SECOND AMENDED AND RESTATED SECURITY AGREEMENT
EXHIBIT
4.3
SECOND
AMENDED AND RESTATED
THIS
SECOND AMENDED AND RESTATED
SECURITY AGREEMENT (this “Agreement”) is made as of
August 30, 2007, by and among SDS CAPITAL GROUP SPC, LTD., as
collateral agent for the holders (the “Holders”) of
the Notes (as defined below) (in such capacity, the “Collateral
Agent”), and MATRITECH, INC., a Delaware corporation (together
with its successors and permitted assigns, the
“Borrower”). The Collateral Agent and the
Holders are hereinafter collectively referred to as the “Secured
Party.”
Background
A. Borrower
and certain Holders entered into that certain Securities Purchase Agreement
dated as of January 13, 2006 (as the same may be amended, restated, modified,
supplemented and/or replaced from time to time, the “Series
A Purchase Agreement”),
pursuant to which Borrower issued its 15% Secured Convertible Promissory Notes
to such Holders (the “Series A Note Holders”) in the
original aggregate principal amount of $6,997,960 (as the same may be amended,
restated, modified, supplemented and/or replaced from time to time, the
“Series
A Notes”).
B. In
order to induce the Series A Note Holders to purchase the Series A Notes,
Borrower executed and delivered to the Collateral Agent a Security Agreement,
dated as of January 13, 2006 (the “Initial Security
Agreement”), pursuant to which Borrower granted to the Collateral
Agent, for the benefit of the Series A Note Holders, a perfected security
interest in certain property of Borrower to secure the prompt payment,
performance and discharge in full of all of Borrower’s obligations under the
Series A Notes.
C. In
connection with the Series A Purchase Agreement, concurrently therewith,
Borrower and the Collateral Agent entered into a Contingent License Agreement,
dated as of January 13, 2006 (the “Initial
Contingent License Agreement”), pursuant
to which Borrower granted to the Collateral Agent, for the benefit of the Series
A Note Holders, a contingent license under the Matritech Patent Rights, the
Matritech Trademark Rights and the MIT Patent Rights (each as defined therein)
on the terms and conditions set forth therein.
D. Borrower
and certain Holders entered into a Securities Purchase Agreement, dated as
of
January 22, 2007 (as the same may be amended, restated, modified, supplemented
and/or replaced from time to time, the “Series
B Purchase Agreement”),
pursuant to which Borrower issued its Series B 15% Secured Convertible
Promissory Notes to such Holders (the “Series B Note
Holders”) in the original aggregate principal amount of up to
$4,500,000 (as the same may be amended, restated, modified, supplemented and/or
replaced from time to time, the “Series
B Notes”).
E. In
connection with the Series B Purchase Agreement, concurrently therewith, the
holders of a majority of outstanding principal balance of the Series A Notes
consented to the
issuance
of the Series B Notes and directed the Collateral Agent to amend and restate
the
Initial Security Agreement and Initial Contingent License Agreement to enable
the Series B Note Holders to have a pari passu position with the Series
A Note Holders as to the security interest and license granted under such
agreements, and the Initial Security Agreement and Initial Contingent License
Agreement were so amended and restated (as heretofore amended, the
“Existing Security Agreement” and
“Existing Contingent License,”
respectively).
F. Concurrently
herewith, Borrower and certain Holders are entering into a Securities Purchase
Agreement, dated as of the date hereof (as the same may be amended, restated,
modified, supplemented and/or replaced from time to time, the
“Series C Purchase
Agreement”, and, together with the Series A Purchase Agreement and
the Series B Purchase Agreement, the “Purchase
Agreements”) pursuant to which Borrower is issuing Series C 15%
Secured Promissory Notes to such Holders (the “Series C Note
Holders” and together with the Series A Note Holders and the
Series B Note Holders, the “Holders”) in the original
aggregate principal amount of $3,500,000 (as the same may be amended, restated,
modified, supplemented and/or replaced from time to time, the
“Series
C Notes” and together with
the Series A Notes and Series B Notes, the
“Notes”).
G. Concurrently
herewith, the holders of a majority of outstanding principal balance of the
Series A Notes, and the holders of a majority of outstanding principal balance
of the Series B Notes, have consented to the issuance of the Series C Notes
and
directed the Collateral Agent to amend and restate the Existing Security
Agreement and Existing Contingent License Agreement to enable the Series C
Note
Holders to have a pari passu position with the Series A Note Holders
and the Series B Note Holders as to the security interest and license granted
under such agreements.
H. In
connection with the Series C Purchase Agreement, concurrently therewith,
Borrower and Collateral Agent are amending and restating the Existing Contingent
License Agreement (as the same may be amended, restated, modified, supplemented
and/or replaced from time to time, the “Contingent License
Agreement”) to, among other things, grant to the Collateral Agent,
for the benefit of all the Holders, a contingent license under the Matritech
Patent Rights, the Matritech Trademark Rights and the MIT Patent Rights (each
as
defined therein), on the terms and conditions set forth therein.
I. In
order to induce the Series C Note Holders to extend credit to the Borrower
under
and pursuant to the Series C Notes, Borrower agrees to amend and restate the
Existing Security Agreement in order to grant to the Collateral Agent, for
the
benefit of itself and the Holders, a perfected security interest in certain
property of Borrower to secure the prompt payment, performance and discharge
in
full of all of Borrower’s obligations under the Notes, all on the terms and
conditions set forth herein.
Accordingly,
in consideration of the
foregoing and the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to amend and restate the Existing
Security Agreement so that, as amended and restated, it reads in its entirety
as
provided herein:
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1.
DEFINITIONS. Capitalized
terms used but not otherwise defined herein shall have the meanings assigned
to
such terms in the respective Purchase Agreements or Notes, as
applicable. The following terms, as used herein, shall have the
following meanings:
“Account”
shall
be used herein as defined in the Uniform Commercial Code.
“Collateral”
shall have the meaning ascribed to such term in Section 3.
“Document”
shall be used herein as defined in the Uniform Commercial Code.
“Effective
Date” means the date of this Agreement.
“Equipment”
shall be used herein as defined in the Uniform Commercial Code, but in any
event
shall include, but not be limited to, tangible personal property held by
Borrower for use primarily in business and shall include equipment, machinery,
furniture, vehicles, fixtures, furnishings, dyes, tools, and all accessories
and
parts now or hereafter affixed thereto as well as all attachments, replacements,
substitutes, accessories, additions and improvements to any of the foregoing,
but Equipment shall not include Inventory.
“Event
of
Default” means any Event of Default described in (1) Sections A(i),
(ii) or (iii) of Article VI of the Series C Notes; (2) Sections A(i), (vi)
or
(vii) of Article VI of the Series B Notes; or (3) Sections A(i), (vi) or (vii)
of Article VI of the Series A Notes.
“General
Intangibles” shall be used herein as defined in the Uniform
Commercial Code but in any event shall include, without limitation, payment
intangibles, contract rights (other than Accounts), franchises, licenses, choses
in action, books, records, customer lists, tax, insurance and other kinds of
refunds, patents, trademarks, trade names, service marks, slogans, trade dress,
copyrights, other intellectual property rights and applications for intellectual
property rights, goodwill, plans, licenses, software (to the extent it does
not
constitute Goods) and other rights in personal property.
“Goods”
shall
be used herein as defined in the Uniform Commercial Code.
“Intellectual
Property” means, collectively, all patents, trademarks, service
marks, trade dress, trade names and corporate names, and copyrights, and any
registrations, applications and renewals for any of the foregoing, relating
directly or indirectly, in whole or in part, to the NMP22 Product
Line.
“Inventory”
shall be used herein as defined in the Uniform Commercial Code but in any event
shall include, but not be limited to, tangible personal property held by or
on
behalf of Borrower (or in which Borrower has an interest in mass or a joint
or
other interest) for sale or lease or to be furnished under contracts of service,
tangible personal property which Borrower has so leased or furnished, and raw
materials, work in process and materials used, produced or consumed in
Borrower’s business, and shall include tangible personal property returned to
Borrower by the purchaser following a sale thereof by Borrower and tangible
personal property represented by Documents. All equipment,
accessories and parts at any time attached or added to items of Inventory or
used in connection therewith shall be deemed to be part of the
Inventory.
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“Licensed
Assets” means, collectively, the Matritech Patent Rights, the
Matritech Trademark Rights and the MIT Patent Rights (each as defined in the
Contingent License Agreement) and any other Intellectual Property from time
to
time subject to the grant of a license in favor of the Collateral Agent pursuant
to the Contingent License Agreement.
“Lien”
means
any lien, mortgage, security interest, chattel mortgage, pledge or other
encumbrance (statutory or otherwise) of any kind securing satisfaction or
performance of an obligation, including any agreement to give any of the
foregoing, any conditional sales or other title retention agreement, any lease
in the nature thereof, and the filing of or the agreement to give any financing
statement under the Code of any jurisdiction or similar evidence of any
encumbrance, whether within or outside the United States.
“NMP22
Business” means the business of Borrower relating to the NMP22
Product Line, including, without limitation, the development, manufacture,
marketing, sale, distribution and licensing of the NMP22 Products.
“NMP22
Product
Line” means the Borrower’s product line of diagnostic devices
designed to detect bladder cancer, including, without limitation, the Point
of
Care NMP22® BladderChek® Test and NMP22® Test Kit.
“NMP22
Products” means the Point of Care NMP22® BladderChek® Test, the
NMP22® Test Kit and any other products included from time to time in the NMP22
Product Line.
“Organizational
Documents” mean, with respect to any Person other than a natural
person, the documents by which such Person was organized (such as a certificate
of incorporation, certificate of limited partnership or articles of
organization, and including, without limitation, any certificates of designation
for preferred stock or other forms of preferred equity) and which relate to
the
internal governance of such Person (such as bylaws, a partnership agreement
or
an operating, limited liability or members agreement).
“Permitted
Liens” means, collectively, all of the following Liens: (a) Liens
securing indebtedness described in Article VIII(C)(v)(a) of the Series A Notes,
the Series B Notes and the Series C Notes (i.e., indebtedness incurred to
finance receivables in an amount at any time not to exceed 80% of the
outstanding receivables owed to the Borrower at such time), (b) Liens securing
indebtedness described in Article VIII(C)(v)(b) of the Series A Notes, the
Series B Notes and the Series C Notes (i.e., equipment purchase and lease
financing in an amount at any time not to exceed $200,000), provided that
no such Liens shall extend to or cover any property other than the leased
property or equipment purchased by proceeds of such permitted financing; (c)
Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings and for which Borrower maintains adequate reserves, (d) Liens for
mechanics and other similar Liens not delinquent, and (e) Liens to secure
payment of workers’ compensation, employment insurance, old age pensions, social
security or other like obligations incurred in the ordinary course of
business.
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“Person”
means
any individual, corporation, partnership, limited liability company, trust,
unincorporated association, business, or other legal entity, and any government
or any governmental agency or political subdivision thereof.
“Proceeds”
shall be used herein as defined in the Uniform Commercial Code but, in any
event, shall include, but not be limited to, (a) any and all proceeds of any
insurance (whether or not Collateral Agent is named as the loss payee thereof),
indemnity, warranty or guaranty payable to Borrower or Collateral Agent from
time to time with respect to any of the Collateral, (b) any and all payments
(in
any form whatsoever) made or due and payable to Borrower from time to time
in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any Governmental Authority
(or any Person acting under color of Governmental Authority), (c) any and all
amounts received when Collateral is sold, leased, licensed, exchanged, collected
or disposed of, (d) any rights arising out of Collateral, and (e) any and all
other amounts from time to time paid or payable under or in connection with
any
of the Collateral.
“Secured
Obligations” means all of Borrower’s obligations under the Notes,
in each case, whether now or hereafter existing, voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any
part
of such payment is avoided or recovered directly or indirectly from Secured
Party as a preference, fraudulent transfer or otherwise as such obligations
may
be amended, supplemented, converted, extended or modified from time to
time. Without limiting the generality of the foregoing, the term
“Secured Obligations” shall include, without limitation: (i) principal of, and
interest on the Notes; and (ii) all amounts (including but not limited to
post-petition interest) in respect of the foregoing that would be payable but
for the fact that the obligations to pay such amounts are unenforceable or
not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Borrower.
“Uniform
Commercial
Code” shall mean the Uniform Commercial Code in effect on the date
hereof and as amended from time to time, and as enacted in the State of Delaware
or in any state or states which, pursuant to the Uniform Commercial Code as
enacted in the State of Delaware, has jurisdiction with respect to all, or
any
portion of, the Collateral or this Agreement, from time to time. It
is the intent of the parties that the definitions set forth above should be
construed in their broadest sense so that Collateral will be construed in its
broadest sense. Accordingly if there are, from time to time, changes
to defined terms in the Uniform Commercial Code that broaden the definitions,
they are incorporated herein and if existing definitions in the Uniform
Commercial Code are broader than the amended definitions, the existing ones
shall be controlling. Similarly, where the phrase “as defined in the
Uniform Commercial Code, but in any event shall include, but not be limited
to .
. .” is used above, it means as defined in the Uniform Commercial
Code except that if any of the enumerated types of items specified thereafter
would not fall within the Uniform Commercial Code definition, they shall
nonetheless be included in the applicable definition for purposes of this
Agreement.
2.
LIEN
PRIORITIES; PARI PASSU RANKING. The Collateral Agent and each
Holder agree as amongst themselves that, notwithstanding any provision of the
Uniform
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Commercial
Code, any applicable law or decision, any Note, the Existing Security Agreement,
any Purchase Agreement or any other Transaction Document to the
contrary:
(a) the
Collateral Agent and the Holders shall have a valid and perfected security
interest in and Lien on the Collateral and all proceeds thereof, subject only
to
Permitted Liens, to secure payment and performance of the Secured Obligations,
and such security interest and Lien shall be pari passu in all respects as
amongst the Collateral Agent and the Holders, notwithstanding the date, time,
method, manner or order of creation or perfection of the Liens granted to the
Collateral Agent, any Series A Note Holder, any Series B Note Holder or any
Series C Note Holder, notwithstanding any defect or deficiency in, or failure
to
perfect such Liens, or whether the Collateral Agent or any other Secured Party
holds possession of all or any part of the Collateral, or whether any such
Lien
was granted prior to or after commencement of any insolvency, bankruptcy or
similar proceeding of Borrower;
(b) the
Series A Notes, Series B Notes and Series C Notes shall rank pari passu
in right of payment with each other; and
(c) all
Proceeds of Collateral shall be paid to the Collateral Agent, to be paid or
distributed as follows: (i) first, to the Collateral Agent to payment of that
portion of the Secured Obligations constituting fees, expenses (including,
without limitation, expenses related to attorneys’ fees and other professionals’
fees), indemnities and other amounts due to the Collateral Agent in its capacity
as such; (ii) second, to the Series A Note Holders, Series B Note Holders and
Series C Note Holders, ratably according to the aggregate amounts remaining
unpaid on account of the Secured Obligations owing to each such Holder, to
the
extent necessary to pay in full all Secured Obligations remaining unpaid; and
(iii) third, any remainder shall be paid to Borrower or as a court of competent
jurisdiction may direct.
3.
GRANT
OF SECURITY INTEREST. As security for the payment and performance
of the Secured Obligations, effective as of the Effective Date, Borrower hereby
affirms, pledges and hypothecates to the Collateral Agent, for the benefit
of
the Holders, and creates in favor of the Collateral Agent, for the benefit
of
the Holders, a security interest in and to, all of Borrower’s right, title and
interest in and to all the following property, in all its forms, in each case
whether now or hereafter existing, whether now owned or hereafter acquired,
created or arising, and wherever located (collectively, but without duplication,
the “Collateral”):
(a) All
Inventory, Equipment and General Intangibles used by Borrower in connection
with, or otherwise relating to, the NMP22 Product Line, including, without
limitation:
(i)
any and all NMP22 Products and
components thereof (including, without limitation, reagents and cell lines)
held
by or on behalf of Borrower (or in which Borrower has an interest in mass or
a
joint or other interest) for sale or lease or to be furnished under contracts
of
service, any and all NMP22 Products which Borrower has so leased or furnished,
and any and all raw materials, work in process and materials used, produced
or
consumed to manufacture or produce the NMP22 Products,
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and
any
and all written materials related to the NMP22 Products (including, without
limitation, the written materials listed on Schedule 5);
(ii)
any and all Equipment (including,
without limitation, plastic molds and the Equipment listed on Schedule 5)
used by Borrower in the manufacture, production or processing of NMP22 Products,
and all accessories and parts now or hereafter affixed thereto as well as all
attachments, replacements, substitutes, accessories, additions and improvements
to any of the foregoing;
(iii)
any and all contract rights of
Borrower in or arising under any contract or agreement of Borrower relating
directly or indirectly, in whole or in part, to the NMP22 Product Line,
including without limitation Borrower’s agreements with Unotech Diagnostics,
Inc., Xxxxxx Laboratories and Inverness Medical
Innovations, Inc.; and
(iv)
any and all cell lines used by
Borrower in connection with the NMP22 Product Line, and any and all written
know-how, protocols and other printed materials referring or relating to the
culturing and propagation of such cell lines; and
(b) All
Proceeds of any and all of the foregoing.
Notwithstanding
the foregoing, it is the intention of the parties to the Agreement that the
security interest granted herein shall not extend to, and the term “Collateral”
shall exclude, (1) any and all (A) Intellectual Property utilized or to be
utilized outside the Field (as defined in the Contingent License Agreement),
but
only if such Intellectual Property is subject to the grant of a license in
favor
of the Collateral Agent for use inside the Field pursuant to the Contingent
License Agreement, and/or (B) other Licensed Assets; (2) the Borrower’s
trademarks in the name “Matritech” and any registrations, applications and
renewals for the foregoing, (3) any and all general laboratory Equipment and
materials, and (4) any item of General Intangibles that is now or hereafter
held
by Borrower, solely in the event and to the extent that: (i) as the
result of the security interest granted herein, Borrower’s rights in or with
respect to such item of General Intangibles would be forfeited or would become
void, voidable, terminable, or revocable, or, with respect to any item of
General Intangibles that is now or hereafter held by Borrower as licensee or
lessee, if Borrower would be deemed to have breached, violated, or defaulted
such underlying license, lease or other agreement that governs such item of
General Intangibles; (ii) any such restriction shall be effective and
enforceable under applicable law; and (iii) any such forfeiture, voidness,
voidability, terminability, revocability, breach, violation, or default cannot
be remedied by Borrower using its commercially reasonable efforts;
provided, however, that the security interest granted herein shall
extend to, and the term “Collateral” shall include, (y) any and all proceeds of
such item of General Intangibles to the extent that the granting of a security
interest in such proceeds is not so restricted, and (z) upon any such licensor,
lessor or other applicable party’s consent with respect to any such otherwise
excluded item of General Intangibles being obtained, thereafter such item of
General Intangibles as well as any proceeds thereof that might theretofore
have
been excluded from the grant of security interest contained herein and the
term
“Collateral”.
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4.
REPRESENTATIONS
AND WARRANTIES OF BORROWER. Borrower represents and warrants to
Secured Party as follows. The following representations and
warranties shall survive execution of this Agreement and shall not be affected
or waived by any examination or inspection made by Secured Party:
(b) Authority
to Execute Agreement; Binding Agreement. Borrower has the
corporate or other power to execute, deliver and perform its obligations under
this Agreement (including, without limitation, the right and power to give
Secured Party a security interest in the Collateral) and has taken all necessary
corporate and other action to authorize the execution, delivery and performance
of this Agreement. This Agreement has been duly executed by
Borrower. This Agreement constitutes the legal, valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its
terms except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization and similar laws of general application relating
to
or affecting the rights and remedies of creditors or general principles of
equity.
(c) Borrower’s
Title. Except for the security interests granted hereunder,
Borrower is, as to all Collateral presently owned by it, and shall be as to
all
Collateral hereafter acquired by it, the owner or in the case of leased or
licensed assets, the lessee or licensee, of said Collateral free from any Lien
other than Permitted Liens.
(d) Location
of Inventory and Equipment. All of Borrower’s Inventory and
Equipment that are included in the Collateral are located at the locations
specified on Schedule 2-A. Except as disclosed on Schedule
2-A, none of such Inventory or Equipment are in the possession of any
consignee, bailee, warehouseman, agent or processor.
(e) Location
of Borrower. The principal place of business of Borrower, the
chief executive office of Borrower and the office where Borrower keeps its
books
and records relating to the Collateral are specified on Schedule
2-B. Borrower has no other place of business except as separately
specified on Schedule 2-B.
(f) Names
Used by Borrower. (i) The actual name of Borrower is the name set
forth in the preamble above; (ii) Borrower has no trade names except as set
forth on Schedule 3 attached hereto; (iii) Borrower has not used any name
other than that stated in the preamble hereto or as set forth on Schedule
3 for the preceding five years; and (iv) no entity has merged into Borrower
or been acquired by Borrower within the past five years except as set forth
on
Schedule 3.
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(g) Perfected
Security Interest. This Agreement creates a valid security
interest in the Collateral, subject only to Permitted Liens, securing payment
of
the Secured Obligations. Upon the filing of the Uniform Commercial
Code financing statement in the office set forth on Schedule 4 hereto,
all security interests granted pursuant to this Agreement that may be perfected
by filing a UCC financing statement shall have been duly
perfected. Except for the filings referred to in the preceding
sentence, no action of Borrower is necessary to create, perfect or protect
such
security interest. Without limiting the generality of the foregoing,
except for such filings, no consent of any third parties (excluding the Secured
Party) and no authorization, approval or other action by, and no notice to
or
filing with any Governmental Authority or regulatory body by Borrower is
required as of the date of this Agreement for (i) the execution, delivery and
performance of this Agreement by Borrower; (ii) the creation or perfection
of
the security interest in the Collateral; or (iii) the enforcement of Secured
Party’s rights hereunder.
(h) Absence
of Conflicts with Other Agreements, Etc. Neither the pledge by
Borrower of the Collateral hereunder nor any of the provisions hereof
(including, without limitation, the grant by Borrower of the remedies provided
hereunder) violates any of the provisions of (i) any Organizational Documents
of
Borrower, (ii) any other agreement to which Borrower or any of its property
is a
party or is subject, or (iii) any judgment, decree, order or award of any court,
governmental body or arbitrator or any applicable law, rule or regulation
applicable to Borrower or any of its property (except, with respect to clauses
(ii) and (iii), for such violations that would not, individually or in the
aggregate, have a Material Adverse Effect).
(i) Subsidiaries. The
Borrower has no subsidiaries other than Matritech GmbH. Matritech
GmbH does not own any Equipment or Intellectual Property used in connection
with
or otherwise relating to the NMP22 Product Line.
5.
COVENANTS
OF BORROWER. Borrower covenants that:
(a) Filing
of Financing Statements and Preservation of Interests. Borrower
hereby authorizes Collateral Agent to file in such office or offices in the
United States as is necessary, or as Collateral Agent reasonably deems
desirable, such financing and continuation statements and amendments and
supplements thereto, and such other documents as Collateral Agent reasonably
may
require to perfect, preserve and protect the security interests granted
herein.
(b) Collateral
In Possession of Third Parties. To the extent that any Collateral
is in the possession of any third party, and such Collateral has a fair market
value in excess of $25,000 in the aggregate, Borrower shall promptly notify
Collateral Agent of the existence thereof and, at Collateral Agent’s request,
Borrower shall join with Collateral Agent in notifying such third party of
Secured Party’s security interest and shall make commercially reasonable efforts
to obtain an acknowledgement from such third party that it is holding the
Collateral for the benefit of Secured Party.
(c) Notice
of Changes. Borrower shall notify Collateral Agent as
follows:
(i) without
providing at least thirty (30) days prior written notice to Collateral Agent,
Borrower will not change its name in any respect, its place of business or,
if
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more
than
one, chief executive office, or its mailing address or organizational
identification number (if it has one);
(ii) if
Borrower does not have an organizational identification number and obtains
one
after the date of this Agreement, Borrower will forthwith notify Collateral
Agent in writing of such organizational identification number; and
(iii) Borrower
will not change its type of organization, jurisdiction of organization or other
legal structure without providing at least thirty (30) days prior written notice
to Collateral Agent.
(d) Use
and Condition of Equipment. Each item of Equipment included in
the Collateral will be maintained in good repair, working order and condition,
ordinary wear and tear and depreciation excepted, and Borrower will provide
all
maintenance service and repairs necessary for such purpose.
(e) Insurance. Borrower
shall maintain with financially sound and reputable insurers, insurance with
respect to the Collateral against loss or damage of the kinds and in the amounts
customarily insured against by entities of established reputation having similar
properties similarly situated and in such amounts as are customarily carried
under similar circumstances by other such Persons and otherwise as is prudent
for Persons engaged in similar businesses but in any event sufficient to cover
the full replacement cost thereof. Borrower shall cause each
liability insurance policy issued in connection herewith to provide, and the
insurer issuing such policy to certify to Collateral Agent that (a) Collateral
Agent will be named as additional insured under each such liability insurance
policy; (b) if such insurance be proposed to be cancelled or materially changed
for any reason whatsoever, such insurer will promptly notify Collateral Agent
and such cancellation or change shall not be effective as to Collateral Agent
for at least thirty (30) days after receipt by Collateral Agent of such notice
(ten (10) days in the case of cancellation for non-payment of premiums), unless
the effect of such change is to extend or increase coverage under the policy;
and (c) Collateral Agent will have the right (but no obligation) at its election
to remedy any default in the payment of premiums within thirty (30) days of
notice from the insurer of such default (ten (10) days in the case of
cancellation for non-payment of premiums). Unless otherwise agreed by
Borrower and Collateral Agent, the proceeds arising out of any claim in respect
of any Collateral will be applied by Borrower to the repair and/or replacement
of such Collateral with respect to which the loss was incurred to the extent
reasonably feasible. Copies of such policies or the related
certificates shall be delivered to Collateral Agent upon Collateral Agent’s
reasonable request.
(f) Transfer
of Collateral. Other than the disposition of Inventory in the
ordinary course of Borrower’s business as presently conducted, and the
disposition of obsolete, worn-out or surplus Equipment in the ordinary course
of
Borrower’s business with a fair market value not to exceed $25,000 in any
calendar year, Borrower shall not sell, assign, transfer, encumber or otherwise
dispose of any Collateral without the prior written consent of Collateral Agent
and Collateral Agent does not authorize any such disposition. For
purposes of this provision, “dispose of any Collateral” shall include, without
limitation, the creation of a security interest or other encumbrance (whether
voluntary or involuntary) on such Collateral other than Permitted
Liens.
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(g) Taxes
and Assessments. Borrower shall promptly pay when due and
payable, all taxes and assessments imposed upon the Collateral, provided
that no such tax or assessment need be paid if being contested in good faith
by
appropriate proceedings promptly initiated and diligently conducted and if
such
reserve or other appropriate provision, if any, as shall be required by
generally accepted accounting principles, shall have been made therefor and,
if
the filing of a bond or other indemnity is necessary to avoid the creation
of a
Lien against any of the Collateral, such bond shall have been filed or indemnity
provided.
(h) Inventory. Borrower
shall not return any Inventory included in the Collateral to the supplier
thereof, except for damaged or unsalable Inventory or otherwise in the ordinary
course of Borrower’s business. Without limiting the generality of the
foregoing, in the event Borrower becomes a “debtor in possession” as defined in
11 U.S.C. §1101 (or any successor thereto), Borrower agrees, to the extent
permitted by applicable law, not to move pursuant to 11 U.S.C. §546 (or any
successor thereto) for permission to return Inventory included in the Collateral
to any creditor which shipped such goods to Borrower without Collateral Agent’s
written consent and Borrower hereby waives any rights to return such Inventory
arising under 11 U.S.C. §546(h), or any successor section
thereto. Without the consent of Collateral Agent, Borrower shall not
permit any subsidiary of Borrower to maintain Collateral in excess of $500,000
at any time. Borrower shall deliver to Collateral Agent, no later
than 45 days after the end of each of Borrower’s fiscal quarters, a certificate
setting forth the amount of Collateral maintained by its subsidiaries as of
the
end of such fiscal quarter.
(i) Defense
of Secured Party’s Rights. Borrower warrants and will defend
Secured Party’s right, title and security interest in and to the Collateral
against the claims of any Person (other than the holders of Permitted Liens
with
respect to such Permitted Liens).
(j) Inspections. Borrower
will permit Collateral Agent, or its designee, upon its reasonable request
and
reasonable prior notice, and at any reasonable times during Borrower’s usual
business hours, to inspect the Collateral, all records related thereto (and
to
make extracts or copies from such records), and the premises upon which any
of
the Collateral is located, and, if an Event of Default has occurred and is
continuing, to discuss Borrower’s affairs and finances with any Person and to
verify with such Person the amount, quality, value and condition of, or any
other matter relating to, the Collateral.
(k) Power
of Attorney. Borrower has duly executed and delivered to
Collateral Agent a power of attorney (a “Power of Attorney”) in
substantially the form attached hereto as Annex A. The power
of attorney granted pursuant to the Power of Attorney is a power coupled with
an
interest and shall be irrevocable until full and indefeasible payment of the
Secured Obligations. The powers conferred on Collateral Agent under
the Power of Attorney are solely to protect Secured Party’s interests in the
Collateral and shall not impose any duty upon Collateral Agent to exercise
any
such powers. Collateral Agent agrees that, notwithstanding anything
to the contrary in the Power of Attorney, (i) except for the powers granted
in
clause (e) of the Power of Attorney, it shall not exercise any power or
authority granted under the Power of Attorney unless an Event of Default has
occurred and is continuing (and, in any event, it shall not exercise any such
power or authority until the Effective Date), and (ii) Collateral Agent shall
account for any moneys received by Collateral Agent in respect of any
foreclosure on or disposition of Collateral pursuant to the Power of Attorney
provided that Collateral Agent shall
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11
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not
have
any duty as to any Collateral, and Collateral Agent shall be accountable only
for amounts that it actually receives as a result of the exercise of such
powers. NEITHER SECURED PARTY NOR ITS AFFILIATES, PARTNERS, OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE RESPONSIBLE TO BORROWER
FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE, EXCEPT
IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT JURISDICTION,
NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL DAMAGES.
(l) Other
Assurances. Borrower agrees that from time to time, at the sole
expense of Borrower, it will promptly execute and deliver all such further
instruments and documents, and take all such further action as may be necessary,
or as Collateral Agent may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Collateral Agent to exercise and enforce its rights and remedies hereunder
and
with respect to any Collateral or to otherwise carry out the purposes of this
Agreement, including, without limitation: (i) using commercially reasonable
efforts to obtain governmental and other third party waivers, consents and
approvals in form and substance reasonably satisfactory to the Collateral Agent,
including, without limitation, any consent of any licensor, lessor or other
person obligated on Collateral, and (ii) using commercially reasonable efforts
to obtain waivers from landlords in form and substance reasonably satisfactory
to the Collateral Agent.
6.
REMEDIES
UPON DEFAULT.
(a) At
any
time after the Effective Date, upon the occurrence and during the continuation
of an Event of Default, Collateral Agent may exercise, in addition to any other
rights and remedies provided herein, under other contracts and under law, all
the rights and remedies of a secured party under the Uniform Commercial
Code. Without limiting the generality of the foregoing, at any time
after the Effective Date, upon the occurrence and during the continuation of
an
Event of Default, in accordance with applicable law, (i) at the request of
Collateral Agent, Borrower shall, at its cost and expense, assemble the
Collateral owned or used by it as directed by Collateral Agent at a place that
is reasonably convenient to Collateral Agent and Borrower; and (ii) Collateral
Agent may (but is not obligated to), without notice except as provided below,
sell the Collateral at public or private sale, on such terms as are commercially
reasonable. Borrower agrees that ten (10) days prior written notice
of any sale referred to in clause (ii) above shall constitute sufficient
notice. Any Secured Party may purchase Collateral at any such
sale. Borrower shall be liable to Secured Party for any deficiency
amount.
(b) Collateral
Agent may comply with any applicable law in connection with a disposition of
Collateral and compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. Collateral
Agent may sell the Collateral without giving any warranties and may specifically
disclaim such warranties. If Collateral Agent sells any of the
Collateral on credit, Borrower will only be credited with payments actually
made
by the purchaser. In addition, Borrower waives any and all rights
that it may have to a judicial hearing in advance of the enforcement of any
of
Secured Party’s rights and remedies hereunder,
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12
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including,
without limitation, its right following an Event of Default to take immediate
possession of the Collateral and to exercise its rights and remedies with
respect thereto.
(c) For
the
purpose of enabling Collateral Agent to further exercise rights and remedies
under this Section 6 or elsewhere provided by agreement or applicable law,
Borrower has granted to Collateral Agent a license to use, license or sublicense
any of the Licensed Assets now owned or hereafter acquired by Borrower pursuant
to the Contingent License Agreement, on the terms and subject to the conditions
set forth therein.
(d) The
parties understand and agree that (i) the security interest granted to
Collateral Agent with respect to the Collateral, and (ii) the license granted
to
the Collateral Agent with respect to the Licensed Assets pursuant to the
Contingent License Agreement, will and is intended to permit Collateral Agent
and its successors and assigns, during the continuance of an Event of Default
as
provided herein, to take title to and make use of all rights to the Collateral,
and make use of all rights of Borrower to the Licensed Assets in conjunction
with the Collateral.
7.
OBLIGATIONS
ABSOLUTE.
(a) Change
of Circumstance. THE RIGHTS OF THE COLLATERAL AGENT HEREUNDER AND
THE OBLIGATIONS OF BORROWER HEREUNDER SHALL BE ABSOLUTE AND UNCONDITIONAL,
SHALL
NOT BE SUBJECT TO ANY COUNTERCLAIM, SETOFF, RECOUPMENT OR DEFENSE BASED UPON
ANY
CLAIM THAT BORROWER OR ANY OTHER PERSON MAY HAVE AGAINST ANY SECURED PARTY
AND
SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL FULL AND INDEFEASIBLE SATISFACTION
OF THE SECURED OBLIGATIONS. Without limiting the generality of the
foregoing, the obligations of Borrower shall not be released, discharged or
in
any way affected by any circumstance or condition (whether or not Borrower
shall
have any notice or knowledge thereof) including, without limitation, any
amendment or modification of or supplement to a Purchase Agreement, the Notes
or
any other Transaction Document (including, without limitation, increasing the
amount or extending the maturity of the Secured Obligations); any waiver,
consent, extension, indulgence or other action or inaction under or in respect
of any such agreements or instruments, or any exercise or failure to exercise
of
any right, remedy, power or privilege under or in respect of any such agreements
or instruments, or any exercise or failure to exercise of any right, remedy,
power or privilege under or in respect of any such agreements or instruments;
any invalidity or unenforceability, in whole or in part, of any term hereof
or
of the Purchase Agreements, the Notes or any other Transaction Document; any
failure on the part of Borrower or any other Person for any reason to perform
or
comply with any term of the Purchase Agreements, the Notes or any other
Transaction Document; any furnishing or acceptance of any additional security
or
guaranty; any release of Borrower or any other Person or any release of any
or
all security or any or all guarantees for the Secured Obligations, whether
any
such release is granted in connection with a bankruptcy or otherwise; any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or similar proceeding with respect to Borrower or any other Person
or their respective properties or creditors; the application of payments
received by Secured Party from any source that were lawfully used for some
other
purpose, which lawfully could have been applied to the payment, in full or
in
part, of the Secured Obligations; or any other occurrence whatsoever, whether
similar or dissimilar to the foregoing. Without limiting the
generality of the foregoing, at any time that
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13
–
the
Notes
are amended to increase the amount of the obligations thereunder, the amount
of
the Secured Obligations shall be accordingly increased.
(b) No
Duty To Marshal Assets. Secured Party shall have no obligation to
marshal any assets in favor of Borrower or any other Person or against or in
payment of any or all of the Secured Obligations.
(c) Waiver
of Right of Subrogation, Etc. Borrower hereby waives any and all
rights of subrogation, reimbursement, or indemnity whatsoever in respect of
Borrower arising out of remedies exercised by Collateral Agent hereunder until
full and indefeasible payment of the Secured Obligations.
(d) Other
Waivers. Borrower hereby waives promptness, diligence and notice
of acceptance of this Agreement. In connection with any sale or other
disposition of Collateral, to the extent permitted by applicable law, Borrower
waives any right of redemption or equity of redemption in the
Collateral. Borrower further waives presentment and demand for
payment of any of the Secured Obligations, protest and notice of protest,
dishonor and notice of dishonor or notice of default or any other similar notice
with respect to any of the Secured Obligations, and all other similar notices
to
which Borrower might otherwise be entitled, except as otherwise expressly
provided in the Transaction Documents. Secured Party is under no
obligation to pursue any rights against third parties with respect to the
Secured Obligations and Borrower hereby waives any right it may have to require
otherwise. Borrower (to the extent that it may lawfully do so)
covenants that it shall not at any time insist upon or plead, or in any manner
claim or take the benefit of, any stay, valuation, appraisal or redemption
now
or at any time hereafter in force that, but for this waiver, might be applicable
to any sale made under any judgment, order or decree based on this Agreement;
and Borrower (to the extent that it may lawfully do so) hereby expressly waives
and relinquishes all benefit of any and all such laws and hereby covenants
that
it will not hinder, delay or impede the execution of any power in this Agreement
delegated to Collateral Agent, but that it will suffer and permit the execution
of every such power as though no such law or laws had been made or
enacted.
(e) Borrower
further waives to the fullest extent permitted by law any right it may have
under the constitution of the State of Delaware (or under the constitution
of
any other state in which any of the Collateral or Borrower may be located),
or
under the Constitution of the United States of America, to notice (except for
notice specifically required hereby) or to a judicial hearing prior to the
exercise of any right or remedy provided by this Agreement to Collateral Agent,
and waives its rights, if any, to set aside or invalidate any sale duly
consummated in accordance with the foregoing provisions hereof on the grounds
(if such be the case) that the sale was consummated without a prior judicial
hearing.
(f) BORROWER’S
WAIVERS UNDER THIS SECTION 7 HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY AND AFTER BORROWER HAS BEEN APPRISED AND COUNSELED BY ITS ATTORNEY
AS
TO THE NATURE THEREOF AND ITS POSSIBLE ALTERNATIVE RIGHTS.
8.
NO
IMPLIED WAIVERS. No failure or delay on the part of Secured Party
in exercising any right, power or privilege under this Agreement or the other
Transaction
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14
–
Documents
and no course of dealing between Borrower, on the one hand, and Secured Party,
on the other hand, shall operate as a waiver of any such right, power or
privilege. No single or partial exercise of any right, power or
privilege under this Agreement or the other Transaction Documents precludes
any
other or further exercise of any such right, power or privilege or the exercise
of any other right, power or privilege. The rights and remedies
expressly provided in this Agreement and the other Transaction Documents are
cumulative and not exclusive of any rights or remedies which Secured Party
would
otherwise have. No notice to or demand on Borrower in any case shall
entitle Borrower to any other or further notice or demand in similar or other
circumstances or shall constitute a waiver of the right of Secured Party to
take
any other or further action in any circumstances without notice or
demand. Any waiver that is given shall be effective only if in
writing and only for the limited purposes expressly stated in the applicable
waiver.
9.
STANDARD
OF CARE.
(a) In
General. No act or omission of Collateral Agent (or agent or
employee of any thereof) shall give rise to any defense, counterclaim or offset
in favor of Borrower or any claim or action against Collateral Agent (or agent
or employee thereof), in the absence of gross negligence or willful misconduct
of Collateral Agent (or agent or employee thereof) as determined in a
final, nonappealable judgment of a court of competent
jurisdiction. Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which Collateral Agent accords to other collateral it holds (or, in the absence
of any such collateral, to its own property of such type), it being understood
that it has no duty to take any action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral
or to
preserve any rights of any parties and shall only be liable for losses which
are
a result of its gross negligence or willful misconduct as determined in a final,
nonappealable judgment of a court of competent jurisdiction.
(b) No
Duty to Preserve Rights. Without limiting the generality of the
foregoing, Collateral Agent has no duty (either before or after an Event of
Default) to collect any amounts in respect of the Collateral or to preserve
any
rights relating to the Collateral.
(c) No
Duty to Prepare for Sale. Without limiting the generality of the
foregoing, Collateral Agent has no obligation to clean-up or otherwise prepare
the Collateral for sale.
(d) Duties
Relative to Contracts. Without limiting the generality of the
foregoing, Borrower shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by Borrower
thereunder. Collateral Agent shall not have any obligation or
liability under any such contract or agreement by reason of or arising out
of
this Agreement or the receipt by Collateral Agent of any payment relating to
any
of the Collateral, nor shall Collateral Agent be obligated in any manner to
perform any of the obligations of Borrower under or pursuant to any such
contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by Collateral Agent in respect of the Collateral or as to
the
sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any
performance or to
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15
–
collect
the payment of any amounts which may have been assigned to Collateral Agent
or
to which Collateral Agent may be entitled at any time or times.
(e) Reliance
on Advice of Counsel. In taking any action under this Agreement
or any other Transaction Document, Collateral Agent shall be entitled to rely
upon the advice of counsel of Collateral Agent’s choice and shall be fully
protected in acting on such advice whether or not the advice rendered is
ultimately determined to have been accurate.
10.
MISCELLANEOUS.
(a) Assignment. Collateral
Agent may assign or transfer this Agreement and any or all rights or obligations
hereunder without the consent of Borrower and without prior
notice. Borrower shall not assign or transfer this Agreement or any
rights or obligations hereunder without the prior written consent of Collateral
Agent. Notwithstanding the foregoing, if there should be any
assignment of any rights or obligations by operation of law or in contravention
of the terms of this Agreement or otherwise then all covenants,
agreements, representations and warranties made herein or pursuant hereto by
or
on behalf of Borrower shall bind the successors and assigns of Borrower,
together with the preexisting Borrower, whether or not such new or additional
Persons execute a joinder hereto or assumption hereof. The rights and
privileges of Collateral Agent under this Agreement shall inure to the benefit
of its successors and assigns.
(b) Notices. Any
notice contemplated herein or required or permitted to be given hereunder shall
be made in the manner set forth in the applicable Purchase Agreement, and
delivered, in the case of Borrower and Collateral Agent, at the addresses set
forth on the signature pages to the applicable Purchase Agreement, or to such
other address as any party hereto may have last specified by written notice
to
the other party or parties.
(c) Severability. Every
provision of this Agreement is intended to be severable. If any term
or provision of this Agreement shall be invalid, illegal or unenforceable for
any reason, the validity, legality and enforceability of the remaining
provisions shall not be affected or impaired thereby. Any invalidity, illegality
or unenforceability in any jurisdiction shall not affect the validity, legality
or enforceability of any such term or provision in any other
jurisdiction.
(d) Costs
and Expenses. Without limiting any other cost reimbursement
provisions in the Transaction Documents, upon demand, Borrower shall pay to
Collateral Agent the amount of any and all reasonable expenses incurred by
Collateral Agent hereunder or in connection herewith, including, without
limitation those that may be incurred in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Collateral Agent hereunder
or
(iv) the failure of Borrower to perform or observe any of the provisions
hereof.
(e) Indemnification
by Borrower. Borrower shall indemnify, reimburse and hold
harmless Collateral Agent and its affiliates, and all of their partners,
members, shareholders, officers, directors, employees, agents and advisors
and
any successors, assigns and participants
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16
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thereof
(each, an “Indemnitee”), from and against any and all
losses, claims, liabilities, damages, penalties, suits, costs and expenses,
of
any kind or nature (including fees relating to the cost of investigating and
defending any of the foregoing) imposed on, incurred by or asserted against
such
Indemnitee in any way related to or arising from or alleged to arise from this
Agreement or the Collateral, except any such losses, claims, liabilities,
damages, penalties, suits, costs and expenses which result from the gross
negligence or willful misconduct of the Indemnitee as determined by a final
nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any
other
indemnification provision in any other Transaction Document.
(f) Counterparts;
Integration. This Agreement may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute
a
single contract. This Agreement, the Contingent License Agreement and
the other Transaction Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Delivery of an executed counterpart of a signature page of
this Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
(g) Amendments
and Waivers. The terms of this Agreement may be waived, altered
or amended only by an instrument in writing duly executed by Borrower and
Collateral Agent and consented to by (i) the holders of at least a majority
of
the aggregate outstanding principal balance of the Series A Notes, (ii) the
holders of at least a majority of the aggregate outstanding principal balance
of
the Series B Notes and (iii) the holder(s) of at least a majority of the
aggregate outstanding principal balance of the Series C Notes.
(h) Headings. Headings
to this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof.
(i) Amended
and Restated Agreement. This Agreement amends, restates and
replaces the Existing Security Agreement. The security interests
granted by the Borrower under the Existing Security Agreement continue without
interruption under this Agreement.
11.
SPECIFIC
PERFORMANCE. Borrower hereby authorizes Collateral Agent to
demand specific performance of this Agreement at any time when Borrower shall
have failed to comply with any provision hereof, and Borrower hereby irrevocably
waives any defense based on the adequacy of a remedy at law which might be
asserted as a bar to the remedy of specific performance hereof in any action
brought therefor.
12.
TERMINATION. At
such time as the Secured Obligations have been indefeasibly paid and performed
in full, then the security provided for herein shall terminate, provided,
however, that all indemnities of Borrower contained in this Agreement shall
survive and remain operative and in full force and effect regardless of the
termination of this Agreement.
13.
GOVERNING
LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) Governing
Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and
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17
–
to
be
performed in the State of Delaware. Each of Borrower and Collateral
Agent irrevocably consents to the exclusive jurisdiction of the United States
federal courts and the state courts located in the County of New Castle,
Delaware, in any suit or proceeding between the parties based on or arising
under this Agreement and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in such courts. Each of Borrower
and Collateral Agent irrevocably waives the defense of an inconvenient forum
to
the maintenance of such suit or proceeding in such forum. Each of
Borrower and Collateral Agent further agrees that service of process upon it
mailed by first class mail shall be deemed in every respect effective service
of
process upon it in any such suit or proceeding. Nothing herein shall
affect the right of Collateral Agent or Borrower to serve process in any other
manner permitted by law. Borrower and Collateral Agent agree that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
(b) Waiver
of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (I) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES
HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS
SECTION.
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18
–
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in
the name and on behalf of the parties hereto as of the date first above
written.
BORROWER
MATRITECH,
INC.
By:
____________________________
Name:
Xxxxxxx
X.
Xxxxx
Title: Chief
Executive Officer
|
|
COLLATERAL
AGENT
|
SDS
CAPITAL GROUP SPC,
LTD.,
as
Collateral Agent
By:
____________________________
Name:
Title:
Annex
A
FORM
OF POWER OF ATTORNEY
This
Power of Attorney is executed and delivered by Matritech, Inc., a Delaware
corporation (“Borrower”), to SDS Capital Group SPC, Ltd. as Collateral
Agent (“Attorney”). This Power of Attorney is delivered in
connection with and pursuant to those certain 15% Secured Convertible Promissory
Notes dated January 13, 2006, the Series B 15% Secured Convertible Promissory
Notes dated January 22, 2007 and the 15% Secured Promissory Note dated the
date
hereof (each as the same may be amended, modified, restated and/or supplemented
from time to time) (collectively the “Notes”) and that certain Second
Amended and Restated Security Agreement dated as of even date herewith delivered
in connection therewith (the “Security
Agreement”). Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Security
Agreement. No person or entity to whom this Power of Attorney is
presented, as authority for Attorney to take any action or actions contemplated
hereby, shall be required to inquire into or seek confirmation from Borrower
as
to the authority of Attorney to take any action described below, or as to the
existence of or fulfillment of any condition to this Power of Attorney, which
is
intended to grant to Attorney unconditionally the authority to take and perform
the actions contemplated herein, and Borrower irrevocably waives any right
to
commence any suit or action, in law or equity, against any person or entity
which acts in reliance upon or acknowledges the authority granted under this
Power of Attorney. The power of attorney granted hereby is coupled
with an interest, and may not be revoked or canceled by Borrower without
Attorney’ s written consent.
Borrower
hereby irrevocably constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution,
as
Borrower’s true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Borrower and in the name of Borrower or
in
its own name, from time to time in Attorney’s discretion upon the occurrence and
during the continuation of an Event of Default, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of the Notes, the
Security Agreement and any and all agreements, documents and instruments
executed, delivered or filed in connection therewith from time to time
(collectively, the “Transaction Documents”) and, without limiting the
generality of the foregoing, Borrower hereby grants to Attorney the power and
right, on behalf of Borrower, without notice to or assent by Borrower, and
at
any time, to do the following (to the extent the same may be necessary or
desirable to accomplish the purposes of the Transaction Documents):
(a) effect
any repairs to any Collateral, or continue or obtain any insurance required
under the Transaction Documents and pay all or any part of the premiums therefor
and costs thereof, and make, settle and adjust all claims under such policies
of
insurance, and make all determinations and decisions with respect to such
policies;
(b) pay
or
discharge any taxes, liens, security interests, or other encumbrances levied
or
placed on or threatened against the Collateral;
(c) defend
any suit, action or proceeding brought against Borrower relating to the
Collateral if Borrower does not defend such suit, action or proceeding, and
settle, compromise or adjust any suit, action, or proceeding described above
and, in connection therewith, give such discharges or releases as Attorney
may
deem appropriate;
(d) communicate
in its own name with any party to any contract included in the Collateral with
regard to the assignment of the right, title and interest of Borrower in and
under such contracts and other matters relating thereto;
(e) to
the
extent that Borrower’s authorization given in the Security Agreement is not
sufficient, to file such financing statements with respect to the Security
Agreement as Attorney may deem appropriate and to execute in Borrower’s name
such financing statements and amendments thereto and continuation statements
which may require Borrower’s signature; and
(f) execute,
deliver and/or record, as applicable, in connection with any sale or other
remedy provided for in any Transaction Document, any endorsements, assignments
or other applications for or instruments of conveyance or transfer with respect
to the Collateral and to otherwise direct such sale or resale, all as though
Attorney were the absolute owner of the property of Borrower for all purposes,
and to do, at Attorney’s option and Borrower’s expense, at any time or from time
to time, all acts and other things that Attorney reasonably deems necessary
to
perfect, preserve, or realize upon the Collateral and Attorney’s liens thereon,
all as fully and effectively as Borrower might do.
IN
WITNESS WHEREOF, this Power of Attorney is duly executed on behalf of Borrower
this ____ day of ____________, 20___.
MATRITECH,
INC.
By: ________________
Name:
Title:
NOTARY
PUBLIC CERTIFICATE
On
this
_____ day of ____________, 20___, [officer’s name] who is personally known to me
appeared before me in his/her capacity as the [title] of [name of Borrower]
(“Borrower”) and executed on behalf of Borrower the Power of Attorney in
favor of _______________, as Collateral Agent, to which this Certificate is
attached.
_______________________________________
Notary
Public
Schedule
1
STATUS
Matritech,
Inc. is a Delaware corporation
Matritech,
Inc.’s federal taxpayer ID# is 00-0000000
Matritech,
Inc.’s organization ID# in Delaware is 2142166
Schedule
2-A
LOCATIONS
OF GOODS
Matritech,
Inc.
000
Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
Matritech
GmbH
Xxxxxxxxxx
Xxxxxxx 0
X00000 Xxxxxxxx
Xxxxxxx
One
mold
(value in excess of $25,000) for the NMP22® BladderChek® Test cassette housing
is located at:
Sterling
Manufacturing Company, Inc.
X.X.
Xxx
0000
000
Xxxxxxxx Xxxxxx
Xxxxx
Xxxxxxxxx, XX 00000
One
mold
(value less than $25,000) for the NMP22® BladderChek® Test cassette housing is
located at:
Fireball
Technology Ltd.
00
Xxxxxxx Xxxxxxx, #000
Xxxxxxxx,
Xxxxx
Raw
materials and WIP (value in excess of $25,000) for NMP22® BladderChek® Test are
located at:
Unotech
Diagnostics,
Inc.
0000
Xxxxxxxxx Xxx. Xxxxx 000
Xxx
Xxxxxxx, XX 00000
WIP
(value less than $25,000) for NMP22® BladderChek® Test is located
at:
LSNE
Lyophilization
Services of New England
0
Xxxxxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Cell
lines used to produce antibodies used in the NMP® products are located
at:
Maine
Biotechnology Services
0000X
Xxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
with
a
back-up vial at:
American
Tissue Culture Center
00000
Xxxxxxxxxx Xxxx.
Xxxxxxxx,
XX 00000-0000
Schedule
2-B
LOCATIONS
OF BORROWER
Matritech,
Inc.
000
Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
Matritech
GmbH
Xxxxxxxxxx
Xxxxxxx 0
X00000 Xxxxxxxx
Xxxxxxx
Books
and
records are maintained primarily at the Newton location.
Schedule
3
NAMES
USED BY BORROWER
Matritech,
Inc.
Matritech
GmbH
Schedule
4
FILING
OFFICES
Delaware
Secretary of State
Schedule
5
DEDICATED
EQUIPMENT
2
plate
fillers
automatic
labeler for vials
incubation
oven
automatic
fill machine
plate
reader
2
plate
washers
Written
materials related to NMP22® products:
Marketing
materials
Package
inserts
Device
history record for NMP22® Test Kit and related SOPs
Device
history record for NMP22® BladderChek® Test (without SOPs)
