Asset Purchase Agreement, dated August 13, 2018, by and between Scienza Labs, Inc. and Romark Global Pharma, LLC

Term		Section
AAA		Section 8.6
Accounts Receivable		Section 1.1(b)(iv)
Affiliate Entities		Section 1.1(b)(i)
Agreement		Preamble
Asset		Section 1.1(a)
Assigned Contracts		Section 1.1(a)(iv)
Assignment and Assumption Agreement		Section 1.4(a)(ii)
Assumed Liabilities		Section 1.1(c)
Bill of Sale		Section 1.4(a)(i)
Board of Arbitration		Section 8.7
Buyer		Preamble
Claim		Section 6.3(a)
Closing		Section 1.3
Closing Date		Section 1.3
Damages		Section 6.2(a)
Effective Time		Section 1.3
Escrow Agreement		Section 1.2
Escrow Amount		Section 1.2
Excluded Asset		Section 1.1(b)
Guaranty Agreement		Section 1.4(b)(iv)
Retained Liability		Section 1.1(d)
Furniture & Equipment		Section 1.1(a)(i)
Guarantees		Section 1.1(a)(v)
Non-Party Affiliates		Section 8.14
Optional End Date		Section 7.1
Party		Preamble
Permitted Liens		Section 2.7(a)
Promissory Note		Section 1.4(b)(i)(B)
Purchase Price		Section 1.2(a)
Rules		Section 8.6
Seller		Preamble
Security Agreement		Section 1.4(b)(iii)
Sublease		Section 5.1(e)
Transfer Taxes		Section 4.1(a)
Transferred IP		Section 1.1(a)(ii)
Transferred Software		Section 1.1(a)(v)

 

This ESCROW AGREEMENT (the “Agreement”) is executed this 13th day of August, 2018, by and between, SCIENZA LABS, INC., a corporation organized under the laws of Puerto Rico (the “Seller”); ROMARK GLOBAL PHARMA, LLC a limited liability company organized under the laws of Puerto Rico (the “Buyer”), and COMPLIANCE RESOURCES GROUP, INC., a corporation organized under the laws of Puerto Rico (the “Escrow Agent”). Seller, Buyer and Escrow Agent are from time to time collectively referred herein to as the “Parties” and individually as a “Party.” All capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Asset Purchase Agreement (as hereinafter defined).

 

 

WHEREAS, on the date hereof, Seller and Buyer have executed and entered into that certain Asset Purchase Agreement (the “Asset Purchase Agreement”) pursuant to which Seller has agreed to sell, assign and transfer to Buyer, and Buyer has agreed to purchase, acquire and accept from Seller, all of Seller’s rights, title and interest in, to and under the Assets, for the aggregate purchase price of Five Million Dollars ($5,000,000.00);

 

WHEREAS, pursuant to Section 1.2 of the Asset Purchase Agreement, (1) Buyer has agreed to deposit One Million Seven Hundred Fifty Thousand Dollars ($1,750,000.00) (the “Escrow Amount”) and (2) each of Buyer, Seller, and Guarantor have agreed to deliver undated original executed copies of the Escrow Closing Documents with the Escrow Agent, to be released in accordance with Section 6 hereof;

 

WHEREAS, the Buyer and Seller desire to enter into this Agreement pursuant to which Buyer will deposit the Escrow Amount with the Escrow Agent and each of Buyer, Seller, and Guarantor will deliver undated executed copies of the Escrow Closing Documents to the Escrow Agent;

 

WHEREAS, the Escrow Amount shall be held by the Escrow Agent to be disbursed to Seller, or returned to Buyer, as may be applicable, in accordance with the terms of this Agreement and the Asset Purchase Agreement;

 

WHEREAS, the Escrow Closing Documents shall be held by the Escrow Agent to be released to Buyer or Seller, as may be applicable, in accordance with the terms of this Agreement and the Asset Purchase Agreement;

 

NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the Parties hereto enter into this Agreement, under the following terms and conditions:

 

1.               Appointment of Escrow Agent.

 

(a)               Escrow Agent. Seller and Buyer hereby jointly appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent hereby accepts such appointment, upon receipt shall acknowledge receipt of the Escrow Amount and the Escrow Closing Documents (collectively, the “Escrow Property”) and agrees to hold the Escrow Property, subject to the terms and conditions of this Agreement. The Escrow Agent shall not distribute or release the Escrow Property except in accordance with the terms and conditions of this Agreement.

 

(b)               Escrow Agent Representative. The Parties hereto agree that Mrs. Liza Ru’z, Vice-President of Escrow Agent, shall be the authorized representative to act on behalf and in representation of the Escrow Agent for all matters arising under this Agreement, and she shall remain the authorized representative of the Escrow Agent until a successor authorized representative shall be chosen by the Escrow Agent, whose name shall be notified in writing to Seller and Buyer.

 

 

 

2.               The Escrow and Scope of Services Provided.

 

(a)               The Escrow Amount. On the date hereof, Buyer will pay, or cause to be paid, an amount in cash equal to the Escrow Amount to the Escrow Agent by wire transfer of immediately available funds to Escrow Agent’s bank account listed below, to be held by the Escrow Agent in accordance with the terms and provisions of this Agreement.

 

Escrow Agent’s Bank Information:

Bank: Scotiabank of Puerto Rico

ABA:

Acct. No.:

 

(b)               The Escrow Closing Documents. On the date hereof, Buyer, Seller, and Guarantor will deliver, or cause to be delivered, the Escrow Closing Documents to the Escrow Agent by personal delivery or nationally recognized overnight courier, to Escrow Agent’s address listed in Section 9(b) below, to be held by Escrow Agent in accordance with the terms and provisions of this Agreement.

 

(c)               Scope of Responsibility. Notwithstanding any provision of this Escrow Agreement to the contrary, the Escrow Agent is obligated only to perform the duties specifically set forth in this Escrow Agreement (or required by applicable law), which the Parties agree are purely ministerial in nature.

 

3.               Compensation for Services. In consideration for the services to be performed by Escrow Agent hereunder, Buyer and Seller shall pay to Escrow Agent the sum of (a) One Hundred Dollars ($100) for administration fees plus (b) One Thousand Eight Hundred Ninety Dollars ($1,890.00) as reimbursement for the cost incurred by Escrow Agent to acquire the insurance policy with the coverage requested by Buyer and Seller, for the total aggregate sum of One Thousand Nine Hundred Ninety Dollars ($1,990.00) (the “Escrow Fees”). Each of Buyer, on the one hand, and Seller, on the other hand, shall pay one-half of the Escrow Fees for the services to be rendered by the Escrow Agent pursuant to this Agreement.

 

4.               No Investment. The Parties to this Agreement agree that the Escrow Amount shall not be invested or used for any purpose, other than to be held by the Escrow Agent in a separate designated account to be opened by the Escrow Agent in a financial institution in Puerto Rico until and when the Escrow Amount is to be disbursed to Seller or returned to Buyer in accordance with and the pursuant to the terms of this Agreement.

 

5.               Release of Escrow Amount and Escrow Closing Documents. Upon Seller’s delivery of the written certification to Escrow Agent in the form attached hereto as Exhibit A (the “Certification”), the Escrow Agent shall:

 

(a)               wire to Seller the Escrow Amount in accordance with Seller’s wire instructions set forth in Exhibit B attached hereto;

 

(b)               date each Escrow Closing Document as of the date of the Certification;

 

(c)               deliver to Buyer the original (A) Bill of Sale, (B) Assignment and Assumption Agreement, and (C) Landlord Consent and Estoppel;

 

 

 

(d)               deliver to Seller the original (A) Promissory Note, (B) Security Agreement, and (C) Guaranty Agreement; and

 

(e)               deliver to each of Buyer and Seller an original Sublease Agreement.

 

6.               Return of Escrow Amount. In the event Buyer and Seller deliver a joint written notice to Escrow Agent that the Asset Purchase Agreement has been terminated, the Escrow Agent shall (a) deliver to Buyer the Escrow Amount in accordance with Buyer’s wire instructions set forth in Exhibit B attached hereto, and (b) destroy the Escrow Closing Documents.

 

7.               Termination. This Agreement shall terminate upon the earlier of (a) the disbursement of all of the Escrow Property pursuant to Section 5 or (b) the return of the Escrow Amount and destruction of the Escrow Closing Documents pursuant to Section 6. Upon termination of this Agreement, Escrow Agent shall thereafter be relieved and released from any liability or obligation under this Agreement.

 

8.               Liability of Escrow Agent and Indemnification.

 

(a)               Duties. Escrow Agent’s sole duties and responsibilities shall be to hold and disburse the Escrow Property in accordance with this Agreement. Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement. Escrow Agent shall not be deemed to have any implied duties or obligations under or related to this Agreement.

 

(b)               Reliance. Escrow Agent may (i) act in reliance upon any writing or instrument or signature from Elizabeth Plaza or Pedro Lasanta (each, a “Seller Authorized Representative”) which it, in good faith believes to be genuine; (ii) assume validity and accuracy of any statement or assertion contained in such a writing or instrument; and (iii) assume that any Seller Authorized Representative purporting to give any writing, notice, advice or instructions in connection with the provisions of this Agreement has been duly authorized to do so. Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner of execution, or validity of any instrument deposited in escrow, nor as to the identity, authority, or right of any Person executing any instrument.

 

(c)               Indemnification. Buyer and Seller shall jointly and severally indemnify and hold the Escrow Agent harmless from and against any liability, loss, damage or expense (including, without limitation, reasonable and documented attorneys’ fees) that the Escrow Agent may incur in connection with this Agreement and its performance hereunder or in connection herewith, except to the extent such liability, loss, damage or expense arises from its willful misconduct or gross negligence. The indemnification provided under this Section 9(c) shall be allocated and paid in the same manner as the Escrow Fees under Section 3 above. For the avoidance of doubt, the Escrow Fees set forth in Section 3 are the only compensation Escrow Agent shall receive in connection with the work performed under this Agreement and the indemnification provided under this Section 8(c) applies in the case of a future controversy between the Parties.

 

9.               Miscellaneous.

 

(a)               Entire Agreement; Amendment; Waiver; Assignment. This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof. Any provision hereof can be amended, supplemented, changed, or waived, only by written instrument making specific reference to this Agreement and signed, in the case of an amendment, supplement or modification, by Buyer, Seller and Escrow Agent, or in the case of a waiver, by the Party against whom the waiver is to be effective. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. Any rights or obligations hereunder shall not be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of the other Parties hereto. Any attempt to assign this Agreement in violation of the foregoing shall be void and of no effect.

 

 

 

(b)               Notice. All notices, requests, claims, demands and other communications hereunder shall be deemed to have been duly given and made if in writing and if given by personal delivery upon the Person for whom it is intended, nationally recognized overnight courier or certified mail at the following addresses, return receipt requested, or if sent by email, provided that the email is promptly followed by a confirmation copy delivered by certified mail or by a nationally recognized overnight courier to the Person at the address set forth below (or to such other address as a Party may have specified by notice given to the other Party pursuant to this provision):

 

IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed in its name and delivered by a duly authorized officer, on the date first written above.

Escrow Agent:

Compliance Resources Group, Inc.

________________________________

Name: Liza Ruíz

Title: Vice-President

Seller:

Scienza Labs, Inc.

________________________________

Name: Pedro Lasanta

Title: Chief Financial Officer

Buyer:

Romark Global Pharma, LLC

________________________________

Name: Edgardo Nieves Quiles, attorney-at-law

Title: Authorized Representative

 

This Certification is being delivered on behalf of Scienza Labs, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Seller”) pursuant to Section 1.2 of that certain Asset Purchase Agreement (the “Asset Purchase Agreement”), dated as of August 13, 2018, by and among Seller and Romark Global Pharma, LLC, a limited liability company organized under the laws of the Commonwealth of Puerto Rico (“Buyer”), and pursuant to Section 5 of that certain Escrow Agreement, dated August 13, 2018, by and among Seller and Buyer. Capitalized terms used and not defined herein shall have the meaning ascribed to such term in the Asset Purchase Agreement.

I, ____________________________, being the duly appointed, qualified and acting ___________________ of Seller, solely in my capacity as an officer of Seller, and not in my individual capacity and without personal liability, do hereby certify that Seller has satisfied the conditions to Buyer’s obligations to consummate the transaction set forth in Section 5.1 of the Asset Purchase Agreement (other than those conditions that by their nature are to be satisfied at Closing).

Scienza Labs, Inc.

Bank: BPPR

Account Name: Scienza Labs, Inc.

ABA:

Acct. No.:

Romark Global Pharma, LLC

Bank: Banco Popular

Account Name: Romark Global Pharma

ABA:

Acct: No.:

 

IN WITNESS WHEREOF, each of the Parties has caused this Bill of Sale to be duly executed on its behalf as of the day and year first above written.

 

U.S. $3,000,000.00  Effective Date: _______________, 2018

1.               Parties.

3.               Payments.

4.               Application of Payments. So long as no Event of Default has occurred and is continuing under this Note, all payments hereunder shall first be applied to Interest, then to Principal (first to Principal outstanding under Tranche B and then to Principal outstanding under Tranche A). Upon the occurrence and continuance of an Event of Default under this Note, all payments hereunder shall first be applied to costs pursuant to Section 9.2, then to Interest and the remainder to Principal (provided that any application of payments to Principal shall first be applied to principal outstanding under Tranche B and then to Principal outstanding under Tranche A).

 

5.               Prepayment. This Note may be prepaid in whole or in part without penalty. Any prepayment shall be accompanied by an amount equal to the Interest accrued thereon to the date of receipt of such prepayment in collected funds, provided, however, Maker may not make any prepayment of Principal under Tranche A until the entire outstanding Principal amount of Tranche B shall have been paid in full.

 

6.               Place of Payment. All payments hereunder shall be made to Holder at Holder's offices at 6 Road 696, Dorado, PR 00646, or such other place as Holder may from time to time designate in writing.

7.               Reporting Covenant; Information.

 

7.1               Promptly when available but no later than ten (10) days after delivery to the lenders under Romark Laboratories, L.C.’s (“Parent”) first lien senior secured credit facility, furnish a copy of the annual audit report of Parent and its subsidiaries for the immediately preceding Fiscal Year of Parent, including therein a consolidated (and consolidating) balance sheets and statements of earnings and cash flows of Parent and its subsidiaries (including Maker) as at the end of such fiscal year, certified by independent auditors of nationally recognized standing selected by Parent and reasonably acceptable to Holder.

 

7.2               Promptly when available and in any event no later than ten (10) days after delivery to the lenders under Parent’s first lien senior secured credit facility, furnish to Holder consolidated balance sheets of Parent and its subsidiaries (including Maker) as of the end of each fiscal quarter of Parent (including the last fiscal quarter of each fiscal year), together with consolidated statements of earnings and consolidated statements of cash flows for such fiscal quarter and for the period beginning with the first day of such fiscal year and ending on the last day of such fiscal quarter, together with a comparison with the corresponding period of the previous fiscal year.

 

7.3               Maker will permit any representatives designated by the Holder, upon reasonable prior notice, to visit with and discuss Maker’s affairs, finances and condition with its officers, all at such reasonable times and as often as reasonably requested.

 

8.               Events of Default. An “Event of Default” shall be deemed to have occurred under this Note upon the occurrence of any of the following events:

 

8.1               If any payment of Principal, Interest, or any other sum due Holder hereunder or under the Security Agreement or the Guaranty is not paid within ten (10) days from the date when due; or

 

8.2               If any representation or warranty in any document, certificate, or affidavit delivered in connection with this Note, including but not limited to the Security Agreement and the Guaranty, whether executed by or on behalf of Maker, or any guarantor of this Note is at any time false, misleading, or breached, except for any such breach resulting from a state of facts that would not reasonably be expected to have a Material Adverse Effect (defined below), provided that this exception shall not apply to the representations in Sections 3(a) through 3(g), inclusive, of the Security Agreement or Sections 9(a) through 9(e), inclusive, of the Guaranty; or

 

8.3               If Maker or any guarantor of this Note (a) is voluntarily adjudicated a bankrupt or insolvent, (b) seeks or consents to the appointment of a receiver or trustee for itself or for all or any part of its property, (c) files a petition seeking relief, including reorganization, arrangement or similar relief, under the present Bankruptcy Code or other similar present or future applicable laws of the United States or any state or any other competent jurisdiction, (d) makes a general assignment for the benefit of creditors or (e) admits in writing its inability to pay its debts as they mature; or

 

8.4               If a receiver or trustee is appointed for Maker or any guarantor of this Note, or for all or any part of their respective properties without their respective consents and such appointment is not vacated within sixty (60) days, or if a petition is filed against Maker or any guarantor of this Note, seeking relief, including reorganization, arrangement or similar relief, under the present Bankruptcy Code or other similar present or future applicable laws of the United States or any state or other competent jurisdiction, and such petition is not dismissed within sixty (60) days after the filing thereof; or

8.5               If Maker or any guarantor of this Note voluntarily or involuntarily dissolves or liquidates; or

 

8.6               If Maker or any guarantor of this Note shall breach or be in default under any of the terms of this Note (other than as specified in Subsections 8.1, 8.2, 8.3, 8.4, or 8.5 of this Note) or any of the Security Agreement or the Guaranty (subject to the cure periods referenced therein), and such breach or default shall not have been cured within Ten (10) Business Days; or

 

8.7               If Maker or any guarantor of this Note shall fail to make any payment of principal or interest (regardless of amount), (i) in respect of any Indebtedness the outstanding principal amount of which equals or exceeds $50,000, when and as the same shall become due and payable (after giving effect to any grace, cure or notice periods as originally in effect, without regard to any extension of any such periods) and such failure results in the acceleration of any Indebtedness under any of the Senior Credit Facilities (defined below) or (ii) under any of the Senior Credit Facilities.

 

8.8               If Maker shall default under that certain Commercial / Industrial Sublease Agreement dated as of August __, 2018 between Maker and Pharma-Bio Serv PR Inc. (“Sublease”) and such default is not cured within the applicable cure period (if any) under the Sublease.

 

8.9               If a Change of Control shall occur. For purposes of this Note "Change of Control" shall mean (a) Parent shall cease to, directly or indirectly, (i) own and control at least more than fifty (50%) percent of the outstanding voting equity interests of Maker, or (ii) possess the right to elect (through contract, ownership of voting securities or otherwise) at all times a majority1 of the board of directors (or similar governing body) of the Maker and to direct the management policies and decisions of the Maker.

 

9.               Default Remedies.

 

9.1               Upon the occurrence and continuance of an Event of Default under this Note, the Holder, at its option, may declare the entire unpaid Principal balance of this Note, together with accrued Interest, and all other sums due to Holder under this Note, the Security Agreement and the Guaranty, to be immediately due and payable without notice or demand.

 

9.2               In addition to payments of Interest and Principal, if there is a default in this Note, the Holder shall be entitled to recover from the Maker all of the Holder's costs of collection, including the Holder's reasonable attorneys' fees (whether for services incurred in collection, litigation, bankruptcy proceedings, appeals, or otherwise), and all other reasonable costs incurred in connection therewith, and all other amounts payable by Maker to Holder under the Security Agreement.

 

1 Subject to review of the organizational documents.

 

10.               Certain Definitions; Security Agreement; Guaranty. The term “Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in San Juan, Puerto Rico are authorized or required by law to remain closed. The term “Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of Maker or Guarantor, (b) the ability of Maker or Guarantor to pay and perform any of their obligations under this Note, the Security Agreement or the Guaranty, (c) the legality, validity, binding effect or enforceability of this Note, the Security Agreement or the Guaranty, (d) the rights of or benefits available to the Holder under this Note, the Security Agreement or the Guaranty, or (e) a material portion of the Collateral. The term “Indebtedness” means, (a) all liabilities, obligations and indebtedness of the referenced party for borrowed money including, but not limited to, obligations evidenced by bonds, debentures, notes or other similar instruments of any such party, (b) all obligations of the referenced party to pay the deferred purchase price of property or services, except trade payables arising in the ordinary course of business not more than 90 days past due or payable on such later date as is customary in the trade, (c) all obligations of the referenced party as lessee under Capital Leases, (d) all Indebtedness of any other party secured by a lien on any asset of the referenced party, (e) all guarantees by the referenced party of Indebtedness of others, (f) all obligations, contingent or otherwise, of the referenced party with respect to letters of credit (supporting payment of Indebtedness), whether or not drawn, including, without limitation, reimbursement obligations related thereto, and banker’s acceptances issued for the account of the referenced party, and (g) all outstanding payment obligations with respect to performance surety bonds that have been drawn upon. “Senior Credit Facilities” means any Indebtedness evidenced by any of (i) that certain Amended and Restated Indenture dated as of June 28, 2018 by and among, Romark Biosciences S.Á R.L. LLC., Romark Global Pharma, LLC, Romark Laboratories, L.C. and US Back National Association, (ii) that certain Credit and Security Agreement dated as of June 28, 2018 by and among Romark Global Pharma, LLC and Banco Popular de Puerto Rico, and (iii) that certain Credit Agreement dated as of June 28, 2018 by and among Romark Global Pharma, LLC and Popular Mezzanine Fund LLC. This Note is secured by that certain Security Agreement of even date herewith from Maker, as Debtor, in favor of Holder, as Secured Party (“Security Agreement”) and by that certain Guaranty of Payment from Parent in favor of Holder (“Guaranty”). Reference is made to the provisions of the Security Agreement and the Guaranty for a description of the further rights of the Holder.

 

11.               Waivers. Except only for any notices which are specifically required by another provision of this Note, Maker waives notice (including, but not limited to, notice of intent to accelerate and notice of acceleration, notice of protest and notice of dishonor), demand, presentment for payment, protest, diligence in collecting and the filing of suit for the purpose of fixing liability. Maker absolutely, unconditionally and irrevocably waives any and all right to assert any defense, counterclaim, cross claim or setoff ("Claim") of any nature whatsoever with respect to this Note (including but not limited to any Claims under, arising as a result of, or in any way related to that certain Asset Purchase Agreement (“Asset Purchase Agreement”) dated as of August ___, 2018 between Maker and Holder), except for any defense based upon a material breach by Seller (as defined therein) of Section 2.2 (Authority and Enforceability) or Section 2.7 (Personal Property) of the Asset Purchase Agreement.

12.               Assignment. Holder may transfer this Note: (i) to any affiliate of Holder without the consent of Maker, provided that any such affiliate assumes the obligations of the Holder under the Asset Purchase Agreement, and (ii) with the prior written consent of the Maker which shall not be unreasonably withheld or delayed, to any other Person (each, a “Permitted Transferee”). Holder may deliver to any Permitted Transferee(s) all or any of the property then held by Holder as security for the indebtedness evidenced by this Note and the Permitted Transferees shall thereupon become vested with all the powers and rights herein given to Holder with respect thereto; and Holder shall thereafter be forever relieved and fully discharged from any liability or responsibility in the matter, but Holder shall retain all rights and powers hereby given with respect to any property not so transferred. The Holder shall provide Maker with a courtesy notice of such transfer by Holder under clause (i) above, provided that failure to provide such notice shall in no way affect or impair the transfer by Holder.

 

13.               GOVERNING LAW, VENUE AND JURISDICTION. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO. BORROWER IRREVOCABLY AGREES THAT ANY LEGAL PROCEEDINGS IN RESPECT OF THIS NOTE OR THE SECURITY AGREEMENT MAY BE BROUGHT IN THE COURT OF FIRST INSTANCE OF THE COMMONWEALTH OF PUERTO RICO, OR IN THE DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO AND BORROWER IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH LEGAL PROCEEDINGS.

 

14.               Miscellaneous Provisions.

 

14.1               The term Holder, as used herein, shall mean any holder of this Note.

 

14.2               Time is of the essence in this Note.

 

14.3               The captions of sections of this Note are for convenient reference only, and shall not affect the construction or interpretation of any of the terms and provisions set forth in this Note.

 

14.4               If any provision or portion of this Note is declared or found by a court of competent jurisdiction to be unenforceable or null and void, such provision or portion thereof shall be deemed stricken and severed from this Note, and the remaining provisions and portions thereof shall continue in full force and effect.

 

14.5               This Note may not be amended, extended, renewed or modified nor shall any waiver of any provision hereof be effective, except by an instrument in writing executed by an authorized officer of Holder. Any waiver of any provision hereof shall be effective only in the specific instance and for the specific purpose for which given.

 

14.6               Notice. Any notice to Maker under this Note shall be in writing and sent to the address indicated for it under the signature line hereof, and any notice to Holder shall be sent to the address set forth in Section 6 above, in each case, by overnight delivery through a nationally recognized courier service, properly addressed with delivery charges prepaid and shall be deemed effective when received or when delivery is refused by the addressee or cannot be made because of a change in address of which the sending party has not been notified. Notwithstanding any provision herein to the contrary concerning modifications, a change in address may be effected by a notice sent by either party to the other party by the means set forth in this Section.

 

15.               WAIVER OF TRIAL BY JURY. MAKER AND HOLDER WAIVE TRIAL BY JURY IN CONNECTION WITH ANY ACTION OR PROCEEDING OF ANY NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, ANY COUNTERCLAIM, OFFSET OR DEFENSE) ARISING UNDER, OUT OF OR IN CONNECTION WITH THIS NOTE.

IN WITNESS WHEREOF, the undersigned has executed this Promissory Note as of this 13th day of August, 2018 intending to be bound hereby and to be effective as of the day and year first above written.

ROMARK GLOBAL PHARMA, LLC

Address for Notices:

B5 Tambonuco Street, Suite 216 Pmb 317

Guaynabo, Puerto Rico

00968

Affidavit No. _____

Acknowledged and subscribed before me in _____________, Puerto Rico, this ___ day of _______, 2018 by _________________________, in representation and on behalf of Romark Global Pharma, LLC, who is of legal age, single, executive and resident of __________________, Puerto Rico, personally know to be or identified by ___________________________.

THIS SECURITY AGREEMENT (this "Security Agreement") is effective as of _________________, 2018 by ROMARK GLOBAL PHARMA, LLC, a limited liability company organized under the laws of the Commonwealth of Puerto Rico (the "Debtor"), having its chief executive office located at B5 Tabonuco Street, Suite 216, Pmb 317, Guaynabo, PR 00968, in favor of SCIENZA LABS, INC., a corporation organized under the laws of the Commonwealth of Puerto Rico, having its chief executive office located at 6 Road 696, Dorado, PR 00646, as holder (and any of its successors and Permitted Transferee(s), the “Holder”) of the Note described below (and its successors and Permitted Transferee(s), the "Secured Party"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Note (as defined below).

A.           Debtor and Secured Party entered into that certain Asset Purchase Agreement dated as of August 13, 2018, providing for the sale of certain property and assets to Debtor ("Purchase Agreement"), and in consideration thereof Debtor agreed to deliver and has executed and delivered a $3,000,000 Promissory Note in favor of Holder, dated as of the date hereof ("Note").

B.           Romark Laboratories, L.C., a Florida limited liability company (“Guarantor”) has delivered to Secured Party its Guaranty of Payment with respect to the Note (“Guaranty”).

C.           Debtor has agreed to deliver this Security Agreement providing for the granting of a security interest by Debtor to Secured Party in the hereinafter defined Collateral to secure certain of Debtor's obligations to Holder under the Note and certain of Guarantor’s obligations to Holder under the Guarantee, all on the terms and conditions set forth in this Security Agreement.

In consideration of the foregoing, Debtor hereby agrees as follows:

1.           GRANT OF SECURITY INTEREST.

(a)           Collateral. For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby grants Secured Party a continuing security interest in all of Debtor's estate, right, title and interest in and to all personal property of Debtor described on Schedule C to this Security Agreement sold by Holder to Debtor pursuant to the Purchase Agreement, wherever located, together with all substitutions and replacements to any of the foregoing, and all products and proceeds from the sale of any of the foregoing, and rents, revenues and profits therefrom (for the avoidance of doubt, excluding such rents, revenues and profits to the extent the same constitute inventory of the of the Debtor), including the proceeds of any insurance policies (whether or not Secured Party is the loss payee thereof) and under any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing ("Collateral"), including, without limitation those assets sold to Debtor pursuant to the Purchase Agreement consisting of (i) machinery, equipment, appliances, tooling, parts, counter space, fixtures, spare parts, maintenance equipment, cleaning equipment and supplies, printers, furnishings, computer and other electronic equipment, furniture, and goods described on Schedule C to this Security Agreement and (ii) all present or future books, records, documents, computer tapes and discs, relating to all of the foregoing, in which Debtor may now have or hereafter acquire an interest. For avoidance of doubt, the Collateral shall exclude all “Excluded Assets”, as such term is defined in the Purchase Agreement.

Where applicable, and to the extent not otherwise defined herein, all terms used herein (whether or not capitalized herein) defined in Chapter 9 of the Puerto Rico Commercial Transactions Act (the "UCC", as it may be amended and in effect from time-to-time) shall have the same definitions herein as specified in the UCC.

Any of the foregoing terms which are defined in the UCC shall have the meaning provided in the UCC, as amended and in effect from time-to-time, as supplemented, expanded or limited by the foregoing. For avoidance of doubt, it is expressly understood and agreed that, to the extent the UCC is revised subsequent to the date hereof such that the definition of any of the foregoing terms included in the description of the Collateral is changed, the parties hereto desire that any property which is included in such changed definitions which would not otherwise be included in the foregoing grant on the date hereof be included in such grant immediately upon the effective date of such revision. Notwithstanding the immediately preceding sentence, the foregoing grant is intended to apply immediately on the date hereof to all of the Collateral to the fullest extent permitted by law regardless of whether any particular item of the Collateral is currently subject to the UCC.

The security interests are granted as security only and shall not subject Secured Party to, or transfer to Secured Party, or in any way affect or modify, any obligation or liability of Debtor with respect to any of the Collateral or any transaction in connection therewith. Debtor will perform and comply in all material respects with all of its obligations in respect of the Collateral, including accounts, contracts, leases and other general intangibles, and the exercise by Secured Party of any of its rights hereunder shall not release Debtor from any of its duties or obligations. Secured Party shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Security 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 claim for payment assigned hereunder.

(b)           Perfection of Security Interest.

(i)           Filing. Debtor will execute, deliver, file and record (in such manner and form as Secured Party may require), and hereby authorizes Secured Party to file and record, any financing statements, continuation statements and amendments thereto, or this Agreement (which the parties hereto agree shall be sufficient as a financing statement hereunder), any specific assignments or other paper that may be necessary or desirable, or that Secured Party may request, in order to create, confirm, preserve, perfect or validate the Security Interest or to enable Secured Party to exercise and enforce its rights and remedies hereunder or under applicable law with respect to any of the Collateral. Debtor hereby appoints Secured Party as Debtor's attorney-in-fact to execute and file in the name and on behalf of Debtor such additional financing statements, continuation statements and amendments thereto as Secured Party may at any time request or require with respect to the Collateral.

(ii)           Other. Debtor shall, at any time and from time-to-time, take such other customary steps as Secured Party may reasonably require to permit Secured Party to insure the perfection and priority of Security Interest in any of the Collateral and of the preservation of its rights therein.

2.           OBLIGATIONS. The grant of the security interest hereunder shall secure the following obligations (the "obligations"): (i) the payment of all obligations of debtor, whether now existing or hereafter arising, with respect to the payment of the principal constituting tranche a under the note (the principal amount of which is currently $2,000,000.00), and the payment of all accrued interest with respect to tranche a under the note, (ii) the performance of all other obligations of debtor under the note and this security agreement, exclusive of (x) obligations consisting of the payment of principal constituting tranche b under the note, and (y) obligations consisting of the payment of accrued interest with respect to tranche b under the note, and (iii) the payment of any and all reasonable costs and expenses incurred by secured party to enforce its rights under the note and the guaranty as such rights relate to the payment of the principal constituting tranche a of the note, and the payment of any interest thereon, and to enforce any and all of secured party’s rights under this security agreement, and (iv) the payment and performance of any and all reasonable costs and expenses incurred by secured party to protect or preserve the collateral or the security title, lien and security interest created hereby or for any other purpose provided herein; provided the maximum amount secured by this agreement at any time will not exceed $2,000,000 in the aggregate

3.           REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to secured party that the following statements are true, correct and complete:

(a)           Title to Collateral. Debtor has good and marketable title to the Collateral, free of all adverse claims, interests, liens or encumbrances, except the security interest in favor of U.S. Bank National Association, as collateral agent (“US Bank Lien”). The security interest created under this Security Agreement constitutes a valid security interest in the Collateral and, upon filing of a financing statement, a valid perfected security interest in the items and types of Collateral in which a security interest may be perfected by the filing of a financing statement.

(b)           Validity of Loan Documents; Authority. Each of this Security Agreement and the Note is the legally valid and binding obligation of Debtor, enforceable against Debtor in accordance with its terms, subject only to limitations on enforceability imposed by (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors' rights generally and (ii) general equitable principles. Debtor has the power and authority to execute, deliver, perform its obligations under this Security Agreement and the Note, and to grant the security interest provided for in this Security Agreement, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Security Agreement and the Note, and the grant of a security interest pursuant to this Security Agreement.

(c)           Location of Debtor; State of Incorporation. Debtor's chief executive office is located at the address shown above, and the Debtor's state of incorporation is the Commonwealth of Puerto Rico.

(d)           Location of Collateral. All locations at which the Collateral is located (other than vehicles and property attached thereto) are specified on Schedule A attached hereto and made a part hereof.

(e)           Name, Identity, and Structure. During the past five years, Debtor's business has not been conducted under any name other than Debtor's name as set forth above, nor has it changed its structure or state of incorporation, through incorporation, merger, consolidation, joint venture or otherwise other than as set forth on Schedule B attached hereto and made a part hereof.

(f)           Insurance. Debtor has delivered to Secured Party copies of all insurance policies, and with certificates of insurance naming Secured Party as loss payee/additional insured with respect to such insurance policies, maintained by Debtor with respect to the Collateral, and the operation thereof, and Debtor will use commercially reasonable efforts to provide Secured Party with endorsements to such insurance policies naming Secured Party as loss payee/additional insured with respect to such insurance policies within sixty (60) days from the date hereof, and in any event shall provide such endorsements within one-hundred twenty (120) days from the date hereof.

(g)           Taxes, Levies, Etc. Debtor has filed or caused to be filed prior to delinquency all federal, state and local material tax returns that are required to be filed, and has paid and shall continue to pay when due all taxes as shown on such returns, unless such taxes are being contested by it, in good faith and by appropriate proceedings and then only if and to the extent reserves have been fully set aside on its books therefor to the extent required by generally accepted accounting principles.

4.           COVENANTS. Debtor will comply with all covenants in this section 4, unless debtor has received the written consent of secured party

(a)           Title to Collateral. Debtor shall not create or permit the existence of claims, interests, liens, or other encumbrances against any of the Collateral, other than the US Bank Lien. Debtor shall provide prompt written notice to Secured Party of any future claims, interests, liens or encumbrances against any of the Collateral, and shall defend diligently Debtor's and Secured Party's interests (including the priority of such interests) in all Collateral.

(b)           Change in Name, Etc. Debtor shall not (i) change the location of its place of business or chief executive office; or (ii) change its name, identity, state of incorporation, state organization number, or employer identification number, unless it shall have given Secured Party fifteen (15) days' prior written notice of its intention to take any action described in clauses (i) and (ii), and authenticated or executed and delivered to Secured Party all financing statements, financing statement amendments and other instruments which Secured Party may reasonably request in connection therewith.

(c)           Change in Accounts; Location of Collateral. Debtor agrees not to move any Collateral to or allow any Collateral to be at a location other than as provided on Schedule A. Debtor will, at its own cost and expense, cause to be delivered to Secured Party landlord or other third party agreements, lien search results, or any other instruments or documents as Secured Party may reasonably request from time-to-time.

(d)           Change in Structure. Debtor agrees not to change its corporate organizational structure or state of incorporation in any manner unless it shall have given Secured Party fifteen (15) days' prior written notice of its intention to take any such action.

(e)           Further Assurances. Upon the reasonable request of Secured Party, Debtor shall do all acts and things as Secured Party may from time-to-time deem necessary or advisable to enable it to perfect, maintain and continue the perfection and priority of the security interest of Secured Party in the Collateral, or to facilitate the exercise by Secured Party of any rights or remedies granted to Secured Party hereunder or provided by law. Without limiting the foregoing, Debtor agrees to execute, in form and substance satisfactory to Secured Party, such financing statements, continuation statements, amendments thereto, supplemental agreements, assignments, notices of assignments, and other instruments and documents as Secured Party may from time-to-time reasonably request. Debtor shall, at any time and from time-to-time, take such steps as Secured Party may reasonably request for Secured Party to obtain an acknowledgment, in form and substance satisfactory to Secured Party, of any bailee having possession of any of the Collateral that such bailee holds such Collateral for Secured Party. Secured Party shall use reasonable care in the custody and preservation of any Collateral in its possession, but shall not be required to take any steps necessary to preserve rights against other parties. All reasonable costs and expenses incurred by Secured Party to establish, perfect, maintain, determine the priority of, or release the security interest granted hereunder (including the cost of all filings, recordings, and taxes thereon and the fees and expenses of any designee of Secured Party) shall become part of the Obligations secured hereby and be paid by Debtor on demand.

Debtor hereby authorizes Secured Party to file one or more financing or continuation statements, and amendments thereto (or similar documents required by any laws of any applicable jurisdiction) in the jurisdiction where this Security Agreement will be given effect and any other appropriate jurisdiction, relating to all or any part of the Collateral without the signature of Debtor where permitted by law.

(f)           Insurance. Debtor shall maintain such insurance with such insurance companies, in such amounts, and covering such risks, as are at all times reasonably required by Secured Party. Debtor acknowledges that at no time shall it maintain insurance coverage with respect to the Collateral in lesser amounts or coverage than in effect on the date hereof.

(g)           Disposition and Use of Collateral by the Debtor. Without the prior written consent of Secured Party, Debtor shall not at any time sell, transfer, lease, abandon or otherwise dispose of any Collateral.

(h)           Condition of Collateral. Debtor shall, at its own expense, make all alterations, replacements and improvements to the Collateral as may from time-to-time be necessary in order to ensure that the Collateral remains in good repair, working order and condition, ordinary wear and tear excepted, subject at all times to good manufacturing practices and regulatory requirements.

(i)           Condition of Books and Records. Debtor shall maintain complete, accurate and up-to-date books, records, accounts, and other information relating to all Collateral in such form and in such detail as may be reasonably satisfactory to Secured Party, and shall allow Secured Party or its representatives to examine and copy such books, records, accounts and other information upon reasonable notice and during normal business hours, or at such other times as the parties may agree. Debtor shall furnish to Secured Party statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party may request, all in reasonable detail, to the extent Debtor possesses such information or can acquire it without unreasonable effort or expense.

(j)           Right of Inspection. Upon reasonable notice and during normal business hours, or at such other times as the parties may agree, Debtor shall allow Secured Party or its representatives to examine any of Debtor's properties or locations where the Collateral is located, and the books and records pertaining to the Collateral, and to have access to Debtor's officers and management personnel so that Secured Party or its representatives may confirm, physically inspect and appraise any of the Collateral; provided, however, that upon the occurrence and continuing existence of an Event of Default, Secured Party or its representatives may conduct such visits and inspections and engage in such discussions at the expense of Debtor, and as frequently as it may specify, provided any such visits or inspections do not interfere with the normal operations of the Debtor.

(k)           Negative Pledge. Debtor shall not grant a negative pledge upon any of the Collateral in favor of any party.

(l)           No Fixtures. It is the intention of the parties hereto that none of the Collateral (except for the “Improvements” (as defined in the Purchase Agreement)) shall become fixtures. Debtor agrees to take all such reasonable action or actions as may be reasonably necessary to prevent any of the Collateral from becoming fixtures (unless the Collateral already exists as a fixture on such real estate on the date hereof), which actions may include, without limitation, the use of Debtor's commercially reasonable efforts to obtain waivers of liens, in form satisfactory to Secured Party, from each lessor of real property on which any of the Collateral is or is to be located, to the extent reasonably requested by Secured Party.

5.           EVENT OF DEFAULT. For purposes of this security agreement, an "event of default" shall exist hereunder upon the occurrence of any event of default under the note, or (b) the breach of or failure by debtor to perform or observe any covenant or agreement contained in this security agreement or the purchase agreement, to the extent debtor does not cure such default within 10 days from notice from secured party.

6.           RIGHTS AND REMEDIES. Upon the occurrence and during the continuation of any event of default hereunder, secured party may declare all obligations to be immediately due and payable and proceed against debtor directly for payment, and, to the extent permitted by law, may exercise any and all rights and remedies of a secured party in the enforcement of its security interest under the ucc, this security agreement, or any other law. Without limiting the foregoing:

(a)           Disposition of Collateral. Secured Party may sell, lease, or otherwise dispose of all or any part of the Collateral, in its then condition or following any commercially reasonable preparation or processing thereof, whether by public, judicial or private sale or at any brokers' board, in lots or in bulk, for cash, on credit or otherwise, with or without representations or warranties, and upon commercially reasonable terms, and Secured Party may purchase such Collateral at any public or judicial sale, or, if such Collateral is of a type that is customarily sold on a recognized market or is of a type which is the subject of widely distributed standard price quotations, at any private sale. To the extent permitted by law, Debtor hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any law now existing or hereafter adopted. At any time when advance notice of sale is required, Debtor agrees that ten (10) business days' prior written notice shall be reasonable notification within the meaning of the UCC. In connection with the foregoing, Secured Party may:

(i)           require Debtor to assemble the Collateral and all records pertaining thereto and make such Collateral and records available to Secured Party at a place to be designated by Secured Party which is reasonably convenient to both parties;

(ii)           enter the premises occupied by Debtor or premises under Debtor's control and take possession of the Collateral;

(iii)           without charge by Debtor, use or occupy the premises of Debtor or premises under Debtor's control, including warehouse and other storage facilities;

(iv)           without charge by Debtor, use or sublicense the use of any intellectual property necessary for the operation (for example, operating software) of any of the Collateral (and such use or right of use shall inure to the benefit of all successors, assigns and transferees of Secured Party and their respective successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise); provided however, for the avoidance of doubt, the foregoing right of use shall not extend to any intellectual property developed by the Debtor in its use of the Collateral or resulting from Debtor’s research and development activities;

(v)           rely upon the advice or instructions of any one or more brokers or other experts selected by Secured Party to determine the method or manner of disposition of any of the Collateral and, in such event, any disposition of the Collateral by Secured Party in accordance with such advice or instructions shall be presumptively deemed to be commercially reasonable; and

(vi)           compromise and settle or sell, assign or transfer or ask, collect, receive or issue any and all claims possessed by Debtor which constitute a portion of the Collateral, all in the name of Debtor.

(b)           Proceeds. Secured Party may collect and apply all proceeds of the Collateral, and may endorse the name of Debtor in favor of Secured Party on any and all checks, drafts, money orders, notes, acceptances, or other instruments of the same or a different nature, constituting, evidencing, or relating to the Collateral which may come into the possession of Secured Party. Secured Party may receive and open all mail addressed to Debtor and remove therefrom any cash or non-cash items of payment constituting proceeds of the Collateral.

(c)           Insurance Adjustments. Secured Party may adjust, settle, and cancel any and all insurance covering any Collateral, endorse the name of Debtor in favor of Secured Party on any and all checks or drafts drawn by any insurer, whether representing payment for a loss or a return of unearned premium, and execute any and all proofs of claim and other documents or instruments of every kind required by any insurer in connection with any payment by such insurer.

(d)           Appointment of Receiver. Without demand or notice to Debtor, except to the extent required by law, Secured Party shall have the right to the appointment of a receiver for the properties and assets of Debtor, and Debtor hereby consents to such right and to such appointment and hereby waives any objection Debtor may have thereto and hereby waives the right to have a bond or other security posted by Secured Party or any other person in connection therewith.

The net proceeds of any disposition of the Collateral shall be applied by Secured Party, after deducting its reasonable expenses incurred in such disposition, including, but not limited to, the reasonable attorneys' fees and legal expenses incurred by Secured Party, to the extent not prohibited by law, to the payment in whole or in part of the Obligations in the manner as Secured Party elects in its sole and absolute discretion.

(e)           Remedies Cumulative. The enumeration of the foregoing rights and remedies is not intended to be exhaustive, and such rights and remedies shall be separate and cumulative, and the exercise of any right or remedy or both shall not preclude the exercise of any other rights or remedies, all of which are cumulative and non-exclusive.

7.           DEBTOR'S WAIVERS. Debtor hereby waives (a) any defense based upon any lack of authority of the officers, directors, partners or agents acting or purporting to act on behalf of debtor or any principal thereof or any defect in the formation of debtor; (b) all rights and defenses arising out of an election of remedies by secured party; (c) any rights and defenses based upon any borrowing or any grant of a security interest under section 364 of the bankruptcy code;(d) any rights and defenses based upon any waiver by secured party of its rights, powers or remedies under this security agreement, the note, the purchase agreement, the guaranty or any other agreement, or any delay by secured party in exercising the same; (e) presentment, demand, protest and notice of any kind, including, without limitation, notice of default, and any defenses relating thereto arising under applicable law; (f) any rights and defenses based on the fair value limitations of applicable law;(g) any rights and defenses based on any transfer of all or part of any security for the obligations to secured party by deed in lieu of foreclosure; (h) any rights and defenses based on release of any guarantor, surety, collateral or other security for any of the obligations; (i) any claim in defense arising under or related to the purchase agreement; and (k) any principle or provision of law, statutory or otherwise, which is or might be in conflict with the terms and provisions of this agreement. Debtor hereby agrees that the payment of any sums payable under the note or the guaranty or other act which tolls any statute of limitations applicable to the note or the guaranty shall similarly operate to toll the statute of limitations applicable to debtor's liability hereunder.

8.           OTHER PROVISIONS.

(a)           Amendment and Waiver. Without the prior written consent of Secured Party, no amendment or waiver of, or consent to any departure by Debtor from, any provision hereunder shall be effective. Any such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No delay or failure by Secured Party to exercise any remedy hereunder shall be deemed a waiver thereof or of any other remedy hereunder. A waiver on any one occasion shall not be construed as a bar to or waiver of any remedy on any subsequent occasion.

(b)           Costs and Attorneys' Fees. Except as prohibited by law, if at any time Secured Party employs counsel in connection with the creation, perfection, preservation, or release of the security interest of Secured Party in the Collateral or the enforcement of any of Secured Party's rights or remedies hereunder or under the Note or with respect to any other Obligations, all of Secured Party's reasonable attorneys' fees arising from such services and all other reasonable expenses, costs, or charges relating thereto shall become part of the Obligations secured hereby and be paid by Debtor on demand.

(c)           No Obligation to Make Loans. Nothing contained herein or in any financing statement or other collateral document executed or filed in connection herewith shall be construed to obligate Secured Party to make any loan, advance or extension of credit to Debtor.

(d)           Termination; Reinstatement. This Security Agreement, the security interest of Secured Party in the Collateral, and all other documents or instruments contemplated hereby shall continue in full force and effect until all Obligations have been paid in full, and (ii) the Note has been terminated in accordance with its terms and any preference period applicable to payments made on or security given for the Obligations has expired under law. To the extent Debtor or any third party makes a payment or payments to Secured Party or Secured Party receives any payment or proceeds of the Collateral for the Obligations, enforces its security interest or exercises any right of set off, and such payment or payments or the proceeds thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, or required to be repaid to a trustee, receiver, or any other party under any bankruptcy, insolvency or other law or in equity, or any combination of the foregoing, then, to the extent of such recovery, the Obligations or any part thereof originally intended to be satisfied shall be revived and continued in full force and effect, and this Security Agreement, if earlier terminated, shall be revived and continued in full force and effect, as if such payment or payments had not been made, or such enforcement or set off had not occurred. Upon termination of this Security Agreement, Secured Party (at the written request of Debtor and at the sole expense of Debtor) will (a) execute and deliver to Debtor such documents as Debtor may reasonably request to evidence such termination and (b) file such termination statements, release all liens of record and take all other action as reasonably requested by Debtor to effectuate the same.

(e)           Performance by Secured Party. Upon the occurrence of an Event of Default hereunder, Secured Party may, at its option and without prior notice to or demand upon Debtor, without obligation and without waiving or diminishing any of its other rights or remedies hereunder, fully perform or discharge any of such duties, provided that Secured Party shall use good faith efforts to give written notice to Debtor promptly after taking any such action; further provided that Secured Party shall have no liability for failing to give such notice. Upon the occurrence of an Event of Default hereunder, all costs and expenses incurred by Secured Party in connection therewith, together with interest thereon at the default rate applicable to the Note balance or advance secured hereby shall become part of the Obligations secured hereby and be due and paid by Debtor upon demand.

 

(f)           Indemnification, Etc. Debtor hereby expressly indemnifies and holds Secured Party harmless from any and all claims, causes of action, or other proceedings, and from any and all liability, loss, damage, and reasonable expense of every nature, arising by reason of Secured Party's enforcement of its rights and remedies hereunder, or by reason of Debtor's failure to comply with any law, other than any such claim, cause of action or other proceeding, liability, loss, damage or expense arising by reason of gross negligence or willful misconduct on the part of Secured Party. The obligations of Debtor under this Section 8(f) shall survive the termination of the other provisions of this Security Agreement.

(g)           Power of Attorney. Debtor hereby constitutes and appoints Secured Party during the term of any Obligations as its attorney-in-fact, effective upon the occurrence and during the continuance of an Event of Default, which appointment is an irrevocable, durable agency, coupled with an interest, with full power of substitution. This power of attorney and mandate is for the purpose of taking, whether in the name of Debtor or in the name of Secured Party, any action which Debtor is obligated to perform hereunder or which Secured Party may reasonably deem necessary or advisable to accomplish the purposes of this Security Agreement (including the power to continue operations). The powers conferred upon Secured Party in this Section 8(g) are solely to protect its interest in the Collateral and shall not impose any duty upon Secured Party to exercise any such powers.

(h)           Binding Effect. This Security Agreement shall be binding upon and inure to the benefit of Secured Party and its successors and assigns, and in the event of an assignment of all or any of the Obligations, the rights hereunder, to the extent applicable to the indebtedness so assigned, may be transferred with such indebtedness. This Security Agreement shall be binding upon and inure to the benefit of Debtor and its successor and assigns; provided, that Debtor may not assign any of its rights or obligations hereunder without the prior written consent of Secured Party.

(i)           Notices. All notices hereunder shall be delivered in accordance with the terms and conditions set forth in and to the address provided for the parties in the Note.

(j)           Governing Law. Without giving effect to the principles of conflict of laws and except to the extent governed by federal law, the laws of the Commonwealth of Puerto Rico, without reference to choice of law doctrine, shall govern this Security Agreement, and all disputes and matters between the parties to this Security Agreement.

(k)           Waiver of Jury Trial. DEBTOR AND SECURED PARTY HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECURITY AGREEMENT AND ANY OTHER DOCUMENT EVIDENCING ANY OTHER OBLIGATION, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS SECURITY AGREEMENT AND SECURED PARTY/DEBTOR RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS SECURITY AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. DEBTOR AND SECURED PARTY ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS SECURITY AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. DEBTOR AND SECURED PARTY FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO ANY DOCUMENTS OR AGREEMENTS RELATING TO THIS SECURITY AGREEMENT, INCLUDING THE NOTE. IN THE EVENT OF LITIGATION, THIS SECURITY AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. DEBTOR AND SECURED PARTY ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF SECURED PARTY.

(l)           Severability. The determination that any term or provision of this Security Agreement is unenforceable or invalid shall not affect the enforceability or validity of any other term or provision hereof.

(m)           Entire Agreement. This Security Agreement, together with all documents referred to herein, constitute the entire agreement between Debtor and Secured Party with respect to the matters addressed herein.

EXECUTED as of this 13th day of August, 2018, by duly authorized representative of Debtor intending to be bound hereby and to be effective as of the date first shown above.

ROMARK GLOBAL PHARMA, LLC

Name:

Title:

Affidavit No. _____

Acknowledged and subscribed before me in _____________, Puerto Rico, this ___ day of _______, 2018 by _________________________, in representation and on behalf of Romark Global Pharma, LLC, who is of legal age, single, executive and resident of __________________, Puerto Rico, personally know to be or identified by ___________________________.

THIS GUARANTY OF PAYMENT (this "Guaranty") is effective as of the ______ day of _________________, 2018 by Romark Laboratories, L.C., a Florida limited liability company (the “Guarantor”), in favor of each of Scienza Labs, Inc., a corporation organized under the laws of the Commonwealth of Puerto Rico (“Scienza”), in connection with that certain Promissory Note dated of even date herewith issued by Romark Global Pharma, LLC (“RGP”) to Scienza, in the original principal amount of $3,000,000 (the "Note"). Capitalized terms used herein and not otherwise defined herein shall have the meaning given to such terms in the Note.

 

R E C I T A L S:

 

WHEREAS, Guarantor, as an affiliate of the RGP, will receive substantial benefit as a result of the extension of credit by Scienza evidenced by the Note and has agreed to enter into this Guaranty to provide assurance for the payment of the obligations of RGP arising out of or in connection with the Note and the Security Agreement.

 

WHEREAS, Guarantor has agreed that the payment obligations of RGP arising out of or in connection with the Note and the Security Agreement are jointly and severally (solidariamente) the obligations of Guarantor, pursuant to the terms of this Guaranty.

 

 NOW THEREFORE, in consideration of the premises and mutual covenants herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Guarantee. Guarantor unconditionally guarantees, as a primary obligor and not merely as a surety, the due and punctual payment of all obligations and liabilities of the rgp arising out of, in connection with, or related to the note and the security agreement, whether contingent, liquidated, unmatured or matured, including without limitation, (i) rgp's payment obligations under note and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, however arising (including but not limited to under the note and the security agreement), whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), owing by rgp to scienza, all the obligations referred to in the preceding sentence collectively called the “guaranteed obligations”).

 

Guarantor further agrees that the guaranteed obligations may be extended, renewed or increased, in whole or in part, without notice to or further assent from guarantor, and that guarantor will remain bound upon its guarantee notwithstanding any extension, renewal, or increase of any guaranteed obligations. “payment in full” or “paid in full” means, with respect to the guaranteed obligations, the indefeasible payment in cash in full of all monetary obligations.

 

2.           Obligations not waived. To the fullest extent permitted by applicable law, guarantor waives presentment or protest to, demand of or payment from the rgp or any other obligor of any of the guaranteed obligations, and also waives notice of acceptance of its guarantee and notice of protest for nonpayment. To the fullest extent permitted by applicable law, the obligations of guarantor hereunder shall not be affected by (a) the failure of scienza to assert any claim or demand or to enforce or exercise any right or remedy against rgp under the provisions of the note or the security agreement or otherwise, or (b) any rescission, waiver, amendment or modification of, or any release from any of the terms or provisions of, this guaranty, the note or the security agreement.

 

3.           Guaranty of payment; obligations joint and several; separate actions; waiver of statute of limitations; reinstatement of liability. Guarantor further agrees that its guaranty constitutes a guaranty of payment when due and not of collection, and waives any right to require that any resort be had by scienza to any security that may be held for payment of the guaranteed obligations. The obligations hereunder are independent of the obligations of rgp, and a separate action or actions may be brought and prosecuted against guarantor whether action is brought against rgp or any other person, or whether rgp or any other person is joined in any such action or actions. Guarantor acknowledges that this guaranty is absolute and unconditional, there are no conditions precedent to the effectiveness of this guaranty, and this guaranty is in full force and effect and is binding on guarantor as of the date written below, regardless of whether scienza obtains any guaranties from others or takes any other action contemplated by guarantor. Guarantor waives the benefit of any statute of limitations affecting guarantor's liability hereunder orthe enforcement thereof, and guarantor agrees that any payment of any of the guaranteed obligations or other act which shall toll any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to guarantor's liability hereunder. The liability of guarantor hereunder shall be reinstated and revived and the rights of scienza shall continue if and to the extent for any reason any amount at any time paid on account of any guaranteed obligation guaranteed hereby is rescinded or must otherwise be restored by scienza, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. The determination as to whether any amount so paid must be rescinded or restored shall be made by scienza in its sole discretion; provided however, that if scienza chooses to contest any such matter at the request of guarantor, guarantor agrees to indemnify and hold scienza harmless from and against all reasonable costs and expenses, including reasonable attorneys' fees, expended or incurred by scienza in connection therewith, including without limitation, in any litigation with respect thereto.

 

4.           Security. To the extent that any of the guaranteed obligations are secured, guarantor authorizes scienza to (a) take and hold security for payment of guarantor’s obligations under this guaranty and the guaranteed obligations and exchange, enforce, waive and release any such security, (b) apply such security and direct the order or manner of sale thereof as scienza in their sole discretion may determine and (c) release or substitute any one or more endorsees, other guarantors or other obligors.

 

5.           [reserved].

 

6.           No discharge or diminishment of guaranty; defenses waived; agreement to pay. Except with to the extent the specific defenses to payment expressly reserved by rgp pursuant to section 11 of the note are applicable:

 

(a)           the obligations of guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (other than for payment in full), including any claim of waiver, release, surrender, alteration or compromise of any of the guaranteed obligations, and shall not be subject to any defense or setoff, counterclaim, recoupment or terminationwhatsoever by reason of the invalidity, illegality or unenforceability of the guaranteed obligations or otherwise. Without limiting the generality of the foregoing, the obligations of guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of scienza to assert any claim or demand or to enforce any remedy under the note, the security agreement, the asset purchase agreement or any other document or agreement, by any waiver or modification of any provision of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the guaranteed obligations, or to the fullest extent that guarantor may prospectively waive such defenses under applicable law, by any other act or omission that may or might in any manner or to the extent vary the risk of such guarantor or that would otherwise operate as a discharge of guarantor as a matter of law or equity (other than payment in full); and

 

(b)           to the fullest extent permitted by applicable law, guarantor waives any defense based on or arising out of any defense of rgp or the unenforceability of the guaranteed obligations or any part thereof from any cause, or the cessation from any cause of the liability of rgp, other than payment in full. Scienza may, attheir election, compromise or adjust any part of the guaranteed obligations, make any other accommodation with any other guarantor or obligor or any other guarantor, without affecting or impairing in any way the liability of guarantor hereunder except forpayment in full. Pursuant to applicable law, guarantor waives any defense arising out of any such election even though such election operates, pursuant to applicable law, to impair or to extinguish any right of reimbursement or subrogation or other right or remedy of guarantor against rgp or any other guarantor, as the case may be, or any security.

 

(c)           in furtherance of the foregoing and not in limitation of any other right that scienza has at law or in equity against guarantor by virtue hereof, upon the failure of rgp to pay any guaranteed obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, guarantor hereby promises to and will forthwith pay, or cause to be paid, to scienza, in cash the amount of such unpaid guaranteed obligation.

 

7.           Subordination. Upon payment by guarantor of any sums to scienza, all rights of guarantor against rgp arising as a result thereof by way of right of subrogation, contribution, reimbursement, indemnity or otherwise shall in all respects be subordinate and junior in right of payment to the prior payment in full. If any amount shall erroneously be paid to guarantor on account of such subrogation, contribution, reimbursement, indemnity or similar right, such amount shall be held in trust for the benefit of scienza and shall forthwith be paid to scienza to be credited against the payment of the guaranteed obligations, whether matured or unmatured, in such order as in the note.

 

 

8.           Information. Guarantor assumes all responsibility for being and keeping itself informed of the rgp’s financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the guaranteed obligations and the nature, scope and extent of the risks that guarantor assumes and incurs hereunder, and agrees that scienza will not have any duty to advise guarantor of information known to it regarding such circumstances or risks.

 

9.           Representations and warranties. Guarantor represents and warrants as follows:

 

(a)           it is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization;

 

(b)           guarantor has full power and legal right to execute and deliver, and to perform and observe the provisions of this guaranty;

 

(c)           the execution, delivery and performance by guarantor of this guaranty have been duly authorized by all necessary action, and do not contravene any law or contractual restriction binding on or affecting guarantor or any of guarantor’s property, and guarantor is not included on the u.s. office of foreign asset control list;

 

(d)           no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other person is required for the due execution, delivery and performance by guarantor of this guaranty; and

 

(e)           this guaranty is the legal, valid and binding obligation of guarantor, enforceable against guarantor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceeding in equity or at law).

 

10.           Binding effect; several agreement; assignments. Whenever in this guaranty any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all covenants, promises and agreements by or on behalf of the guarantor that are contained in this guaranty shall bind and inure to the benefit of each party hereto and their respective successors and assigns. This guaranty shall become effective as to guarantor when a counterpart hereof executed on behalf of guarantor shall have been delivered to scienza and thereafter shall be binding upon guarantor and their respective successors and assigns, and shall inure to the benefit of guarantor, scienza, and their respective successors and assigns, except that guarantor shall not have the right to assign its rights or obligations hereunder or any interest herein (and any such attempted assignment shall be void ab initio). Scienza may assign its rights under this guaranty in connection with the assignment of the underlying guaranteed obligations, in whole or in part, to the extent permitted under the note.

 

11.           Waivers; amendment.

 

(a)           no failure or delay of scienza of any kind in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights of scienza hereunder and under the note and the security agreement are cumulative and are not exclusive of any rights or remedies that it would otherwise have. No waiver of any provision of this guaranty or consent to any departure by guarantor therefrom shall in any event be effective unless the same shall be permitted by this subsection (b) below, and then such waiver and consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on guarantor in any case shall entitle guarantor to any other or further notice in similar or other circumstances.

 

(b)           neither this guaranty nor any provision hereof may be waived, amended or modified except pursuant to a written agreement entered into between (i) scienza and (ii) the guarantor with respect to which such waiver, amendment or modification relates.

 

 

14.           Notices. Except as otherwise herein provided, any notice or other communication required hereunder shall be delivered in accordance with the terms and conditions set forth in and to the address provided for the parties in the note.

 

 

15.           Survival of agreement; severability.

 

(a)           all covenants, agreements representations and warranties made by the guarantor herein and in the certificates or other instruments prepared or delivered in connection with or pursuant to this guaranty or any other agreement shall continue in full force and effect until the guaranteed obligations have been paid in full.

 

(b)           if one or more of the provisions contained in this guaranty or in any other agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provision.

 

16.           Counterparts. This guaranty may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract (subject to section 10), and shall become effective as provided in section 10. Delivery of an executed signature page to this guaranty by facsimile or electronic transmission shall be as effective as delivery of a manually executed counterpart of this guaranty.

 

17.           Rules of interpretation. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated or otherwise modified, (b) any reference herein to any person or entity shall be construed to include such person’s or entity’s successors and assigns permitted hereunder, and (c) the words “herein,” “hereof” and “hereunder,” and words of similar import when used herein, shall be construed to refer to this guaranty in its entirety and not to any particular provision thereof. Each of the parties hereto has been represented by counsel and this guaranty has been jointly drafted. No doctrine construing ambiguities against a drafter shall be employed in the interpretation hereof.

 

18.           Savings clause.

 

(a)           it is the intent of guarantor and scienza that the liability of guarantor under this guaranty as of any date shall be limited to a maximum aggregate amount equal to the greatest amount that would not render guarantor’s obligations under this guaranty subject to avoidance, discharge or reduction as of such date as a fraudulent transfer or conveyance under applicable federal and state laws pertaining to bankruptcy, reorganization, arrangement, moratorium, readjustment of debts, dissolution, liquidation or other debtor relief, specifically including, without limitation, the united states bankruptcy code and any fraudulent transfer and fraudulent conveyance laws (collectively, “insolvency laws”), in each instance after giving effect to all other liabilities of guarantor, contingent or otherwise, that are relevant under applicable insolvency laws of any rights to subrogation, contribution, reimbursement, indemnity or similar rights of guarantor pursuant to (y) applicable law or (z) any agreement (including this guaranty) providing for an equitable allocation among guarantor and other affiliates of the guarantor of obligations arising under guaranties by such parties.

 

(b)           the substantive laws under which the possible avoidance or unenforceability of the guaranteed obligations as may be determined in any case or proceeding shall hereinafter be referred to as the “avoidance provisions”. To the extent set forth in section 18(a), but only to the extent that the guaranteed obligations would otherwise be subject to avoidance or found unenforceable under the avoidance provisions, if guarantor is not deemed to have received valuable consideration, fair value or reasonably equivalent value for the guaranteed obligations, or if the guaranteed obligations would render guarantor insolvent, or leave guarantor with an unreasonably small capital to conduct its business, or cause guarantor to have incurred debts (or to have intended to have incurred debts) beyond its ability to pay such debts as they mature, in each case as of the time any of the guaranteed obligations are deemed to have been incurred under the avoidance provisions and after giving effect to the contribution by guarantor, the maximum guaranteed obligations for which guarantor shall be liable hereunder shall be reduced to that amount which, after giving effect thereto, would not cause the guaranteed obligations (or any other obligations of guarantor to scienza), as so reduced, to be subject to avoidance or unenforceability under the avoidance provisions.

 

(c)           this section 18 is intended solely to preserve the rights of scienza hereunder to the maximum extent that would not cause the guaranteed obligations of guarantor to be subject to avoidance or unenforceability under the avoidance provisions, and neither the guarantor nor any other person or entity shall have any right or claim under this section 18 as against scienza that would not otherwise be available to such person or entity under the avoidance provisions.

 

IN WITNESS WHEREOF, Guarantor has duly executed this Guaranty as of this 13th day of August, 2018 intending to be bound hereby and to be effective as of the day and year first above written.

GUARANTOR: 

ROMARK LABORATORIES L.C.

By: ________________________________

Name: ________________________________

Title: ________________________________

Affidavit No. _____

Acknowledged and subscribed before me in _____________, Puerto Rico, this ___ day of _______, 2018 by _________________________, in representation and on behalf of ________________________, who is of legal age, single, executive and resident of __________________, Puerto Rico, personally know to be or identified by ___________________________.

and in Part 207 of Title 21 of the Code of Federal Regulations whi can be found in the following hyperlink: https://www.gpo.gov/fdsys/search/pagedetails.action?collectionCode=FR&browsePath=2016%2F08%2F08-31%5C%2F4%2FFood%20and%20Drug%20Administration&granuleId=2016-20471&packageId=FR-2016-08-31&fromBrowse=true.