Exhibit 10.6
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of August 29, 2003 (as amended,
restated, amended and restated, supplemented or otherwise modified from time to
time, this "AGREEMENT"), is made by DIOMED, INC., a Delaware corporation (the
"GRANTOR"), in favor of Gibralt US, Inc., a Colorado corporation (in its
individual capacity, "▇▇▇"), as agent (in such capacity as agent, the
"DESIGNATED NOTE INVESTOR") for the Secured Parties (as herein after defined).
Capitalized terms used herein and not otherwise defined in ARTICLE I shall have
their respective definitions specified under the Securities Purchase Agreement,
dated as of August 8, 2003 (the "SECURITIES PURCHASE AGREEMENT"), among Diomed
Holdings, Inc. ("HOLDINGS") and the Investors named therein.
W I T N E S S E T H:
WHEREAS, pursuant to the Securities Purchase Agreement, Holdings
proposes to issue and sell to the Investors purchasing Secured Bridge Notes at
the Tranche I Closing, one or more Secured Bridge Notes, in an aggregate
principal amount of $6,995,000.00;
WHEREAS, as a condition precedent to such purchase and sale of the
Secured Bridge Notes at the Tranche I Closing, Grantor is required to guaranty
such Secured Bridge Notes pursuant to its Guarantees and to execute and deliver
this Agreement in order to secure such Guarantees and its obligations under the
other Investor Documents to which it is a party; and
WHEREAS, Grantor will derive substantial benefits from the transactions
contemplated by the Securities Purchase Agreement and has duly authorized the
execution, delivery and performance of this Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in order to induce the Secured
Parties to purchase the Secured Bridge Notes, Grantor agrees, for the benefit of
the Designated Note Investor and each other Secured Party, as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following terms (whether or not underscored) when
used in this Agreement, including its preamble and recitals, shall have the
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):
"ACCOUNT" means a right to payment of a monetary obligation, whether or
not earned by performance (and shall include invoices, contracts, rights,
accounts receivable, notes, refunds, indemnities, interest, late charges, fees,
undertakings, and all other obligations and amounts owing to Grantor from any
Person):
(a) for property that has been or is to be sold, leased, licensed,
assigned or otherwise disposed of;
(b) for services rendered or to be rendered;
(c) for a policy of insurance issued or to be issued;
(d) for a secondary obligation incurred or to be incurred;
(e) for energy provided or to be provided;
(f) for the use or hire of a vessel under a charter or other
contract;
(g) arising out of the use of a credit or charge card or
information contained on or for use with the card; or
(h) as winnings in a lottery or other game of chance operated or
sponsored by a state, governmental unit of a State, or person licensed or
authorized to operate the game by a State or governmental unit of a State.
"ACCOUNT CONTROL AGREEMENT" means an account control agreement in form
and substance satisfactory to the Designated Note Investor, entered into among
Grantor, the Designated Note Investor and the bank or Securities Intermediary
where a Deposit Account or Securities Account, respectively, of Grantor is
maintained, as such agreement may be amended, restated, amended and restated,
supplemented or otherwise modified from time to time.
"AGREEMENT" is defined in the PREAMBLE.
"ASSIGNED AGREEMENT" means each agreement more particularly described
on SCHEDULE VI hereto (as such Schedule may be supplemented from time to time
pursuant to SECTION 4.12 hereof), in each case, as such agreement may be
amended, restated, amended and restated, supplemented or otherwise modified from
time to time.
"AUTHENTICATE" means
(a) to sign; or
(b) to execute or otherwise adopt a symbol, or encrypt or
similarly process a record in whole or in part, with the present intent of the
authenticating person to identify the person and adopt or accept a record.
"AXCAN" means Axcan Pharma, Inc., a Canadian company.
"AXCAN NOTE" means that certain promissory note, dated as of September
24, 2001, of Grantor in favor of Axcan, in the original principal amount of
$936,000.
"AXCAN LIEN" means the lien on Inventory of Grantor created in favor of
Axcan pursuant to the Axcan Note.
"CHATTEL PAPER" means a record or records that evidence both a monetary
obligation and a security interest in specific goods, a security interest in
specific goods and software used in the goods, a security interest in specific
goods and license of software used in the goods, a lease of specific goods, or a
lease of specific goods and license of software used in the goods.
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"COLLATERAL" is defined in SECTION 2.1.
"COLLATERAL ACCOUNT" means, for Grantor, a deposit account in the name
of the Designated Note Investor and subject to the sole dominion and control of
the Designated Note Investor.
"COMMERCIAL TORT CLAIM" means a claim arising in tort with respect to
which:
(a) the claimant is an organization; or
(b) the claimant is an individual and the claim:
(i) arose in the course of the claimant's business or
profession; and
(ii) does not include damages arising out of personal
injury to or the death of an individual.
"COMMODITY ACCOUNT" means an account maintained by a Commodity
Intermediary in which a Commodity Contract is carried out for a Commodity
Customer.
"COMMODITY CONTRACT" means a commodity futures contract, an option on a
commodity futures contract, a commodity option or any other contract that, in
each case, is
(a) traded on or subject to the rules of a board of trade that has
been designated as a contract market for such a contract pursuant to the federal
commodities laws; or
(b) traded on a foreign commodity board of trade, exchange or
market, and is carried on the books of a Commodity Intermediary for a Commodity
Customer.
"COMMODITY CUSTOMER" means a person for whom a Commodity Intermediary
carries a Commodity Contract on its books.
"COMMODITY INTERMEDIARY" means
(a) a Person who is registered as a futures commission merchant
under the federal commodities laws; or
(b) a Person who in the ordinary course of its business provides
clearance or settlement services for a board of trade that has been designated
as a contract market pursuant to federal commodities laws.
"COMPUTER HARDWARE AND SOFTWARE COLLATERAL" means:
(a) all computer and other electronic data processing hardware,
integrated computer systems, central processing units, memory units, display
terminals, printers, features, computer elements, card readers, tape drives,
hard and soft disk drives, cables, electrical supply hardware, generators, power
equalizers, accessories and all peripheral devices and other related computer
hardware;
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(b) all software programs (including both source code, object code
and all related applications and data files), whether now owned or hereafter
acquired by Grantor, designed for use on the computers and electronic data
processing hardware described in CLAUSE (A) above;
(c) all licenses and leases of software programs;
(d) all firmware associated therewith;
(e) all documentation (including flow charts, logic diagrams,
manuals, guides and specifications) with respect to such hardware, software and
firmware described in the preceding CLAUSES (A) through (D); and
(f) all rights with respect to all of the foregoing, including any
and all copyrights, licenses, options, warranties, service contracts, program
services, test rights, maintenance rights, support rights, improvement rights,
renewal rights and indemnifications and any substitutions, replacements,
additions, modifications or model conversions of any of the foregoing.
"CONTROL" means any appropriate method of gaining control of collateral
under the U.C.C.
"COPYRIGHT COLLATERAL" means:
(a) all copyrights of Grantor, whether statutory or common law,
registered or unregistered, now or hereafter in force throughout the world
including all of Grantor's right, title and interest in and to all copyrights
registered in the United States Copyright Office or anywhere else in the world
and also including the copyrights referred to in ITEM A of SCHEDULE IV attached
hereto (as such Schedule may be supplemented from time to time pursuant to
SECTION 4.12 hereof), and all applications for registration thereof, whether
pending or in preparation;
(b) all copyright licenses, including each copyright license
referred to in ITEM B of SCHEDULE IV attached hereto (as such Schedule may be
supplemented from time to time pursuant to SECTION 4.12 hereof); and
(c) the right to ▇▇▇ for past, present and future infringements of
any thereof, all rights corresponding thereto throughout the world, all
extensions and renewals of any thereof and all proceeds of the foregoing,
including licenses, royalties, income, payments, claims, damages and proceeds of
suit.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook, or similar
account (including all bank accounts, collection accounts and concentration
accounts, together with all funds held therein and all certificates and
instruments, if any, from time to time representing or evidencing such accounts)
maintained with a bank.
"DESIGNATED NOTE INVESTOR" is defined in the PREAMBLE and shall include
any successor agent for the holders of the Secured Bridge Notes appointed by
such holders pursuant to SECTION 6.1 (G).
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"DOCUMENTS" means a document of title or a receipt of the type
described in Section 7-201(2) of the U.C.C.
"ELECTRONIC CHATTEL PAPER" means Chattel Paper evidenced by a record or
records consisting of information stored in an electronic medium.
"ENTITLEMENT HOLDER" means a Person identified in the records of a
Securities Intermediary as the Person having a Security Entitlement against the
Securities Intermediary. If a person acquires a Security Entitlement by virtue
of Section 8-501(b)(2) or (3) of the U.C.C., such person is the Entitlement
Holder.
"EQUIPMENT" means all machinery, equipment in all its forms, wherever
located, including all computers, furniture and furnishings, all other property
similar to the foregoing (including tools, parts, rolling stock and supplies of
every kind and description), components, parts and accessories installed thereon
or affixed thereto and all parts thereof, and all Fixtures and all accessories,
additions, attachments, improvements, substitutions and replacements thereto and
therefor.
"EVLT PATENT" has the meaning provided in the Securities Purchase
Agreement.
"FINANCIAL ASSET" means
(a) a Security;
(b) an obligation of a Person or a share, participation or other
interest in a Person or in property or an enterprise of a Person, which is, or
is of a type, dealt with in or traded on financial markets, or which is
recognized in any area in which it is issued or dealt in as a medium for
investment; or
(c) any property that is held by a Securities Intermediary for
another person in a Securities Account if the Securities Intermediary has
expressly agreed with the other Person that the property is to be treated as a
Financial Asset under Article 8 of the U.C.C. As the context requires, the term
Financial Asset shall mean either the interest itself or the means by which a
Person's claim to it is evidenced, including a certificated or uncertificated
Security, a certificate representing a Security or a Security Entitlement.
"FIXTURES" means all items of Equipment, whether now owned or hereafter
acquired, of Grantor that become so related to particular real estate that an
interest in them arises under any real estate law applicable thereto.
"GENERAL INTANGIBLE" means any personal property, including things in
action, Payment Intangibles and software, other than Accounts, Chattel Paper,
Commercial Tort Claims, Deposit Accounts, Documents, Goods, Instruments,
Investment Property, Letter-of-Credit Rights, Letters of Credit, money, and oil,
as, or other minerals before extraction.
"GOODS" means all things that are movable when a security interest
attaches, including computer programs embedded in goods and any supporting
information provided in connection with a transaction relating to the program if
(i) the program is associated with the goods in such a manner that is
customarily is considered part of the goods, or (ii) by becoming the owner of
the goods, a person acquires a right to use the program in connection with the
goods.
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"GRANTOR" is defined in the PREAMBLE.
"INTELLECTUAL PROPERTY COLLATERAL" means, collectively, the Computer
Hardware and Software Collateral, the Copyright Collateral, the Patent
Collateral (including, without limitations, the EVLT Patent), the Trademark
Collateral and the Trade Secrets Collateral.
"INTELLECTUAL PROPERTY SECURITY AGREEMENT" means a memorandum agreement
with respect to the security interest granted by Grantor pursuant to this
Agreement in the Copyright Collateral, Patent Collateral or Trademark Collateral
of Grantor which is registered under the federal laws of the United States of
America or the laws of any foreign country, which agreement shall be in form and
substance satisfactory to the Designated Note Investor and in form suitable for
filing in the United States Patent and Trademark Office, the United States
Copyright Office or in the corresponding filing office under the laws of such
foreign jurisdiction, as applicable, from Grantor, as such agreement may be
amended, restated, amended and restated, supplemented or otherwise modified form
time to time.
"INSTRUMENT" means a negotiable instrument or any other writing that
evidences a right to the payment of a monetary obligation, is not itself a
security agreement or lease, and is of a type that in ordinary course of
business is transferred by delivery with any necessary endorsement or
assignment.
"INVENTORY" means Goods, other than farm products, which:
(a) are leased by a Person as lessor;
(b) are held by a Person for sale or lease or to be furnished
under a contract of service;
(c) are furnished by a Person under a contract of service; or
(d) consist of raw materials, work in process, or materials used
or consumed in a business,
and includes, without limitation, (i) finished goods, returned goods and
materials and supplies of any kind, nature or description which are or might be
used in connection with the manufacture, packing, shipping, advertising, selling
or finishing of any of the foregoing; (ii) all goods in which Grantor has an
interest in mass or a joint or other interest or right of any kind (including
goods in which Grantor has an interest or right as consignee); (iii) all goods
which are returned to or repossessed by Grantor; and (iv) all accessions
thereto, products thereof and documents therefor, except to the extent that a
security interest therein which is deemed necessary by the Grantor or Holdings
is granted to any third party by the Grantor or Holdings pursuant to a factoring
or other asset-based financing transaction entered into from time to time by the
Grantor and/or Holdings.
"INVESTMENT DOCUMENT" has the meaning provided in the Securities
Purchase Agreement.
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"INVESTMENT PROPERTY" means all Securities (whether certificated or
uncertificated), Security Entitlements, Securities Accounts, Financial Assets,
Commodity Contracts and Commodity Accounts of Grantor; PROVIDED, HOWEVER, that
Investment Property shall not include any certificated Securities constituting
Collateral (as defined in the Pledge Agreement).
"LETTER-OF-CREDIT RIGHT" means a right to payment or performance under
a letter of credit, whether or not the beneficiary has demanded or is at the
time entitled to demand payment or performance, but excludes the right of a
beneficiary to demand payment or performance under a letter of credit.
"NOTES" means the Secured Bridge Notes.
"PATENT COLLATERAL" means:
(a) all letters patent and applications for letters patent
throughout the world (including all patent applications in preparation for
filing anywhere in the world), including each patent and patent application
referred to in ITEM A of SCHEDULE II attached hereto (as such Schedule may be
supplemented from time to time pursuant to SECTION 4.12 hereof), including,
without limitation, the EVLT Patent;
(b) all patent licenses, including each patent license referred to
in ITEM B of SCHEDULE II attached hereto (as such Schedule may be supplemented
from time to time pursuant to SECTION 4.12 hereof), including, without
limitation, the Patent License Agreement;
(c) all reissues, divisions, continuations, continuations-in-part,
extensions, renewals and reexaminations of any of the items described in CLAUSES
(A) and (B) above; and
(d) all proceeds of, and rights associated with, the foregoing
(including license royalties and proceeds of infringement suits), the right to
▇▇▇ third parties for past, present or future infringements of any patent or
patent application, including any patent or patent application referred to in
ITEM A of SCHEDULE II attached hereto (as such Schedule may be supplemented from
time to time pursuant to SECTION 4.12 hereof), and for breach or enforcement of
any patent license, including any patent license referred to in ITEM B of
SCHEDULE II attached hereto (as such Schedule may be supplemented from time to
time pursuant to SECTION 4.12 hereof), and all rights corresponding thereto
throughout the world.
"PAYMENT INTANGIBLE" means a general intangible under which the account
debtor's principal obligation is a monetary obligation.
"PROCEEDS" means the following property:
(a) whatever is acquired upon the sale, lease, license, exchange,
or other disposition of the Collateral;
(b) whatever is collected on, or distributed on account of, the
Collateral;
(c) rights arising out of the Collateral; and
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(d) to the extent of the value of the Collateral and to the extent
payable to the debtor or the secured party, insurance payable by reason of the
loss or nonconformity of, defects or infringement of rights in, or damage to,
the Collateral.
Notwithstanding the foregoing, Receivables Collateral shall not constitute
Proceeds of the sale, lease, exchange, loss, conversion or other disposition of
Inventory.
"RECEIVABLES COLLATERAL" means, collectively, Accounts, Documents,
Instruments and Chattel Paper, except to the extent that a security interest
therein is granted to any third party by the Grantor or Holdings pursuant to a
factoring or other asset-based financing transaction entered into from time to
time by the Grantor and/or Holdings.
"SECURED OBLIGATIONS" is defined in SECTION 2.2.
"SECURED PARTIES" means the holders of the Secured Bridge Notes and the
Designated Note Investor.
"SECURITIES" means any obligations of an issuer or any shares,
participations or other interests in an issuer or in property or an enterprise
of an issuer which
(a) are represented by a certificate representing a security in
bearer or registered form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the issuer;
(b) are one of a class or series or by its terms is divisible into
a class or series of shares, participations, interests or obligations; and
(c) (i) are, or are of a type, dealt with or trade on securities
exchanges or securities markets or (ii) are a medium for investment and by their
terms expressly provide that they are a security governed by Article 8 of the
U.C.C.
"SECURITIES ACCOUNT" shall mean an account to which a Financial Asset
is or may be credited in accordance with an agreement under which the Person
maintaining the account undertakes to treat the Person for whom the account is
maintained as entitled to exercise rights that comprise the Financial Asset.
"SECURITY ENTITLEMENTS" means the rights and property interests of an
Entitlement Holder with respect to a Financial Asset.
"SECURITY INTERMEDIARY" means
(a) a clearing corporation; or
(b) a Person, including a bank or broker, that in the ordinary
course of its business maintains securities accounts for others and is acting in
that capacity.
"SUPPORTING OBLIGATION" means a Letter-of-Credit Right or secondary
obligation that supports the payment or performance of an Account, Chattel
Paper, Document, General
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Intangible, Instrument or Investment Property, including, without limitation,
all security agreements, Guarantees, leases and other contracts securing or
otherwise relating to any such Accounts, Chattel Paper, Documents, General
Intangible, Instruments or Investment Property, including Goods represented by
the sale or lease of delivery which gave rise to any of the foregoing, returned
or repossessed merchandise and rights of stoppage in transit, replevin,
reclamation and other rights and remedies of an unpaid vendor, lienor or secured
party.
"TANGIBLE CHATTEL PAPER" means Chattel Paper evidenced by a record or
records consisting of information that is inscribed on a tangible medium.
"TERMINATION DATE" means the date on which the payment in full in cash
of the Secured Obligations is made, PROVIDED, that this Agreement shall continue
to be effective or be reinstated, as the case may be, if at any time any payment
(in whole or in part) of any of the Secured Obligations is rescinded or must
otherwise be restored by any Secured Party upon the insolvency, bankruptcy or
reorganization of the Grantor, Holdings or otherwise, all as though such payment
had not been made.
"TRADEMARK COLLATERAL" means:
(a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, trade dress, service
marks, certification marks, collective marks, logos, other source of business
identifiers, prints and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of a like nature (all of the foregoing
items in this CLAUSE (A) being collectively called a "Trademark"), now existing
anywhere in the world or hereafter adopted or acquired, whether currently in use
or not, all registrations and recordings thereof and all applications in
connection therewith, whether pending or in preparation for filing, including
registrations, recordings and applications in the United States Patent and
Trademark Office or in any office or agency of the United States of America or
any State thereof or any foreign country, including those referred to in ITEM A
of SCHEDULE III attached hereto (as such Schedule may be supplemented from time
to time pursuant to SECTION 4.12);
(b) all Trademark licenses, including each Trademark license
referred to in ITEM B of SCHEDULE III attached hereto (as such Schedule may be
supplemented from time to time pursuant to SECTION 4.12);
(c) all reissues, extensions or renewals of any of the items
described in CLAUSES (A) and (B) above;
(d) all of the goodwill of the business connected with the use of,
and symbolized by the items described in, CLAUSES (A) and (B) above; and
(e) all proceeds of, and rights associated with, the foregoing,
including any claim by Grantor against third parties for past, present or future
infringement or dilution of any Trademark, Trademark registration or Trademark
license, including any Trademark, Trademark registration or Trademark license
referred to in ITEM B of SCHEDULE III attached hereto (as such Schedule may be
supplemented from time to time pursuant to SECTION 4.12), or for any injury to
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the goodwill associated with the use of any such Trademark or for breach or
enforcement of any Trademark license.
"TRADE SECRETS COLLATERAL" means common law and statutory trade secrets
and all other confidential or proprietary information and all know-how obtained
by or used in or contemplated at any time for use in the business of Grantor
(all of the foregoing being collectively called a "TRADE SECRET"), whether or
not such Trade Secret has been reduced to a writing or other tangible form
(including all documents and things embodying, incorporating or referring in any
way to such Trade Secret, all Trade Secret licenses), including each Trade
Secret license referred to in SCHEDULE V attached hereto, and including the
right to ▇▇▇ for and to enjoin and to collect damages for the actual or
threatened misappropriation of any Trade Secret and for the breach or
enforcement of any such Trade Secret license.
"U.C.C." means the Uniform Commercial Code as from time to time in
effect in the State of New York or, with respect to any Collateral located in
any state or jurisdiction other than the State of New York, the Uniform
Commercial Code as from time to time in effect in such state or jurisdiction.
"WAIVER AGREEMENT" means a waiver agreement with a landlord or bailee
of Grantor in form and substance satisfactory to the Designated Note Investor,
entered into among such landlord or bailee, as the case may be, Grantor and the
Designated Note Investor, as such agreement may be amended, restated, amended
and restated, supplemented or otherwise modified from time to time.
1.2 SECURITIES PURCHASE AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Agreement,
including its preamble and recitals, have the meanings provided in the
Securities Purchase Agreement.
1.3 U.C.C. DEFINITIONS. Unless otherwise defined herein or the context
otherwise requires, terms for which meanings are provided in the U.C.C. are used
in this Agreement, including its preamble and recitals, with such meanings.
1.4 OTHER INTERPRETIVE PROVISIONS. The rules of construction in Section
20(d) of the Securities Purchase Agreement shall be equally applicable to this
Agreement.
ARTICLE II
SECURITY INTEREST
2.1 GRANT OF SECURITY. Grantor hereby assigns and pledges to the
Designated Note Purchaser for the benefit of each of the Secured Parties, and
hereby grants to the Designated Note Purchaser for the benefit of each of the
Secured Parties a security interest in, all of its right, title and interest in
and to the following, whether now or hereafter existing or acquired
(collectively, the "COLLATERAL"):
(a) all Equipment in all of its forms of Grantor;
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(b) all Inventory in all of its forms of Grantor, PROVIDED,
HOWEVER, that the Lien created hereby in such Inventory shall be junior and
subordinate to the Axcan Lien (and no other Liens) so long as the Axcan Note
remains outstanding;
(c) all Receivables Collateral in all of its forms, including all
Accounts, Documents, Instruments and Chattel Paper, of Grantor;
(d) all General Intangibles in all of its forms, including all
Payment Intangibles, of Grantor;
(e) all Assigned Agreements to which Grantor is now or may
hereafter become a party and all Accounts thereunder, including (i) all rights
of Grantor to receive moneys due and to become due under or pursuant to the
Assigned Agreements, (ii) all rights of Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty with respect to the Assigned
Agreements, (iii) claims of Grantor for damages arising out of or for breach of
or default under the Assigned Agreements and (iv) the right of Grantor to
terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder;
(f) all Supporting Obligations of Grantor;
(g) all Intellectual Property Collateral in all of its forms of
Grantor;
(h) all Investment Property in all of its forms, including all
Securities Accounts, of Grantor;
(i) all Deposit Accounts of Grantor;
(j) all Commercial Tort Claims of Grantor described in PART E of
SCHEDULE I hereto (as such Schedule may be supplemented from time to time
pursuant to SECTION 4.12 or otherwise);
(k) all other Goods of Grantor;
(l) all of Grantor's books, records, writings, data bases,
information and other property relating to, used or useful in connection with,
evidencing, embodying, incorporating or referring to, any of the foregoing in
this SECTION 2.1;
(m) except for any real property interest of the Grantor, all of
Grantor's other property and rights of every kind and description and interests
therein, including all moneys, securities and other property, now or hereafter
held or received by, or in transit to, the Designated Note Investor from or for
Grantor, whether for safekeeping, pledge, custody, transmission, collection or
otherwise; and
(n) all Proceeds of any and all of the foregoing Collateral.
2.2 SECURITY FOR SECURED OBLIGATIONS. The Collateral of Grantor under
this Agreement secures the prompt payment in full of all obligations of Grantor
under each of the
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Guarantees, this Agreement and the other Investment Documents to which the
Grantor is a party, whether for principal, interest, costs, fees, expenses,
indemnities or otherwise and whether now or hereafter existing (all of such
obligations being the "SECURED OBLIGATIONS").
2.3 CONTINUING SECURITY INTEREST; TRANSFER OF CREDIT EXTENSIONS. This
Agreement shall create a continuing security interest in the Collateral and
shall remain in full force and effect until the Termination Date, be binding
upon Grantor, its successors, transferees and assigns, and inure, together with
the rights and remedies of the Designated Note Investor hereunder, for the
benefit of each Secured Party. Without limiting the generality of the foregoing,
any Secured Party may assign or otherwise transfer (in whole or in part) any
Secured Bridge Note held by it to any other Person, and such other Person shall
thereupon become vested with all the rights and benefits in respect thereof
granted to such Secured Party under any Investment Document (including this
Agreement) or otherwise, subject, however, to any contrary provisions in such
assignment or transfer and to the provisions of the Investment Documents in
respect of assignment or transfer. Upon the payment in full in cash of all
Secured Obligations the security interest granted herein shall terminate and all
rights to the Collateral shall revert to Grantor.
2.4 GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding
(a) Grantor shall remain liable under the contracts and agreements
included in the Collateral (including the Assigned Agreements) to the extent set
forth therein, and shall perform all of its duties and obligations under such
contracts and agreements to the same extent as if this Agreement had not been
executed,
(b) Grantor will comply in all material respects with all laws
relating to the ownership and operation of the Collateral, including all
registration requirements under applicable laws, and shall pay when due all
taxes, fees and assessments imposed on or with respect to the Collateral, except
to the extent the validity thereof is being contested in good faith by
appropriate proceedings for which adequate reserves in accordance with GAAP have
been set aside by Grantor,
(c) the exercise by the Designated Note Investor or the other
Secured Parties of any of their rights hereunder shall not release Grantor from
any of its duties or obligations under any such contracts or agreements included
in the Collateral and
(d) neither the Designated Note Investor nor any other Secured
Party shall have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this Agreement, nor shall any
Secured Party be obligated to perform any of the obligations or duties of
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
2.5 SECURITY INTEREST ABSOLUTE. All rights of the Designated Note
Investor and the Secured Parties and the security interests granted to the
Designated Note Investor for the benefit of the Secured Parties hereunder, and
all obligations of Grantor hereunder, shall be absolute and unconditional,
irrespective of any of the following conditions, occurrences or events:
(a) any lack of validity or enforceability of any Investment
Document;
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(b) the failure of the Designated Note Investor or any Secured
Party to assert any claim or demand or to enforce any right or remedy against
Grantor or any other Person under the provisions of any Investment Document or
otherwise or to exercise any right or remedy against any other guarantor of, or
collateral securing, any Secured Obligation;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations or any other extension,
compromise or renewal of any Secured Obligation, including any increase in the
Secured Obligations resulting from the extension of additional credit to Grantor
or any other obligor or otherwise;
(d) any reduction, limitation, impairment or termination of any
Secured Obligation for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and Grantor
hereby waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise, unenforceability of, or any other
event or occurrence affecting, any Secured Obligation or otherwise;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of any Investment
Document;
(f) any addition, exchange, release, surrender or non-perfection
of any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for any of
the Secured Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, Grantor or
otherwise.
2.6 WAIVER OF SUBROGATION. Until the Termination Date, Grantor shall
not exercise any claim or other rights which it may now or hereafter acquire
against any other Person that arises from the existence, payment, performance or
enforcement of Grantor's obligations under this Agreement, including any right
of subrogation, reimbursement, exoneration or indemnification, any right to
participate in any claim or remedy against Holdings or any collateral which any
Secured Party now has or hereafter acquires, whether or not such claim, remedy
or right arises in equity or under contract, statute or common law, including
the right to take or receive from Holdings, directly or indirectly, in cash or
other property or by set-off or in any manner, payment or security on account of
such claim or other rights. If any amount shall be paid to Grantor in violation
of the preceding sentence, such amount shall be deemed to have been paid for the
benefit of the Secured Parties, and shall forthwith be paid to the Designated
Note Investor to be credited and applied upon the Secured Obligations as
provided in SECTION 5.1(B), whether matured or unmatured. Grantor acknowledges
that it will receive direct and indirect benefits for the financing arrangements
contemplated by the Investment Documents and that the agreement set forth in
this Section is knowingly made in contemplation of such benefits.
2.7 RELEASE; TERMINATION.
(a) Upon any sale, transfer or other disposition of any item of
Collateral of Grantor, the Designated Note Investor on behalf of the Secured
Parties will, at Grantor's expense and without any representations, warranties
or recourse of any kind whatsoever, execute and
13
deliver to Grantor such documents as Grantor shall reasonably request to
evidence the release of such item of Collateral from the assignment and security
interest granted hereby; PROVIDED, HOWEVER, that (i) at the time of such request
and such release no Event of Default shall have occurred and be continuing, (ii)
Grantor shall have delivered to the Designated Note Investor, at least ten
Business Days prior to the date of the proposed release, a written request for
release describing the item of Collateral and the terms of the sale, lease,
transfer or other disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a form of release for
execution by the Designated Note Investor (which release shall be in form and
substance satisfactory to the Designated Note Investor) and a certificate of
Grantor to the effect that the transaction is in compliance with the Investment
Documents and as to such other matters as the Designated Note Investor may
reasonably request and (iii) the proceeds of any such sale, lease, transfer or
other disposition required to be applied, at the discretion of Grantor, to
either reinvestment in the business of Grantor or to redemption of the Notes in
accordance with the terms and conditions of the Notes. Notwithstanding the
foregoing, it is understood and agreed that all sales of goods and inventory
(including laser systems, disposables and related items) made in the ordinary
course of business shall automatically be released from the liens created by
this Agreement and shall not require any further act by or notice to the
Designated Note Investor or the Secured Parties.
(b) Upon the Termination Date, the pledge, assignment and security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such termination, the Designated Note Investor will,
at Grantor's expense and without any representations, warranties or recourse of
any kind whatsoever, execute and deliver to Grantor such documents as Grantor
shall reasonably request to evidence such termination and deliver to Grantor all
Instruments, Tangible Chattel Paper and negotiable documents representing or
evidencing the Collateral, if any, then held by the Designated Note Investor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Grantor represents and warrants unto the Designated Note Investor and
each other Secured Party as set forth in this Article.
3.1 LOCATION OF GRANTOR; COLLATERAL, ETC. (a) ITEM A of SCHEDULE I
hereto identifies for Grantor (i) the state in which it is organized, (ii) the
relevant organizational identification number (or states that one does not
exist), and (iii) the principal place of business and chief executive office of
Grantor and the office where Grantor keeps its records concerning the
Collateral, and where the original copies of each Assigned Agreement and all
originals of all Tangible Chattel Paper are located.
(b) Except as disclosed in ITEM C of SCHEDULE I hereto (as such
Schedule may be supplemented from time to time pursuant to SECTION 4.12 hereof),
all of the Equipment and Inventory of Grantor are located at the places
specified in ITEM B of SCHEDULE I hereto (as such Schedule may be supplemented
from time to time pursuant to SECTION 4.12 hereof), each of which locations is
owned or leased by Grantor.
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(c) Except as disclosed in ITEM C of SCHEDULE I hereto (as such
Schedule may be supplemented from time to time pursuant to SECTION 4.12 hereof),
none of the Collateral is in the possession of any consignee, bailee,
warehouseman, agent or processor, located on any leased property or subject to
the Control of any Person, other than any Secured Party or Grantor.
(d) Except as set forth in ITEM D of SCHEDULE I hereto, Grantor
has no trade names and has not been known by any legal name different from the
one set forth on the signature page hereto.
(e) ITEM E of SCHEDULE I hereto (as such Schedule may be
supplemented from time to time pursuant to SECTION 4.12 hereof), describes all
Commercial Tort Claims owned by Grantor as of the date hereof and as of the date
of each supplement to such Schedule delivered pursuant to SECTION 4.12 hereof.
(f) Except as notified by Grantor to the Designated Note Investor
in writing, Grantor is not a party to any one or more Federal, state or local
government contracts.
3.2 OWNERSHIP. Grantor owns the Collateral.
3.3 NEGOTIABLE DOCUMENTS, INSTRUMENTS, CHATTEL PAPER AND ASSIGNED
AGREEMENTS. Grantor shall keep in its sole possession, free of the Control of
any Person other than the Secured Parties, all originals of all negotiable
documents, Instruments and Tangible Chattel Paper currently owned or held by
Grantor, and true and correct copies of each Assigned Agreement.
3.4 INTELLECTUAL PROPERTY COLLATERAL. (a) With respect to any
Intellectual Property Collateral that is material to the operations of Grantor:
(i) Intellectual Property Collateral is subsisting and has not
been adjudged invalid or unenforceable, in whole or in part, and is valid and
enforceable;
(ii) Grantor has made all necessary filings and recordations to
protect its interest in such Intellectual Property Collateral, including
recordations of all of its interests in the Patent Collateral and Trademark
Collateral in the United States Patent and Trademark Office and in corresponding
offices throughout the world and its claims to the Copyright Collateral in the
United States Copyright Office and in corresponding offices throughout the
world;
(iii) in the case of any such Intellectual Property Collateral
that is owned by Grantor, Grantor is the exclusive owner of the entire and
unencumbered right, title and interest in and to such Intellectual Property
Collateral other than licenses of such Intellectual Property Collateral in favor
of Grantor's subsidiaries and no claim has been made that the use of such
Intellectual Property Collateral does or may violate the asserted rights of any
third party;
(iv) in the case of any such Intellectual Property Collateral that
is licensed by Grantor, Grantor is in compliance with all the material terms of
such license; and
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(v) Grantor has performed and will continue to perform all acts
and has paid and will continue to pay all required fees and taxes to maintain
each and every item of such Intellectual Property Collateral in full force and
effect throughout the world, as applicable.
(b) Grantor owns directly or is entitled to use by license or
otherwise, all patents, Trademarks, Trade Secrets, copyrights, licenses,
technology, know-how, processes and rights with respect to any of the foregoing
used in or necessary for the conduct of Grantor's business.
3.5 VALIDITY, ETC. This Agreement creates a valid and perfected
security interest in the Collateral and all Proceeds thereof, securing the
payment of the Secured Obligations, and all filings and other actions necessary
or desirable to perfect and protect such security interest have been duly taken.
3.6 AUTHORIZATION, APPROVAL, ETC. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority (other
than the filing of financing statements in the U.C.C. filing offices of each
jurisdiction referred to in SECTION 3.1(A)(I) and any local U.C.C. filing
relating to Fixtures and, if there is any Intellectual Property Collateral, the
filing of this Agreement or Intellectual Property Security Agreements with the
United States Patent and Trademark Office, the United States Copyright Office
and the comparable filing office of any foreign jurisdiction, as the case may
be) is required either (a) for the grant by Grantor of the security interest
granted hereby or for the execution, delivery and performance of this Agreement
by Grantor or (b) for the perfection of or the exercise by the Designated Note
Investor of the rights and remedies hereunder.
3.7 DUE EXECUTION, VALIDITY, ETC. Grantor has full power and authority,
and holds all requisite governmental licenses, permits and other approvals, to
enter into and perform its obligations under this Agreement. The execution,
delivery and performance by Grantor of this Agreement does not contravene or
result in a default under Grantor's articles of incorporation or by-laws or
contravene or result in a default under any material contractual restriction,
Lien or law binding on Grantor. This Agreement has been duly executed and
delivered on behalf of Grantor and constitutes the legal, valid and binding
obligation of Grantor enforceable in accordance with its terms subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar law affecting creditor's right generally, and subject to the effect of
general principles of equity (regardless of whether considered in a proceeding
in equity or at law).
3.8 ASSIGNED AGREEMENTS.
(a) SCHEDULE VI hereto accurately identifies for Grantor each
agreement which is material to Grantor to which Grantor is a party as of the
date hereof and as of the date of each supplement thereto delivered pursuant to
SECTION 4.12. For purposes of this SECTION 3.8(A), any agreement pursuant to
which Grantor reasonably expects to recognize aggregate future revenues in
excess of $100,000 or to receive indemnity or other payments in excess of
$100,000 shall be deemed to be material.
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(b) The Assigned Agreements of Grantor, true and complete copies
of which have been furnished to the Designated Note Investor, have been duly
authorized, executed and delivered by Grantor and (to the best knowledge of
Grantor) each other party thereto, are in full force and effect and are binding
upon and enforceable against Grantor and (to the best knowledge of Grantor) each
other party thereto, in accordance with their terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditor's right generally, and subject to the effect of general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).
(c) To the knowledge of Grantor, there exists no default under any
Assigned Agreement by any party thereto.
3.9 COMMERCIAL TORT CLAIMS. Except for matters disclosed in ITEM E of
SCHEDULE I hereto (as such Schedule may be supplemented from time to time
pursuant to SECTION 4.12 hereof), Grantor does not own any Commercial Tort
Claims.
3.10 DEPOSIT ACCOUNTS; SECURITIES ACCOUNTS. SCHEDULE VII hereto (as
such Schedule may be supplemented from time to time pursuant to SECTION 4.12
hereof) accurately identifies each Deposit Account and each Securities Account
of Grantor as of the date hereof and as of the date of each supplement to such
Schedule delivered pursuant to SECTION 4.12 hereof.
ARTICLE IV
COVENANTS
Grantor covenants and agrees that, until the Termination Date, Grantor
will, unless the Designated Note Investor shall otherwise agree in writing,
perform the obligations set forth in this Section.
4.1 AS TO EQUIPMENT AND INVENTORY. Grantor hereby agrees that it shall,
except in the ordinary course of its business or in the exercise of its
reasonable business judgment,
(a) keep all the Equipment and Inventory (other than Inventory
sold in the ordinary course of business) at the places therefor specified in
SECTION 3.1 unless Grantor has given at least 30 days' prior written notice to
the Designated Note Investor of another location, whether by delivery of a
supplement to SCHEDULE I hereto delivered pursuant to SECTION 4.12 hereto or
otherwise, and all action, if any, necessary to maintain in accordance with the
terms hereof the Designated Note Investor' perfected security interest therein
(including any action requested pursuant to CLAUSE (E) of this SECTION 4.1)
shall have been taken with respect to the Equipment and Inventory;
(b) cause the Equipment to be maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and tear
excepted, and make or cause to be made all repairs, replacements and other
improvements in connection therewith which are necessary so that Grantor may
properly conduct its business;
(c) pay promptly when due all property and other taxes,
assessments and governmental charges or levies imposed upon, and all claims
(including claims for labor, materials and supplies) against, the Equipment and
Inventory, except to the extent the validity thereof is being contested in good
faith by appropriate proceedings and for which adequate reserves in accordance
with GAAP have been set aside;
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(d) not sell any Inventory to any customer on approval or on any
other basis which entitles the customer to return, or which may obligate Grantor
to repurchase, such Inventory; and
(e) at the request of the Designated Note Investor, cause the
landlord, bailee, warehouseman or processor at any location identified on PART C
of SCHEDULE I with Control over any Equipment or Inventory of Grantor to enter
into a Waiver Agreement with Grantor and the Designated Note Investor.
4.2 AS TO ACCOUNTS, CHATTEL PAPER, DOCUMENTS AND INSTRUMENTS.
(a) Grantor shall not change its name or jurisdiction of
organization unless Grantor has given at least 30 days' prior written notice to
the Designated Note Investor, and all actions necessary to maintain the
Designated Note Investor's perfected security interest shall have taken with
respect to the Collateral of Grantor.
(b) Upon written notice by the Designated Note Investor to Grantor
pursuant to this SECTION 4.2(B), all Proceeds received by Grantor shall be
delivered in kind to the Designated Note Investor for deposit to the Collateral
Account, and Grantor shall not commingle any such Proceeds, and shall hold
separate and apart from all other property, all such Proceeds in express trust
for the benefit of the Secured Parties until delivery thereof is made to the
Designated Note Investor. The Designated Note Investor will not give the notice
referred to in the preceding sentence unless there shall have occurred and be
continuing any Event of Default. No funds, other than proceeds of Collateral of
Grantor, will be deposited in the Collateral Account.
(c) The Designated Note Investor shall have the right to apply any
amount in the Collateral Account to the payment pursuant to SECTION 5.1(B) of
any Secured Obligations which are due and payable or payable upon demand, or to
the payment pursuant to SECTION 5.1(B) of any Secured Obligations at any time
that any Event of Default shall exist. Subject to the rights of the Designated
Note Investor, Grantor shall have the right on each Business Day, with respect
to and to the extent of collected funds in the Collateral Account, to require
the Designated Note Investor to purchase cash equivalent investments. The
Designated Note Investor may at any time and shall promptly following Grantor's
request therefor, so long as no Event of Default has occurred and is continuing,
transfer to Grantor's general demand deposit account at its bank any or all of
the collected funds in the Collateral Account; PROVIDED, HOWEVER, that any such
transfer shall not be deemed to be a waiver or modification of any of the
Designated Note Investor's or other Secured Parties' rights under this Section.
4.3 AS TO COLLATERAL GENERALLY.
(a) Until such time as the Designated Note Investor shall notify
Grantor of the revocation of such power and authority after the occurrence and
during the continuance of any Event of Default, Grantor (i) may sell, lease or
furnish under the contracts of service any of the Inventory normally held by
Grantor for such purpose, and use and consume any raw materials,
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work in process or materials normally held by Grantor for such purpose, and sell
or otherwise dispose of any other Collateral, (ii) will, at its own expense,
endeavor to collect, as and when due, all amounts due with respect to any of the
Collateral, including the taking of such action with respect to such collection
as the Designated Note Investor may reasonably request or, in the absence of
such request, as Grantor may deem advisable; and (iii) may grant to any party
obligated on any of the Collateral, any rebate, refund or allowance to which
such party may be lawfully entitled, and may accept, in connection therewith,
the return of goods, the sale or lease of which shall have given rise to such
Collateral. The Designated Note Investor, however, may, at any time following
the occurrence and during the continuance of any Event of Default, whether
before or after any revocation of such power and authority or the maturity of
any of the Secured Obligations, notify any parties obligated on any of the
Collateral to make payment to the Designated Note Investor of any amounts due or
to become due thereunder and enforce collection of any of the Collateral by suit
or otherwise and surrender, release, or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than the
original period) any indebtedness thereunder or evidenced thereby. Upon request
of the Designated Note Investor after the occurrence and during the continuance
of any Event of Default, Grantor will, at its own expense, notify any parties
obligated on any of the Collateral to make payment to the Secured Parties of any
amounts due or to become due thereunder.
(b) The Designated Note Investor is authorized to endorse, in the
name of Grantor, any item, howsoever received by the Designated Note Investor,
representing any Proceeds of any of the Collateral.
4.4 AS TO INTELLECTUAL PROPERTY COLLATERAL.
(a) Grantor shall not, unless Grantor shall either (i) reasonably
and in good faith determine that any of the Patent Collateral is of negligible
economic value to Grantor or (ii) have a valid business purpose to do otherwise,
do any act, or omit to do any act, whereby any of the Patent Collateral may
lapse or become abandoned or dedicated to the public or unenforceable.
(b) Grantor shall not, and Grantor shall not permit any of its
licensees to, unless Grantor shall either (i) reasonably and in good faith
determine that any of the Trademark Collateral is of negligible economic value
to Grantor or (ii) have a valid business purpose to do otherwise,
(A) fail to continue to use any of the Trademark
Collateral in order to maintain all of the Trademark
Collateral in full force free from any claim of abandonment
for non-use;
(B) fail to maintain as in the past the quality of
products and services offered under all of the Trademark
Collateral;
(C) fail to employ all of the Trademark Collateral
registered with any Federal or state or foreign authority with
an appropriate notice of such registration; or
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(D) do or permit any act or knowingly omit to do any
act whereby any of the Trademark Collateral may lapse or
become invalid or unenforceable.
(c) Grantor shall not, unless Grantor shall either reasonably and
in good faith determine that any of the Copyright Collateral or any of the Trade
Secrets Collateral is of negligible economic value to Grantor or have a valid
business purpose do otherwise, do or permit any act or knowingly omit to do any
act whereby any of the Copyright Collateral or any of the Trade Secrets
Collateral may lapse or become invalid or unenforceable or placed in the public
domain except upon expiration of the end of an unrenewable term of a
registration thereof.
(d) Grantor shall notify the Designated Note Investor immediately
if it knows that any application or registration relating to any material item
of the Intellectual Property Collateral may become abandoned or dedicated to the
public or placed in the public domain or invalid or unenforceable, or of any
adverse determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any foreign counterpart
thereof or any court) regarding Grantor's ownership of any of the Intellectual
Property Collateral, its right to register the same or to keep and maintain and
enforce the same.
(e) Grantor shall take all necessary steps, including in any
proceeding before the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in any other country or
any political subdivision thereof, to maintain and pursue any application (and
to obtain the relevant registration) filed with respect to, and to maintain any
registration of, the Intellectual Property Collateral, including the filing of
applications for renewal, affidavits of use, affidavits of incontestability and
opposition, interference and cancellation proceedings and the payment of fees
and taxes (except to the extent that dedication, abandonment or invalidation is
permitted under the foregoing CLAUSES (A), (B) and (C)).
(f) In no event shall Grantor nor any of its agents, employees,
designees or licensees file an application for the registration of any
Intellectual Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office or any similar office or agency in
any other country or any political subdivision thereof, unless it promptly
informs the Designated Note Investor and, upon request of the Designated Note
Investor, executes and delivers any and all agreements, instruments, documents
and papers as the Designated Note Investor may reasonably request to evidence
the Secured Parties' security interest in such Intellectual Property Collateral
and the goodwill and general intangibles of Grantor relating thereto or
represented thereby.
(g) Grantor shall at its expense:
(i) perform and observe in all material respects all the terms and
provisions of the Patent License Agreement (as defined in the Securities
Purchase Agreement) to be performed or observed by it, maintain the Patent
License Agreement in full force and effect, enforce the Patent License Agreement
in accordance with its terms and take all such action to such end as may be from
time to time reasonably requested by the Designated Note Investor; and
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(ii) furnish to the Designated Note Investor promptly upon receipt
thereof copies of all material notices, requests and other documents received by
Grantor under or pursuant to the Patent License Agreement, and from time to time
furnish to the Designated Note Investor such information and reports regarding
the Patent License Agreement as the Designated Note Investor may reasonably
request.
(h) Grantor shall not, unless it has reasonably and in good faith
determined that it has a valid business purpose and upon written consent of the
Designated Note Investor:
(i) cancel or terminate the Patent License Agreement or consent to
or accept any cancellation or termination thereof;
(ii) amend or otherwise modify in any material respect the Patent
License Agreement or give any material consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Patent License
Agremeent; or
(iv) take any other action in connection with the Patent License
Agreement that would impair in any material respect the value of the interest or
rights of Grantor thereunder or that would impair in any material respect the
interest or rights of any Secured Party.
4.5 INSURANCE. Grantor will maintain or cause to be maintained such
insurance as it deems necessary for the reasonable conduct of its business.
4.6 [INTENTIONALLY OMITTED].
4.7 AS TO THE ASSIGNED AGREEMENTS.
(a) Grantor shall at its expense:
(i) perform and observe in all material respects all the terms and
provisions of the Assigned Agreements to be performed or observed by it,
maintain the Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms and take all such action to such end
as may be from time to time reasonably requested by the Designated Note
Investor; and
(ii) furnish to the Designated Note Investor promptly upon receipt
thereof copies of all material notices, requests and other documents received by
Grantor under or pursuant to the Assigned Agreements, and from time to time
furnish to the Designated Note Investor such information and reports regarding
the Assigned Agreements as the Designated Note Investor may reasonably request.
(b) Grantor shall not, unless it has reasonably and in good faith
determined that it has a valid business purpose and upon written notification to
the Designated Note Investor:
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(i) cancel or terminate any Assigned Agreement or consent to or
accept any cancellation or termination thereof;
(ii) amend or otherwise modify any Assigned Agreement or give any
consent, waiver or approval thereunder;
(iii) waive any default under or breach of any Assigned Agreement;
or
(iv) take any other action in connection with any Assigned
Agreement that would impair in any material respect the value of the interest or
rights of Grantor thereunder or that would impair in any material respect the
interest or rights of any Secured Party.
4.8 INSPECTIONS AND VERIFICATION. Upon the occurrence and during the
continuance of an Event of Default, the Designated Note Investor shall have the
right, at Grantor's own cost and expense, to inspect the Collateral, all records
related thereto (and to make extracts and copies from such records) and the
premises upon which any of the other Collateral is located, to discuss Grantor's
affairs with the officers of Grantor and its independent accountants and to
verify under reasonable procedures the validity, amount, quality, quantity,
value, condition and status of, or any other matter relating to, the Collateral,
including, in the case of Accounts or other Collateral in the possession of any
third Person, by contacting Account Debtors or the third person possessing such
other Collateral for the purpose of making such a verification.
4.9 BAILEES, WAREHOUSES AND LEASED PREMISES. Except in the ordinary
course of Grantor's business, no Collateral shall at any time be in the
possession or Control of any warehouseman, bailee or Grantor's agents or
processors or located on any leased premises without the Designated Note
Investor's prior written consent and unless the Designated Note Investor, if the
Designated Note Investor has so requested, has received a Waiver Agreement, or
warehouse receipts or other bailee lien waivers satisfactory to the Designated
Note Investor prior to the commencement of such possession or Control. Grantor
shall, upon the request of the Designated Note Investor, notify any such
warehouseman, bailee, agent, processor or lessor of the Liens granted to the
Secured Parties hereunder, shall instruct such Person to hold all such
Collateral for the Designated Note Investor's account subject to the Designated
Note Investor's instructions and shall obtain a Waiver Agreement or other
acknowledgement satisfactory to the Designated Note Investor from such Person
that such Person holds the Collateral for the Secured Parties' benefit.
4.10 COMMERCIAL TORT CLAIMS. Grantor shall advise the Designated Note
Investor promptly upon Grantor becoming aware, after the date hereof, that it
owns any additional Commercial Tort Claims. With respect to any such Commercial
Tort Claims, Grantor will execute and deliver such documents as the Designated
Note Investor deems necessary to create, perfect and protect the Designated Note
Investor's security interest in such Commercial Tort Claim.
4.11 BANK ACCOUNTS; SECURITIES ACCOUNTS. Upon request by the Designated
Note Investor, Grantor shall enter into an Account Control Agreement with each
financial institution with which Grantor maintains from time to time any Deposit
Account or any Securities Account. Grantor hereby grants to the Designated Note
Investor, a continuing security interest in all such
22
Deposit Accounts and Securities Accounts and all funds and Investment Property
at any time paid, deposited, credited or held in such Deposit Accounts and
Securities Accounts (whether for collection, provisionally or otherwise) or
otherwise in the possession of such financial institutions, and each such
financial institution shall act as the Designated Note Investors' agent in
connection therewith.
4.12 FURTHER ASSURANCES, ETC.(i) Grantor agrees that, from time to time
at its own expense, Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that the Designated Note
Investor may reasonably request, in order to perfect, preserve and protect any
security interest granted or purported to be granted hereby or to enable the
Designated Note Investor to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. With respect to the foregoing and the
grant of the security interest hereunder, Grantor hereby authorizes the
Designated Note Investor to Authenticate and to file one or more financing or
continuation statements, and amendments thereto, and make filings with the
United States Patent and Trademark Office or United States Copyright Office (or
any successor office or any similar office in any other country), in each case
for the purpose of perfecting, continuing, enforcing or protecting the security
interest granted by Grantor, without the signature of Grantor, and naming
Grantor as debtor and the Secured Parties as secured parties. A carbon,
photographic, telecopied or other reproduction of this Agreement, any
Intellectual Property Security Agreement or any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement
where permitted by law. Grantor shall from time to time amend the Schedules
hereto to reflect the addition of Collateral hereunder or to reflect the
disposition of Collateral pursuant to transactions permitted under any
Investment Document; PROVIDED that the Grantor's failure to so amend any such
schedule to reflect the addition of Collateral shall not render the security
interest granted to the Secured Parties in and to such Collateral invalid or
unenforceable. Grantor shall deliver to the Designated Note Investor copies of
such revised Schedules and, upon such delivery, such Schedules shall be deemed
to be the Schedules hereunder.
ARTICLE V
REMEDIES
5.1 REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) Upon receipt of the written direction of the Secured Parties
that hold a majority in outstanding principal amount of the Secured Bridge
Notes, the Designated Note Investor on behalf of the Secured Parties may
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and remedies of
a secured party on default under the U.C.C.
(b) All cash proceeds received by the Designated Note Investor in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral may, in the discretion of the Designated Note Investor,
be held, to the extent permitted under applicable law, by the Designated Note
Investor as additional collateral security for all or any part of the Secured
Obligations, and/or then or at any time thereafter shall be applied (after
payment of any amounts payable to the Designated Note Investor pursuant to
Section 5.2) in whole or in part by the Designated Note Investor for the ratable
benefit of the Secured Parties. Any surplus of such cash
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or cash proceeds held by the Designated Note Investor and remaining after
payment in full of all the Secured Obligations, shall be paid over to Grantor or
to whomsoever may be lawfully entitled to receive such surplus.
(c) Upon receipt of the written direction of the Secured Parties
that hold a majority in outstanding principal amount of the Secured Bridge
Notes, the Designated Note Investor may exercise any and all rights and remedies
of Grantor under or in connection with the Collateral, including the right to
▇▇▇ upon or otherwise collect, extend the time for payment of, modify or amend
the terms of, compromise or settle for cash, credit, or otherwise upon any
terms, grant other indulgences, extensions, renewals, compositions, or releases,
and take or omit to take any other action with respect to the Collateral, any
security therefor, any agreement relating thereto, any insurance applicable
thereto, or any Person liable directly or indirectly in connection with any of
the foregoing, without discharging or otherwise affecting the liability of
Grantor for the Secured Obligations or under this Agreement or any other
Investment Document and the Assigned Agreements or otherwise in respect of the
Collateral, including any and all rights of Grantor to demand or otherwise
require payment of any amount under, or performance of any provision of, any
Collateral.
5.2 INDEMNITY AND EXPENSES. Grantor agrees to indemnify the Designated
Note Investor from and against any and all claims, losses and liabilities
arising out of or resulting from this Agreement and the other Investment
Documents (including enforcement of this Agreement and other Investment
Documents), except claims, losses or liabilities resulting from the Designated
Note Investor's gross negligence or willful misconduct as determined by a final
judgment of a court of competent jurisdiction. Grantor will upon demand pay to
the Designated Note Investor the amount of any and all reasonable expenses,
including the reasonable fees and disbursements of its counsel and of any
experts and Designated Note Investor, which the Designated Note Investor may
incur in connection with the following:
(a) the administration of this Agreement;
(b) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of the
Secured Parties hereunder; or
(d) the failure by Grantor to perform or observe any of the
provisions hereof.
5.3 WAIVERS. Grantor hereby waives any right, to the extent permitted
by applicable law, to receive prior notice of or a judicial or other hearing
with respect to any action or prejudgment remedy or proceeding by the Designated
Note Investor to take possession, exercise control over or dispose of any item
of Collateral where such action is permitted under the terms of this Agreement
or any other Investment Document or by applicable laws or the time, place or
terms of sale in connection with the exercise of the Designated Note Investor's
rights hereunder. Grantor waives, to the extent permitted by applicable laws,
any bonds, security or sureties required by the Designated Note Investor with
respect to any of the Collateral. Grantor also waives any damages (direct,
consequential or otherwise) occasioned by the enforcement of the
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Secured Parties' rights under this Agreement or any other Investment Document,
including, the taking of possession of any Collateral or the giving of notice to
any Account Debtor or the collection of any Receivables Collateral, all to the
extent that such waiver is permitted by laws. Grantor also consents that the
Designated Note Investor, in connection with the enforcement of the Designated
Note Investor' rights and remedies under this Agreement, may enter upon any
premises owned by or leased to it without obligations to pay rent or for use and
occupancy, through self-help, without judicial process and without having first
obtained an order of any court. These waivers and all other waivers provided for
in this Agreement and the other Investment Documents have been negotiated by the
parties and Grantor acknowledges that it has been represented by counsel of its
own choice and has consulted such counsel with respect to its rights hereunder.
ARTICLE VI
THE DESIGNATED NOTE INVESTOR
6.1 APPOINTMENT OF DESIGNATED NOTE INVESTOR BY THE SECURED PARTIES.
(a) Each of the Secured Parties hereby irrevocably appoints,
designates and authorizes ▇▇▇ as agent for such Secured Party to take such
action on behalf of such Secured Party under the provisions of this Agreement
and each other Investment Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Investment Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary contained
elsewhere herein or in any other Investment Document, the Designated Note
Investor shall not have any duties or responsibilities, except those expressly
set forth herein, nor shall the Designated Note Investor have or be deemed to
have any fiduciary relationship with any Secured Party, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Investment Document or otherwise exist
against the Designated Note Investor.
(b) The Designated Note Investor may execute any of its duties
under this Agreement or any other Investment Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel and
other consultants or experts concerning all matters pertaining to such duties.
The Designated Note Investor shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects in the absence of
gross negligence or willful misconduct.
(c) The Designated Note Investor shall not (a) be liable for any
action taken or omitted to be taken by it under or in connection with this
Agreement or any other Investment Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct in connection
with its duties expressly set forth herein), or (b) be responsible in any manner
to any Secured Party for any recital, statement, representation or warranty made
by the Grantor or any officer thereof, contained herein or in any other
Investment Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Designated Note Investor
under or in connection with, this Agreement or any other Investment Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of
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this Agreement or any other Investment Document, or for any failure of the
Grantor or any other party to any Investment Document to perform its obligations
hereunder or thereunder.
(d) Designated Note Investor shall be entitled to rely, and shall
be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Grantor), independent accountants and other experts selected by the Designated
Note Investor. The Designated Note Investor shall be fully justified in failing
or refusing to take any action under any Investment Document unless it shall
first receive such advice or concurrence of the Secured Parties as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Secured Parties against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Designated Note Investor shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Investment Document in accordance with a request or consent of the Secured
Parties holding more than 50% of the outstanding principal amount of the Notes
(unless the consent of all the Secured Parties is required pursuant to SECTION
7.2(A)) and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Secured Parties.
(e) Each Secured Party acknowledges that the Designated Note
Investor has not made any representation or warranty to it, and that no act by
the Designated Note Investor hereafter taken, including any consent to and
acceptance of any assignment or review of the affairs of the Grantor or any
Affiliate thereof, shall be deemed to constitute any representation or warranty
by the Designated Note Investor to any Secured Party as to any matter, including
whether the Designated Note Investor have disclosed material information in
their possession. Each Secured Party represents to the Designated Note Investor
that it has, independently and without reliance upon the Designated Note
Investor and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Grantor and its subsidiaries, and all applicable laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement.
(f) Whether or not the transactions contemplated hereby are
consummated, the Secured Parties shall indemnify upon demand the Designated Note
Investor (to the extent not reimbursed by or on behalf of the Grantor and
without limiting the obligation of the Grantor to do so), pro rata, and hold
harmless the Designated Note Investor from and against any and all Indemnified
Liabilities incurred by it; provided, however, that no Secured Party shall be
liable for the payment to the Designated Note Investor of any portion of such
Indemnified Liabilities to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from the
Designated Note Investor's own gross negligence or willful misconduct; PROVIDED,
HOWEVER, that no action taken in accordance with the directions of the Secured
Parties shall be deemed to constitute gross negligence or willful misconduct for
purposes of this SECTION 10. Without limitation of the foregoing, each Secured
Party shall reimburse the Designated Note Investor upon demand for its ratable
share of any costs or out-of-pocket expenses incurred by the Designated Note
Investor in connection with the preparation, execution, delivery,
administration,
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modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Investment Document, or any
document contemplated by or referred to herein, to the extent that the
Designated Note Investor is not reimbursed for such expenses by or on behalf of
the Grantor.
(g) The Designated Note Investor may resign as Designated Note
Investor upon thirty (30) days notice to the Secured Parties and to the Grantor.
If the Designated Note Investor resigns under this Agreement, within fifteen
(15) days after the delivery by the Designated Note Investor of its notice of
resignation, the Secured Parties shall appoint a successor Designated Note
Investor from any of the other Secured Parties, and shall notify the Grantor of
the identity of and contact information for such successor Designated Note
Investor within five (5) days of such successor Designated Note Investor's
appointment.
(h) The Designated Note Purchaser need not be an Investor, but may
instead be a trust company, bank, or other fiduciary agent reasonably acceptable
to the Company and the Placement Agent.
6.2 APPOINTMENT AS ATTORNEY-IN- FACT.
The Grantor hereby irrevocably constitutes and appoints the Designated
Note Investor and any officer or agent thereof, with full power of substitution,
as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Grantor and in the name of the Grantor
or in its own name, for the purpose of carrying out the terms of this Agreement,
to take, upon the occurrence and during the continuance of any Event of Default,
any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes of
this Agreement. Upon the occurrence and during the continuance of an Event of
Default, the Grantor hereby gives the Designated Note Investor the power and
right, on behalf of the Grantor, without notice to or assent by the Grantor, to
do any or all of the following:
(a) in the name of Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under or in respect of any
Collateral and file any claim or take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Designated Note
Investor for the purpose of collecting any and all such moneys due under or in
respect of any Collateral whenever payable; and
(b) (i) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due thereunder
directly to the Designated Note Investor or as the Designated Note Investor
shall direct; (ii) ask or demand for, collect, and receive payment of and give
receipt for, any and all moneys, claims and other amounts due or to become due
at any time in respect of or arising out of any Collateral; (iii) receive,
collect, sign and endorse any drafts or other instruments, documents and chattel
paper in connection with any of the Collateral; (iv) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any portion thereof and to enforce any
other right in respect of any Collateral; (v) defend any suit, action or
27
proceeding brought against the Grantor with respect to any Collateral; (vi)
settle, compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the Designated Note
Investor may deem appropriate; and (vii) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Designated Note Investor (for the benefit
of the Secured Parties) were the absolute owner thereof for all purposes, and
do, at the option of the Secured Parties and at their expense, at any time, or
from time to time, all acts and things that the Secured Parties deem necessary
to protect, preserve or realize upon the Collateral and the Secured Parties'
security interests therein and to effect the intent of this Agreement, all as
fully and effectively as Grantor might do.
Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section is irrevocable and coupled with an interest.
6.3 SECURED PARTIES MAY PERFORM. If the Grantor fails to perform any
agreement contained herein, the Designated Note Investor may perform, or cause
performance of, such agreement and the reasonable expenses of the Designated
Note Investor incurred in connection therewith shall be payable by Grantor
pursuant to SECTION 6.2.
6.4 DESIGNATED NOTE INVESTOR HAS NO DUTY. (a) In addition to, the
powers conferred on the Designated Note Investor hereunder are solely to protect
its interest (on behalf of the Secured Parties) in the Collateral and shall not
impose any duty on it to exercise any such powers. Neither the Designated Note
Investor nor any of its officers, directors, employees or agents shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of Grantor or any other Person or to take any
other action whatsoever with regard to the Collateral or any part thereof
(including the taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral). Neither the
Designated Note Investor nor any of its officers, directors, employees or agents
shall be responsible to Grantor for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
(b) Grantor assumes all responsibility and liability arising from
or relating to the use, sale or other disposition of the Collateral. The Secured
Obligations shall not be affected by any failure of the Designated Note Investor
to take any steps to perfect the pledge and security interest granted hereunder
or to collect or realize upon the Collateral, nor shall loss or damage to the
Collateral release the Grantor from any Secured Obligations.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.1 INVESTMENT DOCUMENT. (a) This Agreement is an Investment Document
executed pursuant to the Securiteies Purchase Agreement and shall (unless
otherwise expressly indicated herein) be construed, administered and applied in
accordance with the terms and provisions thereof.
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(b) Concurrently herewith Grantor is executing and delivering to
the Designated Note Investor the Pledge Agreement pursuant to which Grantor is
pledging all the certificated Investment Property of Grantor. Such pledges shall
be governed by the terms of the Pledge Agreement and not by this Agreement.
7.2 AMENDMENTS, ETC.; SUCCESSORS AND ASSIGNS.
(a) No amendment to or waiver of any provision of this Agreement
nor consent to any departure by Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Designated Note
Investor at the direction of Secured Parties holding more than 50% of the
outstanding Notes; PROVIDED HOWEVER, that the Desginated Note Investor shall not
agree to any such amendment or waiver which modifies the definition of the
Secured Parties hereunder of the terms of ARTICLE V hereof without a written
direction from each Secured Party and, with respect to any such amendment, by
Grantor, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
(b) Upon the delivery by Grantor of supplements to the Schedules
to this Agreement pursuant to SECTION 4.12 the schedule supplements attached to
each such certificate shall be incorporated into and become a part of and
supplement SCHEDULES I through VII hereto, as appropriate, and the Designated
Note Investor may attach such schedule supplements to such Schedules, and each
reference to such Schedules shall mean and be a reference to such Schedules, as
supplemented pursuant hereto.
(c) This Agreement shall be binding upon Grantor and its
successors, transferees and assigns and shall inure to the benefit the
Designated Note Investor and the Secured Parties and their respective
successors, transferees and assigns; PROVIDED, HOWEVER, that Grantor may not
assign its obligations hereunder without the prior written consent of the
Designated Note Investor.
7.3 ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and mailed, delivered or transmitted
by facsimile to each party hereto at the address set forth in Section 18 of the
Securities Purchase Agreement. All such notices and other communications shall
be deemed to be given or made at the times provided in Section 18 of the
Securities Purchase Agreement.
7.4 SECTION CAPTIONS. Section captions used in this Agreement are for
convenience of reference only, and shall not affect the construction of this
Agreement.
7.5 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace
the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
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7.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
7.7 GOVERNING LAW, ETC. (A) THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE EXTENT
THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES
HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ SITTING IN NEW
YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY SHALL BE BROUGHT, AT THE DESIGNATED NOTE INVESTOR'S OPTION, IN THE
COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF
THOSE COURTS. GRANTOR AND THE GRANTOR IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR OTHER
INVESTMENT DOCUMENT RELATED THERETO. EACH PARTY HERETO WAIVES PERSONAL SERVICE
OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY THE LAW OF SUCH STATE.
7.8 WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY INVESTMENT DOCUMENT OR IN ANY WAY CONNECTED WITH OR
RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH
RESPECT TO ANY INVESTMENT DOCUMENT OR THE INVESTMENT RELATED THERETO, IN EACH
CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT
OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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7.9 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER INVESTMENT DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
OR BY PRIOR OR CONTEMPORANEONS WRITTEN AGREEMENTS. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
[Signature page follows.]
31
IN WITNESS WHEREOF, the Grantor and the Designated Note Investor have
caused this Security Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.
DIOMED, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Chief Executive Officer
DESIGNATED NOTE INVESTOR:
Gibralt US, Inc.,
as the Designated Note Investor
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Authorized Officer