waives demand,
presentment, notice of dishonor, protest, and notice of protest.
WITHOUT LIMITING OTHER RIGHTS ACCORDED TO NOVARTIS HEREUNDER, LECTEC HEREBY
CERTIFIES THAT THE TRANSACTION CONTEMPLATED BY THIS NOTE IS A COMMERCIAL
TRANSACTION AND HEREBY WAIVES (A) ITS RIGHTS TO NOTICE AND HEARING AS OTHERWISE
ALLOWED BY LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH NOVARTIS MAY DECIDE
TO USE, AND (B) ALL RIGHTS AS OTHERWISE ALLOWED BY LAW TO REQUEST THAT NOVARTIS
POST A BOND, WITH OR WITHOUT SURETY, TO PROTECT LECTEC OR ANY OTHER PERSON OR
ENTITY LIABLE UNDER THIS NOTE AGAINST DAMAGES THAT MAY BE CAUSED BY ANY
PREJUDGMENT REMEDY SOUGHT OR OBTAINED BY NOVARTIS BY VIRTUE OF ANY DEFAULT OR
PROVISION OF THIS NOTE OR THE AGREEMENT, AND LECTEC HEREBY CONSENTS TO THE
ISSUANCE OF ANY SUCH PREJUDGMENT REMEDY WITHOUT SUCH A BOND.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Note as of
the date and year first above written.
LECTEC CORPORATION
By:
Name:
Its:
Title:
Section 2.5.1(b)
Form of New Security Agreement
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Security Agreement") dated as of January 1, 2004
between NOVARTIS CONSUMER HEALTH, INC., 200 Kimball Drive, Parsippany, NJ 07054
("Creditor"), a Delaware corporation, and LECTEC CORPORATION, 10701 Red Circle
Drive, Minnetonka, MN 55343 ("Debtor"), a Minnesota corporation.
Recitals
A.
Creditor has agreed to advance funds to Debtor as provided in a certain Supply
and License Agreement of even date herewith ("Supply Agreement") and Debtor is
otherwise indebted to Creditor. Debtor has issued it a promissory note (the
"Note") to Creditor evidencing Debtor's obligation to repay advances made or to
be made by Creditor to Debtor and such other indebtedness of Debtor to Creditor.
B.
Debtor has agreed to grant a security interest in its assets as provided in this
Security Agreement to secure its payment obligations under the Note.
NOW, THEREFORE, the parties hereby agree as follows:
1. Security Interest. To secure the full and prompt payment to Creditor of the
obligations of Borrower under the Note (hereinafter, the "Liabilities"), Debtor
has granted and hereby grants to Creditor a continuing security interest in and
to all of Debtor's accounts receivable, inventory, equipment and general
intangibles (hereinafter, the "Collateral"), whether now owned or existing or
hereafter acquired or arising, the proceeds of the Collateral, and all books and
records (including, without limitation, customer lists, credit files, computer
programs, print-outs, and other computer materials and records) of Debtor
pertaining to the Collateral.
2. Disclosure of Security Interest. Debtor shall make appropriate entries upon
its financial statements disclosing Creditor's security interest in the
Collateral.
3. Financing Statements. At Creditor's request, Debtor shall execute or deliver
to Creditor, at any time or times hereafter, all supplemental documentation that
Creditor may reasonably request relating to the perfection of the security
interest granted in Section 1, in form and substance acceptable to Creditor, and
pay the costs of any recording or filing of the same.
4. Perfection and Priority; Location of Collateral. Debtor represents that:
(A)
None of the Collateral