SECURITY AGREEMENT
Exhibit 10.3
THIS
SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”) dated as
of September 26, 2017, by and among Medite Cancer Diagnostics,
Inc., a Delaware corporation (the “Company”, and
together with each of the undersigned direct and indirect
Subsidiaries from time to time and any other Person who becomes a
party to this Agreement by execution of a joinder in the form of
Exhibit A attached
hereto being hereinafter sometimes referred to individually as a
“Debtor” and, collectively, as the
“Debtors”), and GPB Debt Holdings II, LLC, a Delaware
limited liability company, in its capacity as Collateral Agent (the
“Collateral Agent”), and Purchaser (together with its
successors and permitted assigns, the “Secured
Party”).
W I T N E S S E T H:
WHEREAS, pursuant
to the Purchase Agreement (as hereafter defined), the Secured Party
will purchase that certain senior secured convertible note issued
by the Company (such note, together with any promissory notes or
other securities issued in exchange or substitution therefor or
replacement thereof, and as any of the same may be amended,
supplemented, restated or modified and in effect from time to time,
the “Notes”);
AND
WHEREAS, the Notes are being acquired by the Secured Party, and the
Secured Party has made certain financial accommodations to the
Company pursuant to a Purchase Agreement dated as of the date
hereof between the Company and the Secured Party (as the same may
be amended, restated, supplemented or otherwise modified from time
to time, the “Purchase Agreement”);
AND
WHEREAS, each Debtor will derive substantial benefit and advantage
from the financial accommodations to the Company set forth in the
Purchase Agreement and the Notes, and it will be to each such
Debtor’s direct interest and economic benefit to assist the
Company in procuring said financial accommodations from the Secured
Party;
AND
WHEREAS, to induce the Secured Party to enter into the Purchase
Agreement and purchase the Notes, Debtor will pledge and grant a
security interest in all of its right, title and interest in and to
the Collateral (as hereinafter defined) as security for its
Obligations for the benefit of the Secured Party and its successors
and permitted assigns;
NOW,
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:
Section
1. Definitions. Capitalized terms
used herein without definition and defined in the Purchase
Agreement are used herein as defined therein. In addition, as used
herein:
“Accounts”
means any “account,” as such term is defined in the
UCC, and, in any event, shall include, without limitation,
“supporting obligations” as defined in the
UCC.
“Chattel
Paper” means any “chattel paper,” as such term is
defined in the UCC.
“Collateral”
shall have the meaning ascribed thereto in Section 3
hereof.
“Commercial
Tort Claims” means “commercial tort claims”, as
such term is defined in the UCC.
“Contracts”
means all contracts, undertakings, or other agreements (other than
rights evidenced by Chattel Paper, Documents or Instruments) in or
under which a Debtor may now or hereafter have any right, title or
interest, including, without limitation, with respect to an
Account, any agreement relating to the terms of payment or the
terms of performance thereof.
“Copyrights”
means any copyrights, rights and interests in copyrights, works
protectable by copyrights, copyright registrations and copyright
applications, including, without limitation, the copyright
registrations and applications listed on Schedule III attached hereto
(if any), and all renewals of any of the foregoing, all income,
royalties, damages and payments now and hereafter due and/or
payable under or with respect to any of the foregoing, including,
without limitation, damages and payments for past, present and
future infringements of any of the foregoing and the right to xxx
for past, present and future infringements of any of the
foregoing.
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“Deposit
Accounts” means all “deposit accounts” as such
term is defined in the UCC, now or hereafter held in the name of a
Debtor.
“Documents”
means any “documents,” as such term is defined in the
UCC, and shall include, without limitation, all documents of title
(as defined in the UCC), bills of lading or other receipts
evidencing or representing Inventory or Equipment.
“Equipment”
means any “equipment,” as such term is defined in the
UCC and, in any event, shall include, Motor Vehicles.
“Event of
Default” shall have the meaning set forth in the
Notes.
“Excluded
Assets” means each of the following: (1) any lease, license
or other agreement or any property subject to a capital lease,
purchase money security interest or similar arrangement, to the
extent that a grant of a Lien thereon in favor of Secured Party
would violate or invalidate such lease, license, agreement or
capital lease, purchase money security interest or similar
arrangement or create a right of termination in favor of any other
party thereto (other than the Debtors), so long as such provision
exists and so long as such lease, license or agreement was not
entered into in contemplation of circumventing the obligation to
provide Collateral hereunder or in violation of the Purchase
Agreement, other than to the extent that any such term would be
rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or
9-409 of the UCC (or any successor provision or provisions) of any
relevant jurisdiction or any other applicable law including the
bankruptcy code, or principles of equity, (2) any of the
outstanding equity interests in a Foreign Subsidiary to the extent
that the pledge thereof is prohibited by the laws of the
jurisdiction of such Foreign Subsidiary’s organization and
(3) any application to register any trademark or service xxxx xxxxx
to the filing under applicable law of a verified statement of use
(or the equivalent) for such trademark or service xxxx to the
extent the creation of a security interest therein or the grant of
a lien thereon would void or invalidate such trademark or service
xxxx.
“General
Intangibles” means any “general intangibles,” as
such term is defined in the UCC, and, in any event, shall include,
without limitation, all right, title and interest in or under any
Contract, models, drawings, materials and records, claims, literary
rights, goodwill, rights of performance, Copyrights, Trademarks,
Patents, warranties, rights under insurance policies and rights of
indemnification.
“Goods”
means any “goods”, as such term is defined in the UCC,
including, without limitation, fixtures and embedded Software to
the extent included in “goods” as defined in the
UCC.
“Governmental
Authority” means the government of the United States of
America or any other nation, or any political subdivision thereof,
whether state or local, or any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or
administration powers or functions of or pertaining to government
over any Debtor or any of its subsidiaries, or any of their
respective properties, assets or undertakings.
“Instruments”
means any “instrument,” as such term is defined in the
UCC, and shall include, without limitation, promissory notes,
drafts, bills of exchange, trade acceptances, letters of credit,
letter of credit rights (as defined in the UCC), and Chattel
Paper.
“Inventory”
means any “inventory,” as such term is defined in the
UCC.
“Investment
Property” means any “investment property”, as
such term is defined in the UCC.
“Obligations”
means all obligations, liabilities and indebtedness of every nature
of Debtors from time to time owed or owing under or in respect of
this Agreement, the Purchase Agreement, the Notes, any of the other
Security Documents and any of the other Transaction Documents, as
the case may be, including, without limitation, the principal
amount of all debts, claims and indebtedness, accrued and unpaid
interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now
and/or from time to time hereafter owing, due or payable whether
before or after the filing of a bankruptcy, insolvency or similar
proceeding under applicable federal, state, foreign or other law
and whether or not an allowed claim in any such
proceeding.
“Lien”
has the meaning set forth in the Purchase Agreement.
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“Motor
Vehicles” shall mean motor vehicles, tractors, trailers and
other like property, whether or not the title thereto is governed
by a certificate of title or ownership.
“Mortgage”
has the meaning set forth in Section 2(h).
“Patents”
means any patents and patent applications, including, without
limitation, the inventions and improvements described and claimed
therein, all inventions subject to
the patents and patent applications listed on Schedule IV attached
hereto (if any), and the
reissues, divisions, continuations, renewals, extensions and
continuations-in-part of any of the foregoing, and all income,
royalties, damages and payments now or hereafter due and/or payable
under or with respect to any of the foregoing, including, without
limitation, damages and payments for past, present and future
infringements of any of the foregoing and the right to xxx for
past, present and future infringements of any of the
foregoing.
“Permitted
Indebtedness” has the meaning set forth in the
Notes.
“Proceeds”
means “proceeds,” as such term is defined in the UCC
and, in any event, includes, without limitation, (a) any and all
proceeds of any insurance, indemnity, warranty or guaranty payable
with respect to any of the Collateral, (b) any and all payments (in
any form whatsoever) made or due and payable 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), and (c) any and all other amounts from
time to time paid or payable under, in respect of or in connection
with any of the Collateral.
“Representative”
means any Person acting as agent, representative or trustee on
behalf of the Secured Party from time to time.
“Security
Documents” means this Agreement and any other documents
securing the Liens of the Secured Party hereunder.
“Software”
means all “software” as such term is defined in the
UCC, now owned or hereafter acquired by a Debtor, other than
software embedded in any category of Goods, including, without
limitation, all computer programs and all supporting information
provided in connection with a transaction related to any
program.
“Trademarks”
means any trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service
marks, logos, other business identifiers, prints and labels on
which any of the foregoing have appeared or appear, all
registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, the trademarks
and applications listed in Schedule V attached hereto (if
any) and renewals thereof, and all income, royalties, damages and
payments now or hereafter due and/or payable under or with respect
to any of the foregoing, including, without limitation, damages and
payments for past, present and future infringements of any of the
foregoing and the right to xxx for past, present and future
infringements of any of the foregoing.
“Transaction
Documents” means the Purchase Agreement, the Notes, the
Security Documents, the Warrants and any other related agreements
delivered to and in favor of the Purchaser.
“UCC”
shall mean the Uniform Commercial Code as in effect from time to
time in the State of New York; provided, that to the extent that
the Uniform Commercial Code is used to define any term herein and
such term is defined differently in different Articles or Divisions
of the Uniform Commercial Code, the definition of such term
contained in Article or Division 9 shall govern.
Section
2. Representations, Warranties and
Covenants of Debtors. Each Debtor represents and warrants
to, and covenants with, the Secured Party as follows:
(a) Such
Debtor has or will have rights in and the power to grant a security
interest in the Collateral in which it purports to grant a security
interest pursuant to Section 3 hereof (subject, with respect to
after acquired Collateral, to such Debtor acquiring the same) and
no Lien other than Permitted Liens exist or will exist upon such
Collateral at any time.
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(b) This
Agreement is effective to create in favor of Secured Party a valid
security interest in and Lien upon all of such Debtor’s
right, title and interest in and to the Collateral, and upon (i)
the filing of appropriate UCC financing statements in the
jurisdictions listed on Schedule I attached hereto,
(ii) the execution of a deposit account control agreement, (iii)
filings in the United States Patent and Trademark Office, or United
States Copyright Office with respect to Collateral that is
applications for or registered Patents and Trademarks, or
Copyrights, as the case may be, (iv) the filing of the Mortgages in
the jurisdictions listed on Schedule I hereto, (v) the
security interest created hereby being noted on each certificate of
title evidencing the ownership of any Motor Vehicle in accordance
with Section 4.1(d) hereof and (vi) delivery to the Secured Party
or its Representative of Instruments duly endorsed by such Debtor
or accompanied by appropriate instruments of transfer duly executed
by such Debtor with respect to Instruments not constituting Chattel
Paper, such security interest will be a duly perfected first
priority perfected security interest (subject to Permitted Liens)
in all of the Collateral.
(c) All of the
Equipment, Inventory and Goods owned by such Debtor is located at
the places as specified on Schedule I attached hereto.
Except as disclosed on Schedule I, none of the
Collateral is in the possession of any bailee, warehousemen,
processor or consignee, other than Collateral in transit, out for
repair or with an employee in ordinary course of business.
Schedule I
discloses such Debtor’s name as of the date hereof as it
appears in official filings in the state or province, as
applicable, of its incorporation, formation or organization, such
Debtor’s state or province, as applicable, of incorporation,
formation or organization and the chief place of business, chief
executive office and the office where such Debtor keeps its books
and records and the states in which such Debtor conducts its
business. Such Debtor has only one state or province, as
applicable, of incorporation, formation or organization. Such
Debtor does not do business and has not done business during the
past five (5) years under any trade name or fictitious business
name except as disclosed on Schedule II attached
hereto.
(d) Schedules III, IV and V contain complete and accurate
lists as of the date hereof of all (i) registered copyrights and
applications therefor; (ii) patents and pending applications
therefor; (iii) registered trademarks and service marks and
applications therefor; and (iv) all unregistered trademarks and
service marks that are material to the operations of the business
of such Debtor; in each case owned by such Debtor. No Copyrights,
Patents or Trademarks listed on Schedules III, IV and V,
respectively, if any, have been adjudged invalid or unenforceable
or have been canceled, in whole or in part, or are not presently
subsisting. Each of such Copyrights, Patents and Trademarks (if
any) is valid and enforceable. Such Debtor is the sole and
exclusive owner of the entire and unencumbered right, title and
interest in and to each of such Copyrights, Patents and Trademarks,
identified on Schedules
III, IV and V, as applicable, as being owned by such Debtor,
free and clear of any liens, charges and encumbrances, including
without limitation licenses, shop rights and covenants by such
Debtor not to xxx third persons. Such Debtor has adopted, used and
is currently using, or has a current bona fide intention to use,
all of such Trademarks. Such Debtor has no notice of any suits or
actions commenced or threatened in writing with reference to the
Copyrights, Patents or Trademarks owned by it.
(e) Each Debtor agrees
to deliver to the Secured Party an updated Schedule I, II, III, IV and/or
V within five (5) Business Days of any change
thereto.
(f) All depositary and
other accounts including, without limitation, Deposit Accounts,
securities accounts, brokerage accounts and other similar accounts,
maintained by each Debtor are described on Schedule VI hereto, which
description includes for each such account the name of the Debtor
maintaining such account, the name, address and telephone and
telecopy numbers of the financial institution at which such account
is maintained, the account number and the account officer, if any,
of such account. No Debtor shall open any new Deposit Accounts,
securities accounts, brokerage accounts or other accounts unless
such Debtor shall have given Secured Party ten (10) Business
Days’ prior written notice of its intention to open any such
new accounts. Each Debtor shall deliver to Secured Party a revised
version of Schedule
VI showing any changes thereto within five (5) Business Days
of any such change. Each Debtor hereby authorizes the financial
institutions at which such Debtor maintains an account to provide
Secured Party with such information with respect to such account as
Secured Party from time to time may request, and each Debtor hereby
consents to such information being provided to Secured Party. In
addition, all of such Debtor’s depositary, security,
brokerage and other accounts including, without limitation, Deposit
Accounts shall be subject to the provisions of Section 4.5
hereof.
(g) Such Debtor does
not own any Commercial Tort Claim except for those disclosed on
Schedule VII hereto
(if any).
(h) Such Debtor does
not have any interest in real property with respect to real
property except as disclosed on Schedule VIII (if any). Each
Debtor shall deliver to Secured Party a revised version of
Schedule VIII
showing any changes thereto within ten (10) Business Days of any
such change. Except as otherwise agreed to by Secured Party, all
such interests in real property with respect to such real property
are subject to a mortgage or deed of trust, as applicable in
accordance with the custom in the relevant jurisdiction, in form
and substance satisfactory to Secured Party, in favor of Secured
Party (hereinafter, a “Mortgage”).
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(i) Each Debtor shall
duly and properly record each interest in real property held
by such Debtor except with respect to easements, rights of
way, access agreements, surface damage agreements, surface use
agreements or similar agreements that such Debtor, using
prudent customs and practices in the industry in which it operates,
does not believe are of material value or material to the operation
of such Debtor’s business or, with respect to state and
federal rights of way, are not capable of being recorded as a
matter of state and federal law.
(j) All Equipment
(including, without limitation, Motor Vehicles) owned by a Debtor
and subject to a certificate of title or ownership statute is
described on Schedule
IX hereto.
Section
3. Collateral. As collateral
security for the prompt payment in full when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations, each
Debtor hereby pledges and grants to the Secured Party a Lien on and
security interest in and to all of such Debtor’s right, title
and interest in the following properties and assets of such Debtor,
whether now owned by such Debtor or hereafter acquired and whether
now existing or hereafter coming into existence and wherever
located (all being collectively referred to herein as
“Collateral”):
(a) all
Instruments, together with all payments thereon or
thereunder:
(b) all
Accounts;
(c) all
Inventory;
(d) all General
Intangibles (including payment intangibles (as defined in the UCC)
and Software);
(e) all
Equipment;
(f) all
Documents;
(g) all
Contracts;
(h) all
Goods;
(i) all Investment
Property, including without limitation all equity interests now
owned or hereafter acquired by such Debtor;
(j) all Deposit
Accounts, including, without limitation, the balance from time to
time in all bank accounts maintained by such Debtor;
(k) all Commercial Tort
Claims specified on Schedule VII;
(l) all Trademarks,
Patents and Copyrights;
(m) all books and
records pertaining to the other Collateral; and
(n) all other tangible
and intangible property of such Debtor, including, without
limitation, all interests in real property, Proceeds, tort claims,
products, accessions, rents, profits, income, benefits,
substitutions, additions and replacements of and to any of the
property of such Debtor described in the preceding clauses of this
Section 3 (including, without limitation, any proceeds of insurance
thereon, insurance claims and all rights, claims and benefits
against any Person relating thereto), other rights to payments not
otherwise included in the foregoing, and all books, correspondence,
files, records, invoices and other papers, including without
limitation all tapes, cards, computer runs, computer programs,
computer files and other papers, documents and records in the
possession or under the control of such Debtor, any computer bureau
or service company from time to time acting for such
Debtor.
Notwithstanding
anything to the contrary contained herein or in any Transaction
Document, in no event shall the security interest granted herein or
therein attach to any Excluded Assets.
Section
4. Covenants; Remedies. In
furtherance of the grant of the pledge and security interest
pursuant to Section 3 hereof, each Debtor hereby agrees with the
Secured Party as follows:
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4.1 Delivery
and Other Perfection; Maintenance, etc.
(a) Delivery of Instruments, Documents,
Etc. Each Debtor shall deliver and pledge to the Secured
Party or its Representative any and all Instruments, negotiable
Documents, Chattel Paper and certificated securities (accompanied
by stock powers executed in blank, which stock powers may be filled
in and completed at any time upon the occurrence of any Event of
Default) duly endorsed and/or accompanied by such instruments of
assignment and transfer executed by such Debtor in such form and
substance as the Secured Party or its Representative may request;
provided, that so
long as no Event of Default shall have occurred and be continuing,
each Debtor may retain for collection in the ordinary course of
business any Instruments, negotiable Documents and Chattel Paper
received by such Debtor in the ordinary course of business, and the
Secured Party or its Representative shall, promptly upon request of
a Debtor, make appropriate arrangements for making any other
Instruments, negotiable Documents and Chattel Paper pledged by such
Debtor available to such Debtor for purposes of presentation,
collection or renewal (any such arrangement to be effected, to the
extent deemed appropriate by the Secured Party or its
Representative, against a trust receipt or like document). If a
Debtor retains possession of any Chattel Paper, negotiable
Documents or Instruments pursuant to the terms hereof, such Chattel
Paper, negotiable Documents and Instruments shall be marked with
the following legend: “This writing and the obligations
evidenced or secured hereby are subject to the security interest of
GPB Debt Holdings II, LLC, in its capacity as Collateral Agent for
the benefit of the Purchaser, as secured party.”
(b) Other Documents and Actions.
Subject to the rights of holders of
Permitted Liens, each Debtor shall give, execute, deliver,
file and/or record any financing statement, registration, notice,
instrument, document, agreement, Mortgage or other papers that may
be necessary or desirable (in the reasonable judgment of the
Secured Party or its Representative) to create, preserve, perfect
or validate the security interest granted pursuant hereto (or any
security interest or mortgage contemplated or required hereunder,
including with respect to Section 2(h) of this Agreement) or to
enable the Secured Party or its Representative to exercise and
enforce the rights of the Secured Party hereunder with respect to
such pledge and security interest, provided that notices to
account debtors in respect of any Accounts or Instruments shall be
subject to the provisions of clause (e) below; provided further
that with respect to Medite GmbH (Austria) and MEDITE sp.zo.o
(Poland), Collateral Agent shall not require any foreign governed
security documentation so long as such entities are dissolved or
otherwise wound up within 120 days of the date of this Agreement
(such time which may be extended with the consent of Collateral
Agent in its sole discretion). Notwithstanding the foregoing each
Debtor hereby irrevocably authorizes the Secured Party at any time
and from time to time to file in any filing office in any
jurisdiction any initial financing statements (and other similar
filings or registrations under other applicable laws and
regulations pertaining to the creation, attachment, or perfection
of security interests) and amendments thereto that (a) indicate the
Collateral (i) as all assets of such Debtor or words of similar
effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the UCC, or (ii)
as being of an equal or lesser scope or with greater detail, and
(b) contain any other information required by part 5 of Article 9
of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether such Debtor
is an organization, the type of organization and any organization
identification number issued to such Debtor, and (ii) in the case
of a financing statement filed as a fixture filing, a sufficient
description of real property to which the Collateral relates. Each
Debtor agrees to furnish any such information to the Secured Party
promptly upon request. Each Debtor also ratifies its authorization
for the Secured Party to have filed in any jurisdiction any like
initial financing statements or amendments thereto if filed prior
to the date hereof.
(c) Books and Records. Each Debtor
(or a Company on behalf of a Debtor) shall maintain at its own cost
and expense complete and accurate books and records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Collateral and
all other dealings with the Collateral. Upon the occurrence and
during the continuation of any Event of Default, each Debtor shall
deliver and turn over any such books and records (or true and
correct copies thereof) to the Secured Party or its Representative
at any time on demand. Each Debtor shall permit any Representative
of the Secured Party, in accordance with Section 8.13 of the
Purchase Agreement, to inspect such books and records at any time
during reasonable business hours and will provide photocopies
thereof at such Debtor’s expense to the Secured Party upon
request of the Secured Party.
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(d) Motor Vehicles. Each Debtor
shall, promptly upon acquiring same, cause the Secured Party to be
listed as the lienholder on each certificate of title or ownership
covering any items of Equipment, including Motor Vehicles, having a
value in excess of $100,000 individually or in the aggregate for
all such items of Equipment of the Debtor, or otherwise comply with
the certificate of title or ownership laws of the relevant
jurisdiction issuing such certificate of title or ownership in
order to properly evidence and perfect Secured Party’s
security interest in the assets represented by such certificate of
title or ownership.
(e) Notice to Account Debtors;
Verification. (i) Subject to
the rights of holders of Permitted Liens, upon the
occurrence and during the continuance of any Event of Default or if
any rights of set-off (other than set-offs against an Account
arising under the Contract giving rise to the same Account) or
contra accounts may be asserted, upon request of the Secured Party
or its Representative, each Debtor shall promptly notify (and each
Debtor hereby authorizes the Secured Party and its Representative
so to notify) each account debtor in respect of any Accounts or
Instruments or other Persons obligated on the Collateral that such
Collateral has been assigned to the Secured Party hereunder, and
that any payments due or to become due in respect of such
Collateral are to be made directly to the Secured Party, and (ii)
the Secured Party and its Representative shall have the right at
any time or times to make direct verification with the account
debtors or other Persons obligated on the Collateral of any and all
of the Accounts or other such Collateral.
(f) Intellectual Property. If such
Debtor shall (i) obtain rights to any new patentable inventions,
any registered Copyrights or any Patents or Trademarks, or (ii)
become entitled to the benefit of any registered Copyrights or any
Patents or any registered Trademarks
or unregistered Trademarks material to the operations of the
business of such Debtor or any improvement on any Patent,
the provisions of this Agreement above shall automatically apply
thereto and such Debtor shall give to Secured Party prompt written
notice thereof. Each Debtor hereby authorizes Secured Party to
modify this Agreement by amending Schedules III, IV and V, as
applicable, to include any such registered Copyrights or any such
Patents and Trademarks. Each Debtor shall have the duty (i) to
prosecute diligently any patent, trademark, or service xxxx
applications pending as of the date hereof or hereafter, (ii) to
preserve and maintain all rights in the Copyrights, Patents and
Trademarks, to the extent material to the operations of the
business of such Debtor and (iii) to ensure that the Copyrights,
Patents and Trademarks are and remain enforceable, in each case to
the extent material to the operations of the business of such
Debtor. Any expenses incurred in connection with such
Debtor’s obligations under this Section 4.1(f) shall be borne
by such Debtor. Except for any such items that a Debtor reasonably
believes (using prudent industry customs and practices) are no
longer necessary for the on-going operations of its business, no
Debtor shall abandon any material right to file a patent, trademark
or service xxxx application, or abandon any pending patent,
trademark or service xxxx application or any other Copyright,
Patent or Trademark without the prior written consent of Secured
Party, which consent shall not be unreasonably
withheld.
(g) Further Identification of
Collateral. Each Debtor will, when and as often as requested
by the Secured Party or its Representative, furnish to the Secured
Party or such Representative, statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as the Secured Party or its
Representative may reasonably request, all in reasonable
detail.
(h) Investment Property. Each
Debtor will take any and all actions required or reasonably requested by the Secured Party,
from time to time, to (i) cause the Secured Party to obtain
exclusive control of any Investment Property owned by such Debtor
in a manner acceptable to the Secured Party and (ii) obtain from
any issuers of Investment Property and such other Persons, for the
benefit of the Secured Party, written confirmation of the Secured
Party’s control over such Investment Property. For purposes
of this Section 4.1(h), the Secured Party shall have exclusive
control of Investment Property if (i) such Investment Property
consists of certificated securities and a Debtor delivers such
certificated securities to the Secured Party (with appropriate
endorsements if such certificated securities are in registered
form); (ii) such Investment Property consists of uncertificated
securities and the issuer thereof agrees, pursuant to documentation
in form and substance satisfactory to the Secured Party, that it
will comply with instructions originated by the Secured Party
without further consent by such Debtor, and (iii) such Investment
Property consists of security entitlements and either (x) the
Secured Party becomes the entitlement holder thereof or (y) the
appropriate securities intermediary agrees, pursuant to the
documentation in form and substance satisfactory to the Secured
Party, that it will comply with entitlement orders originated by
the Secured Party without further consent by any Debtor; provided
that in each case Secured Party may only exercise the remedies set
forth under this Agreement with respect to any Investment Property
during the existence of an Event of Default.
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(i) Commercial Tort Claims. Each
Debtor shall promptly notify Secured Party of any Commercial Tort
Claim acquired by it that concerns a claim in excess of $50,000 and
unless otherwise consented to by Secured Party, such Debtor shall
enter into a supplement to this Agreement granting to Secured Party
a Lien on and security interest in such Commercial Tort
Claim.
4.2 Other Liens. Debtors will not
create, permit or suffer to exist, and will defend the Collateral
against and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Liens, and will defend the right, title
and interest of the Secured Party in and to the Collateral and in
and to all Proceeds thereof against the claims and demands of all
Persons whatsoever, except holders of Permitted Liens.
4.3 Preservation of Rights. Whether
or not any Event of Default has occurred or is continuing, the
Secured Party and its Representative may, but shall not be required
to, take any steps the Secured Party or its Representative deems
necessary or appropriate to preserve any Collateral or any rights
against third parties to any of the Collateral, including obtaining
insurance for the Collateral at any time when such Debtor has
failed to do so, and Debtors shall promptly pay, or reimburse the
Secured Party for, all expenses incurred in connection
therewith.
4.4 Formation
of Subsidiaries; Name Change; Location; Bailees.
(a) No Debtor shall
form or acquire any subsidiary unless (i) such Debtor pledges all
of the stock or equity interests of such subsidiary to the Secured
Party pursuant to an agreement in a form agreed to by the Secured
Party, (ii) such subsidiary becomes a party to this Agreement and
all other applicable Security Documents and (iii) the formation or
acquisition of such Subsidiary is not prohibited by the terms of
the Transaction Documents.
(b) No Debtor shall (i)
reincorporate or reorganize itself under the laws of any
jurisdiction other than the jurisdiction in which it is
incorporated or organized as of the date hereof, or (ii) otherwise
change its identity or corporate structure, in each case, without
the prior written consent of Secured Party, which consent shall not
be unreasonably withheld, or (iii) change its name without
delivering twenty (20) days prior notice of such change to Secured
Party. Each Debtor will notify Secured Party promptly in writing
prior to any such change in the proposed use by such Debtor of any
tradename or fictitious business name other than any such name set
forth on Schedule
II attached hereto.
(c) Except
for the sale of Inventory in the ordinary course of business and
other sales of assets expressly permitted by the terms of the
Purchase Agreement, Collateral in transit, our for repair or with
an employee in the ordinary course of business, each Debtor will
keep the Collateral at the locations specified in Schedule I. Each Debtor will
give Secured Party thirty (30) day’s prior written notice of
any change in such Debtor’s chief place of business or of any
new location for any of the Collateral.
(d) If any Collateral
is at any time in the possession or control of any warehousemen,
bailee, consignee or processor in an aggregate amount of at least
$100,000, such Debtor shall, upon the request of Secured Party or
its Representative, notify such warehousemen, bailee, consignee or
processor of the Lien and security interest created hereby and
shall instruct such Person to hold all such Collateral for Secured
Party’s account subject to Secured Party’s
instructions.
(e) Each Debtor
acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any
financing statement relating to
Secured Party’s security interests hereunder without
the prior written consent of Secured Party and agrees that it will
not do so without the prior written consent of Secured Party,
subject to such Debtor’s rights under Section 9-509(d)(2) to
the UCC.
(f) Subject to the rights of holders of Permitted
Liens, no Debtor shall enter into any Contract that
restricts or prohibits the grant to Secured Party of a security
interest in material Accounts, Chattel Paper, Instruments or
payment intangibles or the proceeds of the foregoing.
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4.5 Events of Default, Etc. During
the period during which an Event of Default shall have occurred and
be continuing, subject to the
rights of holders of Permitted Liens:
(a) each Debtor shall,
at the request of the Secured Party or its Representative, assemble
the Collateral and make it available to Secured Party or its
Representative at a place or places designated by the Secured Party
or its Representative which are reasonably convenient to Secured
Party or its Representative, as applicable, and such
Debtor;
(b) the Secured Party
or its Representative may make any reasonable compromise or
settlement deemed desirable with respect to any of the Collateral
and may extend the time of payment, arrange for payment in
installments, or otherwise modify the terms of, any of the
Collateral;
(c) the Secured Party
shall have all of the rights and remedies with respect to the
Collateral of a secured party under the UCC (whether or not said
UCC is in effect in the jurisdiction where the rights and remedies
are asserted) and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be
asserted, including, without limitation, the right, to the maximum
extent permitted by law, to: (i) exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if
the Secured Party were the sole and absolute owner thereof (and
each Debtor agrees to take all such action as may be appropriate to
give effect to such right) and (ii) to the appointment of a
receiver or receivers for all or any part of the Collateral or
business of a Debtor, whether such receivership be incident to a
proposed sale or sales of such Collateral or otherwise and without
regard to the value of the Collateral or the solvency of any person
or persons liable for the payment of the Obligations secured by
such Collateral. Each Debtor hereby consents to the appointment of
such receiver or receivers, waives any and all defenses to such
appointment and agrees that such appointment shall in no manner
impair, prejudice or otherwise affect the rights of Secured Party
under this Agreement. Each Debtor hereby expressly waives notice of
a hearing for appointment of a receiver and the necessity for bond
or an accounting by the receiver;
(d) the Secured Party
or its Representative in its discretion may, in the name of the
Secured Party or in the name of a Debtor or otherwise, demand, xxx
for, collect or receive any money or property at any time payable
or receivable on account of or in exchange for any of the
Collateral, but shall be under no obligation to do so;
(e) the Secured Party
or its Representative may take immediate possession and occupancy
of any premises owned, used or leased by a Debtor and exercise all
other rights and remedies which may be available to the Secured
Party;
(f) the Secured Party
may, upon reasonable notice (such reasonable notice to be
determined by Secured Party in its sole and absolute discretion,
which shall not be less than ten (10) days), with respect to the
Collateral or any part thereof which shall then be or shall
thereafter come into the possession, custody or control of the
Secured Party or its Representative, sell, lease, license, assign
or otherwise dispose of all or any part of such Collateral, at such
place or places as the Secured Party deems best, and for cash or
for credit or for future delivery (without thereby assuming any
credit risk), at public or private sale, without demand of
performance or notice of intention to effect any such disposition
or of the time or place thereof (except such notice as is required
above or by applicable statute and cannot be waived), and the
Secured Party or anyone else may be the purchaser, lessee,
licensee, assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent permitted by law,
at any private sale) and thereafter hold the same absolutely, free
from any claim or right of whatsoever kind, including any right or
equity of redemption (statutory or otherwise), of Debtors, any such
demand, notice and right or equity being hereby expressly waived
and released. The Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place
to which the sale may be so adjourned;
(g) the rights,
remedies and powers conferred by this Section 4.5 are in addition
to, and not in substitution for, any other rights, remedies or
powers that the Secured Party may have under any Transaction
Document, at law, in equity or by or under the UCC or any other
statute or agreement. The Secured Party may proceed by way of any
action, suit or other proceeding at law or in equity and no right,
remedy or power of the Secured Party will be exclusive of or
dependent on any other. The Secured Party may exercise any of its
rights, remedies or powers separately or in combination and at any
time; and
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(h) unless otherwise
agreed in the sole discretion of Secured Party, each Debtor,
Secured Party and each Debtor’s bank shall enter into a
deposit account control agreement in form and substance
satisfactory to Secured Party that is sufficient to give Secured
Party “control” (for purposes of Articles 8 and 9 of
the Uniform Commercial Code) over such account and which directs
such bank to transfer such funds so deposited on a daily basis, or
at other times acceptable to Secured Party, to Secured Party,
either to any account maintained by Secured Party at said bank or
by wire transfer to appropriate account(s) at Secured Party. All
funds deposited in such Deposit Accounts shall immediately become
subject to the security interest of Secured Party for its own
benefit, and Secured Party shall obtain the agreement by such bank
to waive any offset rights against the funds so deposited. Secured
Party shall apply all funds received by it from the Deposit
Accounts to the satisfaction of the Obligations.
The
proceeds of each collection, sale or other disposition under this
Section 4.5 shall be applied in accordance with Section 4.8
hereof.
4.6 Deficiency. If the proceeds of
sale, collection or other realization of or upon the Collateral are
insufficient to cover the costs and expenses of such realization
and the payment in full of the Obligations, Debtors shall remain
jointly and severally liable for any deficiency.
4.7 Private Sale. Each Debtor
recognizes that the Secured Party may be unable to effect a public
sale of any or all of the Collateral consisting of securities by
reason of certain prohibitions contained in the Securities Act of
1933, as amended (the “Act”), and applicable state
securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will
be obliged to agree, among other things, to acquire such Collateral
for their own account for investment and not with a view to the
distribution or resale thereof. Each Debtor acknowledges and agrees
that any such private sale may result in prices and other terms
less favorable to the seller than if such sale were a public sale
and each Debtor agrees that it is not commercially unreasonable for
Secured Party to engage in any such private sales or dispositions
under such circumstances. The Secured Party shall be under no
obligation to delay a sale of any of the Collateral to permit a
Debtor to register such Collateral for public sale under the Act,
or under applicable state securities laws, even if Debtors would
agree to do so. The Secured Party shall not incur any liability as
a result of the sale of any such Collateral, or any part thereof,
at any private sale provided for in this Agreement conducted in a
commercially reasonable manner, and so long as Secured Party
conducts such sale in a commercially reasonable manner each Debtor
hereby waives any claims against the Secured Party arising by
reason of the fact that the price at which the Collateral may have
been sold at such a private sale was less than the price which
might have been obtained at a public sale or was less than the
aggregate amount of the Obligations, even if the Secured Party
accepts the first offer received and does not offer the Collateral
to more than one offeree.
Each
Debtor further agrees to do or cause to be done all such other acts
and things as may be necessary to make such sale or sales of any
portion or all of any such Collateral valid and binding and in
compliance with any and all applicable laws, regulations, orders,
writs, injunctions, decrees or awards of any and all courts,
arbitrators or governmental instrumentalities, domestic or foreign,
having jurisdiction over any such sale or sales, all at such
Debtor’s expense. Each Debtor further agrees that a breach of
any of the covenants contained in this Section 4.7 will cause
irreparable injury to the Secured Party, that the Secured Party has
no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this
Section 4.7 shall be specifically enforceable against Debtors, and
each Debtor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except
for a defense that no Event of Default has occurred and is
continuing.
4.8 Application of Proceeds. The
proceeds of any collection, sale or other realization of all or any
part of the Collateral, and any other cash at the time held by the
Secured Party under this Agreement, shall be applied to the
Obligations in such order as Secured Party shall
elect.
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4.9 Attorney-in-Fact. Each Debtor
hereby irrevocably constitutes and appoints the Secured Party, with
full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of
such Debtor and in the name of such Debtor or in its own name, from
time to time in the discretion of the Secured Party, for the
purpose of carrying out the terms of this Agreement, 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
perfect or protect any security interest granted hereunder, to
maintain the perfection or priority of any security interest
granted hereunder, or to otherwise accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing,
hereby gives the Secured Party the power and right, on behalf of
such Debtor, without notice to or assent by such Debtor (to the
extent permitted by applicable law), subject to the rights
of holders of Permitted Liens, to do the
following:
(a) 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 this Agreement;
(b) upon the occurrence
and during the continuation of an Event of Default, to ask, demand,
collect, receive and give acquittance and receipts for any and all
moneys due and to become due under any Collateral and, in the name
of such Debtor or its own name or otherwise, to take possession of
and endorse and collect any checks, drafts, notes, acceptances or
other Instruments for the payment of moneys due under any
Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Secured Party for the purpose of collecting any
and all such moneys due under any Collateral whenever payable and
to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the
Secured Party for the purpose of collecting any and all such moneys
due under any Collateral whenever payable;
(c) to pay or discharge
charges or liens levied or placed on or threatened against the
Collateral, to effect any insurance called for by the terms of this
Agreement and to pay all or any part of the premiums
therefor;
(d) to direct any party
liable for any payment under any of the Collateral to make payment
of any and all moneys due, and to become due thereunder, directly
to the Secured Party or as the Secured Party shall direct, and to
receive payment of and receipt for any and all moneys, claims and
other amounts due, and to become due at any time, in respect of or
arising out of any Collateral;
(e) upon the occurrence
and during the continuation of an Event of Default, to sign and
indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts and other
Documents constituting or relating to the Collateral;
(f) upon the occurrence
and during the continuation of an Event of Default, to commence and
prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral;
(g) upon the occurrence
and during the continuation of an Event of Default, to defend any
suit, action or proceeding brought against a Debtor with respect to
any Collateral;
(h) upon the occurrence
and during the continuation of an Event of Default, to settle,
compromise or adjust any suit, action or proceeding described above
and, in connection therewith, to give such discharges or releases
as the Secured Party may deem appropriate;
(i) to the extent that
a Debtor’s authorization given in Section 4.1(b) of this Agreement is not
sufficient to file such financing statements with respect to this
Agreement, with or without such Debtor’s signature, or to
file a photocopy of this Agreement in substitution for a financing
statement, as the Secured Party may deem appropriate and to execute
in such Debtor’s name such financing statements and
amendments thereto and continuation statements which may require
such Debtor’s signature;
(j) upon the occurrence
and during the continuation of an Event of Default, generally to
sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely
as though the Secured Party were the absolute owners thereof for
all purposes; and
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(k) to do, at the
Secured Party’s option and at such Debtor’s expense, at
any time, or from time to time, all acts and things which the
Secured Party reasonably deems necessary to protect or preserve or,
upon the occurrence and during the continuation of an Event of
Default, realize upon the Collateral and the Secured Party’s
lien therein, in order to effect the intent of this Agreement, all
as fully and effectively as such Debtor might do.
Each
Debtor hereby ratifies, to the extent permitted by law, all that
such attorneys lawfully do or cause to be done by virtue hereof
provided the same is performed in a commercially reasonable manner.
The power of attorney granted hereunder is a power coupled with an
interest and shall be irrevocable until the Obligations are
indefeasibly paid in full in cash and this Agreement is terminated
in accordance with Section 4.11 hereof.
Each
Debtor also authorizes the Secured Party, at any time from and
after the occurrence and during the continuation of any Event of
Default, (x) to communicate in its own name with any party to any
Contract with regard to the assignment of the right, title and
interest of such Debtor in and under the Contracts hereunder and
other matters relating thereto and (y) to execute, in connection with any
sale of Collateral provided for in Section 4.5 hereof, any
endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
4.10 Perfection.
Prior to or concurrently with the execution and delivery of this
Agreement, each Debtor shall:
(a) at Secured
Party’s request, deliver to the Secured Party or its
Representative the originals of all Instruments together with, in
the case of Instruments constituting promissory notes, allonges
attached thereto showing such promissory notes to be payable to the
order of a blank payee;
(b) deliver to the
Secured Party or its Representative the originals of all Motor
Vehicle titles in the aggregate amount over $100,000, duly endorsed
indicating the Secured Party’s interest therein as a
lienholder, together with such other documents as may be required
consistent with Section 4.1(d) hereof to perfect the security
interest granted by Section 3 in all such Motor Vehicles (if
any).
4.11 Termination;
Partial Release of Collateral. This Agreement and the Liens
and security interests granted hereunder shall not terminate until
the termination of the Purchase Agreement and the Notes and the
full and complete performance and indefeasible satisfaction of all
the Obligations (i) in respect of the Transaction Documents
(including, without limitation, the indefeasible payment in full in
cash of all such Obligations) and (ii) with respect to which claims
have been asserted by the Collateral Agent/ and or Purchaser,
whereupon the Secured Party shall forthwith cause to be assigned,
transferred and delivered, against receipt but without any
recourse, warranty or representation whatsoever, any remaining
Collateral to or on the order of Debtors. The Secured Party shall
also execute and deliver to Debtors upon such termination or in
connection with a Permitted Disposition and at Debtors’
expense such UCC termination statements, certificates for
terminating the liens on the Motor Vehicles (if any), possessory
collateral and such other documentation as shall be reasonably
requested by Debtors to effect the termination and release of the
Liens and security interests in favor of the Secured Party
affecting the Collateral.
4.12 Further
Assurances. At any time and from time to time, upon the
written request of the Secured Party or its Representative, and at
the sole expense of Debtors, subject to the rights of holders of
Permitted Liens, Debtors will promptly and duly execute and deliver
any and all such further instruments, documents and agreements and
take such further actions as the Secured Party or its
Representative may reasonably require in order for the Secured
Party to obtain the full benefits of this Agreement and of the
rights and powers herein granted in favor of the Secured Party,
including, without limitation, using Debtors’ best efforts to
secure all consents and approvals necessary or appropriate for the
assignment to the Secured Party of any Collateral held by Debtors
or in which a Debtor has any rights not heretofore assigned, the
filing of any financing or continuation statements under the UCC
with respect to the liens and security interests granted hereby,
transferring Collateral to the Secured Party’s possession (if
a security interest in such Collateral can be perfected by
possession) in accordance with the terms hereof, placing the
interest of the Secured Party as lienholder on the certificate of
title of any Motor Vehicle in accordance with the terms hereof, and
obtaining waivers of liens from landlords in accordance with the
terms hereof. Each Debtor also hereby authorizes the Secured Party
and its Representative to file any such financing or continuation
statement without the signature of such Debtor to the extent
permitted by applicable law.
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4.13 Limitation
on Duty of Secured Party. The powers conferred on the
Secured Party under this Agreement are solely to protect the
Secured Party’s interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. The Secured
Party shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither
the Secured Party nor its Representative nor any of their
respective officers, directors, employees or agents shall be
responsible to Debtors for any act or failure to act, except for
gross negligence or willful misconduct. Without limiting the
foregoing, the Secured Party and any Representative shall be deemed
to have exercised reasonable care in the custody and preservation
of the Collateral in their possession if such Collateral is
accorded treatment substantially equivalent to that which the
relevant Secured Party or any Representative, in its individual
capacity, accords its own property consisting of the type of
Collateral involved, it being understood and agreed that neither
the Secured Party nor any Representative shall have any
responsibility for taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above) to
preserve rights against any Person with respect to any
Collateral.
Also
without limiting the generality of the foregoing, neither the
Secured Party nor any Representative shall have any obligation or
liability under any Contract or license by reason of or arising out
of this Agreement or the granting to the Secured Party of a
security interest therein or assignment thereof or the receipt by
the Secured Party or any Representative of any payment relating to
any Contract or license pursuant hereto, nor shall the Secured
Party or any Representative be required or obligated in any manner
to perform or fulfill any of the obligations of Debtors under or
pursuant to any Contract or license, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment
received by it or the sufficiency of any performance by any party
under any Contract or license, or to present or file any claim, or
to take any action to collect or enforce any performance or the
payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.
Section
5. Miscellaneous.
5.1 No Waiver. No failure on the
part of the Secured Party or any of its Representatives to
exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by the
Secured Party or any of its Representatives of any right, power or
remedy hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The rights and
remedies hereunder provided are cumulative and may be exercised
singly or concurrently, and are not exclusive of any rights and
remedies provided by law.
5.2 Governing Law. All questions
concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal
laws of the State of New York, without giving effect to any choice
of law or conflict of law provision or rule (whether of the State
of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of
New York.
5.3 Notices. All notices,
approvals, requests, demands and other communications hereunder
shall be delivered or made in the manner set forth in, and shall be
effective in accordance with the terms of, the Purchase Agreement;
provided, that, to the extent any such communication is being made
or sent to a Debtor that is not the Company, such communication
shall be effective as to such Debtor if made or sent to the Company
in accordance with the foregoing. Debtors and Secured Party may change their
respective notice addresses by written notice given to each other
party five (5) days prior to the effectiveness of such
change.
5.4 Amendments, Etc. The terms of
this Agreement may be waived, altered or amended only by an
instrument in writing duly executed by the Debtor sought to be
charged or benefited thereby and the Secured Party. Any such
amendment or waiver shall be binding upon the Secured Party and the
Debtor sought to be charged or benefited thereby and their
respective successors and assigns.
5.5 Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of each of the parties hereto,
provided, that no Debtor shall assign or transfer its rights
hereunder without the prior written consent of the Secured Party.
Secured Party may assign its rights hereunder without the consent
of Debtors, in which event such assignee shall be deemed to be
Secured Party hereunder with respect to such assigned rights;
provided, so long as no Event of Default has occurred and is
continuing, the Secured Party shall not assign any of its rights
hereunder to a competitor of the Company.
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5.6 Counterparts; Headings. This
Agreement may be authenticated in any number of counterparts, all
of which taken together shall constitute one and the same
instrument and any of the parties hereto may authenticate this
Agreement by signing any such counterpart. This Agreement may be
authenticated by manual signature or facsimile, .pdf or similar
electronic signature, all of which shall be equally valid. The
headings in this Agreement are for convenience of reference only
and shall not alter or otherwise affect the meaning
hereof.
5.7 Severability. If any provision
hereof is invalid and unenforceable in any jurisdiction, then, to
the fullest extent permitted by law, (a) the other provisions
hereof shall remain in full force and effect in such jurisdiction
and shall be liberally construed in favor of the Secured Party and
its Representative in order to carry out the intentions of the
parties hereto as nearly as may be possible and (b) the invalidity
or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision
in any other jurisdiction.
5.8 SUBMISSION
TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS.
EACH DEBTOR HEREBY IRREVOCABLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL
OR NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK, BOROUGH OF
MANHATTAN IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT AND EACH DEBTOR HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF
SECURED PARTY TO BRING PROCEEDINGS AGAINST ANY DEBTOR IN THE COURTS
OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY A DEBTOR
AGAINST SECURED PARTY OR ANY AFFILIATE THEREOF INVOLVING, DIRECTLY
OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTION WITH THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN
NEW YORK, NEW YORK (AND SECURED PARTY HEREBY SUBMITS TO THE
JURISDICTION OF SUCH COURT). NOTHING CONTAINED HEREIN SHALL BE
DEEMED TO LIMIT IN ANY WAY ANY RIGHT OF SECURED PARTY TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW.
5.9 WAIVER
OF RIGHT TO TRIAL BY JURY.
EACH DEBTOR AND SECURED PARTY WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY
OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. EACH DEBTOR AND SECURED PARTY AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION 5.9 AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.
5.10 Joint
and Several. The obligations, covenants and agreements of
Debtors hereunder shall be the joint and several obligations,
covenants and agreements of each Debtor, whether or not
specifically stated herein without preferences or distinction among
them.
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5.11 Parallel
Debt. For the purpose
of taking and ensuring the continuing validity of certain of
the security under the Security Documents, each Debtor incorporated
in Germany hereby agrees and covenants with the Collateral Agent by
way of an abstract acknowledgement of debt (abstraktes Schuldanerkenntnis) that
each of them shall pay to the Collateral Agent sums equal to, and
in the currency of, any sums owing by such Debtor to the Secured
Party under any Transaction Document (the "Corresponding
Obligation") when these amounts are due and payable (such abstract
acknowledgement of debt the "Parallel Debt"). Any security granted
by a Debtor incorporated in Germany under any Security Document to
the Collateral Agent to secure the Parallel Debt is granted to the
Collateral Agent shall be held on a German security trust
(deutsch-rechtliche
Sicherheitentreuhand) for the benefit of the Secured
Party.
Notwithstanding
anything to the contrary in this Security Agreement, the Collateral
Agent shall have its own independent right to demand payment of the
Parallel Debt by any Debtor incorporated in Germany. The rights of
the Secured Party to receive payment of the Corresponding
Obligations are several from the rights of the Collateral Agent to
receive payment under the Parallel Debt provided that the payment by
such Debtor of its Parallel Debt to the Collateral Agent in
accordance with this Section 5.11 by a Debtor
incorporated in Germany of its Corresponding Obligations shall be a
good discharge of the relevant Parallel Debt. In the event of a
good discharge of the Corresponding Obligations the Collateral
Agent shall no longer be entitled to demand payment of the Parallel
Debt and such Parallel Debt shall cease to exist. This shall apply
mutatis mutandis in the event of a good discharge of the Parallel
Debt to the Corresponding Obligations.
5.12 Concerning
Collateral Agent. Collateral
Agent shall act in accordance with the terms of the Purchase
Agreement. The Collateral Agent may exercise or refrain from
exercising any rights (including making demands and giving notices)
and take or refrain from taking any action, in accordance with this
Agreement and the Purchase Agreement. The Collateral Agent may
employ agents and attorneys-in-fact in connection herewith and
shall not be liable for the negligence or misconduct of any such
agents or attorneys-in-fact selected by it in good faith. The
Collateral Agent may resign with 10 days’ written notice to
Company and a successor Collateral Agent may be appointed by the
Purchaser in consultation with Company. On the acceptance of
appointment as the successor Collateral Agent, that successor
Collateral Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring
Collateral Agent under this Agreement, and the retiring Collateral
Agent shall thereupon be discharged from its duties and obligations
under this Agreement. After any retiring Collateral Agent's
resignation, the provisions hereof shall inure to its benefit as to
any actions taken or omitted to be taken by it under this Agreement
while it was the Collateral Agent.
5.13 No
Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be
applied against any party.
5.14 ENTIRE
AGREEMENT; AMENDMENT. THIS AGREEMENT, TOGETHER WITH THE
OTHER TRANSACTION DOCUMENTS, SUPERSEDES ALL OTHER PRIOR ORAL OR
WRITTEN AGREEMENTS BETWEEN SECURED PARTY, THE DEBTORS, THEIR
AFFILIATES AND PERSONS ACTING ON THEIR BEHALF WITH RESPECT TO THE
MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT, TOGETHER WITH THE
OTHER TRANSACTION DOCUMENTS AND THE OTHER INSTRUMENTS REFERENCED
HEREIN AND THEREIN, CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES
WITH RESPECT TO THE MATTERS COVERED HEREIN AND THEREIN AND, EXCEPT
AS SPECIFICALLY SET FORTH HEREIN OR THEREIN, NEITHER THE SECURED
PARTY NOR ANY DEBTOR MAKES ANY REPRESENTATION, WARRANTY, COVENANT
OR UNDERTAKING WITH RESPECT TO SUCH MATTERS. AS OF THE DATE OF THIS
AGREEMENT, THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES
WITH RESPECT TO THE MATTERS DISCUSSED HEREIN. NO PROVISION OF THIS
AGREEMENT MAY BE AMENDED, MODIFIED OR SUPPLEMENTED OTHER THAN BY AN
INSTRUMENT IN WRITING SIGNED BY THE DEBTORS AND THE SECURED
PARTY.
[Remainder of Page Intentionally Left Blank; Signature Page
Follows]
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-15-
IN
WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the day and year
first above written.
DEBTORS:
MEDITE CANCER DIAGNOSTICS, INC., a
Delaware corporation
By: /s/ Xxxxx X. Xxxxxxxxx
Name:
Xxxxx Xxxxxxxxx
Title:
Chief Executive Officer
[INSERT
OTHER DEBTORS]
-16-
SECURED PARTY:
GPB
DEBT HOLDINGS II, LLC
By: /s/ Xxxxx Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
Manager
Notice
Address:
000
Xxxx 00xx
Xxxxxx, Xxxxx 0
Xxx
Xxxx, XX 00000
-17-
EXHIBIT A
Form of
Joinder
Joinder
to Security Agreement
The
undersigned, ______________________________, hereby joins in the
execution of that certain Security Agreement dated as of September
26, 2017 (as amended, restated, supplemented or otherwise modified
from time to time, the “Security Agreement”) by Medite
Cancer Diagnostics, Inc., a Delaware corporation, GPB Debt Holdings
II, LLC, a Delaware limited liability company, and each other
Person that becomes a Debtor or a Secured Party (as defined
therein) thereunder after the date thereof and hereof and pursuant
to the terms thereof, to and in favor of the Secured Party. By
executing this Joinder, the undersigned hereby agrees that it is a
Debtor thereunder and agrees to be bound by all of the terms and
provisions of the Security Agreement. The undersigned represents
and warrants that the representations and warranties set forth in
the Security Agreement are, with respect to the undersigned, true
and correct in all material respects as of the date
hereof.
The
undersigned represents and warrants to Secured Party
that:
(a) all of the
Equipment, Inventory and Goods owned by such Debtor is located at
the places as specified on Schedule I and such Debtor
conducts business in the jurisdiction set forth on Schedule I;
(b) except as disclosed
on Schedule I, none
of such Collateral is in the possession of any bailee,
warehousemen, processor or consignee;
(c) the chief place of
business, chief executive office and the office where such Debtor
keeps its books and records are located at the place specified on
Schedule
I;
(d) such Debtor
(including any Person acquired by such Debtor) does not do business
or has not done business during the past five years under any
tradename or fictitious business name, except as disclosed on
Schedule
II;
(e) all registered
Copyrights, Patents and Trademarks owned or licensed by the
undersigned are listed in Schedules III, IV and V, respectively;
(f) all Deposit
Accounts, securities accounts, brokerage accounts and other similar
accounts maintained by such Debtor, and the financial institutions
at which such accounts are maintained, are listed on Schedule VI;
(g) all Commercial Tort
Claims of such Debtor are listed on Schedule VII;
(h) all interests in
real property and mining rights held by such Debtor are listed on
Schedule
VIII;
(i) all Equipment
(including Motor Vehicles) owned by such debtor are listed on
Schedule
IX.
, a
______________
By:
Title:
FEIN:
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