TEMPORARY WAIVER AGREEMENT
THIS
TEMPORARY WAIVER AGREEMENT (this “Waiver”), dated as of the 2nd day of April,
2009, is made by and between Broadwood Partners, L.P. (“Broadwood” or the
“Investor”) and STAAR Surgical Company (“STAAR” or the “Company”). Unless otherwise
defined herein, capitalized terms used but not defined in this Waiver shall have
the meaning ascribed to such term in the Senior Note.
WITNESSETH:
WHEREAS,
the Investor currently owns a $5,000,000 senior note (the “Senior Note”), issued
to the Investor on December 14, 2007 by the Company;
WHEREAS,
an order of judgment was rendered on March 23, 2009 by the California Superior
Court, County of Orange (the “Court”), Case No. 07CC10136 in the matter of Parallax Medical Systems, Inc. x.
XXXXX Surgical Company in the amount of $2.2 million in compensatory
damages and $2.7 million in punitive damages, (collectively, and as it may be
modified by the Court, the “Judgment”);
WHEREAS,
the Court executed an order on March 23, 2009 staying execution of judgment (the
“Stay”) pursuant to Section 918 of the California Code of Civil Procedure
(“CCCP”);
WHEREAS,
as to any Event of Default that occurs or may be deemed to have occurred
pursuant to Section 8(f) of the Senior Note as a result of the Judgment
(“Judgment Default”), the Investor and the Company wish to provide, subject to
the terms and conditions set forth below, that remedies for any such default
under the Senior Note shall not be enforced during the period of the
Stay.
NOW,
THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements herein contained, the Investor and the Company do hereby agree as
follows:
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1.
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The
Investor hereby temporarily waives any Judgment Default during the Stay
Period. For purposes hereof, “Stay Period” shall mean the
shorter of (i) the duration of the Stay, and (ii) July 6,
2009.
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2.
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In
consideration of the Investor’s providing this Waiver, the Company hereby
agrees, within seven business days from the date hereof, to amend the
Senior Note to irrevocably grant (i) a first-priority security interest on
all of the Company’s unencumbered assets as of the date hereof and (ii) a
second-priority security interest on all of the Company’s assets subject
to any purchase money indebtedness, to the Investor to secure the
Company’s obligations under the Senior Note. The Investor
agrees that the amendment shall also provide that the period of notice for
prepayment under Section 6(a) of the Senior Note shall be changed to seven
days for any notice period beginning on or after June 1,
2009.
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3.
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The
Company hereby represents and warrants that, as of the date hereof, other
than any Event of Default relating to the Judgment, no Event of Default
has occurred and is continuing.
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4.
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If,
prior to the expiration of the Stay Period, the Company fully satisfies
the Judgment,
then any Judgment Default will be deemed cured and any resulting
remedies that the Investor may have had under the Senior Note with respect
to any Judgment Default will be
waived.
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5.
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If,
prior to the expiration of the Stay Period, the Company secures a stay of
execution of Judgment until the completion of an appeal pursuant to CCCP
Section 917.1 by posting an appeal bond, or by other action of the
California courts, then any Judgment Default shall be Partially
Cured. For purposes herein, “Partially Cured” shall mean that
the Investor shall not have the right to any acceleration remedies that
the Investor may have had under the Senior Note with respect to the
Judgment Default but from and after the expiration of the Stay Period the
Investor shall have the right to receive interest at a rate of 20% per
annum as provided in the first paragraph of Section 4 of the Senior
Note.
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6.
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If
the Judgment Default is Partially Cured pursuant to Paragraph 5 hereof,
and during the pendency of appeal the Company fully satisfies the Judgment
and finally resolves all other material litigation of the Company that as
of the date of this Waiver is pending and not yet decided, then the
Judgment Default shall be deemed fully cured and the interest rate on the
Senior Note shall be reduced to 7% per annum from the date of such
cure.
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7.
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If,
as of the expiration of the Stay Period, the Company has satisfied neither
the conditions for a cure pursuant to Paragraph 4 nor the conditions for
the note to be Partially Cured pursuant to Paragraph 5, the Company agrees
and acknowledges that an Event of Default pursuant to Section 8(f) of the
Senior Note shall have occurred and that Broadwood may enforce any and all
rights resulting from such waiver without further notice, demand or
presentment.
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8.
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This
Waiver contains the entire understanding between and among the parties and
supersedes any prior understandings and agreements among them respecting
the subject matter of the Waiver.
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9.
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This
Waiver is only effective in the specific instances set forth
herein. No other waiver by the Investor or the Company is
granted or intended except as expressly set forth herein, and the Investor
and the Company expressly reserve the right, now and at all times
hereafter, to require strict compliance with the terms of the Senior Note
in all other respects, whether in connection with any future transaction
in respect of similar matters to those waived herein, or
otherwise.
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10.
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This
Waiver shall be governed by and construed in accordance with the laws of
the State of New York without regard to choice of law
principles.
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11.
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This
Waiver may be executed in any number of counterparts, each of which shall
be an original but all of which together shall constitute one and the same
instrument.
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12.
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In
case any provision of this Waiver shall be held to be invalid, illegal or
unenforceable, such provision shall be severable from the rest of this
Waiver, and the validity legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
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[-signature
page follows-]
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IN
WITNESS WHEREOF, this Temporary Waiver Agreement has been executed as of the
date first written above.
BROADWOOD
PARTNERS, L.P.
By: /s/Xxxx X.
Xxxxxxxx
Name: Xxxx
X. Xxxxxxxx
Title:
General Partner
STAAR
SURGICAL COMPANY
By:/s/Xxxxx X.
Xxxxxxxx
Name: Xxxxx
X. Xxxxxxxx
Title: President
and Chief Executive Officer
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