignor shall furnish the Agent and each
Lender with indemnity therefor (or supply the Agent and such Lender with
evidence satisfactory to it that due provision for the payment thereof has been
made), the Agent and any Lender may hold without interest any balance standing
to Assignor’s credit (if any) and the Agent shall retain its liens in any and
all Collateral.

10.      Among the accounts receivable (the “Accounts”) in which the Agent, for
the ratable benefit of the Lenders, is granted a security interest under the
terms of this Agreement are, or may be, Accounts billed and/or to be billed
under the trade names or trade styles set forth on the attached Schedule C (the
“Trade Styles”) which Trade Styles are owned by the Assignor. In order to induce
the Agent and the Lenders to enter into the transactions contemplated by this
Agreement, the Assignor hereby warrants and confirms that for all purposes,
Accounts heretofore or hereafter issued by the Assignor under the applicable
Trade Style shall be deemed Accounts of the Assignor and shall be credited to
the account of the Assignor with the Agent, for the ratable benefit of the
Lenders, in the same manner that sales under the Assignor’s name are

 

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credited. The Assignor further represents and warrants that the goods and/or
services representing Accounts shall in all instances be the goods and/or
services of the Assignor and all of the Agent’s and the Lenders’ rights under
this Agreement, the Security Agreement and the Ancillary Agreements are
applicable thereto.

11.        THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
All of the rights, remedies, options, privileges and elections given to the
Agent hereunder shall inure to the benefit of the Agent’s successors and
assigns.

12.         ASSIGNOR HEREBY CONSENTS AND AGREES THAT THE STATE AND FEDERAL
COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ASSIGNOR, ON
THE ONE HAND, AND THE AGENT AND/OR ANY LENDER, ON THE OTHER HAND, PERTAINING TO
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT,
PROVIDED, THAT THE AGENT, EACH LENDER AND ASSIGNOR ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE COUNTY
OF NEW YORK, STATE OF NEW YORK, AND FURTHER PROVIDED, THAT NOTHING IN THIS
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE AGENT FROM BRINGING SUIT OR
TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO COLLECT, THE ASSIGNOR
OBLIGATIONS, TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE ASSIGNOR
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE
AGENT. ASSIGNOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND ASSIGNOR HEREBY WAIVES
ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS. ASSIGNOR HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO ASSIGNOR AT THE ADDRESS SET FORTH
ON THE SIGNATURE LINES HERETO AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF ASSIGNOR’S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE U.S. MAIL, PROPER POSTAGE PREPAID.

THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH
APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF
THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER ARISING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE AGENT AND/OR ANY
LENDER AND/OR ASSIGNOR ARISING OUT OF, CONNECTED WITH,

 

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RELATED OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS RELATED HERETO.

13.        This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute one instrument.
Any signature delivered by a party by facsimile or electronic transmission shall
be deemed to be an original signature hereto.

14.        It is understood and agreed that any person or entity that desires to
become an Assignor hereunder, or is required to execute a counterpart of this
Agreement after the date hereof pursuant to the requirements of any Document,
shall become an Assignor hereunder by (x) executing a Joinder Agreement in form
and substance satisfactory to the Agent, (y) delivering supplements to such
exhibits and annexes to such Documents as the Agent shall reasonably request and
(z) taking all actions as specified in this Agreement as would have been taken
by Assignor had it been an original party to this Agreement, in each case with
all documents required above to be delivered to the Agent and with all documents
and actions required above to be taken to the reasonable satisfaction of the
Agent.

15.        All notices from the Agent to Assignor shall be sufficiently given if
mailed or delivered to Assignor’s address set forth below.

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Very truly yours, ANALYTICA INTERNATIONAL, INC. By:  

    /s/ Samuel S. Duffey

  Name:    Samuel S. Duffey   Title:      President Address: 324 South Hyde Park
Avenue, Suite 350 Tampa, Florida 33606 Telephone:    813/864-2554
Facsimile:      813/258-6912 State of Formation: Florida

 

ACCEPTED and AGREED: LV ADMINISTRATIVE SERVICES, INC.

By:  

/s/ Patrick Regan

Name:  

Patrick Regan

Title:  

    Authorized Signatory

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SCHEDULE A

 

Entity   Jurisdiction of Formation  

Organizational

Identification Number

      Analytica International, Inc.   Florida   364511029

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SCHEDULE B

COMMERCIAL TORT CLAIMS

None

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SCHEDULE C

TRADE STYLES

None