==============================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
0-15507
Commission file number
IMMUCELL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 01-0382980
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
56 Evergreen Drive
Portland, ME 04103
(Address of principal executive office and zip code)
(207) 878-2770
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Class of Securities: Outstanding at November 8, 1995:
Common Stock, par value $.10 per share 2,291,981
==============================================
<PAGE>
IMMUCELL CORPORATION
INDEX TO FORM 10-Q
SEPTEMBER 30, 1995
PART I: FINANCIAL INFORMATION PAGE
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS
Consolidated Balance Sheets-
September 30, 1995 and December 31, 1994 3-4
Consolidated Statements of Operations-
Three and nine month periods ended September 30, 1995 and 1994 5
Consolidated Statement of Stockholders' Equity-
Nine months ended September 30, 1995 6
Consolidated Statements of Cash Flows-
Nine month periods ended September 30, 1995 and 1994 7
Notes to Unaudited Consolidated Financial Statements 8-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 9-11
PART II: OTHER INFORMATION
Items 1 through 6 11-12
Signatures 12
<PAGE>
IMMUCELL CORPORATION
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $1,001,920 $1,295,246
Short-term investments 463,536 --
Accounts receivable, net 432,359 401,179
Inventories 598,394 565,531
Prepaid expenses and
accrued interest 71,040 34,946
Total current assets 2,567,249 2,296,902
EQUIPMENT, BUILDING AND
LEASEHOLD IMPROVEMENTS, at cost:
Laboratory equipment 757,727 959,869
Building and leasehold improvements 418,925 426,228
Office furniture and equipment 83,956 130,133
Land 50,000 50,000
1,310,608 1,566,230
Less - Accumulated depreciation (713,916) (798,785)
Net equipment, building and
leasehold improvements 596,692 767,445
OTHER ASSETS 2,150 10,302
TOTAL ASSETS $3,166,091 $3,074,649
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
IMMUCELL CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
(unaudited)
<S> <C> <C>
CURRENT LIABILITIES:
Accrued expensess $ 340,311 $ 296,983
Accounts payable 154,859 158,866
Current portion of notes payable 160,054 108,358
Current portion of mortgage loans 4,606 5,170
Total current liabilities 659,830 569,377
LONG TERM DEBT:
Notes Payable 443,375 375,013
Mortgage loans 208,481 254,754
Total long term debt 651,856 629,767
STOCKHOLDERS' EQUITY:
Common stock, Par value--$.10 per share
Authorized--8,000,000 shares
Issued--2,681,579 shares 268,159 268,159
Capital in excess of par value 8,105,448 8,105,448
Accumulated deficit (5,932,467) (5,911,367)
Treasury stock, at cost--
389,598 shares (586,735) (586,735)
Total stockholders' equity 1,854,405 1,875,505
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $3,166,091 $3,074,649
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
IMMUCELL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
______________________ ______________________
1995 1994 1995 1994
REVENUES:
<S> <C> <C> <C> <C>
Product sales $ 989,598 $ 958,601 $3,373,193 $2,975,133
Collaborative research
and development revenue -- -- -- 250,000
Grant income 186,053 138,105 434,682 138,105
___________ ___________ ___________ __________
Total revenues 1,175,651 1,096,706 3,807,875 3,363,238
___________ ___________ ___________ ___________
COSTS AND EXPENSES:
Product costs 451,285 469,020 1,518,916 1,495,864
Research and development
expenses 379,242 384,117 1,235,363 1,025,135
Sales and marketing
expenses 190,818 146,343 586,127 532,372
General and administrative
expenses 181,057 137,792 514,697 427,138
___________ ___________ ___________ ___________
Total costs and expenses 1,202,402 1,137,272 3,855,103 3,480,509
___________ ___________ ___________ ___________
Interest and other income 33,323 19,238 78,527 49,540
Interest expense 16,690 8,141 52,399 23,786
___________ ___________ ___________ ___________
Net interest and other 16,633 11,097 26,128 25,754
___________ ___________ ___________ ___________
NET LOSS $ (10,118) $ (29,469) $ (21,100) $ (91,517)
=========== =========== =========== ===========
NET LOSS PER SHARE $ -- $ (.01) $ (.01) $ (.03)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 2,291,981 2,634,838 2,291,981 2,634,838
=========== =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
IMMUCELL CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(Unaudited)
Common Stock
<TABLE>
<CAPTION>
$.10 Par Value Capital in Treasury Stock Total
-------------- Excess of Accumulated -------------- Stockholders'
SHARES AMOUNTPAR VALUE DEFICIT SHARES AMOUNT EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE
December 31, 1994 2,681,579 $268,159 $8,105,448 $(5,911,367) 389,598 $(586,735) $1,875,505
Net Loss -- -- -- (21,100) -- -- (21,100)
BALANCE
September 30, 1995 2,681,579 $268,159 $8,105,448 $(5,932,467) 389,598 $(586,735) $1,854,405
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
FINANCIAL STATEMENTS.
<PAGE>
IMMUCELL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
NINE MONTH PERIODS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (21,100) $ (91,517)
Adjustments to reconcile net loss
to net cash provided by
operating activities-
Depreciation and amortization 141,267 121,670
Changes in
Accounts receivable (31,180) 21,567
Inventories (32,863) (100,619)
Prepaid expenses and accrued interest (36,095) (32,502)
Accounts payable (4,007) 49,098
Accrued expenses 51,346 56,934
Net cash provided by
operating activities 67,368 24,631
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in short-term investments (463,536) --
Sales/purchases of equipment, building
and leasehold improvements, net 29,487 (372,542)
Decrease in other assets 8,152 --
Net cash used for
investing activities (425,897) (372,542)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt obligations (126,779) (3,255)
Proceeds from sale of common stock -- 285,000
Stock issuance costs (8,018) (18,868)
Proceeds from notes payable 200,000 30,000
Net cash provided by
financing activities 65,203 292,877
NET DECREASE IN CASH AND
CASH EQUIVALENTS (293,326) (55,034)
BEGINNING CASH AND CASH EQUIVALENTS 1,295,246 1,459,510
ENDING CASH AND CASH EQUIVALENTS $1,001,920 $1,404,476
========== ===========
CASH PAID FOR INTEREST $ 53,664 $ 23,796
========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
IMMUCELL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying statements have been prepared by ImmuCell Corporation
(the "Company") without audit, and reflect the adjustments, all of which are
of a normal recurring nature, that are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented. Certain
information and footnote disclosures normally included in the annual financial
statements which are prepared in accordance with generally accepted accounting
principles have been condensed or omitted. Accordingly, the Company believes
that although the disclosures are adequate to make the information presented
not misleading, these financial statements should be read in conjunction with
the financial statements and the notes to the financial statements as of
December 31, 1994, contained in the Company's Annual Report to shareholders on
Form 10-K as filed with the Securities and Exchange Commission.
The consolidated financial statements of the Company include the accounts
of the Company and its wholly-owned subsidiary, the Kamar Marketing Group, Inc.
All intercompany accounts and transactions have been eliminated in
consolidation.
(2) NET PROFIT/(LOSS) PER COMMON SHARE
Earnings (losses) per share are based on the weighted average number of
common shares outstanding adjusted to reflect the assumed exercise of
outstanding stock options and warrants, to the extent these items had a
dilutive effect on the computations.
(3) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
Raw materials $ 78,910 $ 38,575
Work-in-process 434,793 451,137
Finished goods 84,691 75,819
_________ _________
$598,394 $565,531
======== ========
</TABLE>
(4) DEBT OBLIGATIONS
The Company has long term debt obligations, net of current maturities,
as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
9.5% Bank mortgage, collateralized by first
security interest in building, due 1995 to 2000 $208,482 $ 211,494
9.5% Mortgage, collateralized by second security
interest in building, due 1995 to 2000 -- 43,260
</TABLE>
IMMUCELL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
<TABLE>
<S> <C> <C>
10.27% Note payable to bank, collateralized by accounts
receivable, inventory and certain fixed assets,
due 1995 to 1998 286,433 375,013
9.62% Note payable to bank, collateralized by accounts
receivable, inventory and certain fixed assets,
due 1995 to 1999 156,941 --
$651,856 $629,767
===== =====
</TABLE>
Principal payments under the above debt obligations due subsequent to
September 30, 1995 are approximately as follows: $ 40,000 - 1995; $169,000 -
1996; $187,000 - 1997; $181,000 - 1998; $ 50,000 - 1999 and $190,000 - 2000.
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE NINE AND THREE MONTH PERIODS ENDED
SEPTEMBER 30, 1995
Total revenues equalled $3,808,000 for the nine months ended September
30, 1995 compared to $3,363,000 for the same period in 1994, an increase of
$445,000 (13%). For the three months ended September 30, 1995, total revenues
increased to $1,176,000 from $1,097,000 for the three months ended September
30, 1994, an increase of $79,000 (7%).
Total revenues include $435,000 and $186,000 of grant income for the
nine and three months periods ended September 30, 1995, respectively.
Comparatively, total revenues include $138,000 of grant income for the nine
month period ended September 30, 1994, all of which was recorded in the third
quarter of 1994. Additionally, $250,000 of collaborative research and
development revenue was recognized in the nine months ended September 30, 1994,
none of which was recorded in the three months ended September 30, 1994. The
1995 grant income was recognized primarily under three federally sponsored
research grants that support two of the Company's passive antibody development
programs. The 1994 collaborative research and development revenues included a
milestone payment of $210,000 in May 1994 from Univax Biologics, Inc.
("Univax") to maintain its marketing rights to CRYPTOGAM{TM}, a passive
antibody product intended to prevent diarrhea in AIDS patients, that is
currently in Phase I/II clinical trials. In May 1995, Univax terminated its
sponsorship of this program, and ImmuCell reacquired marketing rights to this
product. The Company is funding the completion of the Phase I/II trial
internally.
Product sales equalled $3,373,000 for the nine months ended September
30, 1995 compared to $2,975,000 for the same period in 1994, an increase of
$398,000 (13%). For the three months ended September 30, 1995, product sales
increased to $990,000 from $959,000 for the three months ended September 30,
1994, an increase of $31,000 (3%). Sales of FIRST DEFENSE{R} and the KAMAR
HEATMOUNT DETECTOR aggregated 83% and 76% of total product sales for the nine
and three month periods ended September 30, 1995, respectively.
Comparatively, sales of these two products aggregated 87% and 83% of total
product sales for the nine and three month periods ended September 30, 1994,
respectively. Sales of these two products increased by 8% during the nine
month period ended September 30, 1995 compared to the same period in 1994;
sales of these two products decreased by 6% during the three month period ended
September 30, 1995 compared to the same period in 1994.
The product mix of sales has been positively effected by the increase in sales
of immunoreagents during 1995.
IMMUCELL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
The gross margin on product sales improved to 55% and 54% of product
sales for the nine and three month periods ended September 30, 1995,
respectively, as compared to 50% and 51% of product sales for the nine and
three month periods ended September 30, 1994, respectively. This gross margin
increased by $375,000 (25%) to $1,854,000 during the nine months ended
September 30, 1995 and by $49,000 (10%) to $538,000 during the three months
ended September 30, 1995 over the corresponding periods in the prior year. The
gross margin has been positively effected by the increase in sales of
immunoreagents during 1995 which have a lower cost of sales than the Company's
other products.
Research and development expenses increased by $210,000 (21%) to
$1,235,000 during the first nine months of 1995 compared to the same period in
1994 and decreased by $5,000 (1%) to $379,000 during the three month period
ended September 30, 1995 compared to the same period in 1994. These expenses
were incurred primarily to develop specific antibodies to be used to prevent
gastrointestinal diseases in humans. Additionally, during the 1995 periods,
work was performed to develop a diagnostic test intended for use in monitoring
public water supplies for the presence of CRYPTOSPORIDIUM PARVUM. The second
quarter of 1995 expenses included significant clinical trial expenses not
incurred during the other periods herein reported. The 1994 expenses and to a
reduced degree the 1995 expenses also included an effort to develop and
commercialize the Company's new purification system, which is intended to
enable the Company to harvest antibodies from milk whey.
Research and development expenses exceeded grant income by $801,000
during the nine months ended September 30, 1995 and by $193,000 during the
three months ended September 30, 1995. In comparison, research and development
expenses exceeded collaborative research and development revenues and grant
income by $637,000 and $246,000 in the respective periods of 1994. Management
believes that the losses incurred resulting from the increasing investment in
the research and development of new products are necessary to foster growth for
the Company in the future. In June 1995, the Company announced that its oral,
milk-based E. COLI preventive antibody product demonstrated highly significant
protection in a human challenge-protection study. It has been, and continues
to be, the Company's strategy to demonstrate efficacy in Phase I/II clinical
trials and then actively pursue corporate partners to fund continued
development in exchange for marketing rights.
Sales and marketing expenses increased modestly (by $54,000 or 10%)
during the nine months ended September 30, 1995 compared to the nine months
ended September 30, 1994 and increased by $44,000 (30%) during the third
quarter of 1995 compared to the third quarter of 1994. General and
administrative expenses increased by $88,000 to $515,000 for the nine months
ended September 30, 1995 and by $43,000 to $181,000 for the three months ended
September 30, 1995.
The increase in research and development expenses, described above,
principally caused the operating losses of $21,000 and $10,000 during the nine
and three month periods ended September 30, 1995, respectively. These losses
compare to losses of $92,000 and $29,000 in the same periods of the prior year.
In order to aggressively develop products to prevent gastrointestinal diseases
in humans, the Company expects to incur further operating losses.
LIQUIDITY AND CAPITAL RESOURCES
Total assets increased by approximately $91,000 to $3,166,000 at
September 30, 1995 from $3,075,000 at December 31, 1994. Cash, cash
equivalents and short-term investments increased by approximately $170,000 to
$1,465,000 at September 30, 1995 from $1,295,000 at December 31, 1994. Net
working capital increased by $180,000 to $1,907,000 at September 30, 1995 from
$1,728,000 at December 31, 1994.
In September 1995, the Company entered into a four year $200,000 note
payable to a bank that bears interest at the rate of 9.62% per year. The
proceeds from this note were first used to repay the outstanding balance of
approximately $44,000 from a second mortgage secured by the Company's office
and laboratory building located at 56 Evergreen Drive in Portland, Maine. The
balance of the proceeds are intended to partially fund the purchase of certain
manufacturing equipment and the
IMMUCELL CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
cost of anticipated building improvements required in connection with the
Company's consolidation of its Portland operations into the building that is
owned by the Company at 56 Evergreen Drive.
In April 1994, the Company obtained notice from the National Institute of
Allergy and Infectious Diseases ("NIAID") that it had been awarded a Phase II
Small Business Innovation Research ("SBIR") grant aggregating $435,000 over two
years. These funds will be used to develop recombinant vaccines to
CRYPTOSPORIDIUM PARVUM. In July 1994, the Company obtained notice from the
NIAID that it had been awarded a second Phase II SBIR grant aggregating
$500,000 over two years. These funds will be used to develop a passive
antibody product for the prevention of cryptosporidiosis in AIDS patients. In
April 1995, the Company obtained notice from the NIAID that it had been awarded
a Phase I SBIR grant aggregating $100,000
through December 1995. These funds will be used to develop the Company's
passive antibody product for prevention of diarrhea caused by enterotoxigenic
E. COLI (commonly known as Travelers' Diarrhea). Approximately 65% of the
combined aggregate proceeds of $1,035,000 will be used to fund internal
research and development expenses, and the balance will fund development
services performed under contract by outside laboratories. As of September 30,
1995, approximately $417,000 remained available to fund future grant
expenditures. Approximately 63% of this $417,000 will be used to fund internal
research and development expenses, and the balance will fund development
services performed under contract by outside laboratories. Approximately
$421,000 and $186,000 in income was recognized under these three grants in the
nine and three month periods ended September 30, 1995, respectively.
In order to maintain an exclusive world-wide license to the use of a
certain purification system for all milk purification applications, the Company
must meet certain performance requirements, including the purchase of a
commercial size system in 1996. The Company is seeking a partner with whom to
jointly develop and commercialize the production of certain proteins from cows'
milk utilizing this purification system. In the event that the Company decides
to make this purchase, the Company would expect a partner to fund all or a
significant part of this purchase.
The Company believes that it has sufficient capital resources to meet its
working capital requirements and to finance its ongoing business operations
during the next twelve months.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
IMMUCELL CORPORATION
PART II. OTHER INFORMATION
(CONTINUED)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.1 $200,000 Commercial Note Payable to Peoples Heritage
Bank dated September 28, 1995.
4.2 Security Agreement dated September 28, 1995 in favor
of Peoples Heritage Bank.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
The Company filed a Form 8-K dated as of September 5, 1995
with the Commission reporting the declaration of a dividend
of one common share purchase right for each outstanding share
of common stock, entitling the holder to purchase one share
of common stock at $70.00 per share under Item # 5, OTHER
EVENTS.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IMMUCELL CORPORATION
Registrant
Date: November 10, 1995 By:/S/ THOMAS C. HATCH
Thomas C. Hatch
President and Chief
Executive Officer
Date: November 10, 1995 By:/S/ MICHAEL F. BRIGHAM
Michael F. Brigham
Chief Financial Officer
and Treasurer
<PAGE>
ImmuCell Corporation
Exhibit Index
PAGE
4.1 $200,000 Commercial Note Payable to Peoples Heritage Bank dated September
28, 1995.
4.2 Security Agreement dated September 28, 1995 in favor of Peoples Heritage
Bank.
27.1 Financial Data Schedule.
<PAGE>
ImmuCell Corporation
Exhibit 4.1
$200,000 Commercial Note Payable to
Peoples Heritage Bank dated
September 28, 1995
<PAGE>
PEOPLES HERITAGE BANK
MEMBER FDIC
COMMERCIAL NOTE
$ 200,000.00 PORTLAND , Maine
SEPTEMBER 28, 1995
FOR VALUE RECEIVED, the undersigned (hereinafter called the "Borrower"),
jointly and severally if more than one, promise(s) to pay to the order of
PEOPLES HERITAGE SAVINGS BANK (hereinafter called the "Lender"), at any of its
banking offices or at such other place as may be designated in writing by the
Lender, the principal sum of TWO HUNDRED THOUSAND AND
NO/100****************Dollars ($ 200,000.00), together with interest on the
principal sum from time to time advanced at (Check one):
INTEREST RATE:
X the fixed rate of NINE AND 62/100****** Percent (9.62 %) per annum
/ / a variable annual rate which shall at all times be equal to
Percent ( %) per annum above the "Base Rate" which
shall mean (i) the base lending rate as determined from time to time
by The First National Bank of Boston or the successor thereto, or
(ii) if said bank shall cease to determine such base lending rate,
then the highest prime rate as published in the Wall Street Journal,
or (iii) if not so published, then the prime rate as published in a
generally recognized source determined by Lender. Lender shall not
be required to notify Borrower of adjustments in said variable
interest rate, and such adjustments shall become effective
immediately upon any change in such Base Rate.
/ / other:
until paid in full in accordance with the following payment schedule, which the
Borrower agrees to follow (Check one).
PAYMENT SCHEDULE:
X in monthly installments of FIVE THOUSAND THIRTY SIX AND
10/100*****Dollars ($ 5,036.10**) each, including principal and
interest (which payments are based upon an amortization schedule of
**FOUR (4)*** years), commencing on OCTOBER 28, 1995, and
monthly thereafter until SEPTEMBER 28, 1999 when all principal and
interest remaining unpaid shall be due and payable in a single
balloon payment, notwithstanding the foregoing amortization
schedule. The Lender shall, on or about each anniversary of the
date of this Note, adjust the amount of such installments to an
amount which, based on changes in the interest rate then applicable
to this Note, will maintain the original amortization schedule.
Payment of all accrued interest hereunder shall be due monthly even
though such interest payment may exceed the installment amount as so
determined.
/ / in one principal payment, due on , 19 with interest
only payable monthly, commencing on , 19 and monthly
thereafter until said principal balance with accrued interest is
paid in full.
/ / in one payment of principal and accrued interest due on ,19 .
/ / other:
All payments shall be applied first to unpaid interest and then to
outstanding principal, until paid in full. All interest hereunder shall be
computed on the basis of the actual number of days elapsed over a 360 day year.
If any payment is not received within fifteen (15) days of when due, then
Borrower shall pay to Lender a late payment fee of six percent (6.0%) of the
amount of such delinquent payment.
DEFAULT INTEREST RATE: Lender shall have the right to charge
interest on the unpaid principal balance hereof at an interest rate of
three percent (3.0%) per annum in excess of the rate of interest otherwise
payable as provided herein, for any period after an event of default (as
defined below) shall have occurred and until the same shall have been cured or
expressly waived by Lender in writing.
PREPAYMENT: This Note may be prepaid in full or in part (check one):
/ / without prepayment charge or premium
/ / with a prepayment charge of % of the amount prepaid
X with a prepayment charge to be calculated pursuant to the formula
set forth in Lender's Commitment Letter to Borrower dated AUGUST
7,1995
Unless Lender expressly agrees otherwise partial prepayments will not affect
the payment schedule required above.
SECURITY:
1. This Note is secured and/or guaranteed pursuant to the terms and
conditions of the following documents which, unless otherwise noted
below, are dated on or about the date of this Note (check as many as
apply):
X a mortgage and security agreement on property located at
56 EVERGREEN DRIVE, PORTLAND, MAINE
/ / a collateral assignment of leases and rentals relating to the
property described in said mortgage and security agreement
X a security agreement respecting personal property, namely (but
without limitation): ALL BUSINESS ASSETS INCLUDING A 62 X 108
GENERAL PURPOSE FREEZE DRYER FOR CHEESE WHEY APPLICATIONS WITH ALL
ATTACHMENTS AND ACCESSORIES.
<PAGE>
/ / a guaranty or guaranties executed by
/ / other:
This Note may also be secured by documents executed in the future by
Borrower or by any Guarantor. If checked here this Note is secured as a
future advance pursuant to the terms of an existing Mortgage and Security
Agreement from Borrower to Lender dated and recorded in the
County Registry of Deeds in Book , Page . This Note may also
be secured by existing security agreements, guaranties or other documents if
the provisions of such existing documents state that they shall secure all
future obligations or liabilities of Borrower to Lender. All documents which
secure or guaranty this Note, whether executed prior hereto, on even date
herewith or in the future, are hereinafter called "Security Documents."
DEFAULT:
2. The entire principal balance hereof, together with all interest and
other charges, as applicable, shall become due and payable at the option of the
Lender, upon the occurrence of any one or more of the following events, each of
which shall constitute an event of default hereunder: (a) the insolvency of the
Borrower or any Guarantor; or (b) the making of any assignment for the benefit
of creditors of the Borrower or any Guarantor, or (c) the issuance of filing
of any attachment, levy, or other judicial process on or against any of the
Borrower's or any Guarantor's assets; or (d) the appointment of a receiver,
trustee or custodian for all or any portion of the property of the Borrower or
any Guarantor; or (e) the commencement of any proceedings under any state or
federal bankruptcy or insolvency law or under laws for relief of debtors, by or
against the Borrower or any Guarantor; or (f) the occurrence of such a change
in the condition or affairs (financial or otherwise) of the Borrower or any
Guarantor as, in the opinion of the Lender, materially impairs the Collateral
(if any) or the prospect of repayment of any amounts outstanding hereunder; or
(g) the death, incompetency, dissolution, business failure (which term
includes, without limitation, the cessation of normal business operations) or
termination of existence of the Borrower or any Guarantor; (h) the failure of
the Borrower or any Guarantor to pay their respective debts as they mature; (i)
any representation or statement made or furnished to Lender by or on behalf of
any Borrower or Guarantor is false or misleading in any material respect; (j)
any default in the payment of any sums due under this Note when due, or default
by the Borrower or any Guarantor in performance of any other obligation under
this Note; (k) the failure of Borrower or any Guarantor to timely provide to
Lender the financial statements, tax returns or other information required
pursuant to the terms of any loan commitment letter from Lender relating to the
loan evidenced by this Note or the failure of Borrower to perform any other
obligations or agreements set forth in any such commitment letter; or (1)
default beyond any applicable cure period in the payment, satisfaction or
performance by the borrower or any Guarantor of any condition or obligation
under any of the Security Documents or under any documents executed in
connection with any other Liabilities of the Borrower or any Guarantor to the
Lender.
REMEDIES:
3. Upon the occurrence of any event of default under this Note the
Lender may declare due and payable at once all amounts outstanding hereunder.
The Lender shall not be required to pursue or to exhaust its remedies against
the Borrower, or its successors, or against any other party liable for payment
hereof, whether maker, Guarantor, or otherwise, or against any property or
assets mortgaged or pledged as security herefor, but upon nonpayment or
nonperformance hereof may immediately demand and enforce payment and
performance from any one or more of Borrower(s) or Guarantor(s), or may seek to
realize upon the value of any collateral, without the necessity of joining any
other Borrower(s) or Guarantor(s), and in each case without any requirement of
first seeking to collect the debt evidenced by the Note from any other source.
Each Borrower hereby irrevocably agrees that any legal action or proceeding
arising out of or relating to this Note may be brought in any state or federal
court in the State of Maine, at the election of Lender. By the execution and
delivery hereof, each Borrower hereby irrevocably submits to the nonexclusive
jurisdiction of any such court in any such action or proceeding. Borrower
irrevocably agrees that in addition to any methods of service provided for
under applicable law, all service of process in any such legal action or
proceeding may be made by certified mail, return receipt requested to the
Borrower's address pursuant to paragraph 7 below. Each Borrower and each
Guarantor shall be liable for, and hereby agrees to pay, upon demand, any and
all costs or expenses of any nature whatsoever incurred by the Lender in
endeavoring to collect or enforce this Note against any party including,
without limiting the generality of the foregoing, reasonable attorneys' fees
and expenses. The Lender shall not be deemed to have waived any of its rights
or remedies under this Note or under any of the Security Documents by any act,
delay, omission or failure or refusal to exercise any of such rights or
remedies. No waiver by Lender of any kind shall be valid unless it is in
writing and signed by an officer of the Lender, and then only to the extent
specifically stated. All of the rights and remedies of the Lender shall be
cumulative and not exclusive, and may be exercised on any one or more occasions
either singularly or concurrently.
4. Borrower hereby grants to Lender, as security for the payment and
performance of this Note, a continuing lien on and security interest in any and
all deposit accounts and funds on deposit herein (general or specific, time or
demand, regardless of maturity or the Bank branch where the deposit accounts
are held) now or hereafter held by Lender and other sums credited by or due
from Lender to Borrower or subject to withdrawal by Borrower, whether or not
any other person or persons could also withdraw money therefrom (collectively
hereinafter called the "Deposits"). After any event of default Lender may
"freeze" or place a "hold" on any Deposits by suspending Borrower's right to
withdraw the Deposits and may set off any Deposits (including those previously
frozen or placed on hold) against any amounts payable by Borrower under this
Note or any other Liabilities. Failure of the Lender to take necessary steps
to preserve rights against any parties with respect to any property in its
possession shall not be deemed a failure to exercise due care.
WAIVERS:
5. The Borrower and each Guarantor hereby (1) waive presentment, notice
of dishonor, notice of protest, and any and all other notices of any nature
whatsoever in connection with the delivery, acceptance, performance, default or
enforcement of this Note and (2) consent and agree that the Lender may at any
time and from time to time without affecting the liability of Borrower or of
any Guarantor or of any other person (excepting any person expressly released
in writing) for payment of the debt evidenced by this Note or for performance
of any obligation contained herein, and without affecting Lender's rights with
respect to any security not expressly released in writing: (a) release any
person liable for all or any part of the indebtedness or for performance of any
obligation; (b) extend the time for payment of any amounts due under this Note;
(c) grant any releases, compromises or indulgences with respect to this Note or
any extensions, renewals, or acceleration hereof or substitutions herefor or
with respect to any Collateral securing the payment of sums outstanding under
this Note to any party primarily or secondarily liable hereunder, or (d) modify
the provisions of this Note all without notice to or consent of any Borrower or
any Guarantor; (3) waive all recourse to suretyship and guarantorship defenses
generally; and (4) waive the right to direct the application of any payment
hereunder. BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY AND ALL
RIGHTS, WHETHER ARISING UNDER THE CONSTITUTIONS OF THE UNITED STATES OR OF ANY
STATE, ANY RULES OF CIVIL PROCEDURE, COMMON OR STATUTORY LAW, OR OTHERWISE, TO
DEMAND A TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM
INVOLVING LENDER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS NOTE OR ANY
OF THE SECURITY DOCUMENTS.
MISCELLANEOUS:
6. If, for any reason, any payment to Lender applied to amounts
outstanding hereunder is required to be refunded by Lender to Borrower or to
any Guarantor or turned over by Lender to any other person or entity, Borrower
and each Guarantor agree to pay to Lender on demand an amount equal to the
payment so refunded or turned over by Lender and the liability of Borrower and
each Guarantor shall not be treated as having been discharged by the original
payment to Lender giving rise to such refunded or turned over payment.
7. All notices, demands or requests provided for or permitted to be
given pursuant to this Note must be in writing and shall be given by personal
delivery or by depositing the same in the United Sates mail, post paid and
certified, return receipt requested at the addresses set forth below, as such
addresses may be changed by notice given to the other party.
LENDER'S ADDRESS: BORROWER'S ADDRESS:
Peoples Heritage Savings Bank
One Portland Square 56 Evergreen Drive
P.O. Box 9540 Portland, Maine 04103
Portland, Maine 04112-9540
Attn: Commercial Loan Dept.
8. Each borrower and each Guarantor shall be jointly and severely
liable to the Lender under this Note and each Borrower has subscribed
his/her/its name hereto without condition that any other person or entity shall
sign or become bound hereunder and without any other conditions whatever. Any
Borrower that is a corporation hereby warrants that it is validly formed, in
existence and in good standing at the present time, with all necessary
authority to enter into, execute and deliver this Note. No invalidity or
unenforceability of any portion or obligation of this Note shall affect the
validity or enforceability of the remaining portions or obligations hereof.
This Note and all actions taken pursuant hereto shall be governed by, and
interpreted and construed in accordance with, the laws of the State of Maine.
This Note evidences a loan for business and commercial purposes and not for
personal, household, or family purposes. The use of captions in this Note is
for purposes of convenience only, and no caption shall affect the meaning of
this Note. As used herein, the word: (1) Liabilities means any and all
liabilities, indebtedness, and obligations of each Borrower and Guarantor to
Lender of any nature whatsoever, now existing or hereafter arising, due or to
become due, absolute or contingent, direct or indirect and whether joint,
several, or joint and several; (2) Guarantor shall mean and include each
endorser, surety, guarantor or other party primarily or secondarily liable to
the Lender with respect to this Note other than the Borrower; (3) Borrower
shall mean each undersigned party; and (4) Lender shall mean Peoples Heritage
Savings Bank and each future holder of this Note. This Note and the provisions
hereof shall be binding upon the heirs, executors, administrations, successors,
legal representatives and assigns of the Borrower and each Guarantor and shall
inure to the benefit of the Lender, its successors, legal representatives and
assigns. This Note is intended to take effect as a sealed instrument.
WITNESS ImmuCell Corporation, a Delaware Corporation
By: By: /S/: MICHAEL F. BRIGHAM
MICHAEL F. BRIGHAM, ITS
CHIEF FINANCIAL OFFICER AND TREASURER
Each of the above Borrower(s) is jointly and severally liable under this
Commercial Note.
02-122 9/92
<PAGE>
ImmuCell Corporation
Exhibit 4.2
Security Agreement dated September 28, 1995
in favor of Peoples Heritage Bank
<PAGE>
PEOPLES HERITAGE BANK
MEMBER FDIC
SECURITY AGREEMENT
The undersigned Debtor (hereinafter the "Debtor"), for valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
hereby grant(s) to PEOPLES HERITAGE SAVINGS BANK, a Maine banking corporation
with a principal office at One Portland Square, Portland, Maine 04101
(hereinafter the "Secured Party"), a security interest in, and the Debtor
hereby assigns to the Secured Party, the following property of Debtor in the
categories indicated, wherever located and whether now owned or existing or
hereafter acquired (hereinafter the "Collateral") (check as many as apply) (if
none of the following categories are checked, then the Debtor shall be deemed
to have granted a security interest in each of the following types and
categories of property):
X All of Debtor's Equipment and Fixtures, as those terms are defined below,
including withoutlimitation the following:
X All of Debtor's Accounts, as defined below.
X All of Debtor's Inventory, as defined below, including without
limitation the following:
/ / All of Debtor's General Intangibles, as defined below.
/ / A certain motor vehicle, being described as follows:
make: ; model: ;
year: ; vehicle identification number:
/ / Other:
together with all products and cash and non-cash proceeds of all of the
foregoing, including without limitation all proceeds of, returned premiums for
and rights to payment under any present or future insurance on any of the
above-described types of property, all rights to payment arising out of or in
connection with any claim or cause of action relating to, or affecting, any
Collateral, and all rents and profits resulting from the temporary use or
possession of any of the foregoing, and all replacements and substitutions
therefor, and all additions and accessions thereto. The acceptance of a
security interest in proceeds by Secured Party shall not be deemed a consent by
Secured Party to the sale by Debtor of any Collateral, except as expressly set
forth herein.
If the following space is checked, the security interest granted herein
constitutes a purchase money security interest as to some or all of the
Collateral. Failure to check the following space, however, will not prevent
the security interest from constituting a purchase money security interest if
it otherwise qualifies as such under 11 M.R.S.A. 9-107 or other applicable law:
X PURCHASE MONEY SECURITY INTEREST.
The security interest granted hereunder is given to secure the prompt
payment and performance when due of all liabilities, indebtedness and
obligations of Debtor to Secured Party of any nature whatsoever, now existing
or hereafter arising, due or to become due, absolute or contingent, direct or
indirect, and whether joint, several, or joint and several, howsoever the same
may be evidenced and regardless of any other security for any of such
obligations, including all Obligations and agreements of Debtor under this
Agreement (hereinafter collectively called the "Obligations"); including
without limitation in the Obligations secured hereby (if the following blanks
spaces are completed) all of Debtor's obligations in connection with a certain
COMMERCIAL PROMISSORY NOTE dated SEPTEMBER 28, 1995
, given by Debtor to Secured Party in the original principal amount of $
200,000.00 , as it may be renewed, extended, replaced and modified from time
to time.
1. DEBTOR'S WARRANTIES. Incident to the foregoing grant, the Debtor
warrants, represents, covenants and agrees with the Secured Party as follows:
A. The Debtor is and shall at all times remain the sole lawful owner of
all Collateral, free of any pledges, interests, charges, liens or encumbrances
other than the security interest granted herein, which shall constitute a first
lien upon all Collateral. The Debtor will warrant defend the same against all
claims and demands of all persons. The Collateral is and shall be used and
operated, and the Obligations secured hereby have been incurred and shall
remain, only for business purposes, and not for personal, family or household
purposes.
B. The Debtor has good right to pledge, sell, consign, assign,
transfer and create a security interest in the Collateral in favor of the
Secured Party.
C. The Collateral will not be voluntarily or involuntarily sold,
transferred, assigned, or otherwise disposed of by the Debtor, in whole or in
part, without the prior written consent of the Secured Party, except for
inventory sold in the normal course of business and in accordance with all of
the terms of this Agreement.
D. All Collateral, and all of Debtor's books, records and other
documents relating to or evidencing the Collateral are to be located at the
Debtor's principal offices at Debtor's address given below (the LOCUS), and
will not be removed therefrom without the prior written consent of the Secured
Party, except for sales of inventory in the normal course of business and
otherwise in accordance with all of the terms of this Agreement. Debtor has no
other place(s) of business. Debtor's correct Social Security number, or
official tax identification number, as appropriate, is as shown below Debtor's
signature at the end of this Agreement.
E. The Debtor shall not permit any Collateral not a fixture on the
date of this Agreement to become a fixture attached to real estate.
F. The Debtor shall immediately notify Secured Party of the occurrence
of any destruction or loss of, depreciation in, or damage to any Collateral, or
of any event which constitutes, or which with the passage of time would
constitute, a default or event of default under this Agreement or under or in
connection with any of the Obligations.
G. If any Debtor is an entity other than a natural person, each such
Debtor not a natural person is now and shall at all times while this Agreement
remains in effect be in existence and in good standing under the laws of its
place of formation and under the laws of every place in which it does business.
Each such Debtor not a natural person is also duly authorized and empowered to
own the Collateral, to grant the security interest created hereby in accordance
with the terms hereof, and to perform the terms of this Agreement, and the
individual(s) acting on behalf of each such Debtor have been duly authorized to
execute this Agreement in their capacities as representatives of such Debtor.
2. DEFINITIONS. As used in this Security Agreement (sometimes hereinafter
referred to as this "Agreement"), the following terms have the following
meanings:
A. ACCOUNTS: The term Accounts as used herein shall mean and include
all accounts and any and all rights of Debtor to payment for goods sold or
leased or for services rendered, all forms of obligations owing to Debtor,
however created or evidenced, all of Debtor's rights under any agreements for
the provision of Debtor's business, whether such agreements are oral or in
writing, all rights of Debtor to payment earned or unearned under a charter or
other contract involving the use or hire of a vessel, and all rights of Debtor
incident to any such charter or contract, all accounts receivable, all right,
title and interest of Debtor in and to any goods, inventory or other property
giving rise to any account, all guaranties, liens and security granted to or
held by Debtor with respect to an account or any other obligation owing to
Debtor, and all of Debtor's rights as an unpaid vendor or lienor, including the
rights of stoppage in transit, replevin and reclamation, and all rights of
Debtor to payment under contracts not yet earned by performance and not
evidenced by an instrument or chattel paper, as well as all general intangibles
relating to or arising out of any account, together with all of Debtor's
instruments, documents, negotiable documents, chattel paper, notes, bills,
drafts, acceptances, deposits, deposit accounts, goods, all of Debtor's rights,
whether created by contract or otherwise, all whether now owned or existing or
hereafter arising or acquired, and all proceeds of any of the foregoing, in
whatever form and wherever located.
B. DEBTOR: The term Debtor as used herein shall mean each of the
undersigned persons and entities, each of whom shall be jointly and severally
bound by all of the terms and provisions of this Agreement, and all
representations, covenants and warranties of Debtor contained herein shall be
true for, and all promises, agreements, consents, acknowledgements,
authorizations, waivers, submissions, obligations and responsibilities of
Debtor contained herein shall be binding upon, each of such persons and
entities, both jointly and severally. Any default hereunder by any one of said
persons or entities shall constitute a default as to all of such persons and
entities. Where appropriate, the term Debtor as used herein shall be deemed to
refer to any one of such persons and entities; specifically, but without
limitation of the foregoing, any references to the property of the Debtor
herein shall be deemed to be references to property or interests owned by any
one or more of such persons or entities, and the Obligations shall include all
obligations of any one or more of the undersigned Debtors to Secured Party.
C. EQUIPMENT: The term Equipment as used herein shall mean and include
all of Debtor's equipment, machinery, furniture, trade fixtures, motor vehicles
and all other tangible personal property of the Debtor (exclusive of inventory)
all whether now owned or hereafter acquired, and wherever located, as well as
all of Debtor's right, title and interest in and to any such goods as may be
now or hereafter held or used by Debtor under any lease, lease-purchase,
conditional sales, use or other agreements under which Debtor is or may become
entitled to the use and possession thereof, with any and all other rights and
benefits flowing from or under such agreements.
D. FIXTURES: The term Fixtures as used herein shall mean and includes
any and all (i) fixtures and improvements of Debtor now owned or hereafter
acquired, now or hereafter erected, constructed, situated or affixed on any
real property now or hereafter owned, leased, used or occupied by Debtor; and
(ii) machinery, equipment, furniture, furnishings, trade fixtures or inventory
of Debtor now owned or hereafter acquired, now or hereafter affixed to any of
the aforementioned real property; in each case together with any and all
additions and accessions thereto, replacements therefor and products thereof.
To the extent that Fixtures are included in the Collateral, the real estate to
which the fixtures are or are to be attached is located at
N/A and is owned by N/A
E. GENERAL INTANGIBLES: The term General Intangibles as used herein
shall mean and include all of Debtor's general intangibles, including, without
limitation, all tax refunds of every kind and nature to which Debtor is now or
hereafter may become entitled, no matter how the same may arise, all other
refunds, things or choses in action, goodwill, rights to performance under
contracts, trade secrets, computer programs and other computer software,
customer lists, trade names, copyrights, trademarks, patents, licenses,
certificates of authority and uncertificated securities, as well as all moneys,
securities and other property (and the proceeds thereof), now or hereafter held
or received by, or in transit to Secured Party, from or for Debtor, whether for
safekeeping, pledge, custody, transmission, collection or otherwise and all
credits and balances of Debtor with Secured Party at any time existing, and all
of Debtor's records and books of account of every kind and nature, including,
without limitation, all books, records, files, ledger cards and sheets, all
electronically recorded data and computer records, whether or not relating to
Debtor or its business, and all service contracts relating to any of the
foregoing.
F. INVENTORY: The term Inventory as used herein shall mean and
include any and all of Debtor's inventory, and all goods used or consumed or
intended to be used or consumed in the course of the Debtor's business, or held
or intended for sale or lease by Debtor or to be furnished by Debtor under
contracts of service, all raw materials, goods or work in process, finished
goods, merchandise, and all materials and supplies of every nature used or
usable in connection with the manufacture, packing, shipping, advertising,
selling, leasing or furnishing of such goods, all goods returned by Debtor's
customers, all whether now owned or hereafter acquired or held on consignment.
G. The singular form of any word or phrase used herein, including
defined terms, shall include the plural, and vice versa. The use herein of a
word of any gender shall include both genders.
H. Unless otherwise specified, references to Sections and other
subdivisions of this Agreement are to the designated Sections and other
subdivisions of this Agreement as originally executed. The words "hereof,"
"herein," "hereunder" and words of similar import refer to this Agreement as a
whole.
I. The use of paragraph headings in this document is for purposes of
convenience only, and no caption or paragraph heading shall affect in any way
the interpretation, meaning or construction of this document.
J. All words and terms used in this Agreement and in any supplement or
amendment hereto, other than those specifically defined in this Agreement or
such supplement or amendment, shall be deemed to have the respective meanings,
if any, assigned to them in the Maine Uniform Commercial Code, as it may be
amended from time to time (the "Code").
3. SCHEDULES OF ACCOUNTS. To the extent that Debtor's Accounts are included
in the Collateral, Debtor agrees to comply with the provisions of this Section
3.
A. From time to time as required by the Secured Party, Debtor shall
provide Secured Party with schedules describing all Accounts created, acquired
or owned by Debtor in such form as may be required by Secured Party and shall
execute and deliver specific written assignments (with recourse) of all
Accounts to Secured Party, provided, however, that any failure of Debtor to
execute and deliver such schedules and/or assignments shall not affect or limit
the Secured Party's security interest or other rights in and to Accounts, and
that any such specific assignments shall not adversely affect or be
prejudicial, either directly or by implication, to Secured Party's rights
hereunder. Together with each schedule, Debtor shall furnish copies of
customers' invoices or an equivalent acceptable to Secured Party, and Debtor
warrants the genuineness thereof. Debtor further warrants that all Accounts
are and will be bona fide existing obligations created by the sale and delivery
of merchandise not on consignment or approval or the rendition of services to
customers in the ordinary course of business, free of liens, encumbrances and
security interests and unconditionally owed to Debtor without defense, offset
or counterclaim. Debtor agrees at all times to keep accurate and complete
records concerning all of Debtor's Accounts.
B. Upon request by the Secured Party, the Debtor agrees to deliver to
Secured Party immediately upon receipt thereof (i.e., within the next business
day following such receipt) all checks, drafts, cash and other remittances in
payment of or on account of any Accounts, for deposit in a bank account
maintained by and (at Secured Party's option) in the name of the Secured Party,
hereinafter called the "Collection Account," all of such instruments to be in
the original form received, and properly endorsed to Secured Party, which
endorsement the Secured Party is hereby irrevocably authorized and empowered to
make on the Debtor's behalf as Debtor's attorney-in-fact for that purpose, in
the event Debtor fails to do so. Pending such delivery, the Debtor agrees not
to commingle any such collections with any of its other funds or property, and
to hold them apart therefrom in trust for the Secured Party. The Secured Party
may apply the whole or any part of the collected funds on deposit in the
Collection Account against the indebtedness secured hereby, the order of such
application to be at the discretion of Secured Party. In the event Secured
Party elects to exercise its rights under this Section 3(B), the Debtor shall
submit to the Secured Party each business day (or at such other intervals as
the Secured Party may prescribe) a statement in form satisfactory to the
Secured Party setting forth the amount of all Accounts of the Debtor and all
collections made thereon.
4. FURTHER DOCUMENTATION. The Debtor agrees to execute and deliver such
notices, financing statements and other documents and to undertake such action
(including paying such filing fees) as Secured Party may request to comply with
the requirements of all applicable state and federal laws in order that the
Secured Party shall have at all times a valid and perfected first lien upon and
a security interest in the Collateral described herein, or which may be
described in any amendment supplementary hereto. In the case of any motor
vehicle or other item included in Collateral for which a Certificate of Title
or similar document is required or exists, Debtor shall cause the security
interest of Secured Party to be duly noted on such Certificate of Title or
similar document, and will deliver the original Certificate of Title or similar
document to be held by the Secured Party.
5. TAXES AND ASSESSMENTS. The Debtor will pay when due all taxes,
assessments and other governmental charges levied or assessed upon or with
respect to the Collateral or any part thereof, or upon the use or operation
thereof, as well as all other taxes and assessments due from Debtor of every
kind and nature.
6. LNSPECTION OF COLLATERAL. The Debtor agrees that the Secured Party, or
its agents, may enter upon the locus at any reasonable time and from time to
time, for the purpose of inspecting the Collateral and any and all records
pertaining to the Collateral, and may audit and make copies of all such
records. The Debtor agrees to notify the Secured Party promptly of any change
in its business name(s), mailing address or principal place of business, of any
additional place(s) of business, in order that a prompt refiling of any
outstanding notices may be made. if necessary, and of any litigation that may
have a material adverse impact on Debtor's financial condition, or on any
Collateral.
7. INSURANCE. The Debtor agrees to keep the Collateral insured at all times
at Debtor's expense, in such amounts (which must in any event be sufficient to
satisfy the co-insurance provisions of the applicable insurance policies), with
such coverage, and with such companies as the Secured Party may from time to
time reasonably require. All such policies of insurance shall require thirty
(30) days' written notice to Secured Party prior to termination of coverage,
and all casualty insurance on Collateral shall name the Secured Party as the
primary loss payee, and shall provide that Secured Party's interests under such
casualty insurance shall not be invalidated or affected in any way by any act
or neglect of Debtor or of any other person or entity. Upon request by Secured
Party, Debtor shall deliver all of such policies of insurance to be held by the
Secured Party. Debtor irrevocably appoints Secured Party as Debtor's exclusive
agent and attorney-in-fact to make, adjust and settle all claims in connection
with such insurance, to receive and endorse any checks and drafts in connection
therewith, and in Secured Party's discretion, to apply the proceeds thereof to
the Obligations.
8. GOVERNMENTAL REQUIREMENTS. In the case of any Collateral requiring
governmental approval, licensing or registration, Debtor agrees to keep all of
such Collateral duly authorized, licensed and registered. Debtor's ownership
and operation of all Collateral shall not violate any law, regulation, rule or
ordinance. and shall not subject the owner or operator to any potential civil
or criminal punishment and shall not be conducted in such a fashion as would or
might void any Insurance required hereunder. Debtor covenants find agrees that
Debtor has and shall keep in effect so long as this Agreement remains in
existence all governmental permits, approvals and licenses necessary for the
conduct of Debtor's business, and Debtor is and shall at all times remain in
full compliance therewith. Upon request be Secured Party, Debtor shall provide
evidence of its compliance with all applicable laws, regulations, rules and
ordinances to Secured Party.
9. CONDITION OF COLLATERAL. The Debtor shall at all times properly and
carefully maintain all Collateral in good operating condition and repair,
subject only to reasonable wear and tear, and will not permit or commit waste
of any Collateral. Debtor shall also preserve all rights, privileges and
franchises held and/or used in Debtor's business and perform in a timely and
workmanlike manner all acts necessary or appropriate to tend, care for,
maintain, prepare for market, preserve and protect all Collateral, in
accordance with the standards and practices generally adhered to by other
owners of like property in the same business as Debtor.
10. DISPOSITION OF COLLATERAL. Debtor hereby covenants and agrees not to
sell, transfer, assign, hypothecate, convey, release, dispose of or remove from
the locus any of the Collateral (other than lnventory, which may be sold, but
only in accordance with the provisions of this section) without the prior
written consent of the Secured Party. Nothing contained in this Agreement
shall be deemed to provide or constitute such consent. Debtor shall not give
any allowances or credits in connection with any sales of Inventory, except in
so far as such allowances and credits are normal and customary in the business
in which Debtor is engaged, and Debtor shall advise Secured Party at least
seven (7) days prior to each sale in writing of the nature, amount, and
underlying Collateral subject to, or to be sold for a price decreased by, any
such allowances or credits. Debtor agrees at all times to keep complete and
accurate records regarding all sales and dispositions of Collateral, and the
proceeds thereof, and to provide copies of all such records to Secured Party
upon Secured Party's request therefor.
11. PROTECTION OF SECURITY. At its option, the Secured Party may at anytime
discharge taxes, liens or security interests or other encumbrances at any time
levied or placed upon the Collateral or any portion thereof, may pay for
insurance on the Collateral and may pay for the protection, maintenance and
preservation of the Collateral, may pay for the fulfillment of any of Debtor's
Obligations to Secured Party under this Agreement or in connection with any of
the Obligations which Debtor fails to perform, and may pay for the enforcement
and foreclosure of the security interest granted to Secured Party herein, for
the taking of any action authorized hereunder after the occurrence of any
default, and for the defense or prosecution of any action or proceeding
relating to this transaction or to any Collateral, and for the exercise of all
other rights of Secured Party hereunder. Secured Party may also contact
account debtors of Debtor to verify the existence, amount and terms of any or
all of Debtor's Accounts, if the same are included in Collateral, and may
notify account debtors of Secured Party's interest in such accounts and request
that payments thereon (and return of goods) be made directly to Secured Party.
Debtor shall confirm and cooperate fully with any such request. Secured Party
may also notify any third parties of Secured Party's rights and security
interest hereunder at any time. Secured Party shall have full power at all
times to sue for, collect, sell, compromise, settle, discharge, extend,
endorse, or otherwise deal with (in Debtor's name if Secured Party deems it
necessary or convenient to do so) any Accounts pledged to Secured Party.
Debtor agrees to reimburse the Secured Party on demand for any payment made, or
any expense incurred by the Secured Party pursuant to any of the foregoing
powers, including reasonable attorney's fees, all of which shall be secured
hereby; any such sums not paid within three (3) business days of demand shall
bear interest from the date of demand at a rate of interest One Percent (1%)
per annum greater than the highest rate charged from time to time in any of the
Obligations. The Secured Party shall not be adjudged Trustee for Debtor with
respect to the Collateral. No third parties shall have any rights in
Collateral in the hands of Secured Party, and Secured Party may apply any funds
received through the exercise of any of the foregoing powers to such of the
Obligations as Secured Party deems appropriate.
12. DEFAULT. Debtor shall be in default under this Security Agreement upon
the happening of any of the following events or conditions:
A. Default in the payment or performance of any of the Obligations
secured hereby or of any covenant or agreement contained or referred to herein
or therein, continuing beyond applicable periods of grace, if any, specifically
including, but without limitation of the foregoing, any sale, transfer or other
disposition of any Collateral, whether voluntary or involuntary, otherwise than
in strict compliance with the terms and conditions of this Agreement.
B. The proving of any warranty, representation, financial
information or statement made or furnished to the Secured Party by or on behalf
of the Debtor to have been false or misleading in any material respect when
made or furnished; or
C. The placing of any lien or attachment against any Collateral,
including without limitation any lien for storage of any Collateral, or the
creation of any security interest in any Collateral, other than the security
interest created hereunder.
D. Dissolution, liquidation, death, incapacity, termination of
existence, insolvency, business failure, appointment of a receiver of any part
of the property of, assignment for the benefit of creditors by, failure to pay
debts as they come due, or the commencement of any proceeding under any
bankruptcy or insolvency laws, by the Debtor, or by any guarantor or surety for
the Debtor, or the entry of an order or decree for relief in an involuntary
bankruptcy or insolvency proceeding against Debtor or any guarantor or surety
for Debtor or the filing of an involuntary petition in bankruptcy against
Debtor or any such guarantor or surety which remains undismissed for 30 days;
or
E. The acceleration of any indebtedness of Debtor to any creditor;
F. If the Secured Party should in good faith deem itself insecure, or
should in good faith deem that the prospects for repayment of any of the
Obligations, or the value or priority of any security or other interest
securing any of the Obligations, has been impaired; or
G. If the Debtor fails to comply with the terms of any lease for any
place of business used or occupied by Debtor and containing any Collateral; or
H. Default in any term or condition of any other agreement between
Debtor and Secured Party; or
I. The transfer of any interest (including the transfer of any stock or
partnership interest) in Debtor without the prior written agreement of Secured
Party.
13. REMEDIES. Upon any such default, and at any time thereafter, the Secured
Party may declare any or all of the Obligations secured hereby immediately due
and payable, may terminate any outstanding commitments to lend money or advance
funds to Debtor pursuant to any existing or contemplated arrangement, and may,
with or without demanding payment of the Obligations secured hereby from
Debtor, set off or apply all or any part of any Collateral in the possession
of Secured Party to the Obligations secured hereby, and Debtor shall have no
further right of any kind in the Collateral so applied. Secured Party may also
possess, repossess, deal in any way with and sell or otherwise dispose of any
Collateral at public or private sale, either in its current condition or after
further care, processing, manufacture, or preparation, any or all of which may
be accomplished or attempted by Secured Party, in its discretion, but without
any obligation to do so, using in any connection therewith any of Debtor's
property or assets, without any charge or liability to Secured Party therefor,
and apply the proceeds thereof against the Obligations, and in connection with
such possession and/or repossession, Secured Party shall have the right to
enter upon any premises where any Collateral may be situated and to enter into
possession of, care for, use, process, complete and/or store such Collateral in
or on such premises, and at Secured Party's option, remain on said premises and
use the same, together with Debtor's materials, supplies, books and records
for any purpose related to the storage, liquidation, collection, protection or
completion of any Collateral and for any purpose relating to the disposition of
any Collateral, or remove any Collateral from such premises to any place or
places desired by Secured Party, if it seems advantageous to Secured Party to
do so, without any liability for trespass or for breach of the peace, or
otherwise. Secured Party shall have no responsibility or liability for any
property in, on, or attached to any Collateral. With respect to any cash or
cash equivalents held by Secured Party as Collateral, Secured Party may apply
the same to any of the Obligations at any time after a default. Secured Party
shall also have the right to take any action it deems necessary or desirable to
protect the Collateral or its interest therein, and may, in connection
therewith (but without limitation) receive, open and dispose of all mail
addressed to Debtor or delivered to Debtor's address, regardless of whether it
should prove to be business, personal or other mail, to whomsoever addressed at
such address; may make, adjust and settle claims in connection with any
insurance covering any of the Collateral, and apply the proceeds thereof to the
debt secured hereby, and may do all things necessary to carry out this
Agreement, may endorse Debtor's name on any checks, notes, acceptances, money
orders, drafts or other forms of payment (including payments payable under any
policy of insurance on any Collateral) or security that may come into Secured
Party's possession; may sign Debtor's name or the name of any of Debtor's
officers or agents on any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, and notices in connection with any Accounts, or any other
document relating to any Accounts, and on any notices to customers; may notify
the post office authorities to change the address for delivery of Debtor's mail
to an address designated by Secured Party, and Secured Party may otherwise use,
operate and deal with the Collateral in any way, and Debtor hereby appoints
Secured Party and any officer of Secured Party as Debtor's attorney-in-fact
with power to exercise all of the Secured Party's rights hereunder, including
all of the foregoing and all of Secured Party's rights under Section 10 hereof,
said power, being coupled with an interest, being irrevocable so long as this
Agreement remains in existence. The Secured Party shall also have the right to
take possession of and sell any goods returned by customers of Debtor or by
others, to stop delivery of any shipment, and to use or transfer, without
charge or liability to Secured Party therefor, any and all of Debtor's labels,
tradenames, trademarks, patents, licenses, certificates of authority, shipping
materials, and advertising materials. The Secured Party shall also have the
right at any time in its discretion, to endorse, collect and transfer into its
own name or that of its nominee any documents, securities or other property
securing the Obligations and receive the income thereon and hold the same as
security for such indebtedness or apply it to such indebtedness. The Secured
Party shall further have all of the rights and remedies of a secured party
under the Uniform Commercial Code as adopted in the State of Maine, as the same
may be amended from time to time, under all other laws and regulations now or
hereafter in effect in the State of Maine, and under the terms of the
Obligations and of all documents executed in connection therewith. The Debtor
does hereby (a) waive all presentment, demand, notice and protest with respect
to the Obligations and the Collateral, and (b) if otherwise entitled thereto,
waive the right to notice and/or hearing prior to the exercise by Secured Party
of any of the Secured Party's rights and remedies hereunder upon default, and
(c) waive any right to direct the application of any payments or other amounts
received or obtained by Secured Party, such that Secured Party shall at all
times have the right to apply and reapply any and all such payments and amounts
to the Obligations in any manner or in any order, in Secured Party's
discretion. Upon demand by Secured Party, Debtor shall assemble all Collateral
at a mutually convenient place to be designated by Secured Party, and shall
make the Collateral available to Secured Party. Debtor and Secured Party agree
that Debtor's place of business is a mutually convenient place for this
purpose, and that Secured Party shall have the right to store any or all
Collateral at Debtor's place of business pending a final disposition thereof by
Secured Party. All expenses of retaking, holding, processing, caring for,
protecting, preparing for sale, selling and the like shall be secured hereby as
Obligations of the Debtor, and shall include the Secured Party's reasonable
attorney's fees and legal expenses. The Secured Party may purchase all or any
Collateral at any sale thereof, and may offset the amount of the purchase price
against the Obligations, in lieu of actual payment thereof. The Secured
Party's rights and remedies hereunder and under any other documents evidencing
security for any Obligations may be exercised without resort or regard to any
other source of satisfaction of the Obligations, and all of the Secured Party's
remedies hereunder and under such other documents may be exercised either
separately or together, as to all or any portion of the Collateral from time to
time while any of the Obligations remains outstanding in Secured Party's
discretion, and shall be deemed cumulative. Unless the Collateral is
perishable, or threatens to decline speedily in value, or is of a type
customarily sold on a recognized market, Secured Party will give Debtor five
(5) days' prior written notice of the time and place of any public sale of
Collateral, or of the time after which any private sale or other disposition of
Collateral may take place, which provision for notice the Debtor agrees is
reasonable.
14. The Secured Party shall have no duty as to the collection or protection
of the Collateral or any income or distribution thereof, and shall have no duty
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Secured Party's rights and remedies hereunder and
under any
other documents evidencing security for any Obligations may be exercised
without resort or regard to any other source of satisfaction of the
Obligations, and all of the Secured Party's remedies hereunder and under such
other documents may be exercised either separately or together, on any one or
more occasions, as to all or any portion of the Collateral from time to time
while any of the Obligations remains outstanding in Secured Party's discretion,
and shall be deemed cumulative.
15. MISCELLANEOUS. Secured Party shall not be deemed to have waived any of
its rights hereunder unless such waiver is in writing and signed by an officer
of Secured Party, and then only to the extent expressly stated in such writing.
No waiver by the Secured Party of any default shall operate as a waiver of any
other default or of a similar default on a future occasion, nor shall the
acceptance by Secured Party of any one or more late or partial payment(s) on
any one or more occasions constitute a waiver of the right to insist upon
strict adherence to the terms of any applicable loan documents on that or any
other or future occasions, or constitute a waiver of any default, nor shall any
delay or failure by Secured Party to exercise any right or remedy hereunder, no
matter how long the same may continue, preclude the later exercise of that or
any other right or remedy hereunder, nor shall any of the foregoing actions
constitute a modification or amendment of this Agreement or of any of Debtor's
obligations hereunder or under any document secured hereby. Debtor agrees to
comply with the terms and conditions of any commitment letter(s) issued by
Secured Party relative to any indebtedness secured hereby. Neither Secured
Party's rights in any Collateral, nor any of Debtor's obligations hereunder,
shall be affected in any way by any act or omission by Secured Party, including
without limitation any release, extension or other indulgence granted to any
party liable for any of the Obligations, or any release of security or
acceptance of additional security. No invalidity or unenforceability of any
provision hereof shall affect the continuing validity or enforceability of any
other provision hereof. All rights of the Secured Party hereunder shall inure
to the benefit of its successors and assigns. The rights and remedies of
Secured Party hereunder are cumulative, and may be exercised from time to time
either singly or in any combination. This Security Agreement may be amended
only by a written agreement signed by both Debtor and Secured Party. The use
of captions in this Agreement is for purposes of convenience only, and no
caption or paragraph heading shall be construed or interpreted so as to affect
the meaning of this Agreement in any way. This Security Agreement shall
become effective when it is signed by the Debtor. Time is of the essence of
every provision of this Agreement. This Security Agreement shall be binding
upon the Debtor and upon the Debtor's heirs, executives, administrators,
representatives, successors and assigns, Debtor shall provide Secured Party
with current annual financial statements and as- filed federal income tax
returns of each person and entity included within the Debtor and of each
guarantor, co-maker, endorser, accommodation party and surety of any of the
Obligations, prepared in each case by an independent public accountant or other
person acceptable to Secured Party within 90 days of the end of each Debtor's
fiscal (or calendar) year. Debtor agrees to provide to Secured Party any
financial information relating to Debtor or Debtor's operations that Secured
Party may require from time to time, promptly upon request therefor by Secured
Party. This Security Agreement and the assignment and security interests
created hereby shall be terminated only upon written notice thereof by Secured
Party to Debtor after the discharge or full satisfaction of the Obligations and
any other amounts secured hereby, but shall survive any temporary reduction to
zero of the amount secured hereby. This Agreement and all rights and
obligations hereunder, including matters of construction, validity and
performance, shall be governed by the laws of the State of Maine. Any
litigation commenced by Debtor against Secured Party shall be brought and
maintained in the State of Maine. All notices required or permitted hereunder
shall be deemed given on the second business day after the mailing thereof by
United States Mail, postage prepaid, addressed to the parties at their
addresses as shown in this Agreement, or at such other address as may be
specified by any party hereto to the others by giving notice thereof in the
manner aforesaid.
16. RETURN OF COLLATERAL. Upon satisfaction in full of the Obligations and
termination of this Agreement, the Secured Party shall promptly return any
balance remaining of the Collateral in the possession of Secured Party to
Debtor, or shall assign its rights in instruments evidencing the Collateral to
Debtor, without recourse, as Debtor may request.
IN WITNESS WHEREOF, the Debtor has caused this instrument to be duly signed
and sealed, as of this 28TH day of SEPTEMBER, 1995.
WITNESS: IMMUCELL CORPORATION, a Delaware corporation
/S/: DAN THORNTON BY: /S/: MICHAEL BRIGHAM
Printed Name: MICHAEL BRIGHAM, ITS CHIEF
FINANCIAL OFFICER AND TREASURER
Debtor
Address: 56 EVERGREEN DRIVE
PORTLAND, MAINE 04103
Debtor's tax identification number: 01-0382980
<PAGE>
WITNESS:
BY:
Printed Name:
Debtor
Address:
Debtor's tax identification number:
WITNESS:
BY:
Printed Name:
Debtor
Address:
Debtor's tax identification number:
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1995 AS REPORTED ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 1,001,920
<SECURITIES> 463,536
<RECEIVABLES> 493,442
<ALLOWANCES> 61,083
<INVENTORY> 598,394
<CURRENT-ASSETS> 2,567,249
<PP&E> 1,310,608
<DEPRECIATION> 713,916
<TOTAL-ASSETS> 3,166,091
<CURRENT-LIABILITIES> 659,830
<BONDS> 651,856
<COMMON> 1,854,405
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,166,091
<SALES> 3,373,193
<TOTAL-REVENUES> 3,807,875
<CGS> 1,518,916
<TOTAL-COSTS> 3,855,103
<OTHER-EXPENSES> 52,399
<LOSS-PROVISION> 9,900
<INTEREST-EXPENSE> 78,527
<INCOME-PRETAX> (21,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,100)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
