PATENT SECURITY AGREEMENT
Execution
Version
This
Agreement is dated the 28th
day of
September, 2007, among Diomed Holdings, Inc., a Delaware corporation, Diomed,
Inc., a Delaware corporation, each with its chief executive office and principal
place of business located at Xxx Xxxxxx Xxxx, Xxxxxxx, Xxxxxxxxxxxxx 00000,
(each, a “Grantor”
and
collectively, the “Grantors”
),
and
Hercules Technology Growth Capital, Inc., a Maryland corporation, with its
chief
executive office and principal place of business located at 000 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxxx Xxxx, Xxxxxxxxxx 00000 (“Secured
Party”).
RECITALS
A. Each
Grantor owns Patents (as defined in the Loan Agreement (as defined below))
and
Patent applications and are party, whether individually or collectively, to
the
Patent Licenses to which it is a party (as defined in the Loan Agreement),
all
as listed on Schedule
1
hereto;
B. Grantors
and Secured Party are parties to a Loan and Security Agreement dated as of
September 28, 2007 and all ancillary documents entered into in connection with
such Loan and Security Agreement, all as may be amended from time to time
(hereinafter referred to collectively as the “Loan
Agreement”);
C. Pursuant
to the terms of the Loan Agreement, each Grantor has granted to Secured Party
a
first priority security interest in all of the tangible and intangible property
of such Grantor, including all right, title and interest of such Grantor in,
to
and under all of such Grantor’s Patents and Patent Licenses, whether presently
existing or hereafter arising or acquired, and all products and proceeds
thereof, including, without limitation, any and all causes of action which
may
exist by reason of infringement thereof for the full term of the Patents, to
secure the payment of the Secured Obligations;
D.
All
capitalized terms not defined herein shall have the meanings set forth in the
Loan Agreement;
NOW,
THEREFORE, in consideration of the premises contained herein, each Grantor
agrees with Secured Party as follows:
1.
To
secure the complete and timely satisfaction of all Secured Obligations, each
Grantor hereby grants, and conveys to Secured Party a continuing security
interest in and lien on all of such Grantor’s entire right, title and interest
in and to, whether presently existing or hereafter arising or acquired, the
Patents and Patent Licenses to which it is a party, including those listed
on
Schedule
1
hereto
(as may be amended from time to time), including, without limitation, all
proceeds thereof (such as, by way of example, license royalties and proceeds
of
infringements, all rights corresponding thereto throughout the world and all
reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof).
2.
Each
Grantor represents, warrants and covenants that:
a)
such
Grantor is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of the Patents owned by such Grantor, free
and
clear of any liens, charges and encumbrances, including, without limitation,
pledges, assignments, licenses, shop rights and covenants by Grantor not to
xxx
third persons, except
for any
license disclosed in Schedule
1;
b)
The
Patents are subsisting and have not been adjudged invalid or unenforceable,
in
whole or in part;
c)
To the
best of such Grantor’s knowledge, each of the Patents is valid and enforceable;
and
d)
such
Grantor has the unqualified right to enter into this Patent Security Agreement
and perform its terms.
3.
Each
Grantor agrees that, until all of the Secured Obligations shall have been
satisfied in full in cash, such Grantor will not enter into any agreement
relating to such Grantor’s Patents (for example, a license agreement) which is
inconsistent with such Grantor’s obligations under this Patent Security
Agreement, without Secured Party’s prior written consent; provided,
that so
long as no Default or Event of Default shall have occurred and be continuing,
such Grantor may grant licenses to third parties to use the Patents in the
ordinary course of business of such Grantor and such third party on arm’s length
and customary business terms.
4.
If,
before the Secured Obligations shall have been satisfied in full in cash, any
Grantor shall obtain rights to any new patentable inventions, or become entitled
to the benefit of any Patent for any reissue, division, continuation, renewal,
extension, or continuation-in-part of any Patent or any improvement on any
Patent, the provisions of paragraph
1
shall
automatically apply thereto and such Grantor shall give to Secured Party prompt
notice thereof in writing.
5.
Each
Grantor authorizes Secured Party to unilaterally modify this Patent Security
Agreement by amending Schedule
1
to
include any future Patents which are Patents under paragraph
1
or
paragraph
4
hereof.
6.
If any
Event of Default shall have occurred and be continuing, Secured Party shall
have, in addition to all other rights and remedies given it by this Patent
Security Agreement or the Loan Agreement, those allowed by law and the rights
and remedies of a secured party under the Uniform Commercial Code as enacted
in
any jurisdiction in which the Patents may be located and, without limiting
the
generality of the foregoing, Secured Party may immediately, without demand
of
performance and without other notice (except as set forth below) or demand
whatsoever to any Grantor, all of which are hereby expressly waived, and without
advertisement, sell at public or private sale or otherwise realize upon, the
whole or from time to time any part of the Patents, or any interest which any
Grantor may have therein, and after deducting from the proceeds of sale or
other
disposition of the Patents all expenses (including reasonable expenses for
brokers’ fees and legal services), shall apply the residue of such proceeds
toward the payment of the Secured Obligations. Any remainder of the proceeds
after payment in full in cash of the Secured Obligations shall be paid over
to
Grantor. Notice of any sale or other disposition of the Patents shall be given
to the Lead Borrower at least ten (10) days before the time of any intended
public or private sale or other disposition of the Patents is to be made, which
each Grantor hereby agrees shall be reasonable notice of such sale or other
disposition. At any such sale or other disposition Secured Party may, to the
extent permissible under applicable law, purchase the whole or any part of
the
Patents sold, free from any right of redemption on the part of such Grantor,
which right is hereby waived and released.
7.
Each
Grantor hereby authorizes and empowers Secured Party to make, constitute and
appoint any officer or agent of Secured Party, as Secured Party may select
in
its exclusive discretion, as such Grantor’s true and lawful attorney-in-fact,
with the power, after and during the continuance of an Event of Default, to
endorse such Grantor’s name on all applications, documents, papers and
instruments necessary for Secured Party to use the Patents, or to grant or
issue
any exclusive or nonexclusive license under the Patents to any third person,
or
necessary for Secured Party to, pledge, convey or otherwise transfer title
in or
dispose of the Patents
to any third person as a part of Secured Party’s realization on such collateral
upon acceleration of the Secured Obligations following an Event of Default.
Each
Grantor hereby ratifies all that such attorney shall lawfully do or cause to
be
done by virtue hereof. This power of attorney being coupled with an interest
shall be irrevocable for the life of this Patent Security
Agreement.
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8.
At
such time as Grantors shall completely satisfy all of the Secured Obligations
(other than inchoate indemnity obligations), this Patent Security Agreement
shall terminate and Secured Party shall execute and deliver to Grantors all
terminations or other instruments as may be necessary or proper terminate the
security interest granted herein and to terminate the applicable Grantor’s
obligations hereunder, subject to any disposition thereof which may have been
made by Secured Party pursuant hereto.
9.
Any
and all reasonable fees, costs and expenses, of whatever kind or nature,
including the reasonable attorneys’ fees and legal expenses incurred by Secured
Party in connection with the preparation of this Patent Security Agreement
and
all other documents relating hereto and the consummation of this transaction,
the filing or recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, counsel
fees, maintenance fees, encumbrances or otherwise protecting, maintaining or
preserving the Patents, or in defending or prosecuting any actions or
proceedings arising out of or related to the Patents, shall be borne and paid
by
Grantors jointly and severally on demand by Secured Party and until so paid
shall be added to the principal amount of the Secured Obligations and shall
bear
interest at the highest applicable Default Rate.
10.
Each
Grantor shall have the duty, through counsel reasonably acceptable to Secured
Party, to prosecute diligently any Patent applications pending as of the date
of
this Patent Security Agreement or thereafter until the Secured Obligations
shall
have been paid in full in cash, to make application on unpatented but patentable
inventions (provided that such registration will not significantly compromise
such Grantor’s competitive position) and to preserve and maintain all rights in
Patents, including, without limitation, the payment of all maintenance fees.
Any
expenses incurred in connection with such an application shall be borne by
Grantors. No Grantor shall abandon any right to file a Patent application,
or
any pending Patent application or Patent without the prior written consent
of
Secured Party, which consent shall not be unreasonably withheld.
11.
Each
Grantor shall have the right, with the consent of Secured Party, which consent
shall not be unreasonably withheld, to bring suit in its own name and to join
Secured Party, if necessary, as a party to such suit so long as Secured Party
is
satisfied, in the exercise of reasonable judgment, that such joinder will not
subject it to any risk of liability, to enforce the Patents. Each Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party for all damages,
costs and expenses, including reasonable attorneys’ fees incurred by Secured
Party, in accordance with the Loan Agreement and this Patent Security
Agreement.
12.
No
course of dealing between any Grantor and Secured Party, nor any failure to
exercise, nor any delay in exercising, on the part of Secured Party, any right,
power or privilege hereunder or under the Loan Agreement shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power
or
privilege hereunder or thereunder preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
13.
At any time and from time to time,
upon the written request of Secured Party, and at the sole expense of Grantors,
Grantors will promptly and duly execute and deliver such further instruments
and
documents and take such further action as Secured Party may reasonably request
for the purpose of obtaining or preserving the full benefits of this Patent
Security Agreement and the Loan Agreement, and of the rights and powers herein
and therein granted, including, without limitation, the filing of any
additional, supplemental, or amended Patent Security Agreements, or the filing
of any financing statements or continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with respect to the Liens created
hereby or in any of the Loan Agreements.
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14.
All
of Secured Party’s rights and remedies with respect to the Patents, whether
established hereby or by the Loan Agreement or any other agreements or by law
shall be cumulative and may be exercised singularly or
concurrently.
15.
The
provisions of this Patent Security Agreement are severable, and if any clause
or
provision shall be held invalid and unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction, and shall not in
any
manner affect such clause or provision in any other jurisdiction, or any clause
or provision of this Patent Security Agreement in any jurisdiction.
16.
This
Patent Security Agreement is subject to modification only by a writing signed
by
the parties hereto, except as provided in paragraph
5.
17.
This
Patent Security Agreement shall be binding upon Grantors and Secured Party
and
their respective permitted successors and assigns, and shall inure to the
benefit of Grantors, Secured Party and the respective permitted successors
and
assigns of Grantors and Secured Party.
18.
The
validity and interpretation of this Patent Security Agreement and the rights and
obligations of the parties shall be governed by the laws of the State of
California.
19.
Section 11.2 (Notice)
of the
Loan Agreement is hereby incorporated herein in its entirety, save that
references therein to the term Lender shall be deemed to be references to
Secured Party herein and references therein to the term Borrower or Borrowers
shall be deemed to be references to any Grantor or the Grantors, as applicable,
herein.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF,
the
execution hereof under seal as of the day and year first above written.
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DIOMED
HOLDINGS, INC.
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By:
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Name:
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Title:
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DIOMED,
INC.
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By:
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Name:
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Title:
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By:
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X.
Xxxxxxxx Martitsch
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Its:
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Associate
General Counsel
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SCHEDULE
1 TO
PATENT
SECURITY AGREEMENT
PATENTS
AND PATENT APPLICATIONS:
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Patent
Title
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Owner
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Registration/
Application No.
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Registration/
File
Date
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METHOD
OF ENDOVENOUS LASER TREATMENT
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Diomed,
Inc.
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6986766
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01/17/2006
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MEDICAL
LASER DEVICE
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Diomed,
Inc.
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6981971
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01/03/2006
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ENDOVASCULAR
LASER DEVICE AND TREATMENT OF VARICOSE VEINS
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Diomed,
Inc.
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6398777
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06/04/2002
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LASER
SYSTEM
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Diomed,
Inc.
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20060089629
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04/26/2006
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