EXHIBIT 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT") is made and entered into as
of November 14, 2002 by VIROLOGIC, INC., a Delaware corporation (the "GRANTOR"),
in favor of SDS Merchant Fund, L.P., as Collateral Agent, for the benefit of the
holders of the Notes (each a "SECURED PARTY" and collectively the "SECURED
PARTIES"). All capitalized terms used but not otherwise defined herein shall
have the respective meanings assigned thereto in the Exchange Agreement (as
defined below).
W I T N E S S E T H :
WHEREAS, Grantor and the Secured Parties have entered into that certain
Exchange Agreement dated as of the date hereof (as from time to time amended,
supplemented or otherwise modified, the "EXCHANGE AGREEMENT");
WHEREAS, pursuant to the Exchange Agreement, Grantor has issued to the
Secured Parties $12,045,987.94 in aggregate principal amount of Grantor's Series
C Convertible Secured Promissory Notes (as from time to time amended,
supplemented or otherwise modified, the "NOTES");
WHEREAS, as collateral security for payment and performance of its
obligations under the Exchange Agreement, the Notes and the other Transaction
Documents, Grantor is willing to grant to the Collateral Agent (for the benefit
of the Secured Parties) a security interest in certain of its property and
assets; and
WHEREAS, Grantor is contemporaneously entering into that certain
Intellectual Property Security Agreement dated as of the date hereof in favor of
the Collateral Agent (for the benefit of the Secured Parties)(as from time to
time amended, supplemented or otherwise modified, the "INTELLECTUAL PROPERTY
SECURITY AGREEMENT");
NOW, THEREFORE, in order to induce the Secured Parties to enter into the
Exchange Agreement and the other Transaction Documents and in consideration of
the premises and the mutual covenants contained herein, the parties hereto
hereby agree as follows:
1. COLLATERAL. As collateral security for the prompt and complete
payment and performance of all Secured Obligations (as defined below), Grantor
hereby pledges, hypothecates, delivers and assigns to the Collateral Agent (for
the benefit of the Secured Parties), and grants to the Collateral Agent (for the
benefit of the Secured Parties) a continuing first priority security interest,
subject only to Permitted Liens (as defined below) in and to, all of Grantor's
right, title and interest in and to all of the following property now owned or
at any time hereafter acquired by Grantor or in which Grantor now has or at any
time in the future may acquire right, title or interest and wheresoever located
(all of the same being hereinafter referred to as the "COLLATERAL"): all
personal property and fixtures of every kind and nature, including, without
limitation all goods (including inventory, equipment and any accessions
thereto),
instruments (including promissory notes), documents, accounts (including
health-care-insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letter-of-credit rights (whether or not the
letter of credit is evidenced by a writing), commercial tort claims, securities
and all other investment property, supporting obligations, any other contract
rights or rights to the payment of money, insurance claims and proceeds, and all
general intangibles including, without limitation, all payment intangibles,
patents, patent applications, trademarks, trademark applications, trade names,
copyrights, copyright applications, software, engineering drawings, service
marks, customer lists, goodwill, and all licenses, permits, agreements of any
kind or nature pursuant to which Grantor possesses, uses or has authority to
possess or use property (whether tangible or intangible) of others or others
possess, use or have authority to possess or use property (whether tangible or
intangible) of Grantor, and all recorded data of any kind or nature, regardless
of the medium of recording including, without limitation, all software,
writings, plans, specifications and schematics.
2. SECURED OBLIGATIONS. For purposes of this Agreement, "SECURED
OBLIGATIONS" shall mean: (a) all obligations and liabilities to the Secured
Parties, whether now existing or hereafter arising, under the Exchange
Agreement, the Notes, this Agreement, the Intellectual Property Security
Agreement, and/or any document or agreement related to any of the foregoing and
the due performance and compliance with the terms of the Exchange Agreement, the
Notes, this Agreement, the Intellectual Property Security Agreement, and/or any
document or agreement related to any of the foregoing; (b) any and all sums
advanced by the Collateral Agent in order to preserve the Collateral or to
preserve the Secured Parties' security interest in the Collateral; and (c) in
the event of any proceeding for the collection or enforcement of any obligations
or liabilities of Grantor referred to in the immediately preceding clauses (a)
and (b) in accordance with the terms of the Exchange Agreement, the Notes, this
Agreement, the Intellectual Property Security Agreement, and/or any document or
agreement related to the foregoing, the expenses of re-taking, holding,
preparing for sale, selling or otherwise disposing of or realizing on the
Collateral, or of any other exercise by the Collateral Agent (for the benefit of
the Secured Parties) of its rights hereunder, together with reasonable
attorneys' fees and court costs.
3. FINANCING STATEMENTS. Grantor hereby irrevocably authorizes the
Collateral Agent at any time and from time to time to file in any Uniform
Commercial Code jurisdiction any initial financing statements and amendments or
continuations thereto that describe the Collateral. Grantor shall execute and
deliver as reasonably required by the Collateral Agent any additional financing
statements or other documents, together with any necessary amendments or
continuation statements so long as this Agreement remains in effect.
4. MAINTENANCE OF SECURITY INTEREST. Grantor will, from time to time,
upon the request of the Secured Parties, deliver specific assignments of
Collateral, together with such other instruments and documents, financing
statements, amendments thereto, assignments or other writings as the Collateral
Agent may reasonably request to carry out the terms of this Agreement or to
protect or enforce the Secured Parties' security interest in the Collateral.
With respect to any and all Collateral to be secured and conveyed under this
Agreement, Grantor agrees to do and cause to be done all things necessary to
perfect and keep in full force the
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security interest granted in favor of the Collateral Agent (for the benefit of
the Secured Parties), including, but not limited to, the prompt payment of all
fees and expenses incurred in connection with any filings made to perfect or
continue a security interest in the Collateral in favor of the Collateral Agent
(for the benefit of the Secured Parties). Grantor agrees to make appropriate
entries upon its financial statements and books and records disclosing the
security interest granted hereunder in favor of the Collateral Agent (for the
benefit of the Secured Parties).
5. RECEIPT OF PAYMENT. In the event an Event of Default (as hereinafter
defined) shall occur and be continuing and Grantor (or any of its affiliates,
subsidiaries, stockholders, directors, officers, employees or agents) shall
receive any proceeds of Collateral, including without limitation monies, checks,
notes, drafts or any other items of payment, Grantor shall hold all such items
of payment in trust for the Collateral Agent (for the benefit of the Secured
Parties), and as the property of the Collateral Agent (for the benefit of the
Secured Parties), separate from the funds of Grantor, and no later than the
first business day following the receipt thereof, Grantor shall cause the same
to be forwarded to the Collateral Agent (for the benefit of the Secured Parties)
for its custody and possession as additional Collateral.
6. COLLECTIONS. Grantor hereby authorizes the Collateral Agent (for the
benefit of the Secured Parties), at all times after the occurrence and during
the continuation of an Event of Default to open Grantor's mail and collect any
and all amounts due to Grantor from any third parties obligated on any accounts
that constitute part of the Collateral ("ACCOUNT DEBTORS"); and (b) to take over
Grantor's post office boxes or make other arrangements as the Collateral Agent
deems necessary to receive Grantor's mail, including notifying the post office
authorities to change the address for delivery of Grantor's mail to such address
as the Collateral Agent may designate.
7. GRANTOR REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything herein
to the contrary notwithstanding, Grantor shall remain liable under each of the
accounts and contracts that constitute part of the Collateral to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise to
each such account and in accordance with and pursuant to the terms and
provisions of each such contract. The Collateral Agent shall not have any
obligation or liability under any account that constitutes part of the
Collateral (or any agreement giving rise thereto) or under any contract that
constitutes part of the Collateral by reason of or arising out of this Agreement
or the receipt by the Collateral Agent of any payment relating to such account
or contract pursuant hereto, nor shall the Collateral Agent be obligated in any
manner to perform any of the obligations of Grantor under or pursuant to any
such account (or any agreement giving rise thereto) or under or pursuant to any
such contract, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any such account (or any agreement giving rise
thereto) or under any such contract, to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts which
may have been assigned to it or to which it may be entitled at any time or
times.
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8. COVENANTS. Grantor covenants with the Collateral Agent (for the
benefit of the Secured Parties) that from and after the date of this Agreement
until termination hereof in accordance with Section 29 hereof:
(a) INSPECTION. The Collateral Agent (by any of its officers, employees
and agents) shall have the right upon its request and prior notice, and at any
reasonable times during Grantor's usual business hours, to inspect the
Collateral, all records related thereto (and to make extracts or copies from
such records), and the premises upon which any of the Collateral is located, to
discuss Grantor's affairs and finances with any individual, corporation,
partnership, limited liability company, trust, unincorporated association,
business, or other legal entity, and any government or any governmental agency
or political subdivision thereof ("PERSON") (other than Account Debtors) and to
verify with any such Person the amount, quality, quantity, value and condition
of, or any other matter relating to, the Collateral and, if an Event of Default
has occurred and is continuing, to discuss Grantor's affairs and finances with
Grantor's Account Debtors and to verify the amount, quality, value and condition
of, or any other matter relating to, the Collateral and such Account Debtors.
Upon or after the occurrence and during the continuation of an Event of Default,
the Collateral Agent (for the benefit of the Secured Parties) may at any time
and from time to time employ and maintain on Grantor's premises a custodian
selected by the Collateral Agent who shall have full authority to do all acts
necessary to protect the interests of the Collateral Agent (for the benefit of
the Secured Parties). All expenses incurred by the Collateral Agent by reason of
the employment of such custodian shall be paid by Grantor, added to the Secured
Obligations and secured by the Collateral.
(b) ASSIGNMENTS, RECORDS AND SCHEDULES OF ACCOUNTS. Grantor shall keep
accurate and complete records of its accounts ("ACCOUNT RECORDS") and from time
to time at intervals reasonably designated by the Collateral Agent, but, other
than during the continuance of an Event of Default, not more often than once per
month, Grantor shall provide the Collateral Agent (for the benefit of the
Secured Parties) with a schedule of accounts in form and substance reasonably
acceptable to the Collateral Agent describing all accounts created or acquired
by Grantor ("SCHEDULE OF ACCOUNTS"); provided, however, that Grantor's failure
to execute and deliver any such Schedule of Accounts shall not affect or limit
the security interest or other rights of the Collateral Agent (for the benefit
of the Secured Parties) in and to any accounts. Grantor shall furnish to the
Collateral Agent such documents relating to the accounts so scheduled, including
without limitation repayment histories and present status reports to the extent
maintained by Grantor in the ordinary course of its business (collectively,
"ACCOUNT DOCUMENTS") and such other matter and information relating to the
status of then existing accounts as the Collateral Agent shall reasonably
request. Grantor shall not remove any Account Records or Account Documents or
change its chief executive offices from ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "CHIEF EXECUTIVE OFFICE") hereto without thirty
(30) days prior written notice to the Collateral Agent as provided in Section 23
hereof.
(c) NOTICE REGARDING DISPUTED ACCOUNTS. In the event any amounts due and
owing in excess of $50,000 are in dispute between any Account Debtor and Grantor
(which shall include without limitation any dispute in which an offset claim or
counterclaim may result),
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Grantor shall provide the Collateral Agent with written notice thereof as soon
as practicable, explaining in detail the reason for the dispute, all claims
related thereto and the amount in controversy.
(d) VERIFICATION OF ACCOUNTS. If an Event of Default has occurred and is
continuing, each of the Collateral Agent's officers, employees or agents shall
have the right, at any reasonable time or times hereafter, to verify with
Account Debtors the validity, amount or any other matter relating to any
accounts and, whether or not an Event of Default has occurred, each of the
Collateral Agent's officers, employees or agents shall have the right to verify
the same with Grantor.
(e) SAFEKEEPING OF INVENTORY. Grantor shall be responsible for the
safekeeping of its inventory, and in no event shall the Collateral Agent and/or
any of the Secured Parties have any responsibility for: (i) any loss or damage
to inventory or destruction thereof occurring or arising in any manner or
fashion from any cause; (ii) any diminution in the value of inventory; or (iii)
any act or default of any carrier, warehouseman, bailee or forwarding agency
thereof or other Person in any way dealing with or handling inventory; unless,
in each case, caused by Collateral Agent's or such Secured Party's gross
negligence or willful misconduct.
(f) LOCATION, RECORDS AND SCHEDULES OF INVENTORY. Grantor shall keep
correct and accurate records itemizing and describing the kind, type, location
and quantity of inventory, its cost therefor and the selling price of inventory
held for sale, and the daily withdrawals therefrom and additions thereto, and
shall furnish to the Collateral Agent from time to time at reasonable intervals
designated by the Collateral Agent, but, other than during the continuance of an
Event of Default, not more often than once per month, a current schedule of
inventory based upon its most recent physical inventory and its daily inventory
records. Grantor shall conduct a physical inventory, no less than annually, and
shall furnish to the Collateral Agent such other documents and reports thereof
as the Collateral Agent shall reasonably request with respect to inventory.
(g) RETURNS OF INVENTORY. If any Account Debtor returns any inventory to
Grantor after shipment thereof, and such return generates a credit in excess of
$50,000 in the aggregate on any account or accounts of such Account Debtor,
Grantor shall notify the Collateral Agent of the same as soon as practicable.
(h) EVIDENCE OF OWNERSHIP OF EQUIPMENT. Grantor, as soon as practicable
following a request therefor by the Collateral Agent, shall deliver to the
Collateral Agent any and all evidence of ownership of any of its equipment
(including without limitation certificates of title and applications for title).
(i) LOCATION, RECORDS AND SCHEDULES OF EQUIPMENT. Grantor shall maintain
accurate, itemized records itemizing and describing the kind, type, quality,
quantity and value of its equipment and shall furnish the Collateral Agent upon
request with a current schedule containing the foregoing information, but, other
than during the continuance of an Event of Default, not more often than once per
fiscal quarter.
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(j) SALE OR MORTGAGE OF EQUIPMENT. Other than in the ordinary course of
business with respect to disposition of obsolescent equipment or replacement of
equipment with other equipment performing similar functions and having similar
or better utility and value, and except as may be permitted by the Exchange
Agreement prior to the occurrence and continuance of an Event of Default,
Grantor shall not sell, exchange, lease, mortgage, encumber, pledge or otherwise
dispose of or transfer any of its equipment or any part thereof without the
prior written consent of the Collateral Agent, which consent shall not be
unreasonably withheld.
(k) MAINTENANCE OF EQUIPMENT. Grantor shall keep and maintain its
equipment in good operating condition and repair, ordinary wear and tear
excepted. Grantor shall not permit any such items to become a fixture to real
property (unless Grantor has granted the Collateral Agent a lien on such real
property) or accessions to other personal property.
(l) COMMERCIAL TORT CLAIMS. If Grantor shall at any time hold or acquire
a commercial tort claim, Grantor shall immediately notify the Collateral Agent
in a writing signed by Grantor of the brief details thereof and grant to the
Collateral Agent (for the benefit of the Secured Parties) in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance satisfactory to
the Collateral Agent.
(m) LETTER OF CREDIT RIGHTS. To the extent that any Collateral consists
of letter-of-credit rights, Grantor shall cause the issuer of each underlying
letter of credit to consent to the assignment to the Collateral Agent (for the
benefit of the Secured Parties) of the proceeds of such letter of credit.
(n) INVESTMENT PROPERTY AND DEPOSIT ACCOUNTS. If there is any investment
property included as Collateral that can be perfected by "control" through an
account control agreement, Grantor shall use its best effort to cause such an
account control agreement to be entered into and delivered to the Collateral
Agent. If there are any deposit accounts included as Collateral that can be
perfected by "control" through an account control agreement, Grantor shall cause
such an account control agreement to be entered into and delivered to the
Collateral Agent. If Grantor shall at any time hold or acquire any certificated
securities, Grantor shall forthwith endorse, assign and deliver the same to the
Collateral Agent, accompanied by such instruments of transfer or assignment duly
executed in blank as the Collateral Agent may from time to time specify.
(o) PROMISSORY NOTES AND CHATTEL PAPER. If Grantor shall at any time
hold or acquire any promissory notes or tangible chattel paper representing an
amount in excess of $50,000, Grantor shall forthwith endorse, assign and deliver
the same to the Collateral Agent, accompanied by such instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time
specify. To the extent that any Collateral consists of electronic chattel paper,
Grantor shall cause the underlying chattel paper to be marked within the meaning
of Section 9-105 of the Code (or successor section thereto).
(p) COLLATERAL IN POSSESSION OF THIRD PARTIES. To the extent that any
Collateral is in the possession of a third party, Grantor will join with the
Collateral Agent in
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notifying the third party of the security interest in favor of the Collateral
Agent (for the benefit of the Secured Parties) and in obtaining an
acknowledgement from the third party that it is holding the Collateral for the
Collateral Agent (for the benefit of the Secured Parties).
(q) NOTICES. Grantor will advise the Collateral Agent promptly, in
reasonable detail, (i) of any Lien (other than Liens permitted hereunder) on, or
claim asserted against, any of the Collateral and (ii) of the occurrence of any
other event which could reasonably be expected to have a material adverse effect
on the value of any material portion of the Collateral or on the Liens created
hereunder. "LIEN" shall mean any lien, mortgage, security interest, chattel
mortgage, pledge or other encumbrance (statutory or otherwise) of any kind
securing satisfaction or performance of an obligation, including any agreement
to give any of the foregoing, any conditional sales or other title retention
agreement, any lease in the nature thereof, and the filing of or the agreement
to give any financing statement under the Code of any jurisdiction or similar
evidence of any encumbrance, whether within or outside the United States.
(r) CHANGE OF NAME; LOCATION; ETC. Grantor shall not make any change (a)
in its name, (b) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or records relating to
Collateral owned by it or any office facility at which Collateral owned by it is
located (including the establishment of any such new office or facility) from
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (c) in its
identity or type of organization or corporate structure, (d) in its Federal
Taxpayer Identification Number or organizational identification number or (e) in
its jurisdiction of organization unless (i) Grantor provides the Collateral
Agent at least thirty (30) days prior written notice of such change and (ii) all
filings have been made under the Uniform Commercial Code or otherwise that are
required in order for the Collateral Agent (for the benefit of the Secured
Parties) to continue at all times following such change to have a valid, legal
and perfected security interest in all the Collateral.
(s) TRANSFER OF COLLATERAL. Except for Permitted Liens or as otherwise
expressly permitted herein, other than the disposition of items of Collateral in
the ordinary course of Grantor's business as presently conducted, Grantor shall
not sell, assign, transfer, encumber or otherwise dispose of any Collateral
without the prior written consent of the Collateral Agent, which consent shall
not be unreasonably withheld. For purposes of this provision, "dispose of
Collateral" shall include, without limitation, the creation of a Lien (whether
voluntary or involuntary) on such Collateral.
(t) TAXES AND ASSESSMENTS. Grantor shall promptly pay when due and
payable, all taxes and assessments imposed upon the Collateral or operations or
business of Grantor, provided that no such charge or claim need be paid if being
contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and if such reserve or other appropriate provision, if any,
as shall be required by generally accepted accounting principles, shall have
been made therefor and, if the filing of a bond or other indemnity is necessary
to avoid the creation of a lien against any of the assets of Grantor, such bond
shall have been filed or indemnity provided.
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(u) FURTHER IDENTIFICATION OF COLLATERAL. Grantor will furnish to the
Collateral Agent from time to time, upon the request of the Collateral Agent,
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Collateral Agent may
reasonably request, all in reasonable detail.
(v) CASH MANAGEMENT. At any time that the Collateral Agent so requests,
the Grantor will work with the Collateral Agent to set up such lock boxes and
segregated accounts as the Collateral Agent may reasonably request in order to
better perfect the security interest created hereunder in proceeds of the
Collateral.
(w) ASSIGNMENT OF CLAIMS ACT. Grantor shall immediately notify
Collateral Agent if any of its accounts arise out of contracts with the United
States or any agency or instrumentality thereof; and at such time as any of such
accounts, individually or in the aggregate, exceed $50,000, Grantor shall
execute any instruments and take any steps required by Collateral Agent in order
that all moneys due and to become due under such contracts shall be assigned to
Collateral Agent (for the benefit of the Secured Parties) and notice given to
the government under the Federal Assignment of Claims Act.
9. GENERAL WARRANTIES AND REPRESENTATIONS. Grantor represents and
warrants to the Collateral Agent (for the benefit of the Secured Parties) that:
(a) Grantor is and, except as permitted by the Exchange Agreement, will
continue to be the owner of the Collateral hereunder, now owned and upon the
acquisition of the same, free and clear of all Liens other than the security
interest in favor of the Collateral Agent (for the benefit of the Secured
Parties) hereunder and under the Intellectual Property Security Agreement and
Permitted Liens, and that it will defend such Collateral and any products and
proceeds thereof against all claims and demands of all third parties at any time
claiming the same or any interest therein adverse to the Collateral Agent.
"PERMITTED LIENS" means (1) capital leases and purchase money security interests
incurred with respect to equipment acquired by Grantor in the ordinary course of
business, involving the incurrence of an aggregate amount of capital lease
obligations and purchase money indebtedness of not more than $2,500,000
outstanding at any one time for all such Liens, provided that no such Liens
shall extend to or cover any property other than the leased property or
equipment purchased by proceeds of such permitted purchase money indebtedness;
(2) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which Borrower maintains adequate reserves, (3) Liens for
mechanics and other similar liens not delinquent, (4) Liens to secure payment of
workers' compensation, employment insurance, old age pensions, social security
or other like obligations incurred in the ordinary course of business, and (5)
Liens in favor of financial institutions arising in connection with Grantor's
deposit accounts held at such institutions.
(b) Grantor has the full legal right and power and all authority and
approval required to enter into, execute and deliver this Agreement, to grant
the security interest of the Collateral Agent (for the benefit of the Secured
Parties) hereunder and to perform fully each of its obligations hereunder. This
Agreement has been duly executed and delivered and constitutes the valid and
binding obligation of Grantor enforceable in accordance with its terms, except
as may
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be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to creditor's rights generally. No approval
or consent of any foreign, federal, state, country, local or other governmental
or regulatory body, and no approval or consent of any other Person is required
in connection with the execution and delivery by Grantor of this Agreement, the
grant of the security interest of the Collateral Agent (for the benefit of the
Secured Parties) hereunder and the consummation and performance by Grantor of
the transactions contemplated hereby. The execution and delivery of this
Agreement, the grant of the security interest of the Collateral Agent (for the
benefit of the Secured Parties) hereunder and the consummation and performance
by Grantor of the transactions contemplated hereby will not conflict with or
result in the breach or violation of any of the terms or conditions of, or
constitute (or with notice or lapse of time or both would constitute) a default
under any material instrument, contract or other agreement to which Grantor is a
party or by or to which it or its assets or properties are bound or subject or
any statute or any regulation, order, judgment or decree of any court or
governmental or regulatory body.
10. PERFECTION WARRANTIES AND REPRESENTATIONS. Grantor represents and
warrants to the Collateral Agent (for the benefit of the Secured Parties) that:
(a) Grantor is a corporation duly organized, validly existing and in
good standing in the State of Delaware and its exact legal name, state issued
organizational identification number and federal employer identification number
are as set forth on Schedule 1.
(b) Grantor has not used any name other than that set forth on Schedule
1 for the preceding five (5) years and no entity has merged into Grantor or been
acquired by Grantor within the past five (5) years.
(c) Grantor's chief executive office and chief place of business is
located at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(d) Set forth on Schedule 1 are the names and addresses of all entities
from whom Grantor has acquired any personal property in a transaction not in the
ordinary course of business during the past five (5) years, together with the
date of such acquisition and the type of personal property acquired (e.g.,
equipment, inventory, etc.).
(e) Set forth on Schedule 1 are all banks or savings institutions at
which Grantor maintains deposit accounts, all securities accounts maintained by
Grantor and a list of all investment property owned or held by Grantor.
(f) Set forth on Schedule 1 is a list and description of all now
existing commercial tort claims of Grantor.
11. ACCOUNT WARRANTIES AND REPRESENTATIONS. With respect to its
accounts, Grantor represents and warrants to the Collateral Agent (for the
benefit of the Secured Parties) that the Collateral Agent may rely on all
statements or representations made by Grantor on or with respect to any Schedule
of Accounts prepared and delivered by it and that:
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(a) All Account Records and Account Documents are located only at the
Chief Executive Office;
(b) All accounts are genuine, are in all material respects what they
purport to be, are not evidenced by an instrument or document or, if evidenced
by an instrument or document, are only evidenced by one original instrument or
document;
(c) All accounts cover bona fide sales and deliveries of inventory
usually dealt in by Grantor, or the rendition by Grantor of services, to an
Account Debtor in the ordinary course of business;
(d) The amounts of the face value shown on any Schedule of Accounts or
invoice statement delivered to the Collateral Agent with respect to any account,
are actually owing to Grantor and are not contingent for any reason; and there
are no setoffs, discounts, allowances, claims, counterclaims or disputes of any
kind or description in an amount greater than $100,000 in the aggregate for all
Account Debtors, or greater than $50,000 individually, existing or asserted with
respect thereto and Grantor has not made any agreement with any Account Debtor
thereunder for any deduction therefrom, except as may be stated in the Schedule
of Accounts and reflected in the calculation of the face value of each
respective invoice related thereto;
(e) Except for conditions generally applicable to Grantor's industry and
markets, there are no facts, events, or occurrences known to Grantor pertaining
particularly to any accounts which are reasonably expected to materially impair
in any way the validity, collectibility or enforcement of accounts that would
reasonably be likely, in the aggregate, to be of material economic value, or in
the aggregate materially reduce the amount payable thereunder from the amount of
the invoice face value shown on any Schedule of Accounts, and on all contracts,
invoices and statements delivered to the Collateral Agent, with respect thereto;
(f) The goods or services giving rise thereto are not, and were not at
the time of the sale or performance thereof, subject to any Lien, except those
of the Collateral Agent (for the benefit of the Secured Parties), Permitted
Liens, and those removed or terminated prior to the date hereof;
(g) Its accounts have not been pledged to any Person other than to the
Collateral Agent (for the benefit of the Secured Parties) under this Agreement
and will be owned by Grantor free and clear of any Liens; and
(h) The security interest of the Collateral Agent (for the benefit of
the Secured Parties) therein will not be subject to any offset, deduction,
counterclaim, lien or other adverse condition.
12. INVENTORY WARRANTIES AND REPRESENTATIONS. With respect to its
inventory, Grantor represents and warrants to the Collateral Agent (for the
benefit of the Secured Parties) that the Collateral Agent may rely on all
statements or representations made by Grantor on or with respect to any
inventory and that:
-10-
(a) All inventory is located only at the locations set forth on Schedule
1 hereto;
(b) None of its inventory is or will be subject to any Lien, except for
the security interest of the Collateral Agent (for the benefit of the Secured
Parties) hereunder and Permitted Liens;
(c) No inventory of Grantor that would reasonably be likely, in the
aggregate, to be of value in excess of $50,000 is, and shall not at any time or
times hereafter be, stored with a bailee, warehouseman, or similar party without
the Collateral Agent's prior written consent and, if the Collateral Agent gives
such consent, Grantor will concurrently therewith cause any such bailee,
warehouseman, or similar party to issue and deliver to the Collateral Agent upon
its request therefor, in form and substance reasonably acceptable to the
Collateral Agent, warehouse receipts therefor in the Collateral Agent's name and
take such other action and be party to such document as deemed necessary or
prudent by the Collateral Agent to maintain the security interest of the
Collateral Agent (for the benefit of the Secured Parties) in such inventory;
(d) No inventory is, and shall not at any time or times hereafter be,
under consignment to any Person, the value of which, when aggregated with all
other inventory under consignment of Grantor, would exceed $50,000; and
(e) No inventory is at or shall be kept at any location that is leased
by Grantor from any other Person with contractual, statutory or other rights to
obtain a Lien, or other right in any inventory which may take priority over the
Lien of the Collateral Agent (for the benefit of the Secured Parties), unless
such lessor waives its rights with respect to such inventory in form and
substance acceptable to the Collateral Agent and delivered in writing to the
Collateral Agent prior to such amount of inventory being at such one or more
locations.
13. EQUIPMENT REPRESENTATIONS AND WARRANTIES. With respect to its
equipment, Grantor represents and warrants to the Collateral Agent (for the
benefit of the Secured Parties) that the Collateral Agent may rely on all
statements or representations made by Grantor on or with respect to any
equipment and that:
(a) All equipment is located only at the locations set forth in Schedule
1 hereto;
(b) None of its equipment is or will be subject to any Lien, except for
the security interest of the Collateral Agent (for the benefit of the Secured
Parties) hereunder and Permitted Liens;
(c) No equipment of Grantor is at or shall be kept at any location that
is leased by Grantor from any other Person with contractual, statutory or other
rights to obtain a Lien, or other right in any equipment which may take priority
over the Lien of the Collateral Agent (for the benefit of the Secured Parties),
unless such lessor waives its rights with respect to such equipment in form and
substance acceptable to the Collateral Agent and delivered in writing to the
Collateral Agent prior to such amount of equipment being at such one or more
locations.
-11-
14. CASUALTY AND LIABILITY INSURANCE REQUIRED.
(a) Grantor will keep the Collateral continuously insured against
such risks as are customarily insured against by businesses of like size and
type engaged in the same or similar operations including, without limiting the
generality of any other covenant herein contained:
(i) casualty insurance on inventory and equipment in an amount
not less than the full insurable value thereof, against loss or damage by theft,
fire and lightning and other hazards ordinarily included under uniform broad
form standard extended coverage policies, limited only as may be provided in the
standard broad form of extended coverage endorsement at the time in use in the
states in which the Collateral is located;
(ii) comprehensive general liability insurance against claims
for bodily injury, death or property damage occurring with or about such
Collateral (such coverage to include provisions waiving subrogation against the
Collateral Agent), with the Collateral Agent (for the benefit of the Secured
Parties) as additional insured parties and as loss payees, in amounts as shall
be reasonably satisfactory to the Collateral Agent;
(iii) liability insurance with respect to the operation of its
facilities under the workers' compensation laws of the states in which such
Collateral is located; and
(iv) business interruption insurance.
(b) Each insurance policy obtained in satisfaction of the
requirements of Section 14(a) hereof:
(i) may be provided by blanket policies now or hereafter
maintained by Grantor;
(ii) shall be issued by such insurer (or insurers) as shall be
financially responsible, of recognized standing and reasonably acceptable to the
Collateral Agent;
(iii) shall be in such form and have such provisions
(including without limitation the loss payable clause, the waiver of subrogation
clause, the deductible amount, if any, and the standard mortgagee endorsement
clause), as are generally considered standard provisions for the type of
insurance involved and are reasonably acceptable in all respects to the
Collateral Agent;
(iv) shall prohibit cancellation or substantial modification,
termination or lapse in coverage by the insurer without at least thirty (30)
days' prior written notice to the Collateral Agent, except for non-payment of
premium, in which case such policies shall provide ten (10) days' prior written
notice;
(v) without limiting the generality of the foregoing, all
insurance policies where applicable under Section 14(a)(i) carried on the
Collateral shall name the Collateral Agent (for the benefit of the Secured
Parties), as loss payees and the Collateral Agent (for the benefit of the
Secured Parties) as additional insured.
-12-
(c) Prior to the expiration of any such policy, Grantor shall
furnish the Collateral Agent with evidence satisfactory to the Collateral Agent
that the policy or certificate has been renewed or replaced or is no longer
required by this Agreement.
(d) Grantor hereby irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Secured Parties) effective upon the occurrence and during the continuance of an
Event of Default, as Grantor's true and lawful attorney (and agent-in-fact) for
the purpose of making, settling and adjusting claims under such policies of
insurance, endorsing the name of Grantor on any check, draft, instrument or
other item or payment for the proceeds of such policies of insurance and for
making all determinations and decisions with respect to such policies of
insurance.
(e) In the event Grantor shall fail to maintain, or fail to cause to
be maintained, the full insurance coverage required hereunder or shall fail to
keep any of its Collateral in good repair and good operating condition, the
Collateral Agent may (but shall be under no obligation to), without waiving or
releasing any Secured Obligation or Event of Default by Grantor hereunder,
contract for the required policies of insurance and pay the premiums on the same
or make any required repairs, renewals and replacements; and all sums so
disbursed by the Collateral Agent, including reasonable attorneys' fees, court
costs, expenses and other charges related thereto, shall be payable on demand by
Grantor to the Collateral Agent (for the benefit of the Secured Parties) and
shall be additional Secured Obligations secured by the Collateral.
(f) Grantor agrees that to the extent that it shall not carry
insurance required by Section 14(a) hereof, it shall in the event of any loss or
casualty pay promptly to the Collateral Agent (for the benefit of the Secured
Parties), for application in accordance with the provisions of Section 14(h)
hereof, such amount as would have been received as Net Proceeds (as hereinafter
defined) by the Collateral Agent, under the provisions of Section 14(h) hereof
had such insurance been carried to the extent required.
(g) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 12(a)(ii) and 12(a)(iii) hereof shall be applied by
Grantor toward extinguishment of the defect or claim or satisfaction of the
liability with respect to which such insurance proceeds may be paid.
(h) The Net Proceeds of the insurance carried with respect to the
Collateral pursuant to the provisions of Section 14(a)(i) hereof shall be paid
to Grantor and held by Grantor in a separate account and applied as follows: (i)
as long as no Event of Default shall have occurred and be continuing, after any
loss under any such insurance and payment of the proceeds of such insurance,
Grantor shall have a period of thirty (30) days after payment of the insurance
proceeds with respect to such loss to elect to either (x) repair or replace the
Collateral so damaged, (y) deliver such Net Proceeds to the Collateral Agent
(for the benefit of the Secured Parties), as additional Collateral or (z) apply
such Net Proceeds to the acquisition of tangible assets used or useful in the
conduct of the business of Grantor, subject to the provisions of this Agreement.
If Grantor elects to repair or replace the Collateral so damaged, Grantor agrees
the Collateral shall be repaired to a condition substantially similar to its
condition prior to damage or replaced with Collateral in a condition
substantially similar to the condition of the Collateral so replaced prior to
damage; and (ii) at all times during which an Event of Default shall have
occurred and be
-13-
continuing, after any loss under such insurance and payment of the proceeds of
such insurance, Grantor shall immediately deliver such Net Proceeds to the
Collateral Agent (for the benefit of the Secured Parties), as additional
Collateral.
(i) "NET PROCEEDS" when used with respect to any insurance proceeds
shall mean the gross proceeds from such proceeds, award or other amount, less
all taxes, fees and expenses (including attorneys' fees) incurred in the
realization thereof.
(j) In case of any material damage to or destruction of all or any
material part of the Collateral pledged hereunder by Grantor, Grantor shall give
prompt notice thereof to the Collateral Agent. Each such notice shall describe
generally the nature and extent of such damage, destruction, taking, loss,
proceeding or negotiations. Grantor is hereby authorized and empowered to adjust
or compromise any loss under any such insurance.
15. EVENTS OF DEFAULT. It is understood and agreed that the occurrence
of any one or more of the following shall constitute an "EVENT OF DEFAULT"
hereunder and shall entitle the Collateral Agent (for the benefit of the Secured
Parties) to take such actions as are elsewhere provided in this Agreement in
respect of Events of Default: (a) an "Event of Default" as defined in the Notes
shall have occurred and be continuing; or (b) any representation or warranty
made by Grantor herein shall prove to have been false in any material respect
when made; or (c) any covenant made by Grantor herein (other than those
covenants contained in Section 8(a) hereof) is breached, violated, or not
complied with and not cured within ten (10) days after notice thereof from the
Collateral Agent; provided, however, that any breach, violation or
non-compliance with any covenant contained in Section 8(a) hereof shall
immediately result in an Event of Default; or (d) any material uninsured damage
to or loss, theft or destruction of any of the Collateral shall occur; or (e)
the security interests granted herein do not constitute for any reason a first
priority perfected security interest in the Collateral covered thereby, subject
only to Permitted Liens.
16. RIGHTS AND REMEDIES UPON AN EVENT OF DEFAULT. Upon and during the
continuance of an Event of Default, the Collateral Agent (for the benefit of the
Secured Parties) shall have the following rights and remedies in addition to any
rights and remedies set forth elsewhere in this Agreement, all of which may be
exercised with or, if allowed by law, without notice to Grantor:
(a) All of the rights and remedies of a secured party under the Uniform
Commercial Code of the state where such rights and remedies are asserted, or
under other applicable law, all of which rights and remedies shall be
cumulative, and none of which shall be exclusive, to the extent permitted by
law, in addition to any other rights and remedies contained in this Agreement or
the other Transaction Documents;
(b) The right to foreclose the Liens created under this Agreement by any
available judicial procedure or without judicial process;
(c) The right to (i) enter upon the premises of Grantor through
self-help and without judicial process, without first obtaining a final judgment
or giving Grantor notice and opportunity for a hearing on the validity of the
Collateral Agent's claim and without any obligation to pay
-14-
rent to Grantor, or any other place or places where any Collateral is located
and kept, and remove the Collateral therefrom to the premises of the Collateral
Agent or any agent of the Collateral Agent, for such time as the Collateral
Agent may desire, in order effectively to collect or liquidate the Collateral,
and/or (ii) require Grantor to assemble the Collateral and make it available to
the Collateral Agent (for the benefit of the Secured Parties) at a place to be
designated by the Collateral Agent that is reasonably convenient to both
parties;
(d) The right to (i) demand payment of its accounts; (ii) enforce
payment of Grantor's accounts, by legal proceedings or otherwise; (iii) exercise
all of Grantor's rights and remedies with respect to the collection of Grantor's
accounts; (iv) settle, adjust, compromise, extend or renew Grantor's accounts;
(v) settle, adjust or compromise any legal proceedings brought to collect
Grantor's accounts; (vi) if permitted by applicable law, sell or assign
Grantor's accounts upon such terms, for such amounts and at such time or times
as the Collateral Agent deems advisable; (vii) discharge and release Grantor's
accounts; (viii) take control, in any manner, of any item of payment or proceeds
referred to in Section 5 above; (ix) prepare, file and sign Grantor's name on a
Proof of Claim in bankruptcy or similar document against any Account Debtor; (x)
prepare, file and sign Grantor's name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with Grantor's accounts;
(xi) endorse the name of Grantor upon any chattel paper, document, instrument,
invoice, freight ▇▇▇▇, ▇▇▇▇ of lading or similar document or agreement relating
to Grantor's accounts or inventory; (xii) use Grantor's stationery for
verifications of Grantor's accounts and notices thereof to Account Debtors;
(xiii) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to any Collateral to which
Grantor has access; and (xiv) do all acts and things and execute all documents
necessary, in the Collateral Agent's sole discretion, to collect Grantor's
accounts; and
(e) The right to sell, assign, lease or to otherwise dispose of all or
any Collateral in its then existing condition, or after any further
manufacturing or processing thereof, at public or private sale or sales, with
such notice as may be required by law, in lots or in bulk, for cash or on credit
with or without representations and warranties, all as the Collateral Agent, in
its sole discretion, may deem advisable. The Collateral Agent shall have the
right to conduct such sales on Grantor's premises or elsewhere and shall have
the right to use Grantor's premises without charge, subject to the rights of any
lessor, for such sales for such time or times as the Collateral Agent may
reasonably determine. The Collateral Agent may, if its deems it reasonable,
postpone or adjourn any sale of the Collateral from time to time by an
announcement at the time and place of such postponed or adjourned sale, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. Grantor agrees that the Collateral Agent have no obligation to
preserve rights to the Collateral against prior parties or to ▇▇▇▇▇▇▇▇ any
Collateral for the benefit of any Person. The Collateral Agent is hereby granted
a license or other right to use, without charge, Grantor's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale and selling
any Collateral and Grantor's rights under any license and any franchise
agreement shall inure to the benefit of the Collateral Agent. If any of the
Collateral shall require repairs, maintenance, preparation or the like, or is in
process or other unfinished state, the Collateral Agent shall have the right,
but shall
-15-
not be obligated, to perform such repairs, maintenance, preparation, processing
or completion of manufacturing for the purpose of putting the same in such
saleable form as the Collateral Agent shall deem appropriate, but the Collateral
Agent shall have the right to sell or dispose of the Collateral without such
processing. In addition, Grantor agrees that in the event notice is necessary
under applicable law, written notice mailed to Grantor in the manner specified
herein ten (10) days prior to the date of public sale of any of the Collateral
or prior to the date after which any private sale or other disposition of the
Collateral will be made shall constitute commercially reasonable notice to
Grantor. The Secured Parties may purchase all or any part of the Collateral at
public or, if permitted by law, private sale, free from any right of redemption
which is hereby expressly waived by Grantor and, in lieu of actual payment of
such purchase price, may set off the amount of such price against the Secured
Obligations. The net cash proceeds resulting from the collection, liquidation,
sale, lease or other disposition of the Collateral shall be applied first to the
expenses (including all attorneys' fees) of retaking, holding, storing,
processing and preparing for sale, selling, collecting, liquidating and the
like, and then to the satisfaction of all Secured Obligations. Any sale or other
disposition of the Collateral and the possession thereof by the Collateral Agent
shall be in compliance with all provisions of applicable law (including
applicable provisions of the Uniform Commercial Code). Grantor shall be liable
to the Secured Parties, and shall pay to the Collateral Agent (for the benefit
of the Secured Parties), on demand any deficiency which may remain after such
sale, disposition, collection or liquidation of the Collateral. The Secured
Parties shall remit to Grantor or other Person entitled thereto any surplus
remaining after this Agreement has been terminated in accordance with Section 29
hereof.
17. ANTI-MARSHALLING PROVISIONS. The right is hereby given by Grantor to
the Collateral Agent (for the benefit of the Secured Parties), to make releases
(whether in whole or in part) of all or any part of the Collateral agreeable to
the Collateral Agent without notice to, or the consent, approval or agreement of
other parties and interests, including junior lienors, which releases shall not
impair in any manner the validity of or priority of the Liens in the remaining
Collateral conferred under such documents, nor release Grantor from personal
liability for the Secured Obligations hereby secured. Notwithstanding the
existence of any other security interest in the Collateral held by the Secured
Parties, the Collateral Agent (for the benefit of the Secured Parties) shall
have the right to determine the order in which any or all of the Collateral
shall be subjected to the remedies provided in this Agreement. The proceeds
realized upon the exercise of the remedies provided herein shall be applied by
the Collateral Agent in the manner herein provided. Grantor hereby waives any
and all right to require the marshalling of assets in connection with the
exercise of any of the remedies permitted by applicable law or provided herein.
18. APPOINTMENT OF THE COLLATERAL AGENT AS GRANTOR'S LAWFUL ATTORNEY.
Without limitation of any other provision of this Agreement, upon and during the
continuance of an Event of Default, Grantor irrevocably designates, makes,
constitutes and appoints the Collateral Agent (for the benefit of the Secured
Parties) (and all third parties designated by the Collateral Agent), as
Grantor's true and lawful attorney (and agent-in-fact) to take all actions and
to do all things required to be taken or done by Grantor under this Agreement.
All acts of the Collateral Agent or its designees taken pursuant to this Section
18 are
-16-
hereby ratified and confirmed and the Collateral Agent or its designees shall
not be liable for any acts of omission or commission nor for any error of
judgment or mistake of fact or law, other than as a result of its gross
negligence or willful misconduct. This power, being coupled with an interest, is
irrevocable by Grantor until this Agreement has been terminated in accordance
with Section 29 hereof.
19. PERFORMANCE BY COLLATERAL AGENT OF GRANTOR'S OBLIGATIONS. If Grantor
fails to perform or comply with any of its agreements contained herein after any
applicable cure period and the Collateral Agent, as provided for by the terms of
this Agreement, shall itself perform or comply, or otherwise cause performance
or compliance, with such agreements, the expenses of the Collateral Agent
incurred in connection with such performance or compliance shall be payable by
Grantor to the Collateral Agent on demand and shall constitute Secured
Obligations secured hereby.
20. RIGHTS AND REMEDIES CUMULATIVE; NON-WAIVER; ETC. The enumeration of
the rights and remedies of the Collateral Agent (for the benefit of the Secured
Parties), set forth in this Agreement is not intended to be exhaustive and the
exercise by the Collateral Agent of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative, and
shall be in addition to any other right or remedy given hereunder, or under any
other agreement between Grantor and the Collateral Agent and/or any Secured
Party or which may now or hereafter exist in law or in equity or by suit or
otherwise. No delay or failure to take action on the part of the Collateral
Agent in exercising any right, power or privilege shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
privilege preclude other or further exercise thereof or the exercise of any
other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No waiver by a party hereunder shall be effective unless it is
in writing and signed by the party making such waiver, and then only to the
extent specifically stated in such writing. No course of dealing between Grantor
and the Collateral Agent or the Collateral Agent's agents or employees shall be
effective to change, modify or discharge any provision of this Agreement or to
constitute a waiver of any Event of Default. Neither the Collateral Agent nor
any Secured Party shall have any liability for any error, omission or delay of
any kind occurring in the handling or liquidation of the Collateral or for any
damages resulting therefrom, other than as a result of its gross negligence or
willful misconduct.
21. SUPPLEMENTAL DOCUMENTATION. At the Collateral Agent's request,
Grantor shall execute and deliver to the Collateral Agent, at any time or times
hereafter, all documents, instruments and other written matter that the
Collateral Agent may request to perfect and maintain perfected the security
interest of the Collateral Agent (for the benefit of the Secured Parties) in the
Collateral, in form and substance acceptable to the Collateral Agent, and pay
all charges, expenses and fees the Collateral Agent may reasonably incur in
filing any of such documents, and all taxes relating thereto. Grantor agrees
that a carbon, photographic, photostatic, or other reproduction of this
Agreement or a financing statement is sufficient as a financing statement and
may be filed by the Collateral Agent in any filing office.
22. WAIVERS. In addition to the other waivers contained herein, Grantor
hereby expressly waives, to the extent permitted by law: presentment for
payment, demand, protest,
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notice of demand, notice of protest, notice of default or dishonor, notice of
payments and nonpayments and all other notices and consents to any action taken
by the Collateral Agent (on behalf of the Secured Parties) unless expressly
required by this Agreement.
23. NOTICE. Any notice shall be conclusively deemed to have been
received by any party hereto and be effective on the day on which delivered to
such party (against receipt therefor) at the address set forth below or such
other address as such party shall specify to the other parties in writing (or,
in the case of telephonic notice or notice by telecopy (where the receipt of
such message is verified by return) expressly provided for hereunder, when
received at such telephone or telecopy number as may from time to time be
specified in written notice to the other parties hereto or otherwise received),
or if sent prepaid by certified or registered mail return receipt requested on
the third business day after the day on which mailed, or if sent prepaid by a
national overnight courier service, on the first business day after the day on
which delivered to such service against receipt therefor, addressed to such
party at said address:
(a) if to Grantor:
ViroLogic, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
Attn: Chief Executive Officer
with a copy simultaneously transmitted by like means to (which
transmittal shall not constitute notice hereunder):
Cooley Godward LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Collateral Agent:
SDS Merchant Fund, L.P.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇, ext. 75
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
with a copy simultaneously transmitted by like means to (which
transmittal shall not constitute notice hereunder):
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Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
One ▇▇▇▇▇ Square
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 23.
24. DEFINITIONS. All terms defined in Article 9 of the Uniform
Commercial Code of the State of Delaware (the "CODE") and used in this Agreement
shall have the same definitions herein as specified in Article 9 of the Code,
and such definitions are hereby incorporated herein by reference and made a part
hereof.
25. ENTIRE AGREEMENT. This Agreement, together with the Exchange
Agreement and the other Transaction Documents, constitute and express the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersede all prior agreements and understandings, inducements,
commitments or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance or usage of the trade inconsistent with any of the terms hereof.
Neither this Agreement nor any portion or provision hereof may be changed,
altered, modified, supplemented, discharged, canceled, terminated, or amended
orally or in any manner other than by an agreement, in writing signed by the
parties hereto.
26. SEVERABILITY. The provisions of this Agreement are independent of
and separable from each other. If any provision hereof shall for any reason be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect the validity or enforceability of any other provision hereof, but this
Agreement shall be construed as if such invalid or unenforceable provision had
never been contained herein.
27. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of Grantor, and the rights, remedies, powers, and
privileges of the Collateral Agent (for the benefit of the Secured Parties)
hereunder shall inure to the benefit of the successors and assigns of the
Collateral Agent; provided, however, that Grantor shall not make any assignment
hereof without the prior written consent of the Collateral Agent.
28. COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in any number of counterparts and all the counterparts taken together shall be
deemed to constitute one and the same instrument. A telephone line facsimile
transmission of this Agreement bearing a signature on behalf of a party hereto
shall be legal and binding on such party.
29. TERMINATION; RELEASE. Upon the indefeasible payment in full of all
Secured Obligations, this Agreement and all obligations of Grantor hereunder
shall terminate
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without delivery of any instrument or performance of any act by any party, and
the Collateral shall automatically be released from the Liens created by this
Agreement and all rights to such Collateral shall automatically revert to
Grantor. Notwithstanding the immediately preceding sentence, upon such
termination of this Agreement, the Collateral Agent, at the expense of Grantor,
shall reassign and redeliver such Collateral then held by or for the Secured
Parties and execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.
30. PARAGRAPH HEADINGS. The paragraph headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
31. INDEMNIFICATION. Grantor agrees to pay, and to save the Collateral
Agent and each Secured Party harmless from, any and all liabilities, costs and
expenses (including, without limitation, legal fees and expenses) (i) with
respect to, or resulting from, any delay in paying, any and all excise, sales or
other taxes which may be payable or determined to be payable with respect to any
of the Collateral, (ii) with respect to, or resulting from, any delay by Grantor
in complying with any law or regulation applicable to any of the Collateral,
(iii) in connection with any action taken by the Collateral Agent in exercising
its rights under this Agreement, and (iv) in connection with the preparation and
enforcement of this Agreement and/or and document or agreement related thereto,
except to the extent caused by Collateral Agent's or such Secured Party's gross
negligence or willful misconduct. In any suit, proceeding or action brought by
the Collateral Agent under any Account or contract that constitutes part of the
Collateral for any sum owing thereunder, or to enforce any provisions of any
such Account or contract, Grantor will save, indemnify and keep the Collateral
Agent harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaim, recoupment or reduction or liability
whatsoever of the Account Debtor thereunder, arising out of a breach by Grantor
of any obligation thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such Account Debtor or its
successors from Grantor. The obligations under this Section 30 shall survive
termination of this Agreement.
32. GOVERNING LAW.
(a) This Agreement and the rights and obligations of Grantor hereunder
shall be governed by, and construed and interpreted in accordance with, the law
of the State of Delaware, except to the extent that under the Code the laws of
another jurisdiction govern matters of perfection and the effect of perfection
or non-perfection of any security interest granted hereunder.
(b) Each party hereby expressly and irrevocably agrees and consents that
any suit, action or proceeding arising out of or relating to this Agreement and
the transactions contemplated herein may be instituted in any state or federal
court sitting in the State of Delaware, and, by the execution and delivery of
this Agreement, each party expressly waives any objection that it may have now
or hereafter to the laying of the venue or to the jurisdiction of any such suit,
action or proceeding, and irrevocably submits generally and unconditionally to
the jurisdiction of any such court in any such suit, action or proceeding.
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(c) Each party agrees that service of process may be made by personal
service of a copy of the summons and complaint or other legal process in any
such suit, action or proceeding, or by registered or certified mail (postage
prepaid) to the address of such party provided by Section 23 hereof, or by any
other method of service provided for under the applicable laws in effect in the
State of Delaware.
(d) Nothing contained in subsections (b) or (c) hereof shall preclude
any party from bringing any suit, action or proceeding arising out of or
relating to this Agreement in the courts of any place where any party or any of
such party's property or assets may be found or located. To the extent permitted
by the applicable laws of any such jurisdiction, each party hereby irrevocably
submits to the jurisdiction of any such court and expressly waives, in respect
of any such suit, action or proceeding, the jurisdiction of any other court or
courts which now or hereafter, by reason of its present or future domicile, or
otherwise, may be available to it.
(e) IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO THIS AGREEMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION WITH THE FOREGOING, EACH PARTY HEREBY AGREES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY AND EACH PARTY HEREBY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY HAVE THAT EACH ACTION OR
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
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IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly
executed and delivered as of the date first above written.
VIROLOGIC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: Chairman & CEO
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Acknowledged and agreed to by the Collateral Agent:
SDS MERCHANT FUND, L.P.,
as Collateral Agent,
by its Managing Member,
SDS Capital Partners, L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Title: Managing Member
-----------------------------
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