Exhibit 10.49
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of September 30, 2008 (this
"Agreement"), among Intraop Medical Corporation, a Nevada corporation (the
"Company") and the holder or holders of the Company's 10% Senior Secured
Debentures, due December 31, 2008, in the original aggregate principal amount of
up to $2,000,000 (the "Debentures") and issued pursuant to that certain
Debenture Purchase Agreement (the "Purchase Agreement") of even date herewith
between the Company and each signatory hereto, their endorsees, transferees and
assigns (collectively referred to as, the "Secured Parties").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement and the Debentures, the
Secured Parties have severally agreed to extend the loans to the Company
evidenced by the Debentures;
WHEREAS, in order to induce the Secured Parties to extend the loans
evidenced by the Debentures, the Company has agreed to execute and deliver to
the Secured Parties this Agreement and to grant the Secured Parties, pari passu
with each other Secured Party, a perfected security interest in certain property
of the Company to secure the prompt payment, performance and discharge in full
of all of the Company's obligations under the Debentures.
NOW, THEREFORE, in consideration of the agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "account", "chattel paper", "commercial tort claim", "deposit account",
"document", "equipment", "fixtures", "general intangibles", "goods",
"instruments", "inventory", "investment property", "letter-of-credit rights",
"proceeds" and "supporting obligations") shall have the respective meanings
given such terms in Article 9 of the UCC.
(a) "Collateral" means the collateral in which the Secured
Parties are granted a security interest by this Agreement and which
shall include the following personal property of the Company, whether
presently owned or existing or hereafter acquired or coming into
existence, wherever situated, and all additions and accessions thereto
and all substitutions and replacements thereof, and all proceeds,
products and accounts thereof, including, without limitation, all
proceeds from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection therewith, and
all dividends, interest, cash, notes, securities, equity interest or
other property at any time and from time to time acquired, receivable
or otherwise distributed in respect of, or in exchange for, any or all
of the Pledged Securities (as defined below):
(i) All goods, including, without limitation, (A) all
machinery, equipment, computers, motor vehicles, trucks,
tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and
other equipment of every kind and nature and wherever
situated, together with all documents of title and documents
representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes
for any of the foregoing and all other items used and useful
in connection with any Company's businesses and all
improvements thereto; and (B) all inventory;
(ii) All Inventory and Intellectual Property of the
Company;
(iii) All contract rights and other general
intangibles, including, without limitation, all partnership
interests, membership interests, stock or other securities,
rights under any of the Organizational Documents, agreements
related to the Pledged Securities, licenses, distribution and
other agreements, computer software (whether "off-the-shelf",
licensed from any third party or developed by the Company),
computer software development rights, leases, franchises,
customer lists, quality control procedures, grants and rights,
goodwill, trademarks, service marks, trade styles, trade
names, patents, patent applications, copyrights, and income
tax refunds (collectively, the "General Intangibles");
(iii) All accounts of the Company including all
insurance proceeds, and rights to refunds or indemnification
whatsoever owing, together with all instruments, all documents
of title representing any of the foregoing, all rights in any
merchandising, goods, equipment, motor vehicles and trucks
which any of the same may represent, and all right, title,
security and guaranties with respect to each account,
including any right of stoppage in transit;
(iv) All documents, letter-of-credit rights,
instruments and chattel paper;
(v) All commercial tort claims;
(vi) All deposit accounts and all cash (whether or
not deposited in such deposit accounts);
(vii) All investment property;
(viii) All supporting obligations;
(ix) All files, records, books of account, business
papers, and computer programs; and
(x) the products and proceeds of all of the foregoing
Collateral set forth in clauses (i)-(ix) above.
Without limiting the generality of the foregoing, the
"Collateral" shall include the shares of capital stock and the
other equity interests listed on Schedule H hereto (as the
same may be modified from time to time pursuant to the terms
hereof), and any other shares of capital stock and/or other
equity interests of any other direct or indirect subsidiary of
the Company obtained in the future, and, in each case, all
certificates representing such shares and/or equity interests
and, in each case, all rights, options, warrants, stock, other
securities and/or equity interests that may hereafter be
received, receivable or distributed in respect of, or
exchanged for, any of the foregoing (all of the foregoing
being referred to herein as the "Pledged Securities") and all
rights arising under or in connection with the Pledged
Securities, including, but not limited to, all dividends,
interest and cash.
Notwithstanding the foregoing, nothing herein shall
be deemed to constitute an assignment of any asset which, in
the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise
prohibited by applicable law (in each case to the extent that
such applicable law is not overridden by Sections 9-406, 9-407
and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the extent permitted by applicable
law, this Agreement shall create a valid security interest in
such asset and, to the extent permitted by applicable law,
this Agreement shall create a valid security interest in the
proceeds of such asset.
(b) "Intellectual Property" means the collective reference to
all rights, priorities and privileges relating to intellectual
property, whether arising under United States, multinational or foreign
laws or otherwise, including, without limitation, (i) all copyrights
arising under the laws of the United States, any other country or any
political subdivision thereof, whether registered or unregistered and
whether published or unpublished, all registrations and recordings
thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in
the United States Copyright Office, (ii) all letters patent of the
United States, any other country or any political subdivision thereof,
all reissues and extensions thereof, and all applications for letters
patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, (iii) all trademarks,
trade names, corporate names, company names, business names, fictitious
business names, trade dress, service marks, logos, domain names and
other source or business identifiers, and all goodwill associated
therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision
thereof, or otherwise, and all common law rights related thereto, (iv)
all trade secrets arising under the laws of the United States, any
other country or any political subdivision thereof, (v) all rights to
obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.
(c) "Majority in Interest" shall mean, at any time of
determination, the majority in interest (based on then-outstanding
principal amounts of Debentures at the time of such determination) of
the Secured Parties.
(d) "Necessary Endorsement" shall mean undated stock powers
endorsed in blank or other proper instruments of assignment duly
executed and such other instruments or documents as the Agent (as that
term is defined below) may reasonably request.
(e) "Obligations" means all of the Company's' obligations
under this Agreement, the Purchase Agreement, the Debentures, and any
other instruments, agreements or other documents executed and/or
delivered in connection herewith or therewith, 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 any of the Secured Parties 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
"Obligations" shall include, without limitation: (i) principal of, and
interest on the Debentures and the loans extended pursuant thereto;
(ii) any and all other fees, indemnities, costs, obligations and
liabilities of the Company from time to time under or in connection
with this Agreement, the Debentures and any other instruments,
agreements or other documents executed and/or delivered in connection
herewith or therewith; and (iii) 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 the Company.
(f) "Organizational Documents" means with respect to the
Company, the documents by which the Company 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 the
Company (such as bylaws, a partnership agreement or an operating,
limited liability or members agreement).
(g) "UCC" means the Uniform Commercial Code of the State of
Nevada and or any other applicable law of any state or states which 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
defined terms in the UCC should be construed in their broadest sense so
that the term "Collateral" will be construed in its broadest sense.
Accordingly if there are, from time to time, changes to defined terms
in the UCC that broaden the definitions, they are incorporated herein
and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.
2. Grant of Perfected Security Interest. As an inducement for the
Secured Parties to extend the loans as evidenced by the Debentures and to secure
the complete and timely payment, performance and discharge in full, as the case
may be, of all of the Obligations, the Company hereby unconditionally and
irrevocably pledges, grants and hypothecates to the Secured Parties a continuing
and perfected security interest in and to, a lien upon and a right of set-off
against all of their respective right, title and interest of whatsoever kind and
nature in and to, the Collateral (the "Security Interest").
3. Delivery of Certain Collateral. Contemporaneously or prior to the
execution of this Agreement, the Company shall deliver or cause to be delivered
to the Agent (a) any and all certificates and other instruments representing or
evidencing the Pledged Securities, and (b) any and all certificates and other
instruments or documents representing any of the other Collateral, in each case,
together with all Necessary Endorsements. The Company is, contemporaneously with
the execution hereof, delivering to Agent, or has previously delivered to Agent,
a true and correct copy of each Organizational Document governing any of the
Pledged Securities.
4. Representations, Warranties, Covenants and Agreements of the
Company. The Company represents and warrants to, and covenants and agrees with,
the Secured Parties as follows:
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and otherwise to carry out its
obligations hereunder. The execution, delivery and performance by the
Company of this Agreement and the filings contemplated therein have
been duly authorized by all necessary action on the part of the Company
and no further action is required by the Company. This Agreement has
been duly executed by the Company. This Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against
the Company 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 and by general principles of equity.
(b) The Company has no place of business or offices where its
books of account and records are kept (other than temporarily at the
offices of its attorneys or accountants) or places where Collateral is
stored or located, except as set forth on Schedule A attached hereto.
Except as disclosed on Schedule A, none of such Collateral is in the
possession of any consignee, bailee, warehouseman, agent or processor.
(c) Except set forth on Schedule B attached hereto, the
Company is the sole owner of the Collateral (except for non-exclusive
licenses granted by the Company in the ordinary course of business),
free and clear of any liens, security interests, encumbrances, rights
or claims, and are fully authorized to grant the Security Interest.
There is not on file in any governmental or regulatory authority,
agency or recording office an effective financing statement, security
agreement, license or transfer or any notice of any of the foregoing
(other than those that will be filed in favor of the Secured Parties
pursuant to this Agreement) covering or affecting any of the
Collateral. So long as this Agreement shall be in effect, the Company
shall not execute and shall not knowingly permit to be on file in any
such office or agency any such financing statement or other document or
instrument (except to the extent filed or recorded in favor of the
Secured Parties pursuant to the terms of this Agreement).
(d) No written claim has been received that any Collateral or
the Company's use of any Collateral violates the rights of any third
party. There has been no adverse decision to the Company's claim of
ownership rights in or exclusive rights to use the Collateral in any
jurisdiction or to the Company's right to keep and maintain such
Collateral in full force and effect, and there is no proceeding
involving said rights pending or, to the best knowledge of the Company,
threatened before any court, judicial body, administrative or
regulatory agency, arbitrator or other governmental authority.
(e) The Company shall at all times maintain its books of
account and records relating to the Collateral at its principal place
of business and its Collateral at the locations set forth on Schedule A
attached hereto and may not relocate such books of account and records
or tangible Collateral unless it delivers to the Secured Parties at
least 30 days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the
United States) and (ii) evidence that appropriate financing statements
under the UCC and other necessary documents have been filed and
recorded and other steps have been taken to perfect the Security
Interest to create in favor of the Secured Parties a valid, perfected
and continuing perfected lien in the Collateral.
(f) This Agreement creates in favor of the Secured Parties a
valid, security interest in the Collateral, securing the payment and
performance of the Obligations. Upon making the filings described in
the immediately following paragraph, all security interests created
hereunder in any Collateral which may be perfected by filing Uniform
Commercial Code financing statements shall have been duly perfected.
Except for the filing of the Uniform Commercial Code financing
statements referred to in the immediately following paragraph, the
recordation of the Intellectual Property Security Agreement (as defined
below) with respect to copyrights and copyright applications in the
United States Copyright Office referred to in paragraph (m), the
execution and delivery of deposit account control agreements satisfying
the requirements of Section 9-104(a)(2) of the UCC with respect to each
deposit account of the Company, and the delivery of the certificates
and other instruments provided in Section 3, no action is necessary to
create, perfect or protect the security interests created hereunder.
Without limiting the generality of the foregoing, except for the filing
of said financing statements, the recordation of said Intellectual
Property Security Agreement, and the execution and delivery of said
deposit account control agreements, no consent of any third parties and
no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required
for (i) the execution, delivery and performance of this Agreement, (ii)
the creation or perfection of the Security Interests created hereunder
in the Collateral or (iii) the enforcement of the rights of the Secured
Parties hereunder.
(g) The Company hereby authorizes the Secured Parties, or any
of them, to file one or more financing statements under the UCC, with
respect to the Security Interest with the proper filing and recording
agencies in any jurisdiction deemed proper by them.
(h) The execution, delivery and performance of this Agreement
by the Company does not (i) violate any of the provisions of any
Organizational Documents of the Company or any judgment, decree, order
or award of any court, governmental body or arbitrator or any
applicable law, rule or regulation applicable to the Company or (ii)
conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing any Company debt
or otherwise) or other understanding to which the Company is a party or
by which any property or asset of the Company is bound or affected. No
consent (including, without limitation, from stockholders or creditors
of the Company) is required for the Company to enter into and perform
its obligations hereunder.
(i) The capital stock and other equity interests listed on
Schedule H hereto represent all of the capital stock and other equity
interests of the subsidiaries of the Company, and represent all capital
stock and other equity interests owned, directly or indirectly, by the
Company. All of the Pledged Securities are validly issued, fully paid
and nonassessable, and the Company is the legal and beneficial owner of
the Pledged Securities, free and clear of any lien, security interest
or other encumbrance except for the security interests created by this
Agreement.
(j) The ownership and other equity interests in partnerships
and limited liability companies (if any) included in the Collateral
(the "Pledged Interests") by their express terms do not provide that
they are securities governed by Article 8 of the UCC and are not held
in a securities account or by any financial intermediary.
(k) Unless the Agent (as defined in Section 18) in its sole
discretion, consents in writing to a senior lien, the Company shall at
all times maintain the liens and Security Interest provided for
hereunder as valid and perfected liens and security interests in the
Collateral in favor of the Secured Parties until this Agreement and the
Security Interest hereunder shall be terminated pursuant to Section 11
hereof; provided, however, the Agent (as defined in Section 18), in its
sole discretion, consents in writing to a senior lien. The Company
hereby agrees to defend the same against the claims of any and all
persons and entities. The Company shall safeguard and protect all
Collateral for the account of the Secured Parties. At the request of
the Secured Parties, the Company will sign and deliver to the Secured
Parties at any time or from time to time one or more financing
statements pursuant to the UCC in form reasonably satisfactory to the
Secured Parties and will pay the cost of filing the same in all public
offices wherever filing is, or is deemed by the Secured Parties to be,
necessary or desirable to effect the rights and obligations provided
for herein. Without limiting the generality of the foregoing, the
Company shall pay all fees, taxes and other amounts necessary to
maintain the Collateral and the Security Interest hereunder, and the
Company shall obtain and furnish to the Secured Parties from time to
time, upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the Security
Interest hereunder.
(l) The Company will not transfer, pledge, hypothecate,
encumber, license, sell or otherwise dispose of any of the Collateral
(except for non-exclusive licenses granted by the Company in its
ordinary course of business and sales of inventory by the Company in
its ordinary course of business) without the prior written consent of a
Majority in Interest.
(m) The Company shall keep and preserve its equipment,
inventory and other tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause to
be operated or located) in any area excluded from insurance coverage.
(n) The Company 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 entities and otherwise as is
prudent for entities engaged in similar businesses but in any event
sufficient to cover the full replacement cost thereof. The Company
shall cause each insurance policy issued in connection herewith to
provide, and the insurer issuing such policy to certify to the Agent
that (a) the Agent will be named as lender loss payee and additional
insured under each such insurance policy; (b) if such insurance be
proposed to be cancelled or materially changed for any reason
whatsoever, such insurer will promptly notify the Agent and such
cancellation or change shall not be effective as to the Agent for at
least thirty (30) days after receipt by the Agent of such notice,
unless the effect of such change is to extend or increase coverage
under the policy; and (c) the 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. If no Event of Default (as defined in the Debentures) exists
and if the proceeds arising out of any claim or series of related
claims do not exceed $100,000, loss payments in each instance will be
applied by the Company to the repair and/or replacement of property
with respect to which the loss was incurred to the extent reasonably
feasible, and any loss payments or the balance thereof remaining, to
the extent not so applied, shall be payable to the Company, provided,
however, that payments received by the Company after an Event of
Default occurs and is continuing or in excess of $100,000 for any
occurrence or series of related occurrences shall be paid to the Agent
and, if received by the Company, shall be held in trust for and
immediately paid over to the Agent unless otherwise directed in writing
by the Agent. Copies of such policies or the related certificates, in
each case, naming the Agent as lender loss payee and additional insured
shall be delivered to the Agent at least annually and at the time any
new policy of insurance is issued.
(o) The Company shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Parties promptly, in sufficient
detail, of any substantial change in the Collateral, and of the
occurrence of any event which would have a material adverse effect on
the value of the Collateral or on the Secured Parties' security
interest therein.
(p) The Company shall promptly execute and deliver to the
Secured Parties such further deeds, mortgages, assignments, security
agreements, financing statements or other instruments, documents,
certificates and assurances and take such further action as the Secured
Parties may from time to time request and may in its sole discretion
deem necessary to perfect, protect or enforce its security interest in
the Collateral including, without limitation, if applicable, the
execution and delivery of a separate security agreement with respect to
the Company's Intellectual Property ("Intellectual Property Security
Agreement") in which the Secured Parties have been granted a security
interest hereunder, substantially in a form acceptable to the Secured
Parties, which Intellectual Property Security Agreement, other than as
stated therein, shall be subject to all of the terms and conditions
hereof.
(q) Upon the reasonable request of a Secured Party and during
normal business hours, the Company shall permit the Secured Parties and
their representatives and agents to inspect the Collateral at any time,
and to make copies of records pertaining to the Collateral as may be
requested by a Secured Party from time to time.
(r) The Company shall take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights,
claims, causes of action and accounts receivable in respect of the
Collateral.
(s) The Company shall promptly notify the Secured Parties in
sufficient detail upon becoming aware of any attachment, garnishment,
execution or other legal process levied against any Collateral and of
any other information received by the Company that may materially
affect the value of the Collateral, the Security Interest or the rights
and remedies of the Secured Parties hereunder.
(t) All information heretofore, herein or hereafter supplied
to the Secured Parties by or on behalf of the Company with respect to
the Collateral is accurate and complete in all material respects as of
the date furnished.
(u) The Company shall at all times preserve and keep in full
force and effect their respective valid existence and good standing and
any rights and franchises material to its business.
(v) The Company will not change its name, type of
organization, jurisdiction of organization, organizational
identification number (if it has one), legal or corporate structure, or
identity, or add any new fictitious name unless it provides at least 30
days prior written notice to the Secured Parties of such change and, at
the time of such written notification, the Company provides any
financing statements or fixture filings necessary to perfect and
continue perfected the perfected security Interest granted and
evidenced by this Agreement.
(w) The Company shall not consign any of its Inventory or sell
any of its Inventory on xxxx and hold, sale or return, sale on
approval, or other conditional terms of sale without the consent of a
Majority in Interest which shall not be unreasonably withheld, except
to the extent such consignment or sale does not exceed 15% of the total
value of all of the Company's finished goods in Inventory.
(x) The Company shall not relocate its chief executive office
to a new location without providing 30 days prior written notification
thereof to the Secured Parties and so long as, at the time of such
written notification, the Company provides any financing statements or
fixture filings necessary to perfect and continue perfected the
perfected security Interest granted and evidenced by this Agreement.
(y) The Company was organized and remains organized solely
under the laws of the State of Nevada.
(z) (i) The actual name of the Company is the name set forth
in the preamble above; (ii) the Company does not have any trade names
except as set forth on Schedule E attached hereto; (iii) the Company
has not used any name other than that stated in the preamble hereto or
as set forth on Schedule E for the preceding five years; and (iv) no
entity has merged into the Company or been acquired by the Company
within the past five years except as set forth on Schedule E.
(aa) At any time and from time to time that any Collateral
consists of instruments, certificated securities or other items that
require or permit possession by the secured party to perfect the
security interest created hereby, the Company shall deliver such
Collateral to the Agent.
(bb) The Company hereby agrees to comply with any and all
orders and instructions of Agent regarding the Pledged Interests
consistent with the terms of this Agreement without the further consent
of the Company as contemplated by Section 8-106 (or any successor
section) of the UCC. Further, the Company agrees that it shall not
enter into a similar agreement (or one that would confer "control"
within the meaning of Article 8 of the UCC) with any other person or
entity.
(cc) The Company shall cause all tangible chattel paper
constituting Collateral to be delivered to the Agent, or, if such
delivery is not possible, then to cause such tangible chattel paper to
contain a legend noting that it is subject to the security interest
created by this Agreement. To the extent that any Collateral consists
of electronic chattel paper, the Company shall cause the underlying
chattel paper to be "marked" within the meaning of Section 9-105 of the
UCC (or successor section thereto).
(dd) If there is any investment property or deposit account
included as Collateral that can be perfected by "control" through an
account control agreement, the Company shall cause such an account
control agreement, in form and substance in each case satisfactory to
the Secured Parties, to be entered into and delivered to the Secured
Parties.
(ee) To the extent that any Collateral consists of
letter-of-credit rights, the Company shall cause the issuer of each
underlying letter of credit to consent to an assignment of the proceeds
thereof to the Secured Parties.
(ff) To the extent that any Collateral is in the possession of
any third party, the Company shall join with the Secured Parties in
notifying such third party of the Secured Parties' security interest in
such Collateral and shall use its best efforts to obtain an
acknowledgement and agreement from such third party with respect to the
Collateral, in form and substance satisfactory to the Secured Parties.
(gg) If the Company shall at any time hold or acquire a
commercial tort claim, the Company shall promptly notify the Secured
Parties in a writing signed by the Company of the particulars thereof
and grant to the Secured Parties in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this
Agreement, with such writing to be in form and substance satisfactory
to the Secured Parties.
(hh) The Company shall immediately provide written notice to
the Secured Parties of any and all accounts which arise out of
contracts with any governmental authority and, to the extent necessary
to perfect or continue the perfected status of the Security Interest in
such accounts and proceeds thereof, shall execute and deliver to the
Secured Parties an assignment of claims for such accounts and cooperate
with the Secured Parties in taking any other steps required, in their
judgment, under the Federal Assignment of Claims Act or any similar
federal, state or local statute or rule to perfect or continue the
perfected status of the Security Interest in such accounts and proceeds
thereof.
(ii) The Company shall vote the Pledged Securities to comply
with the covenants and agreements set forth herein and in the
Debentures.
(jj) The Company shall cause the issuer of any Pledged
Securities to register the pledge of the applicable Pledged Securities
on the books of such issuer. The Company shall notify each issuer of
Pledged Securities to register the pledge of the applicable Pledged
Securities in the name of the Secured Parties on the books of such
issuer. Further, except with respect to certificated securities
delivered to the Agent, the Company shall deliver to Agent an
acknowledgement of pledge (which, where appropriate, shall comply with
the requirements of the relevant UCC with respect to perfection by
registration) signed by the issuer of the applicable Pledged
Securities, which acknowledgement shall confirm that: (a) it has
registered the pledge on its books and records; and (b) at any time
directed by Agent during the continuation of an Event of Default, such
issuer will transfer the record ownership of such Pledged Securities
into the name of any designee of Agent, will take such steps as may be
necessary to effect the transfer, and will comply with all other
instructions of Agent regarding such Pledged Securities without the
further consent of the Company.
(kk) In the event that, upon an occurrence of an Event of
Default, Agent shall sell all or any of the Pledged Securities to
another party or parties (herein called the "Transferee") or shall
purchase or retain all or any of the Pledged Securities, the Company
shall, to the extent applicable: (i) deliver to Agent or the
Transferee, as the case may be, the articles of incorporation, bylaws,
minute books, stock certificate books, corporate seals, deeds, leases,
indentures, agreements, evidences of indebtedness, books of account,
financial records and all other Organizational Documents and records of
the issuer(s) of the Pledged Securities and their direct and indirect
subsidiaries; (ii) use its best efforts to obtain resignations of the
persons then serving as officers and directors of the issuer(s) of the
Pledged Securities and their direct and indirect subsidiaries, if so
requested; and (iii) use its best efforts to obtain any approvals that
are required by any governmental or regulatory body in order to permit
the sale of the Pledged Securities to the Transferee or the purchase or
retention of the Pledged Securities by Agent and allow the Transferee
or Agent to continue the business of the issuer(s) of the Pledged
Securities and their direct and indirect subsidiaries.
(ll) Without limiting the generality of the other obligations
of the Company hereunder, the Company shall promptly (i) cause to be
registered at the United States Copyright Office all of its material
copyrights, (ii) cause the security interest contemplated hereby with
respect to all Intellectual Property registered at the United States
Copyright Office or United States Patent and Trademark Office to be
duly recorded at the applicable office, and (iii) give the Agent notice
whenever it acquires (whether absolutely or by license) or creates any
additional material Intellectual Property.
(mm) The Company will from time to time, at the expense of the
Company, promptly execute and deliver all such further instruments and
documents, and take all such further action as may be necessary or
desirable, or as the Secured Parties may reasonably request, in order
to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Secured Parties to exercise and enforce
their rights and remedies hereunder and with respect to any Collateral
or to otherwise carry out the purposes of this Agreement.
(nn) Schedule F attached hereto lists all of the patents,
patent applications, trademarks, trademark applications, registered
copyrights, and domain names owned by the Company as of the date
hereof. Schedule F lists all material licenses in favor of the Company
for the use of any patents, trademarks, copyrights and domain names as
of the date hereof. All material patents and trademarks of the Company
have been duly recorded at the United States Patent and Trademark
Office and all material copyrights of the Company have been duly
recorded at the United States Copyright Office.
(oo) Except as set forth on Schedule G attached hereto, none
of the account debtors or other persons or entities obligated on any of
the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local statute
or rule in respect of such Collateral.
5. Effect of Pledge on Certain Rights. If any of the Collateral subject
to this Agreement consists of nonvoting equity or ownership interests
(regardless of class, designation, preference or rights) that may be converted
into voting equity or ownership interests upon the occurrence of certain events
(including, without limitation, upon the transfer of all or any of the other
stock or assets of the issuer), it is agreed that the pledge of such equity or
ownership interests pursuant to this Agreement or the enforcement of any of
Agent's rights hereunder shall not be deemed to be the type of event which would
trigger such conversion rights notwithstanding any provisions in the
Organizational Documents or agreements to which the Company is subject or to
which the Company is party.
6. Defaults. The following events shall be "Events of Default" under
this Agreement:
(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Company in this
Agreement shall prove to have been incorrect in any material respect
when made;
(c) The failure by the Company to observe or perform any of
its obligations hereunder for five (5) days after delivery to the
Company of notice of such failure by or on behalf of a Secured Party
unless such default is capable of cure but cannot be cured within such
time frame and the Company is using best efforts to cure same in a
timely fashion; or
(d) If any provision of this Agreement shall at any time for
any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by the Company, or a
proceeding shall be commenced by the Company, or by any governmental
authority having jurisdiction over the Company, seeking to establish
the invalidity or unenforceability thereof, or the Company shall deny
that it has any liability or obligation purported to be created under
this Agreement.
7. Duty To Hold In Trust.
(a) Upon the occurrence of any Event of Default and at any
time thereafter, the Company shall, upon receipt of any revenue,
income, dividend, interest or other sums subject to the Security
Interest, whether payable pursuant to the Debentures or otherwise, or
of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in trust
for the Secured Parties and shall forthwith endorse and transfer any
such sums or instruments, or both, to the Secured Parties, pro-rata in
proportion to their initial purchases of Debentures for application to
the satisfaction of the Obligations (and if any Debenture is not
outstanding, pro-rata in proportion to the initial purchases of the
remaining Debentures).
(b) If the Company shall become entitled to receive or shall
receive any securities or other property (including, without
limitation, shares of Pledged Securities or instruments representing
Pledged Securities acquired after the date hereof, or any options,
warrants, rights or other similar property or certificates representing
a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital,
or issued in connection with any reorganization of any issuer of the
Pledged Securities or any of its direct or indirect subsidiaries) in
respect of the Pledged Securities (whether as an addition to, in
substitution of, or in exchange for, such Pledged Securities or
otherwise), the Company agrees to (i) accept the same as the agent of
the Secured Parties; (ii) hold the same in trust on behalf of and for
the benefit of the Secured Parties; and (iii) to deliver any and all
certificates or instruments evidencing the same to Agent on or before
the close of business on the fifth business day following the receipt
thereof by the Company, in the exact form received together with the
Necessary Endorsements, to be held by Agent subject to the terms of
this Agreement as Collateral.
8. Rights and Remedies Upon Default.
(a) Upon the occurrence of any Event of Default and at any
time thereafter, the Secured Parties, acting through any agent
appointed by them for such purpose, shall have the right to exercise
all of the remedies conferred hereunder and under the Debentures, and
the Secured Parties shall have all the rights and remedies of a secured
party under the UCC. Without limitation, the Secured Parties shall have
the following rights and powers:
(i) The Secured Parties shall have the right to take
possession of the Collateral and, for that purpose, enter,
with the aid and assistance of any person, any premises where
the Collateral, or any part thereof, is or may be placed and
remove the same, and the Company shall assemble the Collateral
and make it available to the Secured Parties at places which
the Secured Parties shall reasonably select, whether at the
Company's premises or elsewhere, and make available to the
Secured Parties, without rent, all of the Company's premises
and facilities for the purpose of the Secured Parties taking
possession of, removing or putting the Collateral in saleable
or disposable form.
(ii) Upon notice to the Company by Agent, all rights
of the Company to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise and
all rights of the Company to receive the dividends and
interest which it would otherwise be authorized to receive and
retain, shall cease. Upon such notice, Agent shall have the
right to receive any interest, cash dividends or other
payments on the Collateral and, at the option of Agent, to
exercise in such Agent's discretion all voting rights
pertaining thereto. Without limiting the generality of the
foregoing, Agent shall have the right (but not the obligation)
to exercise all rights with respect to the Collateral as it
were the sole and absolute owner thereof, including, without
limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a
merger, reorganization, consolidation, recapitalization or
other readjustment concerning or involving the Collateral or
the Company or any of its direct or indirect subsidiaries.
(iii) The Secured Parties shall have the right to
operate the business of the Company using the Collateral and
shall have the right to assign, sell, lease or otherwise
dispose of and deliver all or any part of the Collateral, at
public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or
for future delivery, in such parcel or parcels and at such
time or times and at such place or places, and upon such terms
and conditions as are commercially reasonable, all without
(except as shall be required by applicable statute and cannot
be waived) advertisement or demand upon or notice to the
Company or right of redemption of the Company, which are
hereby expressly waived. Upon each such sale, lease,
assignment or other transfer of Collateral, the Secured
Parties may, unless prohibited by applicable law which cannot
be waived, purchase all or any part of the Collateral being
sold, free from and discharged of all trusts, claims, right of
redemption and equities of the Company, which are hereby
waived and released.
(iv) The Secured Parties shall have the right (but
not the obligation) to notify any account debtors and any
obligors under instruments or accounts to make payments
directly to the Secured Parties and to enforce the Company's
rights against such account debtors and obligors.
(v) The Secured Parties may (but are not obligated
to) direct any financial intermediary or any other person or
entity holding any investment property to transfer the same to
the Secured Parties or their designee.
(vi) The Secured Parties may (but are not obligated
to) transfer any or all Intellectual Property registered in
the name of the Company at the United States Patent and
Trademark Office and/or Copyright Office into the name of the
Secured Parties or any designee or any purchaser of any
Collateral.
(b) The Agent may comply with any applicable law in connection
with a disposition of Collateral and such compliance will not be
considered adversely to affect the commercial reasonableness of any
sale of the Collateral. The Agent may sell the Collateral without
giving any warranties and may specifically disclaim such warranties. If
the Agent sells any of the Collateral on credit, the Company will only
be credited with payments actually made by the purchaser. In addition,
the Company waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of the Agent's rights and
remedies hereunder, 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 the Agent to further exercise
rights and remedies under this Section 8 or elsewhere provided by
agreement or applicable law, the Company hereby grants to the Agent,
for the benefit of the Agent and the Secured Parties, an irrevocable,
nonexclusive license (exercisable without payment of royalty or other
compensation to the Company) to use, license or sublicense following an
Event of Default, any Intellectual Property now owned or hereafter
acquired by the Company, and wherever the same may be located, and
including in such license access to all media in which any of the
licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof.
9. Applications of Proceeds. The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Parties in enforcing their
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Debentures at
the time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
Company any surplus proceeds. If, upon the sale, license or other disposition of
the Collateral, the proceeds thereof are insufficient to pay all amounts to
which the Secured Parties are legally entitled, the Company will be liable for
the deficiency, together with interest thereon, at the rate of 10% per annum or
the lesser amount permitted by applicable law (the "Default Rate"), and the
reasonable fees of any attorneys employed by the Secured Parties to collect such
deficiency. To the extent permitted by applicable law, the Company waives all
claims, damages and demands against the Secured Parties arising out of the
repossession, removal, retention or sale of the Collateral, unless due solely to
the gross negligence or willful misconduct of the Secured Parties as determined
by a final judgment (not subject to further appeal) of a court of competent
jurisdiction.
10. Securities Law Provision. The Company recognizes that Agent may be
limited in its ability to effect a sale to the public of all or part of the
Pledged Securities by reason of certain prohibitions in the Securities Act of
1933, as amended, or other federal or state securities laws (collectively, the
"Securities Laws"), and may be compelled to resort to one or more sales to a
restricted group of purchasers who may be required to agree to acquire the
Pledged Securities for their own account, for investment and not with a view to
the distribution or resale thereof. The Company agrees that sales so made may be
at prices and on terms less favorable than if the Pledged Securities were sold
to the public, and that Agent has no obligation to delay the sale of any Pledged
Securities for the period of time necessary to register the Pledged Securities
for sale to the public under the Securities Laws. The Company shall cooperate
with Agent in its attempt to satisfy any requirements under the Securities Laws
(including, without limitation, registration thereunder if requested by Agent)
applicable to the sale of the Pledged Securities by Agent.
11. Costs and Expenses. The Company agrees to pay all reasonable
out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements
pursuant to the UCC, continuation statements, partial releases and/or
termination statements related thereto or any expenses of any searches
reasonably required by the Secured Parties. The Company shall also pay all other
claims and charges which in the reasonable opinion of the Secured Parties might
prejudice, imperil or otherwise affect the Collateral or the Security Interest
therein. The Company will also, upon demand, pay to the Secured Parties the
amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Parties
may incur in connection with (i) the enforcement of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, or (iii) the exercise or enforcement of
any of the rights of the Secured Parties under the Debentures. Until so paid,
any fees payable hereunder shall be added to the principal amount of the
Debentures and shall bear interest at the Default Rate.
12. Responsibility for Collateral. The Company assumes all liabilities
and responsibility in connection with all Collateral, and the Obligations shall
in no way be affected or diminished by reason of the loss, destruction, damage
or theft of any of the Collateral or its unavailability for any reason. Without
limiting the generality of the foregoing, (a) neither the Agent nor any Secured
Party (i) has any 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, or (ii) has any obligation to clean-up or otherwise prepare the
Collateral for sale, and (b) the Company shall remain obligated and liable under
each contract or agreement included in the Collateral to be observed or
performed by the Company thereunder. Neither the Agent nor any Secured Party
shall have any obligation or liability under any such contract or agreement by
reason of or arising out of this Agreement or the receipt by the Agent or any
Secured Party of any payment relating to any of the Collateral, nor shall the
Agent or any Secured Party be obligated in any manner to perform any of the
obligations of the Company under or pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the
Agent or any Secured Party 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 collect
the payment of any amounts which may have been assigned to the Agent or to which
the Agent or any Secured Party may be entitled at any time or times.
13. Security Interest Absolute. All rights of the Secured Parties and
all obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Debentures or any agreement entered into in connection with the foregoing,
or any portion hereof or thereof; (b) any change in the time, manner or place of
payment or performance of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Debentures or any other agreement entered into in connection with the
foregoing; (c) any exchange, release or nonperfection of any of the Collateral,
or any release or amendment or waiver of or consent to departure from any other
collateral for, or any guaranty, or any other security, for all or any of the
Obligations; (d) any action by the Secured Parties to obtain, adjust, settle and
cancel in its sole discretion any insurance claims or matters made or arising in
connection with the Collateral; or (e) any other circumstance which might
otherwise constitute any legal or equitable defense available to the Company, or
a discharge of all or any part of the Security Interest granted hereby. Until
the Obligations shall have been paid and performed in full, the rights of the
Secured Parties shall continue even if the Obligations are barred for any
reason, including, without limitation, the running of the statute of limitations
or bankruptcy. The Company expressly waives presentment, protest, notice of
protest, demand, notice of nonpayment and demand for performance. In the event
that at any time any transfer of any Collateral or any payment received by the
Secured Parties hereunder shall be deemed by final order of a court of competent
jurisdiction to have been a voidable preference or fraudulent conveyance under
the bankruptcy or insolvency laws of the United States, or shall be deemed to be
otherwise due to any party other than the Secured Parties, then, in any such
event, the Company's obligations hereunder shall survive cancellation of this
Agreement, and shall not be discharged or satisfied by any prior payment thereof
and/or cancellation of this Agreement, but shall remain a valid and binding
obligation enforceable in accordance with the terms and provisions hereof. The
Company waives all right to require the Secured Parties to proceed against any
other person or entity or to apply any Collateral which the Secured Parties may
hold at any time, or to marshal assets, or to pursue any other remedy. The
Company waives any defense arising by reason of the application of the statute
of limitations to any obligation secured hereby.
14. Term of Agreement. This Agreement and the Security Interest shall
terminate on the date on which all payments under the Debentures have been
indefeasibly paid in full and all other Obligations have been paid or
discharged; provided, however, that all indemnities of the Company contained in
this Agreement (including, without limitation, Annex A hereto) shall survive and
remain operative and in full force and effect regardless of the termination of
this Agreement.
15. Power of Attorney; Further Assurances.
(a) The Company authorizes the Secured Parties, and does
hereby make, constitute and appoint the Secured Parties and their
respective officers, agents, successors or assigns with full power of
substitution, as the Company's true and lawful attorney-in-fact, with
power, in the name of the various Secured Parties or the Company, to,
after the occurrence and during the continuance of an Event of Default,
(i) endorse any note, checks, drafts, money orders or other instruments
of payment (including payments payable under or in respect of any
policy of insurance) in respect of the Collateral that may come into
possession of the Secured Parties; (ii) to sign and endorse any
financing statement pursuant to the UCC or any invoice, freight or
express xxxx, xxxx of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection
with accounts, and other documents relating to the Collateral; (iii) to
pay or discharge taxes, liens, security interests or other encumbrances
at any time levied or placed on or threatened against the Collateral;
(iv) to demand, collect, receipt for, compromise, settle and xxx for
monies due in respect of the Collateral; (v) to transfer any
Intellectual Property or provide licenses respecting any Intellectual
Property; and (vi) generally, at the option of the Secured Parties, and
at the expense of the Company, at any time, or from time to time, to
execute and deliver any and all documents and instruments and to do all
acts and things which the Secured Parties deem necessary to protect,
preserve and realize upon the Collateral and the Security Interest
granted therein in order to effect the intent of this Agreement and the
Debentures all as fully and effectually as the Company might or could
do; and the Company hereby ratifies all that said attorney shall
lawfully do or cause to be done by virtue hereof. This power of
attorney is coupled with an interest and shall be irrevocable for the
term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding. The designation set forth herein shall be deemed
to amend and supersede any inconsistent provision in the Organizational
Documents or other documents or agreements to which the Company is
subject or to which the Company is a party. Without limiting the
generality of the foregoing, after the occurrence and during the
continuance of an Event of Default, each Secured Party is specifically
authorized to execute and file any applications for or instruments of
transfer and assignment of any patents, trademarks, copyrights or other
Intellectual Property with the United States Patent and Trademark
Office and the United States Copyright Office.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, with the
proper filing and recording agencies in any jurisdiction, including,
without limitation, the jurisdictions indicated on Schedule C attached
hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested
by the Secured Parties, to perfect the Security Interest granted
hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Secured Parties the
grant or perfection of a perfected security interest in all the
Collateral under the UCC.
(c) The Company hereby irrevocably appoints the Secured
Parties as the Company's attorney-in-fact, with full authority in the
place and instead of the Company and in the name of the Company, from
time to time in the Secured Parties' discretion, to take any action and
to execute any instrument which the Secured Parties may deem necessary
or advisable to accomplish the purposes of this Agreement, including
the filing, in its sole discretion, of one or more financing or
continuation statements and amendments thereto, relative to any of the
Collateral without the signature of the Company where permitted by law,
which financing statements may (but need not) describe the Collateral
as "all assets" or "all personal property" or words of like import, and
ratifies all such actions taken by the Secured Parties. This power of
attorney is coupled with an interest and shall be irrevocable for the
term of this Agreement and thereafter as long as any of the Obligations
shall be outstanding.
16. Notices. All notices, requests, demands and other communications
hereunder shall be subject to the notice provision of the Purchase Agreement (as
such term is defined in the Debentures).
17. Other Security. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Parties shall have the right, in its sole discretion, to
pursue, relinquish, subordinate, modify or take any other action with respect
thereto, without in any way modifying or affecting any of the Secured Parties'
rights and remedies hereunder.
18. Appointment of Agent. The Secured Parties hereby appoint Lacuna
Venture Fund LLLP ("Lacuna") to act as their agent ("Agent") for purposes of
exercising any and all rights and remedies of the Secured Parties hereunder.
Such appointment shall continue until revoked in writing by a Majority in
Interest, at which time a Majority in Interest shall appoint a new Agent;
provided, that Lacuna may not be removed as Agent unless Lacuna shall then hold
less than $100,000 principal amount of Debentures; provided further that such
removal may occur only if each of the other Secured Parties shall then hold not
less than $100,000 principal amount of Debentures. The Agent shall have the
rights, responsibilities and immunities set forth in Annex A hereto.
19. Miscellaneous.
(a) No course of dealing between the Company and the Secured
Parties, nor any failure to exercise, nor any delay in exercising, on
the part of the Secured Parties, any right, power or privilege
hereunder or under the Debentures 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.
(b) All of the rights and remedies of the Secured Parties with
respect to the Collateral, whether established hereby or by the
Debentures or by any other agreements, instruments or documents or by
law shall be cumulative and may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to
supersede all prior negotiations, understandings and agreements with
respect thereto. Except as specifically set forth in this Agreement, no
provision of this Agreement may be modified or amended except by a
written agreement specifically referring to this Agreement and signed
by the Company, the Agent and a Majority in Interest.
(d) In the event any provision of this Agreement is held to be
invalid, prohibited or unenforceable in any jurisdiction for any
reason, unless such provision is narrowed by judicial construction,
this Agreement shall, as to such jurisdiction, be construed as if such
invalid, prohibited or unenforceable provision had been more narrowly
drawn so as not to be invalid, prohibited or unenforceable. If,
notwithstanding the foregoing, any provision of this Agreement is held
to be invalid, prohibited or unenforceable in any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the extent
of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other
provisions of this Agreement and without affecting the validity or
enforceability of such provision or the other provisions of this
Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the
party giving such waiver, and no such waiver shall be deemed a waiver
of any subsequent breach or default or right, whether of the same or
similar nature or otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in
order to carry out the provisions and purposes of this Agreement.
(h) All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the
State of Delaware, without regard to the principles of conflicts of law
thereof. The Company agrees that all proceedings concerning the
interpretations, enforcement and defense of the transactions
contemplated by this Agreement and the Debentures (whether brought
against a party hereto or its respective affiliates, directors,
officers, shareholders, partners, members, employees or agents) shall
be commenced exclusively in the courts of the State of California
located in Santa Xxxxx County and the United States District Court for
the Northern District of California. The Company hereby irrevocably
submits to the exclusive jurisdiction of the courts of the State of
California located in Santa Xxxxx County and the United States District
Court for the Northern District of California for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives,
and agrees not to assert in any proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
proceeding is improper. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any
such proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to
limit in any way any right to serve process in any manner permitted by
law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If any party shall commence a
proceeding to enforce any provisions of this Agreement, then the
prevailing party in such proceeding shall be reimbursed by the other
party for its reasonable attorney's fees and other costs and expenses
incurred with the investigation, preparation and prosecution of such
proceeding.
(i) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the
same Agreement. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.
(j) The Company shall indemnify, reimburse and hold harmless
the Secured Parties and their respective partners, members,
shareholders, officers, directors, employees and agents (collectively,
"Indemnitees") 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 the Debentures, the Purchase Agreement or any other
agreement, instrument or other document executed or delivered in
connection herewith or therewith.
(k) Notwithstanding anything to the contrary contained herein,
if the Company shall issue additional Debentures pursuant to the
Purchase Agreement, any purchaser of such Debentures may become a party
to this Agreement by executing and delivering an additional counterpart
signature page to this Agreement and shall be deemed a "Secured Party"
hereunder.
[SIGNATURE PAGES FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed on the day and year first above written.
INTRAOP MEDICAL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
HOLDERS:
E.U. Capital Venture, Inc.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Secretary - Treasurer
Encyclopedia Equipment LLC
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Member
Lacuna Venture Fund LLLP
By: /s/ Wink Xxxxx
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Name: Wink Xxxxx
Title: Partner
