AMENDED AND RESTATED SECURITY AGREEMENT
EXHIBIT
4.8
AMENDED
AND RESTATED
THIS
AMENDED AND RESTATED SECURITY AGREEMENT (this “Agreement”)
is
made as of January 22, 2007, by and among SDS CAPITAL GROUP SPC, LTD., as
collateral agent for the holders (the “Holders”)
of the
Notes (as defined below) (in such capacity, the “Collateral
Agent”),
and
MATRITECH, INC., a Delaware corporation (together with its successors and
permitted assigns, the “Borrower”).
The
Collateral Agent and the Holders are hereinafter collectively referred to as
the
“Secured
Party.”
Background
A. Borrower
and certain Holders entered into that certain Securities Purchase Agreement
dated as of January 13, 2006 (as the same may be amended, restated, modified,
supplemented and/or replaced from time to time, the “Series
A Purchase
Agreement”),
pursuant to which Borrower issued its 15% Secured Convertible Promissory Notes
to such Holders (the “Series
A Note Holders”)
in the
original aggregate principal amount of $6,997,960 (as the same may be amended,
restated, modified, supplemented and/or replaced from time to time, the
“Series
A Notes”).
B. In
order
to induce the Series A Note Holders to purchase the Series A Notes, Borrower
executed and delivered to the Collateral Agent a Security Agreement, dated
as of
January 13, 2006 (as heretofore amended, the “Existing
Security Agreement”),
pursuant to which Borrower granted to the Collateral Agent, for the benefit
of
the Series A Note Holders, a perfected security interest in certain property
of
Borrower to secure the prompt payment, performance and discharge in full of
all
of Borrower’s obligations under the Series A Notes.
C. In
connection with the Series A Purchase Agreement, concurrently therewith,
Borrower and the Collateral Agent entered into a Contingent License Agreement,
dated as of January 13, 2006 (as heretofore amended, the “Existing Contingent
License Agreement”),
pursuant to which Borrower granted to the Collateral Agent, for the benefit
of
the Series A Note Holders, a contingent license under the Matritech Patent
Rights, the Matritech Trademark Rights and the MIT Patent Rights (each as
defined therein) on the terms and conditions set forth therein.
D. Concurrently
herewith, Borrower and certain Holders are entering into a Securities Purchase
Agreement, dated as of the date hereof (as the same may be amended, restated,
modified, supplemented and/or replaced from time to time, the “Series
B Purchase
Agreement”
and,
together with the Series A Purchase Agreement, the “Purchase
Agreements”),
pursuant to which Borrower is issuing its Series B 15% Secured Convertible
Promissory Notes to such Holders (the “Series
B Note Holders”
and,
together with the Series A Note Holders, the “Holders”)
in the
original aggregate principal amount of up to $4,500,000 (as the same may be
amended, restated, modified, supplemented and/or replaced from time to time,
the
“Series
B Notes”
and
together with the Series A Notes, the “Notes”).
E. Concurrently
herewith, the holders of a majority of outstanding principal balance of the
Series A Notes have consented to the issuance of the Series B Notes and directed
the Collateral Agent to amend and restate the Existing Security Agreement and
Existing Contingent License Agreement to enable the Series B Note Holders to
have a pari
passu
position
with the Series A Note Holders as to the security interest and license granted
under such agreements.
F. In
connection with the Series B Purchase Agreement, concurrently therewith,
Borrower and Collateral Agent are amending and restating the Existing Contingent
License Agreement (as the same may be amended, restated, modified, supplemented
and/or replaced from time to time, the “Contingent
License Agreement”)
to,
among other things, grant to the Collateral Agent, for the benefit of the
Holders, a contingent license under the Matritech Patent Rights, the Matritech
Trademark Rights and the MIT Patent Rights (each as defined therein), on the
terms and conditions set forth therein.
F. In
order
to induce the Series B Note Holders to purchase the Series B Notes pursuant
to
the Series B Purchase Agreement, Borrower agrees to amend and restate the
Existing Security Agreement in order to grant to the Collateral Agent, for
the
benefit of itself and the Holders, a perfected security interest in certain
property of Borrower to secure the prompt payment, performance and discharge
in
full of all of Borrower’s obligations under the Notes, all on the terms and
conditions set forth herein.
Accordingly,
in consideration of the foregoing and the mutual covenants contained herein,
and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the
parties hereto agree to amend and restate the Existing Security Agreement so
that, as amended and restated, it reads in its entirety as provided
herein:
1. DEFINITIONS.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the respective Purchase Agreements, as applicable.
The
following terms, as used herein, shall have the following meanings:
“Account”
shall
be used herein as defined in the Uniform Commercial Code.
“Collateral”
shall
have the meaning ascribed to such term in Section 3.
“Document”
shall
be used herein as defined in the Uniform Commercial Code.
“Effective
Date”
means
the date of this Agreement.
“Equipment”
shall
be used herein as defined in the Uniform Commercial Code, but in any event
shall
include, but not be limited to, tangible personal property held by Borrower
for
use primarily in business and shall include equipment, machinery, furniture,
vehicles, fixtures, furnishings, dyes, tools, and all accessories and parts
now
or hereafter affixed thereto as well as all attachments, replacements,
substitutes, accessories, additions and improvements to any of the foregoing,
but Equipment shall not include Inventory.
“Event
of Default”
means
any Event of Default described in (i) Sections A(i), (vi) or (vii) of Article
VI
of the Series A Notes or (ii) Sections A(i), (vi) or (vii) of Article VI of
the
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Series
B
Notes.
“General
Intangibles”
shall
be used herein as defined in the Uniform Commercial Code but in any event shall
include, without limitation, payment intangibles, contract rights (other than
Accounts), franchises, licenses, choses in action, books, records, customer
lists, tax, insurance and other kinds of refunds, patents, trademarks, trade
names, service marks, slogans, trade dress, copyrights, other intellectual
property rights and applications for intellectual property rights, goodwill,
plans, licenses, software (to the extent it does not constitute Goods) and
other
rights in personal property.
“Goods”
shall
be used herein as defined in the Uniform Commercial Code.
“Intellectual
Property”
means,
collectively, all patents, trademarks, service marks, trade dress, trade names
and corporate names, and copyrights, and any registrations, applications and
renewals for any of the foregoing,
relating
directly or indirectly, in whole or in part, to the NMP22 Product
Line.
“Inventory”
shall
be used herein as defined in the Uniform Commercial Code but in any event shall
include, but not be limited to, tangible personal property held by or on behalf
of Borrower (or in which Borrower has an interest in mass or a joint or other
interest) for sale or lease or to be furnished under contracts of service,
tangible personal property which Borrower has so leased or furnished, and raw
materials, work in process and materials used, produced or consumed in
Borrower’s business, and shall include tangible personal property returned to
Borrower by the purchaser following a sale thereof by Borrower and tangible
personal property represented by Documents. All equipment, accessories and
parts
at any time attached or added to items of Inventory or used in connection
therewith shall be deemed to be part of the Inventory.
“Licensed
Assets”
means,
collectively, the Matritech Patent Rights, the Matritech Trademark Rights and
the MIT Patent Rights (each as defined in the Contingent License Agreement)
and
any other Intellectual Property from time to time subject to the grant of a
license in favor of the Collateral Agent pursuant to the Contingent License
Agreement.
“Lien”
means
any lien, mortgage, security interest, chattel mortgage, pledge or other
encumbrance (statutory or otherwise) of any kind securing satisfaction or
performance of an obligation, including any agreement to give any of the
foregoing, any conditional sales or other title retention agreement, any lease
in the nature thereof, and the filing of or the agreement to give any financing
statement under the Code of any jurisdiction or similar evidence of any
encumbrance, whether within or outside the United States.
“NMP22
Business”
means
the business of Borrower relating to the NMP22 Product Line, including, without
limitation, the development, manufacture, marketing, sale, distribution and
licensing of the NMP22 Products.
“NMP22
Product Line”
means
the Borrower’s product line of diagnostic devices designed to detect bladder
cancer, including, without limitation, the Point of Care NMP22® BladderChek®
Test and NMP22® Test Kit.
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“NMP22
Products”
means
the Point of Care NMP22® BladderChek® Test, the NMP22® Test Kit and any other
products included from time to time in the NMP22 Product Line.
“Organizational
Documents”
mean,
with respect to any Person other than a natural person, the documents by which
such Person was organized (such as a certificate of incorporation, certificate
of limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms
of preferred equity) and which relate to the internal governance of such Person
(such as bylaws, a partnership agreement or an operating, limited liability
or
members agreement).
“Permitted
Liens”
means,
collectively, all of the following Liens: (a) Liens securing indebtedness
described in Article VIII(C)(v)(a) of both the Series A Notes and the Series
B
Notes (i.e., indebtedness incurred to finance receivables in an amount at any
time not to exceed 80% of the outstanding receivables owed to the Borrower
at
such time), (b) Liens securing indebtedness described in Article VIII(C)(v)(b)
of both the Series A Notes and the Series B Notes (i.e., equipment purchase
and
lease financing in an amount at any time not to exceed $200,000), provided
that no
such Liens shall extend to or cover any property other than the leased property
or equipment purchased by proceeds of such permitted financing; (c) Liens for
taxes, fees, assessments or other governmental charges or levies, either not
delinquent or being contested in good faith by appropriate proceedings and
for
which Borrower maintains adequate reserves, (d) Liens for mechanics and other
similar Liens not delinquent, and (e) Liens to secure payment of workers’
compensation, employment insurance, old age pensions, social security or other
like obligations incurred in the ordinary course of business.
“Person”
means
any individual,
corporation, partnership, limited liability company, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
“Proceeds”
shall
be used herein as defined in the Uniform Commercial Code but, in any event,
shall include, but not be limited to, (a) any and all proceeds of any insurance
(whether or not Collateral Agent is named as the loss payee thereof), indemnity,
warranty or guaranty payable to Borrower or Collateral Agent from time to time
with respect to any of the Collateral, (b) any and all payments (in any form
whatsoever) made or due and payable to Borrower from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of
all
or any part of the Collateral by any Governmental Authority (or any Person
acting under color of Governmental Authority), (c) any and all amounts received
when Collateral is sold, leased, licensed, exchanged, collected or disposed
of,
(d) any rights arising out of Collateral, and (e) any and all other amounts
from
time to time paid or payable under or in connection with any of the
Collateral.
“Secured
Obligations”
means
all of Borrower’s obligations under the Notes, in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect, absolute
or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations
or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party as a preference,
fraudulent transfer or
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otherwise
as such obligations may be amended, supplemented, converted, extended or
modified from time to time. Without limiting the generality of the foregoing,
the term “Secured Obligations” shall include, without limitation: (i) principal
of, and interest on the Notes; and (ii) all amounts (including but not limited
to post-petition interest) in respect of the foregoing that would be payable
but
for the fact that the obligations to pay such amounts are unenforceable or
not
allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving Borrower.
“Uniform
Commercial Code”
shall
mean the Uniform Commercial Code in effect on the date hereof and as amended
from time to time, and as enacted in the State of Delaware or in any state
or
states which, pursuant to the Uniform Commercial Code as enacted in the State
of
Delaware, has jurisdiction with respect to all, or any portion of, the
Collateral or this Agreement, from time to time. It is the intent of the parties
that the definitions set forth above should be construed in their broadest
sense
so that Collateral will be construed in its broadest sense. Accordingly if
there
are, from time to time, changes to defined terms in the Uniform Commercial
Code
that broaden the definitions, they are incorporated herein and if existing
definitions in the Uniform Commercial Code are broader than the amended
definitions, the existing ones shall be controlling. Similarly, where the phrase
“as defined in the Uniform Commercial Code, but in any event shall include,
but
not be limited to . . .” is used above, it means as defined in the Uniform
Commercial Code except that if any of the enumerated types of items specified
thereafter would not fall within the Uniform Commercial Code definition, they
shall nonetheless be included in the applicable definition for purposes of
this
Agreement.
2. LIEN
PRIORITIES; PARI PASSU RANKING.
The
Collateral Agent and each Holder agree as amongst themselves that,
notwithstanding any provision of the Uniform Commercial Code, any applicable
law
or decision, any Note, the Existing Security Agreement, any Purchase Agreement
or any other Transaction Document to the contrary:
(a) the
Collateral Agent and the Holders shall have a valid and perfected security
interest in and Lien on the Collateral and all proceeds thereof, subject only
to
Permitted Liens, to secure payment and performance of the Secured Obligations,
and such security interest and Lien shall be pari passu in all respects as
amongst the Collateral Agent and the Holders, notwithstanding the date, time,
method, manner or order of creation or perfection of the Liens granted to the
Collateral Agent, any Series A Note Holder or any Series B Note Holder,
notwithstanding any defect or deficiency in, or failure to perfect such Liens,
or whether the Collateral Agent or any other Secured Party holds possession
of
all or any part of the Collateral, or whether any such Lien was granted prior
to
or after commencement of any insolvency, bankruptcy or similar proceeding of
Borrower;
(b) the
Series A Notes and Series B Notes shall rank pari
passu
in right
of payment with each other; and
(c) all
Proceeds of Collateral shall be paid to the Collateral Agent, to be paid or
distributed as follows: (i) first, to the Collateral Agent to payment of that
portion of the Secured Obligations constituting fees, expenses (including,
without limitation, expenses related to attorneys’ fees and other professionals’
fees), indemnities and other amounts due to the Collateral Agent in its capacity
as such; (ii) second, to the
5
Series
A
Note Holders and the Series B Note Holders, ratably according to the aggregate
amounts remaining unpaid on account of the Secured Obligations owing to each
such Holder, to the extent necessary to pay in full all Secured Obligations
remaining unpaid; and (iii) third, any remainder shall be paid to Borrower
or as
a court of competent jurisdiction may direct.
3. GRANT
OF SECURITY INTEREST.
As
security for the payment and performance of the Secured Obligations, effective
as of the Effective Date, Borrower hereby affirms, pledges and hypothecates
to
the Collateral Agent, for the benefit of the Holders, and creates in favor
of
the Collateral Agent, for the benefit of the Holders, a security interest in
and
to, all of Borrower’s right, title and interest in and to all the following
property, in all its forms, in each case whether now or hereafter existing,
whether now owned or hereafter acquired, created or arising, and wherever
located (collectively, but without duplication, the “Collateral”):
(a) All
Inventory, Equipment and General Intangibles used by Borrower in connection
with, or otherwise relating to, the NMP22 Product Line, including, without
limitation:
(i)
any
and all NMP22 Products and components thereof (including, without limitation,
reagents and cell lines) held by or on behalf of Borrower (or in which Borrower
has an interest in mass or a joint or other interest) for sale or lease or
to be
furnished under contracts of service, any and all NMP22 Products which Borrower
has so leased or furnished, and any and all raw materials, work in process
and
materials used, produced or consumed to manufacture or produce the NMP22
Products, and any and all written materials related to the NMP22 Products
(including, without limitation, the written materials listed on Schedule
5);
(ii)
any
and all Equipment (including, without limitation, plastic molds and the
Equipment listed on Schedule
5)
used by
Borrower in the manufacture, production or processing of NMP22 Products, and
all
accessories and parts now or hereafter affixed thereto as well as all
attachments, replacements, substitutes, accessories, additions and improvements
to any of the foregoing;
(iii)
any
and all contract rights of Borrower in or arising under any contract or
agreement of Borrower relating directly or indirectly, in whole or in part,
to
the NMP22 Product Line, including without limitation Borrower’s agreements with
Unotech Diagnostics, Inc., Xxxxxx Laboratories and
Inverness Medical Innovations, Inc.; and
(iv)
any
and all cell lines used by Borrower in connection with the NMP22 Product Line,
and any and all written know-how, protocols and other printed materials
referring or relating to the culturing and propagation of such cell lines;
and
(b) All
Proceeds of any and all of the foregoing.
Notwithstanding
the foregoing, it is the intention of the parties to the Agreement that the
security interest granted herein shall not extend to, and the term “Collateral”
shall exclude, (1) any and all
6
(A)
Intellectual Property utilized or to be utilized outside the Field (as defined
in the Contingent License Agreement), but only if such Intellectual Property
is
subject to the grant of a license in favor of the Collateral Agent for use
inside the Field pursuant to the Contingent License Agreement, and/or (B) other
Licensed Assets; (2) the Borrower’s trademarks in the name “Matritech” and any
registrations, applications and renewals for the foregoing,
(3) any
and all general laboratory Equipment and materials, and
(4)
any item of General Intangibles that is now or hereafter held by Borrower,
solely in the event and to the extent that: (i) as the result of the security
interest granted herein, Borrower’s rights in or with respect to such item of
General Intangibles would be forfeited or would become void, voidable,
terminable, or revocable, or, with respect to any item of General Intangibles
that is now or hereafter held by Borrower as licensee or lessee, if Borrower
would be deemed to have breached, violated, or defaulted such underlying
license, lease or other agreement that governs such item of General Intangibles;
(ii) any such restriction shall be effective and enforceable under applicable
law; and (iii) any such forfeiture, voidness, voidability, terminability,
revocability, breach, violation, or default cannot be remedied by Borrower
using
its commercially reasonable efforts; provided,
however,
that
the security interest granted herein shall extend to, and the term “Collateral”
shall include, (y) any and all proceeds of such item of General Intangibles
to
the extent that the granting of a security interest in such proceeds is not
so
restricted, and (z) upon any such licensor, lessor or other applicable party’s
consent with respect to any such otherwise excluded item of General Intangibles
being obtained, thereafter such item of General Intangibles as well as any
proceeds thereof that might theretofore have been excluded from the grant of
security interest contained herein and the term “Collateral”.
4. REPRESENTATIONS
AND WARRANTIES OF BORROWER.
Borrower represents and warrants to Secured Party as follows. The following
representations and warranties shall survive execution of this Agreement and
shall not be affected or waived by any examination or
inspection made by Secured Party:
(a) Status.
Borrower is duly organized and validly existing as the type of entity and in
the
state of formation set forth on Schedule
1
hereto.
Schedule
1
hereto
sets forth Borrower’s organizational identification number or, if Borrower does
not have one, states that one does not exist. Borrower has perpetual existence
and the power and authority to own its property and assets and to transact
the
business in which it is engaged or presently proposes to engage. Borrower has
qualified to do business in each state or jurisdiction where its business or
operations so require and where the failure to so qualify would have a Material
Adverse Effect.
(b) Authority
to Execute Agreement; Binding Agreement.
Borrower has the corporate or other power to execute, deliver and perform its
obligations under this Agreement (including, without limitation, the right
and
power to give Secured Party a security interest in the Collateral) and has
taken
all necessary corporate and other action to authorize the execution, delivery
and performance of this Agreement. This Agreement has been duly executed by
Borrower. This Agreement constitutes the legal, valid and binding obligation
of
Borrower, enforceable against Borrower in accordance with its terms except
as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization and similar laws of general application relating to or affecting
the rights and remedies of creditors or general principles of
equity.
(c) Borrower’s
Title.
Except
for the security interests granted hereunder,
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Borrower
is, as to all Collateral presently owned by it, and shall be as to all
Collateral hereafter acquired by it, the owner or in the case of leased or
licensed assets, the lessee or licensee, of said Collateral free from any Lien
other than Permitted Liens.
(d) Location
of Inventory and Equipment.
All of
Borrower’s Inventory and Equipment that are included in the Collateral are
located at the locations specified on Schedule
2-A.
Except
as disclosed on Schedule
2-A,
none of
such Inventory or Equipment are in the possession of any consignee, bailee,
warehouseman, agent or processor.
(e) Location
of Borrower.
The
principal place of business of Borrower, the chief executive office of Borrower
and the office where Borrower keeps its books and records relating to the
Collateral are specified on Schedule
2-B.
Borrower has no other place of business except as separately specified on
Schedule
2-B.
(f) Names
Used by Borrower.
(i) The
actual name of Borrower is the name set forth in the preamble above; (ii)
Borrower has no trade names except as set forth on Schedule
3
attached
hereto; (iii) Borrower has not used any name other than that stated in the
preamble hereto or as set forth on Schedule
3
for the
preceding five years; and (iv) no entity has merged into Borrower or been
acquired by Borrower within the past five years except as set forth on
Schedule
3.
(g) Perfected
Security Interest.
This
Agreement creates a valid security interest in the Collateral, subject only
to
Permitted Liens, securing payment of the Secured Obligations. Upon the filing
of
the Uniform Commercial Code financing statement in the office set forth on
Schedule
4
hereto,
all security interests granted pursuant to this Agreement that may be perfected
by filing a UCC financing statement shall have been duly perfected. Except
for
the filings referred to in the preceding sentence, no action of Borrower is
necessary to create, perfect or protect such security interest. Without limiting
the generality of the foregoing, except for such filings, no consent of any
third parties (excluding the Secured Party) and no authorization, approval
or
other action by, and no notice to or filing with any Governmental Authority
or
regulatory body by Borrower is required as of the date of this Agreement for
(i)
the execution, delivery and performance of this Agreement by Borrower; (ii)
the
creation or perfection of the security interest in the Collateral; or (iii)
the
enforcement of Secured Party’s rights hereunder.
(h) Absence
of Conflicts with Other Agreements, Etc.
Neither
the pledge by Borrower of the Collateral hereunder nor any of the provisions
hereof (including, without limitation, the grant by Borrower of the remedies
provided hereunder) violates any of the provisions of (i) any Organizational
Documents of Borrower, (ii) any other agreement to which Borrower or any of
its
property is a party or is subject, or (iii) any judgment, decree, order or
award
of any court, governmental body or arbitrator or any applicable law, rule or
regulation applicable to Borrower or any of its property (except, with respect
to clauses (ii) and (iii), for such violations that would not, individually
or
in the aggregate, have a Material Adverse Effect).
(i) Subsidiaries.
The
Borrower has no subsidiaries other than Matritech GmbH. Matritech GmbH does
not
own any Equipment or Intellectual Property used in connection with or otherwise
relating to the NMP22 Product Line.
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5. COVENANTS
OF BORROWER.
Borrower covenants that:
(a) Filing
of Financing Statements and Preservation of Interests.
Borrower hereby authorizes Collateral Agent to file in such office or offices
in
the United States as is necessary, or as Collateral Agent reasonably deems
desirable, such financing and continuation statements and amendments and
supplements thereto, and such other documents as Collateral Agent reasonably
may
require to perfect, preserve and protect the security interests granted
herein.
(b) Collateral
In Possession of Third Parties.
To the
extent that any Collateral is in the possession of any third party, and such
Collateral has a fair market value in excess of $25,000 in the aggregate,
Borrower shall promptly notify Collateral Agent of the existence thereof and,
at
Collateral Agent’s request, Borrower shall join with Collateral Agent in
notifying such third party of Secured Party’s security interest and shall make
commercially reasonable efforts to obtain an acknowledgement from such third
party that it is holding the Collateral for the benefit of Secured
Party.
(c) Notice
of Changes.
Borrower shall notify Collateral Agent as follows:
(i) without
providing at least thirty (30) days prior written notice to Collateral Agent,
Borrower will not change its name in any respect, its place of business or,
if
more than one, chief executive office, or its mailing address or organizational
identification number (if it has one);
(ii) if
Borrower does not have an organizational identification number and obtains
one
after the date of this Agreement, Borrower will forthwith notify Collateral
Agent in writing of such organizational identification number; and
(iii) Borrower
will not change its type of organization, jurisdiction of organization or other
legal structure without providing at least thirty (30) days prior written notice
to Collateral Agent.
(d) Use
and Condition of Equipment.
Each
item of Equipment included in the Collateral will be maintained in good repair,
working order and condition, ordinary wear and tear and depreciation excepted,
and Borrower will provide all maintenance service and repairs necessary for
such
purpose.
(e) Insurance.
Borrower shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral against loss or damage of the kinds and in the
amounts customarily insured against by entities of established reputation having
similar properties similarly situated and in such amounts as are customarily
carried under similar circumstances by other such Persons and otherwise as
is
prudent for Persons engaged in similar businesses but in any event sufficient
to
cover the full replacement cost thereof. Borrower shall cause each liability
insurance policy issued in connection herewith to provide, and the insurer
issuing such policy to certify to Collateral Agent that (a) Collateral Agent
will be named as additional insured under each such liability insurance policy;
(b) if such insurance be proposed to be cancelled or materially changed for
any
reason whatsoever, such insurer will promptly notify Collateral Agent and such
cancellation or change shall not be effective as to Collateral Agent for
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at
least
thirty (30) days after receipt by Collateral Agent of such notice (ten (10)
days
in the case of cancellation for non-payment of premiums), unless the effect
of
such change is to extend or increase coverage under the policy; and (c)
Collateral Agent will have the right (but no obligation) at its election to
remedy any default in the payment of premiums within thirty (30) days of notice
from the insurer of such default (ten (10) days in the case of cancellation
for
non-payment of premiums). Unless otherwise agreed by Borrower and Collateral
Agent, the proceeds arising out of any claim in respect of any Collateral will
be applied by Borrower to the repair and/or replacement of such Collateral
with
respect to which the loss was incurred to the extent reasonably feasible. Copies
of such policies or the related certificates shall be delivered to Collateral
Agent upon Collateral Agent’s reasonable request.
(f) Transfer
of Collateral.
Other
than the disposition of Inventory in the ordinary course of Borrower’s business
as presently conducted, and the disposition of obsolete, worn-out or surplus
Equipment in the ordinary course of Borrower’s business with a fair market value
not to exceed $25,000 in any calendar year, Borrower shall not sell, assign,
transfer, encumber or otherwise dispose of any Collateral without the prior
written consent of Collateral Agent and Collateral Agent does not authorize
any
such disposition. For purposes of this provision, “dispose of any Collateral”
shall include, without limitation, the creation of a security interest or other
encumbrance (whether voluntary or involuntary) on such Collateral other than
Permitted Liens.
(g) Taxes
and Assessments.
Borrower shall promptly pay when due and payable, all taxes and assessments
imposed upon the Collateral, provided
that no
such tax or assessment need be paid if being contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and if
such
reserve or other appropriate provision, if any, as shall be required by
generally accepted accounting principles, shall have been made therefor and,
if
the filing of a bond or other indemnity is necessary to avoid the creation
of a
Lien against any of the Collateral, such bond shall have been filed or indemnity
provided.
(h) Inventory.
Borrower shall not return any Inventory included in the Collateral to the
supplier thereof, except for damaged or unsalable Inventory or otherwise in
the
ordinary course of Borrower’s business. Without limiting the generality of the
foregoing, in the event Borrower becomes a “debtor in possession” as defined in
11 U.S.C. §1101 (or any successor thereto), Borrower agrees, to the extent
permitted by applicable law, not to move pursuant to 11 U.S.C. §546 (or any
successor thereto) for permission to return Inventory included in the Collateral
to any creditor which shipped such goods to Borrower without Collateral Agent’s
written consent and Borrower hereby waives any rights to return such Inventory
arising under 11 U.S.C. §546(h), or any successor section thereto. Without the
consent of Collateral Agent, Borrower shall not permit any subsidiary of
Borrower to maintain Collateral in excess of $500,000 at any time. Borrower
shall deliver to Collateral Agent, no later than 45 days after the end of each
of Borrower’s fiscal quarters, a certificate setting forth the amount of
Collateral maintained by its subsidiaries as of the end of such fiscal
quarter.
(i) Defense
of Secured Party’s Rights.
Borrower warrants and will defend Secured Party’s right, title and security
interest in and to the Collateral against the claims of any Person (other than
the holders of Permitted Liens with respect to such Permitted
Liens).
10
(j) Inspections.
Borrower will permit Collateral Agent, or its designee, upon its reasonable
request and reasonable prior notice, and at any reasonable times during
Borrower’s usual business hours, to inspect the Collateral, all records related
thereto (and to make extracts or copies from such records), and the premises
upon which any of the Collateral is located, and, if an Event of Default has
occurred and is continuing, to discuss Borrower’s affairs and finances with any
Person and to verify with such Person the amount, quality, value and condition
of, or any other matter relating to, the Collateral.
(k) Power
of Attorney.
Borrower has duly executed and delivered to Collateral Agent a power of attorney
(a “Power
of Attorney”)
in
substantially the form attached hereto as Annex
A.
The
power of attorney granted pursuant to the Power of Attorney is a power coupled
with an interest and shall be irrevocable until full and indefeasible payment
of
the Secured Obligations. The powers conferred on Collateral Agent under the
Power of Attorney are solely to protect Secured Party’s interests in the
Collateral and shall not impose any duty upon Collateral Agent to exercise
any
such powers. Collateral Agent agrees that, notwithstanding anything to the
contrary in the Power of Attorney, (i) except for the powers granted in clause
(e) of the Power of Attorney, it shall not exercise any power or authority
granted under the Power of Attorney unless an Event of Default has occurred
and
is continuing (and, in any event, it shall not exercise any such power or
authority until the Effective Date), and (ii) Collateral Agent shall account
for
any moneys received by Collateral Agent in respect of any foreclosure on or
disposition of Collateral pursuant to the Power of Attorney provided that
Collateral Agent shall not have any duty as to any Collateral, and Collateral
Agent shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers. NEITHER SECURED PARTY NOR ITS AFFILIATES,
PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE
RESPONSIBLE TO BORROWER FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER OF
ATTORNEY OR OTHERWISE, EXCEPT IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO
THEIR
OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT
OF
COMPETENT JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR
CONSEQUENTIAL DAMAGES.
(l) Other
Assurances.
Borrower agrees that from time to time, at the sole expense of Borrower, it
will
promptly execute and deliver all such further instruments and documents, and
take all such further action as may be necessary, or as Collateral Agent may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Collateral Agent to
exercise and enforce its rights and remedies hereunder and with respect to
any
Collateral or to otherwise carry out the purposes of this Agreement, including,
without limitation: (i) using commercially reasonable efforts to obtain
governmental and other third party waivers, consents and approvals in form
and
substance reasonably satisfactory to the Collateral Agent, including, without
limitation, any consent of any licensor, lessor or other person obligated on
Collateral, and (ii) using commercially reasonable efforts to obtain waivers
from landlords in form and substance reasonably satisfactory to the Collateral
Agent.
6. REMEDIES
UPON DEFAULT.
(a) At
any
time after the Effective Date, upon the occurrence and during the
11
continuation
of an Event of Default, Collateral Agent may exercise, in addition to any other
rights and remedies provided herein, under other contracts and under law, all
the rights and remedies of a secured party under the Uniform Commercial Code.
Without limiting the generality of the foregoing, at any time after the
Effective Date, upon the occurrence and during the continuation of an Event
of
Default, in accordance with applicable law, (i) at the request of Collateral
Agent, Borrower shall, at its cost and expense, assemble the Collateral owned
or
used by it as directed by Collateral Agent at a place that is reasonably
convenient to Collateral Agent and Borrower; and (ii) Collateral Agent may
(but
is not obligated to), without notice except as provided below, sell the
Collateral at public or private sale, on such terms as are commercially
reasonable. Borrower agrees that ten (10) days prior written notice of any
sale
referred to in clause (ii) above shall constitute sufficient notice. Any Secured
Party may purchase Collateral at any such sale. Borrower shall be liable to
Secured Party for any deficiency amount.
(b) Collateral
Agent may comply with any applicable law in connection with a disposition of
Collateral and compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. Collateral Agent may
sell the Collateral without giving any warranties and may specifically disclaim
such warranties. If Collateral Agent sells any of the Collateral on credit,
Borrower will only be credited with payments actually made by the purchaser.
In
addition, Borrower waives any and all rights that it may have to a judicial
hearing in advance of the enforcement of any of Secured Party’s rights and
remedies hereunder, including, without limitation, its right following an Event
of Default to take immediate possession of the Collateral and to exercise its
rights and remedies with respect thereto.
(c) For
the
purpose of enabling Collateral Agent to further exercise rights and remedies
under this Section 6 or elsewhere provided by agreement or applicable law,
Borrower has granted to Collateral Agent a license to use, license or sublicense
any of the Licensed Assets now owned or hereafter acquired by Borrower pursuant
to the Contingent License Agreement, on the terms and subject to the conditions
set forth therein.
(d) The
parties understand and agree that (i) the security interest granted to
Collateral Agent with respect to the Collateral, and (ii) the license granted
to
the Collateral Agent with respect to the Licensed Assets pursuant to the
Contingent License Agreement, will and is intended to permit Collateral Agent
and its successors and assigns, during the continuance of an Event of Default
as
provided herein, to take title to and make use of all rights to the Collateral,
and make use of all rights of Borrower to the Licensed Assets in conjunction
with the Collateral.
7. OBLIGATIONS
ABSOLUTE.
(a) Change
of Circumstance.
THE
RIGHTS OF THE COLLATERAL AGENT HEREUNDER AND THE OBLIGATIONS OF BORROWER
HEREUNDER SHALL BE ABSOLUTE AND UNCONDITIONAL, SHALL NOT BE SUBJECT TO ANY
COUNTERCLAIM, SETOFF, RECOUPMENT OR DEFENSE BASED UPON ANY CLAIM THAT BORROWER
OR ANY OTHER PERSON MAY HAVE AGAINST ANY SECURED PARTY AND SHALL REMAIN IN
FULL
FORCE AND EFFECT UNTIL FULL AND INDEFEASIBLE SATISFACTION OF THE SECURED
OBLIGATIONS. Without limiting the generality of the foregoing, the obligations
of Borrower shall not be released, discharged or in any way affected by any
circumstance or condition (whether or not Borrower shall have any
12
notice
or
knowledge thereof) including, without limitation, any amendment or modification
of or supplement to a Purchase Agreement, the Notes or any other Transaction
Document (including, without limitation, increasing the amount or extending
the
maturity of the Secured Obligations); any waiver, consent, extension, indulgence
or other action or inaction under or in respect of any such agreements or
instruments, or any exercise or failure to exercise of any right, remedy, power
or privilege under or in respect of any such agreements or instruments, or
any
exercise or failure to exercise of any right, remedy, power or privilege under
or in respect of any such agreements or instruments; any invalidity or
unenforceability, in whole or in part, of any term hereof or of the Purchase
Agreements, the Notes or any other Transaction Document; any failure on the
part
of Borrower or any other Person for any reason to perform or comply with any
term of the Purchase Agreements, the Notes or any other Transaction Document;
any furnishing or acceptance of any additional security or guaranty; any release
of Borrower or any other Person or any release of any or all security or any
or
all guarantees for the Secured Obligations, whether any such release is granted
in connection with a bankruptcy or otherwise; any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or similar
proceeding with respect to Borrower or any other Person or their respective
properties or creditors; the application of payments received by Secured Party
from any source that were lawfully used for some other purpose, which lawfully
could have been applied to the payment, in full or in part, of the Secured
Obligations; or any other occurrence whatsoever, whether similar or dissimilar
to the foregoing. Without limiting the generality of the foregoing, at any
time
that the Notes are amended to increase the amount of the obligations thereunder,
the amount of the Secured Obligations shall be accordingly
increased.
(b) No
Duty To Marshal Assets.
Secured
Party shall have no obligation to marshal any assets in favor of Borrower or
any
other Person or against or in payment of any or all of the Secured
Obligations.
(c) Waiver
of Right of Subrogation, Etc.
Borrower
hereby waives any and all rights of subrogation, reimbursement, or indemnity
whatsoever in respect of Borrower arising out of remedies exercised by
Collateral Agent hereunder until full and indefeasible payment of the Secured
Obligations.
(d) Other
Waivers.
Borrower hereby waives promptness, diligence and notice of acceptance of this
Agreement. In connection with any sale or other disposition of Collateral,
to
the extent permitted by applicable law, Borrower waives any right of redemption
or equity of redemption in the Collateral. Borrower further waives presentment
and demand for payment of any of the Secured Obligations, protest and notice
of
protest, dishonor and notice of dishonor or notice of default or any other
similar notice with respect to any of the Secured Obligations, and all other
similar notices to which Borrower might otherwise be entitled, except as
otherwise expressly provided in the Transaction Documents. Secured Party is
under no obligation to pursue any rights against third parties with respect
to
the Secured Obligations and Borrower hereby waives any right it may have to
require otherwise. Borrower (to the extent that it may lawfully do so) covenants
that it shall not at any time insist upon or plead, or in any manner claim
or
take the benefit of, any stay, valuation, appraisal or redemption now or at
any
time hereafter in force that, but for this waiver, might be applicable to any
sale made under any judgment, order or decree based on this Agreement; and
Borrower (to the extent that it may lawfully do so) hereby expressly waives
and
relinquishes all benefit of any and all such laws and
13
hereby
covenants that it will not hinder, delay or impede the execution of any power
in
this Agreement delegated to Collateral Agent, but that it will suffer and permit
the execution of every such power as though no such law or laws had been made
or
enacted.
(e) Borrower
further waives to the fullest extent permitted by law any right it may have
under the constitution of the State of Delaware (or under the constitution
of
any other state in which any of the Collateral or Borrower may be located),
or
under the Constitution of the United States of America, to notice (except for
notice specifically required hereby) or to a judicial hearing prior to the
exercise of any right or remedy provided by this Agreement to Collateral Agent,
and waives its rights, if any, to set aside or invalidate any sale duly
consummated in accordance with the foregoing provisions hereof on the grounds
(if such be the case) that the sale was consummated without a prior judicial
hearing.
(f) BORROWER’S
WAIVERS UNDER THIS SECTION 7 HAVE BEEN MADE VOLUNTARILY, INTELLIGENTLY AND
KNOWINGLY AND AFTER BORROWER HAS BEEN APPRISED AND COUNSELED BY ITS ATTORNEY
AS
TO THE NATURE THEREOF AND ITS POSSIBLE ALTERNATIVE RIGHTS.
8. NO
IMPLIED WAIVERS.
No
failure or delay on the part of Secured Party in exercising any right, power
or
privilege under this Agreement or the other Transaction Documents and no course
of dealing between Borrower, on the one hand, and Secured Party, on the other
hand, shall operate as a waiver of any such right, power or privilege. No single
or partial exercise of any right, power or privilege under this Agreement or
the
other Transaction Documents precludes any other or further exercise of any
such
right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies expressly provided in this Agreement and
the
other Transaction Documents are cumulative and not exclusive of any rights
or
remedies which Secured Party would otherwise have. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice
or
demand in similar or other circumstances or shall constitute a waiver of the
right of Secured Party to take any other or further action in any circumstances
without notice or demand. Any waiver that is given shall be effective only
if in
writing and only for the limited purposes expressly stated in the applicable
waiver.
9. STANDARD
OF CARE.
(a) In
General.
No act
or omission of Collateral Agent (or agent or employee of any thereof) shall
give
rise to any defense, counterclaim or offset in favor of Borrower or any claim
or
action against Collateral Agent (or agent or employee thereof), in the absence
of gross negligence or willful misconduct of Collateral Agent (or agent or
employee thereof) as determined in a final, nonappealable judgment of a court
of
competent jurisdiction. Collateral Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal to that
which Collateral Agent accords to other collateral it holds (or, in the absence
of any such collateral, to its own property of such type), it being understood
that it has no duty to take any action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral
or to
preserve any rights of any parties and shall only be liable for losses which
are
a result of its gross negligence or willful misconduct as determined in a final,
nonappealable
14
judgment
of a court of competent jurisdiction.
(b) No
Duty to Preserve Rights.
Without
limiting the generality of the foregoing, Collateral Agent has no duty (either
before or after an Event of Default) to collect any amounts in respect of the
Collateral or to preserve any rights relating to the Collateral.
(c) No
Duty to Prepare for Sale.
Without
limiting the generality of the foregoing, Collateral Agent has no obligation
to
clean-up or otherwise prepare the Collateral for sale.
(d) Duties
Relative to Contracts.
Without
limiting the generality of the foregoing, Borrower shall remain obligated and
liable under each contract or agreement included in the Collateral to be
observed or performed by Borrower thereunder. Collateral Agent shall not have
any obligation or liability under any such contract or agreement by reason
of or
arising out of this Agreement or the receipt by Collateral Agent of any payment
relating to any of the Collateral, nor shall Collateral Agent be obligated
in
any manner to perform any of the obligations of Borrower under or pursuant
to
any such contract or agreement, to make inquiry as to the nature or sufficiency
of any payment received by Collateral Agent in respect of the Collateral or
as
to the sufficiency of any performance by any party under any such contract
or
agreement, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to Collateral Agent or to which Collateral Agent may be entitled at
any
time or times.
(e) Reliance
on Advice of Counsel.
In
taking any action under this Agreement or any other Transaction Document,
Collateral Agent shall be entitled to rely upon the advice of counsel of
Collateral Agent’s choice and shall be fully protected in acting on such advice
whether or not the advice rendered is ultimately determined to have been
accurate.
10. MISCELLANEOUS.
(a) Assignment.
Collateral Agent may assign or transfer this Agreement and any or all rights
or
obligations hereunder without the consent of Borrower and without prior notice.
Borrower shall not assign or transfer this Agreement or any rights or
obligations hereunder without the prior written consent of Collateral Agent.
Notwithstanding
the foregoing, if there should be any assignment of any rights or obligations
by
operation of law or in contravention of the terms of this Agreement or otherwise
then all covenants, agreements, representations and warranties made herein
or
pursuant hereto by or on behalf of Borrower shall bind the successors and
assigns of Borrower, together with the preexisting Borrower, whether or not
such
new or additional Persons execute a joinder hereto or assumption
hereof.
The
rights and privileges of Collateral Agent under this Agreement shall inure
to
the benefit of its successors and assigns.
(b) Notices.
Any
notice contemplated herein or required or permitted to be given hereunder shall
be made in the manner set forth in the applicable Purchase Agreement and
delivered, in the case of Borrower and Collateral Agent, at the addresses set
forth on the signature pages to the applicable Purchase Agreement, or to such
other address as any party hereto may have last specified by written notice
to
the other party or parties.
15
(c) Severability.
Every
provision of this Agreement is intended to be severable. If any term or
provision of this Agreement shall be invalid, illegal or unenforceable for
any
reason, the validity, legality and enforceability of the remaining provisions
shall not be affected or impaired thereby. Any invalidity, illegality or
unenforceability in any jurisdiction shall not affect the validity, legality
or
enforceability of any such term or provision in any other
jurisdiction.
(d) Costs
and Expenses.
Without
limiting any other cost reimbursement provisions in the Transaction Documents,
upon demand, Borrower
shall
pay to
Collateral Agent the amount of any and all reasonable expenses incurred by
Collateral Agent hereunder or in connection herewith, including, without
limitation those that may be incurred in connection with (i) the administration
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Collateral Agent hereunder
or
(iv) the failure of Borrower to perform or observe any of the provisions
hereof.
(e) Indemnification
by Borrower.
Borrower shall indemnify, reimburse and hold harmless Collateral Agent and
its
affiliates, and all of their partners, members, shareholders, officers,
directors, employees, agents and advisors and any successors, assigns and
participants thereof (each, an “Indemnitee”),
from
and against any and all losses, claims, liabilities, damages, penalties, suits,
costs and expenses, of any kind or nature (including fees relating to the cost
of investigating and defending any of the foregoing) imposed on, incurred by
or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Indemnitee as determined
by a final nonappealable decision of a court of competent jurisdiction. This
indemnification provision is in addition to, and not in limitation of, any
other
indemnification provision in any other Transaction Document.
(f) Counterparts;
Integration.
This
Agreement may be executed in counterparts (and by different parties hereto
in
different counterparts), each of which shall constitute an original, but all
of
which when taken together shall constitute a single contract. This Agreement,
the Contingent License Agreement and the other Transaction Documents constitute
the entire contract among the parties relating to the subject matter hereof
and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Delivery of an executed counterpart
of a
signature page of this Agreement by telecopy shall be effective as delivery
of a
manually executed counterpart of this Agreement.
(g) Amendments
and Waivers.
The
terms of this Agreement may be waived, altered or amended only by an instrument
in writing duly executed by Borrower and Collateral Agent and consented to
by
both (i) the holders of at least a majority of the outstanding principal balance
on the Series A Notes and (ii) the holders of at least a majority of the
outstanding principal balance on the Series B Notes.
(h) Headings.
Headings to this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof.
16
(i) Amended
and Restated Agreement.
This
Agreement amends, restates and replaces the Existing Security Agreement. The
security interests granted by the Borrower under the Existing Security Agreement
continue without interruption under this Agreement.
11. SPECIFIC
PERFORMANCE.
Borrower hereby authorizes Collateral Agent to demand specific performance
of
this Agreement at any time when Borrower shall have failed to comply with any
provision hereof, and Borrower hereby irrevocably waives any defense based
on
the adequacy of a remedy at law which might be asserted as a bar to the remedy
of specific performance hereof in any action brought therefor.
12. TERMINATION.
At such
time as the Secured Obligations have been indefeasibly paid and performed in
full, then the security provided for herein shall terminate, provided,
however, that all indemnities of Borrower contained in this Agreement shall
survive and remain operative and in full force and effect regardless of the
termination of this Agreement.
13. GOVERNING
LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) Governing
Law; Jurisdiction.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware applicable to contracts made and to be performed in the State
of Delaware. Each of Borrower and Collateral Agent irrevocably consents to
the
exclusive jurisdiction of the United States federal courts and the state courts
located in the County of New Castle, Delaware, in any suit or proceeding between
the parties based on or arising under this Agreement and irrevocably agrees
that
all claims in respect of such suit or proceeding may be determined in such
courts. Each of Borrower and Collateral Agent irrevocably waives the defense
of
an inconvenient forum to the maintenance of such suit or proceeding in such
forum. Each of Borrower and Collateral Agent further agrees that service of
process upon it mailed by first class mail shall be deemed in every respect
effective service of process upon it in any such suit or proceeding. Nothing
herein shall affect the right of Collateral Agent or Borrower to serve process
in any other manner permitted by law. Borrower and Collateral Agent agree that
a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
(b) Waiver
of Jury Trial.
EACH
PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OTHER
TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(I) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT,
IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
17
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in
the name and on behalf of the parties hereto as of the date first above
written.
| BORROWER | ||
| MATRITECH, INC. | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxx | |
|
Name: Xxxxxxx X. Xxxxx |
||
| Title: Chief Executive Officer | ||
| COLLATERAL AGENT | ||
|
SDS
CAPITAL GROUP SPC, LTD.,
as
Collateral Agent
|
||
| |
|
|
| By: | /s/ Xxxxx Xxxxx | |
|
Name: Xxxxx Xxxxx |
||
|
Title:
Director
|
||
Signature
Page to Security Agreement
18
Annex
A
FORM
OF POWER OF ATTORNEY
This
Power of Attorney is executed and delivered by Matritech, Inc., a Delaware
corporation (“Borrower”),
to
SDS Capital Group SPC, Ltd. as Collateral Agent (“Attorney”).
This
Power of Attorney is delivered in connection with and pursuant to those certain
15% Secured Convertible Promissory Notes dated January 13, 2006 and the Series
B
15% Secured Convertible Promissory Notes dated as of the date hereof (each
as
the same may be amended, modified, restated and/or supplemented from time to
time) (collectively the “Notes”)
and
that certain Amended and Restated Security Agreement dated as of even date
herewith delivered in connection therewith (the “Security
Agreement”).
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Security Agreement. No person or entity to whom
this Power of Attorney is presented, as authority for Attorney to take any
action or actions contemplated hereby, shall be required to inquire into or
seek
confirmation from Borrower as to the authority of Attorney to take any action
described below, or as to the existence of or fulfillment of any condition
to
this Power of Attorney, which is intended to grant to Attorney unconditionally
the authority to take and perform the actions contemplated herein, and Borrower
irrevocably waives any right to commence any suit or action, in law or equity,
against any person or entity which acts in reliance upon or acknowledges the
authority granted under this Power of Attorney. The power of attorney granted
hereby is coupled with an interest, and may not be revoked or canceled by
Borrower without Attorney’ s written consent.
Borrower
hereby irrevocably constitutes and appoints Attorney (and all officers,
employees or agents designated by Attorney), with full power of substitution,
as
Borrower’s true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Borrower and in the name of Borrower or
in
its own name, from time to time in Attorney’s discretion upon the occurrence and
during the continuation of an Event of Default, to take any and all appropriate
action and to execute and deliver any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of the Notes, the
Security Agreement and any and all agreements, documents and instruments
executed, delivered or filed in connection therewith from time to time
(collectively, the “Transaction
Documents”)
and,
without limiting the generality of the foregoing, Borrower hereby grants to
Attorney the power and right, on behalf of Borrower, without notice to or assent
by Borrower, and at any time, to do the following (to the extent the same may
be
necessary or desirable to accomplish the purposes of the Transaction
Documents):
(a) effect
any repairs to any Collateral, or continue or obtain any insurance required
under the Transaction Documents and pay all or any part of the premiums therefor
and costs thereof, and make, settle and adjust all claims under such policies
of
insurance, and make all determinations and decisions with respect to such
policies;
(b) pay
or
discharge any taxes, liens, security interests, or other encumbrances levied
or
placed on or threatened against the Collateral;
19
(c) defend
any suit, action or proceeding brought against Borrower relating to the
Collateral if Borrower does not defend such suit, action or proceeding, and
settle, compromise or adjust any suit, action, or proceeding described above
and, in connection therewith, give such discharges or releases as Attorney
may
deem appropriate;
(d) communicate
in its own name with any party to any contract included in the Collateral with
regard to the assignment of the right, title and interest of Borrower in and
under such contracts and other matters relating thereto;
(e) to
the
extent that Borrower’s authorization given in the Security Agreement is not
sufficient, to file such financing statements with respect to the Security
Agreement as Attorney may deem appropriate and to execute in Borrower’s name
such financing statements and amendments thereto and continuation statements
which may require Borrower’s signature; and
(f) execute,
deliver and/or record, as applicable, in connection with any sale or other
remedy provided for in any Transaction Document, any endorsements, assignments
or other applications for or instruments of conveyance or transfer with respect
to the Collateral and to otherwise direct such sale or resale, all as though
Attorney were the absolute owner of the property of Borrower for all purposes,
and to do, at Attorney’s option and Borrower’s expense, at any time or from time
to time, all acts and other things that Attorney reasonably deems necessary
to
perfect, preserve, or realize upon the Collateral and Attorney’s liens thereon,
all as fully and effectively as Borrower might do.
IN
WITNESS WHEREOF, this Power of Attorney is duly executed on behalf of Borrower
this ____ day of ____________, 20___.
| MATRITECH, INC. | ||
| |
|
|
| By: | /s/ | |
|
Name:
|
||
| Title: | ||
NOTARY
PUBLIC CERTIFICATE
On
this
_____ day of ____________, 20___, [officer’s name] who is personally known to me
appeared before me in his/her capacity as the [title] of [name of Borrower]
(“Borrower”)
and
executed on behalf of Borrower the Power of Attorney in favor of
_______________, as Collateral Agent, to which this Certificate is
attached.
|
Notary
Public
|
20
Schedule
1
STATUS
Matritech,
Inc. is a Delaware corporation
Matritech,
Inc.’s federal taxpayer ID# is 00-0000000
Matritech,
Inc.’s organization ID# in Delaware is 2142166
Schedule
2-A
LOCATIONS
OF GOODS
Matritech,
Inc.
000
Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
Matritech
GmbH
Xxxxxxxxxx
Xxxxxxx 0
X00000 Xxxxxxxx
Xxxxxxx
One
mold
(value in excess of $25,000) for the NMP22® BladderChek® Test cassette housing
is located at:
Sterling
Manufacturing Company, Inc.
X.X.
Xxx
0000
000
Xxxxxxxx Xxxxxx
Xxxxx
Xxxxxxxxx, XX 00000
One
mold
(value less than $25,000) for the NMP22® BladderChek® Test cassette housing is
located at:
Fireball
Technology Ltd.
00
Xxxxxxx Xxxxxxx, #000
Xxxxxxxx,
Xxxxx
Raw
materials and WIP (value in excess of $25,000) for NMP22® BladderChek® Test are
located at:
Unotech
Diagnostics, Inc.
0000
Xxxxxxxxx Xxx. Xxxxx 000
Xxx
Xxxxxxx, XX 00000
WIP
(value less than $25,000) for NMP22® BladderChek® Test is located
at:
LSNE
Lyophilization
Services of New England
0
Xxxxxxx
Xxxxxx, Xxxxx 000
Xxxxxxxxxx,
XX 00000
Cell
lines used to produce antibodies used in the NMP® products are located
at:
Maine
Biotechnology Services
0000X
Xxxxxx Xxxxxx
Xxxxxxxx,
XX 00000
with
a
back-up vial at:
American
Tissue Culture Center
00000
Xxxxxxxxxx Xxxx.
Xxxxxxxx,
XX 00000-0000
Schedule
2-B
LOCATIONS
OF BORROWER
Matritech,
Inc.
000
Xxxxxx Xxxxxx
Xxxxxx,
XX 00000
Matritech
GmbH
Xxxxxxxxxx
Xxxxxxx 0
X00000 Xxxxxxxx
Xxxxxxx
Books
and
records are maintained primarily at the Newton location.
Schedule
3
NAMES
USED BY BORROWER
Matritech,
Inc.
Matritech
GmbH
Schedule
4
FILING
OFFICES
Delaware
Secretary of State
Schedule
5
DEDICATED
EQUIPMENT
2
plate
fillers
automatic
labeler for vials
incubation
oven
automatic
fill machine
plate
reader
2
plate
washers
Written
materials related to NMP22® products:
Marketing
materials
Package
inserts
Device
history record for NMP22® Test Kit and related SOPs
Device
history record for NMP22® BladderChek® Test (without SOPs)
