SECOND AMENDED PATENT AND TRADEMARK SECURITY AGREEMENT
EXHIBIT 10.9
SECOND AMENDED PATENT AND TRADEMARK SECURITY AGREEMENT
THIS SECOND AMENDED PATENT AND TRADEMARK SECURITY AGREEMENT (this “Agreement”) is made as of
September 7, 2005, by and among Sutura, Inc., a Delaware corporation (the “Company”), Pandora
Select Partners, L.P., a British Virgin Islands limited partnership (“Pandora”), Whitebox Hedged
High Yield Partners, L.P., a British Virgin Islands limited partnership (“WHHY”), Whitebox
Convertible Arbitrage Partners, L.P., a British Virgin Islands limited partnership (“WCAP”),
Whitebox Intermarket Partners, L.P., a British Virgin Islands limited partnership (“WIP”), and ▇▇▇▇
▇. ▇▇▇▇▇▇ (“▇▇▇▇▇▇”) and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (“▇▇▇▇▇▇”), each residents of the State of Minnesota.
Pandora, WHHY, WCAP, WIP, Kohler and ▇▇▇▇▇▇ are referred to herein individually as a “Secured
Party” and together as the “Secured Parties.”
RECITALS
A. The Company, Pandora, WHHY, WCAP, WIP, Kohler and ▇▇▇▇▇▇ entered into a Purchase Agreement
dated September 17, 2004 (the “Original Purchase Agreement”), pursuant to which Pandora, WHHY,
WCAP, WIP, Kohler and ▇▇▇▇▇▇ each purchased a convertible promissory note and a warrant to purchase
shares of the Company’s common stock (“Sutura Stock”) from Sutura in consideration of a collective
$6,550,000 loan (the “Original Loan”).
B. As a condition to making the Original Loan, the Company pledged to the Secured Parties all
of the Company’s assets pursuant to the terms of a Security Agreement dated September 17, 2004 (the
“Original Security Agreement”). The Original Security Agreement provided, among other things, for
the grant by the Company to the Secured Parties of a first priority security interest in all of the
Company’s property and assets, including, without limitation, its patents and patent applications,
its trademarks, service marks and trade names, and its applications for registration of such
trademarks, service marks and trade names. Pursuant to the Original Security Agreement, the
Company executed and delivered to the Secured Parties a Patent and Trademark Security Agreement
dated September 17, 2004 (the “Original Patent and Trademark Security Agreement”) for filing with
the United States Patent and Trademark Office (the “PTO”), and any other relevant recording systems
in any domestic or foreign jurisdiction, as further evidence of and to effectuate such grant of
security interests in such patents and patent applications, trademarks, service marks and trade
names, and applications for registration of such trademarks, service marks and trade names, and the
other general intangibles described therein.
C. The Company, Pandora, WHHY and WIP entered into a second Purchase Agreement dated March 24,
2005 (the “Second Purchase Agreement”), pursuant to which Pandora, WHHY and WIP each purchased an
additional convertible promissory note and an additional warrant to purchase Sutura Stock from the
Company in consideration of a collective $3,000,000 loan.
D. The Company and the Secured Parties entered into an Amended Security Agreement dated March
24, 2005 (the “March 2005 Security Agreement”), which superseded and replaced the Original Security
Agreement, and an Amended Patent and Trademark Security
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Agreement
dated March 24, 2005 (the “March 2005 Patent and
Trademark Security Agreement”),
which superceded and replaced the Original Patent and Trademark Security Agreement.
E. The Company, Pandora, WHHY and WIP have entered into a third Purchase Agreement dated as of
this date (the “Third Purchase Agreement”), pursuant to which Pandora, WHHY, WCAP and WIP are each
purchasing an additional convertible promissory note and an additional warrant to purchase Sutura
Stock from the Company in consideration of a collective $7,000,000 new loan.
F. The Company and the Secured Parties have entered into a Second Amended Security Agreement
as of this date (the “New Security Agreement”) which supercedes and replaces the March 2005
Security Agreement, and desire to enter into this Agreement which will supercede and replace the
March 2005 Patent and Trademark Security Agreement.
Capitalized terms used herein not otherwise defined herein shall have the same meaning as set
forth in the New Security Agreement.
Accordingly, the Company and Secured Parties hereby agree as follows:
SECTION 1 Security Interest.
(a) As security for the payment and performance of the Obligations (as defined in the New
Security Agreement), the Company hereby grants to each Secured Party a security interest in and
mortgage to all of the Company’s right, title and interest in, to and under the following property,
whether now existing or owned or acquired, developed or arising during the term of this Agreement
(collectively, the “Intellectual Property Collateral”):
(i) all patents and patent applications, domestic or foreign, all licenses relating to any of
the foregoing and all income and royalties with respect to any licenses (including, without
limitation, such patents and patent applications as described in Schedule A hereto), all rights to
▇▇▇ for past, present or future infringement thereof, all rights arising therefrom and pertaining
thereto and all reissues, divisions, continuations, renewals, extensions and continuations-in-part
thereof;
(ii) all state (including common law), federal and foreign trademarks, service marks and trade
names, URLs and domain names, and applications for registration of such trademarks, service marks
and trade names, URLs and domain names, all licenses relating to any of the foregoing and all
income and royalties with respect to any licenses (including, without limitation, such marks, names
and applications as described in Schedule B hereto), whether registered or unregistered and
wherever registered, all rights to ▇▇▇ for past, present or future infringement or unconsented use
thereof, all rights arising therefrom and pertaining thereto and all reissues, extensions and
renewals thereof; and
(iii) the entire goodwill of or associated with the businesses now or hereafter conducted by
the Company connected with and symbolized by any of the aforementioned properties and assets;
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(iv) all general intangibles (as defined in the UCC); and
(v) all products and proceeds of any and all of the foregoing.
(b) This Agreement shall create a continuing security interest in the Intellectual Property
Collateral which shall remain in effect until terminated in accordance with Section 16 hereof.
(c) Notwithstanding the foregoing provisions of this Section 1, the grant of a security
interest as provided herein shall not extend to, and the term “Intellectual Property Collateral”
shall not include, any general intangibles of the Company (whether owned or held as licensee or
lessee, or otherwise), to the extent that (i) such general intangibles are not assignable or
capable of being encumbered as a matter of law or under the terms of the license, lease or other
agreement applicable thereto (but solely to the extent that any such restriction shall be
enforceable under applicable law), without the consent of the licensor or lessor thereof or other
applicable party thereto and (ii) such consent has not been obtained.
SECTION 2 Further Assurances; Appointment of Secured Party as Attorney-in-Fact. The
Company at its expense shall execute and deliver, or cause to be executed and delivered, to Secured
Parties any and all documents and instruments reasonably necessary to perfect and continue
perfected, maintain the priority of or provide notice of such Secured Party’s security interest in
the Intellectual Property Collateral and to accomplish the purposes of this Agreement. Each
Secured Party shall have the right to, in the name of the Company, or in the name of such Secured
Party or otherwise, without notice to or assent by the Company, and the Company hereby irrevocably
constitutes and appoints each Secured Party (or any agent designated by it) acting as the Company’s
true and lawful attorney-in-fact with full power and authority, to sign the name of the Company on
all or any of such documents or instruments and perform all other acts that such Secured Party
deems necessary or advisable in order to perfect or continue to perfect, maintain the priority or
enforceability of or provide notice of such Secured Party’s security interest in, the Intellectual
Property Collateral. Following the occurrence of an Event of Default, each Secured Party shall
have the right to, in the name of the Company, or in the name of such Secured Party or otherwise,
to (A) maintain, preserve and protect the Intellectual Property Collateral and to accomplish the
purposes of this Agreement (after the occurrence of any Event of Default), (B) to defend, settle,
adjust or institute any action, suit or proceeding with respect to the Intellectual Property
Collateral (after the occurrence of any Event of Default), (C) to assert or retain any rights under
any license agreement for any of the Intellectual Property Collateral, including without limitation
any rights of the Company arising under Section 365(n) of the Bankruptcy Code (after the occurrence
of any Event of Default), and (D) to execute any and all applications, documents, papers and
instruments for Secured Party to use the Intellectual Property Collateral, to grant or issue any
exclusive or non-exclusive license or sub-license with respect to any Intellectual Property
Collateral, and to assign, convey or otherwise transfer title in or dispose of the Intellectual
Property Collateral (after the occurrence of any Event of Default); provided, however, that in no
event shall Secured Party have the unilateral power, prior to the occurrence and continuation of an
Event of Default, to assign any of the Intellectual Property Collateral to any Person, including
itself, without the Company’s written consent. Solely for purposes of the foregoing, the Company
appoints each Secured Party to act as the Company’s true and lawful attorney-in-fact, effective on the occurrence of an Event of Default, with full
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power and authority to execute any and all other documents and instruments, and to perform any and
all acts and things for and on behalf of the Company, which are necessary or advisable. The power
of attorney set forth in this Section 3, being coupled with an interest is irrevocable so long as
this Agreement shall not have terminated in accordance with Section 16.
SECTION 3 Future Rights. Except as otherwise expressly agreed to in writing by Secured
Parties, if and when, during the term of this Agreement, the Company shall obtain rights to any new
patentable inventions or any new trademarks, or become entitled to the benefit of any of the
foregoing, or obtain rights or benefits with respect to any reissue, division, continuation,
renewal, extension or continuation-in-part of any patents or trademarks, or any improvement of any
patent, the provisions of Section 1 shall automatically apply thereto and the Company shall give to
Secured Parties reasonable notice thereof. The Company shall take commercially reasonable steps to
ensure the validity, perfection, priority and enforceability of the security interests of each
Secured Party in such future acquired Intellectual Property Collateral; provided, however, that the
Company shall not be required to register any patents or trademarks with the PTO except to the
extent consistent with the Company’s past and commercially feasible practices.
SECTION 4 Secured Party’s Duties. Notwithstanding any provision contained in this
Agreement, each Secured Party shall have no duty to exercise any of the rights, privileges or
powers afforded to it and shall not be responsible to the Company or any other Person for any
failure to do so or delay in doing so. Except for the accounting for moneys actually received by
such Secured Party hereunder or in connection herewith, each Secured Party shall have no duty or
liability to exercise or preserve any rights, privileges or powers pertaining to the Intellectual
Property Collateral.
SECTION 5 Representations and Warranties. The Company represents and warrants to each
Secured Party as of the date of this Agreement that:
(a) A true and correct list of all of the existing Intellectual Property Collateral consisting
of U.S. and foreign patents and patent applications and/or registrations owned by the Company, in
whole or in part, is set forth in Schedule A.
(b) A true and correct list of all of the existing Intellectual Property Collateral consisting
of U.S. trademarks, trademark registrations and/or applications owned by the Company, in whole or
in part, is set forth in Schedule B.
(c) To the Company’s knowledge, all patents, trademarks, service marks and trade names of the
Company are subsisting and have not been adjudged invalid or unenforceable in whole or in part.
(d) To the Company’s knowledge, all maintenance fees required to be paid on account of any
patents or trademarks of the Company have been timely paid for maintaining such patents and trademarks in force, and, to the Company’s knowledge, each of the patents and trademarks
constituting part of the Intellectual Property Collateral is valid and enforceable.
(e) No material infringement or unauthorized use presently is being made of any Intellectual
Property Collateral by any Person.
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(f) To the Company’s knowledge, the Company is the sole and exclusive owner of the
Intellectual Property Collateral and the past, present and contemplated future use of such
Intellectual Property Collateral by the Company has not, does not and will not infringe or violate
any right, privilege or license agreement of or with any other Person.
SECTION 6 Covenants. So long as any of the Obligations remain unsatisfied or until this
Agreement has terminated pursuant to Section 16 hereof:
(a) The Company will appear in and defend any action, suit or proceeding which may affect to a
material extent its title to, or each Secured Party’s rights or interest in, the Intellectual
Property Collateral.
(b) The Company will not knowingly allow or suffer any Intellectual Property Collateral to
become abandoned, nor any registration thereof to be terminated, forfeited, expired or dedicated to
the public without the prior written consent of Secured Parties.
(c) The Company will take commercially reasonable action to prosecute all applications for
patents and trademarks (subject to the advice of trademark counsel), and file and prosecute any and
all continuations, continuations-in-part, applications for reissue, applications for certificate of
correction and like matters as shall be reasonable and appropriate in accordance with prudent
business practice, and promptly pay any and all maintenance, license, registration and other fees,
taxes and expenses incurred in connection with any Intellectual Property Collateral.
SECTION 7 Secured Party’s Rights and Remedies.
(a) Each Secured Party shall have all rights and remedies available to it under the New
Security Agreement and applicable law with respect to the security interests in any of the
Intellectual Property Collateral or any other collateral. The Company agrees that such rights and
remedies include, but are not limited to, the right of Secured Party as a secured party to sell or
otherwise dispose of its collateral after default pursuant to the UCC. The Company agrees that
Secured Party shall at all times have such royalty free licenses, to the extent permitted by law,
for any Intellectual Property Collateral that shall be reasonably necessary to permit the exercise
of any of Secured Party’s respective rights or remedies upon or after the occurrence of an Event of
Default and shall additionally have the right to license and/or sublicense any Intellectual
Property Collateral, whether general, special or otherwise, and whether on an exclusive or a
nonexclusive basis, any of the Intellectual Property Collateral, throughout the world for such term
or terms, on such conditions, and in such manner, as such Secured Party in its sole discretion
shall determine in connection with the exercise of any of such rights or remedies. In addition to
and without limiting any of the foregoing, upon the occurrence and during the continuance of an Event of Default, each Secured Party shall have the right but shall in no
way be obligated to bring suit, or to take such other action as such Secured Party deems necessary
or advisable, in the name of the Company or such Secured Party, to enforce or protect any of the
Intellectual Property Collateral, in which event the Company shall, at the request of such Secured
Party, do any and all lawful acts and execute any and all documents required by such Secured Party
in aid of such enforcement. To the extent that Secured Party shall elect not to bring suit to
enforce such Intellectual Property Collateral, the Company agrees to use all reasonable measures,
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whether by action, suit, proceeding or otherwise, to prevent the infringement, misappropriation or
violations thereof by others and for that purpose agrees take commercially reasonable steps to
maintain any action, suit or proceeding against any Person necessary to prevent such infringement,
misappropriation or violation.
(b) The cash proceeds actually received from the sale or other disposition or collection of
Intellectual Property Collateral, and any other amounts received in respect of the Intellectual
Property Collateral the application of which is not otherwise provided for herein, shall be applied
as provided in the Security Agreement.
SECTION 8 Notices. All notices and other communications hereunder shall be given as
provided in the Security Agreement.
SECTION 9 No Waiver; Cumulative Remedies. No failure on the part of each Secured Party to
exercise, and no delay in exercising, any right, remedy, power or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights and remedies under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be available to each
Secured Party.
SECTION 10 Costs and Expenses. The Company agrees to pay on demand all reasonable costs
and expenses of each Secured Party, including reasonable attorneys’ fees, in connection with the
enforcement or attempted enforcement of, and preservation of any rights or interests under, this
Agreement, and the assignment, sale or other disposal of any of the Intellectual Property
Collateral.
SECTION 11 Binding Effect. This Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties thereto and their respective successors and assigns.
SECTION 12 Governing Law. This Agreement shall be governed by, and construed in accordance
with, the law of the State of Minnesota, except to the extent that the validity or perfection of
the security interests hereunder in respect of any Intellectual Property Collateral are governed by
federal law and except to the extent that Secured Parties shall have greater rights or remedies under federal law, in which case
such choice of Minnesota law shall not be deemed to deprive Secured Parties of such rights and
remedies as may be available under federal law.
SECTION 13 Amendment. This Agreement shall not be amended except by the written agreement
of the parties.
SECTION 14 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable laws and regulations.
If, however, any provision of this Agreement shall be prohibited by or invalid under any such law
or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so
modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity
without affecting the remaining provisions of this Agreement, or the validity or effectiveness of
such provision in any other jurisdiction.
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SECTION 15 Counterparts. This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute but one and the same
agreement.
SECTION 16 Termination. Upon payment and performance in full of all Obligations, this
Agreement shall terminate and Secured Parties shall promptly execute and deliver to the Company
such documents and instruments reasonably requested by the Company as shall be necessary to
evidence termination of all security interests given by the Company to Secured Parties hereunder,
including cancellation of this Agreement by written notice from Secured Parties to the PTO;
provided, however, that the obligations of the Company under Section 10 hereof shall survive such
termination.
SECTION 17 New Security Agreement.
The Company acknowledges that the rights and remedies
of each Secured Party with respect to the security interests in the Intellectual Property
Collateral granted hereby are more fully set forth in the New Security Agreement and all such
rights and remedies are cumulative.
SECTION 18 No Inconsistent Requirements. The Company acknowledges that this Agreement and
the New Security Agreement may contain covenants and other terms and provisions variously stated
regarding the same or similar matters, and the Company agrees that all such covenants, terms and
provisions are cumulative and all shall be performed and satisfied in accordance with their
respective terms.
SECTION 19 Conflicts. In the event of any conflict or inconsistency between this Agreement
and the New Security Agreement, the terms of this Agreement shall control.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned have hereunto affixed their signatures.
| The Company: | Secured Parties: | |||||||
| Sutura, Inc. | Pandora Select Partners, L.P. | |||||||
By
|
By | |||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President and | ||||||||
| Chief Executive Officer | Its | |||||||
| Whitebox Hedged High Yield Partners, L.P. | ||||||||
| By | ||||||||
| Its | ||||||||
| Whitebox Convertible Arbitrage Partners, L.P. | ||||||||
| By | ||||||||
| Its | ||||||||
| Whitebox Intermarket Partners, L.P. | ||||||||
| By | ||||||||
| Its | ||||||||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||||
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SCHEDULE A
to
| 1. | Issued U.S. Patents of the Company |
| PATENT # | ISSUE DATE | TITLE | ||||||
1.
|
5860990 | 01/19/1999 | METHOD AND APPARATUS FOR SUTURING | |||||
2.
|
6117144 | 09/12/2000 | SUTURING DEVICE AND METHOD FOR SEALING AN OPENING IN A BLOOD VESSEL OR OTHER BIOLOGICAL STRUCTURE | |||||
3.
|
5820631 | 10/13/1998 | DEVICE AND METHOD FOR SUTURING TISSUE ADJACENT TO A BLOOD VESSEL | |||||
4.
|
6733509 | 05/11/2004 | SUTURE CUTTER | |||||
5.
|
6245079 | 06/12/2001 | SUTURING DEVICE AND METHOD FOR SEALING AN OPENING IN A BLOOD VESSEL OR OTHER BIOLOGICAL STRUCTURE | |||||
6.
|
6551331 | 04/22/2003 | SUTURING DEVICE AND METHOD FOR SEALING AN OPENING IN A BLOOD VESSEL OR OTHER BIOLOGICAL STRUCTURE | |||||
7.
|
6262052 | 05/13/2003 | SUTURING DEVICE AND METHOD | |||||
| 2. | Pending U.S. Patent Applications of the Company |
| REFERENCE | TITLE | |
1.
|
SUTURING DEVICE AND METHOD FOR SEALING AN OPENING IN A BLOOD VESSEL OR OTHER BIOLOGICAL STRUCTURE | |
2.
|
SUTURING DEVICE AND METHOD | |
3.
|
SUTURE CUTTER |
| 3. | Issued International Patents of the Company |
| COUNTRY | NUMBER | DATE | TITLE | |||||
1. |
SCHEDULE A - PAGE 1
| 4. | Pending International Patent Applications of the Company |
| REFERENCE | COUNTRY | TITLE | ||
1.
|
CA | SUTURING DEVICE FOR SEALING AN OPENING IN A BLOOD VESSEL | ||
2.
|
CN | SUTURING DEVICE FOR SEALING AN OPENING IN A BLOOD VESSEL | ||
3.
|
EP | SUTURING DEVICE FOR SEALING AN OPENING IN A BLOOD VESSEL OR OTHER BIOLOGICAL STRUCTURE | ||
4.
|
HK | SUTURING DEVICE FOR SEALING AN OPENING IN A BLOOD VESSEL | ||
5.
|
JP | SUTURING DEVICE FOR SEALING AN OPENING IN A BLOOD VESSEL OR OTHER BIOLOGICAL STRUCTURE | ||
6.
|
AU | SUTURING DEVICE FOR SEALING AN OPENING IN A BLOOD VESSEL | ||
7.
|
JP | KNOT PUSHER |
SCHEDULE A - PAGE 2
SCHEDULE B
To
| 1. | Trademarks of the Company Registered with USPTO |
Sutura®
SuperStich®
| 2. | Unregistered Marks |
A. BECAUSE CLOSURE SHOULD BE THE SIMPLEST PART OF THE PROCEDURE — Serial No.
76/070659
B. SIMPLIFYING CLOSURE WITH SURGICAL PRECISION — Serial No. 76/070657586739.3