Exhibit 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of June 23, 2006,
is made between AKSYS, LTD., a Delaware corporation ("Debtor"), and the Lenders
party (together with any Collateral Agent (as defined below) appointed
hereunder, each a "Secured Party" and, collectively, the "Secured Parties") to
the Loan Agreement referred to below.
Debtor and Secured Parties hereby agree as follows:
Section 1. Definitions; Interpretation.
(a) All capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings assigned to them in the Loan Agreement.
(b) As used in this Agreement, the following terms shall have the
following meanings:
"Collateral" has the meaning set forth in Section 2.
"Collateral Agent" has the meaning set forth in Section 2(e).
"Durus" means Durus Life Sciences Master Fund Ltd., a Cayman Islands
Exempted Company.
"Event of Default" has the meaning set forth in Section 8.
"Loan Agreement" means the Loan Agreement, dated as the date hereof,
between Debtor and Secured Parties, as amended, amended and restated, modified,
renewed, extended or replaced from time to time.
"Majority Secured Parties" means at any time Secured Parties holding
at least 51% of the then aggregate unpaid principal amount of the Loans plus the
unused portion of the Additional Commitment, or, if no such principal amount is
then outstanding, Secured Parties having at least 51% of the aggregate
Commitments.
"Obligations" means the indebtedness, liabilities and other
obligations of Debtor and any Guarantor to Secured Parties or any Collateral
Agent under or in connection with the Loan Agreement, the Notes and the other
Loan Documents, including the Loans, all interest accrued thereon, all fees due
under the Loan Agreement and all other amounts payable by Debtor to Secured
Parties or any Collateral Agent thereunder or in connection therewith, whether
now or hereafter existing or arising, and whether due or to become due, absolute
or contingent, liquidated or unliquidated, determined or undetermined, and
including interest that accrues after the commencement by or against Debtor or
any Guarantor of any Insolvency Proceeding naming such Person as the debtor in
such proceeding.
"Original Agreement" means that certain Security Agreement dated as of
March 31, 2006 entered into between Debtor and Durus.
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"Partnership and LLC Collateral" has the meaning set forth in Section
5(r).
"Pledged Collateral" means Debtor's (i) investment property and (ii)
Partnership and LLC Collateral, including any ownership interests in any
Subsidiaries of Debtor.
"Pledged Collateral Agreements" means any shareholders agreement,
operating agreement, partnership agreement, voting trust, proxy agreement or
other agreement or understanding with respect to any Pledged Collateral.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York.
(c) Where applicable and except as otherwise defined herein, terms
used in this Agreement shall have the meanings assigned to them in the UCC.
(d) The rules of interpretation set forth in Section 1.02 of the Loan
Agreement shall be applicable to this Agreement and are incorporated herein by
this reference.
Section 2. Security Interest.
(a) As security for the payment and performance of the Obligations,
Debtor hereby grants to Secured Parties a security interest in all of Debtor's
right, title and interest in, to and under the following assets, wherever
located and whether now existing or owned or hereafter acquired or arising: all
goods, accounts, chattel paper (whether tangible or electronic), software,
commercial tort claims, deposit accounts, documents, equipment (including all
fixtures), general intangibles (including intellectual property), payment
intangibles, instruments, inventory, investment property, letter-of-credit
rights, money, records, and all other personal property and all products,
proceeds and supporting obligations of any and all of the foregoing
(collectively, the "Collateral"). Notwithstanding the foregoing, "Collateral"
shall not include any rights or interests in any lease, license, contract, or
agreement, as such, if under the terms of such lease, license, contract, or
agreement, or applicable law with respect thereto, the valid grant of a security
interest or lien therein to Secured Parties is prohibited and such prohibition
has not been or is not waived or the consent of the other party to such lease,
license, contract, or agreement has not been or is not otherwise obtained or
under applicable law such prohibition cannot be waived; provided, that the
foregoing exclusion shall in no way be (i) construed to apply if any such
prohibition would be rendered ineffective under the UCC or other applicable law
(including the Bankruptcy Code) or principles of equity, (ii) construed so as to
limit, impair or otherwise affect Secured Parties' unconditional continuing
security interests in and liens upon any rights or interests of Debtor in or to
the proceeds thereof, including monies due or to become due under any such
lease, license, contract, or agreement (including any accounts), or (iii)
construed to apply at such time as the condition causing such prohibition shall
be remedied and, to the extent severable, "Collateral" shall include any portion
of such lease, license, contract, or agreement that does not result in such
prohibition; and provided, further, that Debtor shall obtain the consents with
respect to leases, licenses, contracts and agreements as set forth in the Loan
Agreement.
(b) Debtor hereby acknowledges and agrees for the benefit of Secured
Parties that the Original Agreement is amended and restated by this Agreement,
without novation, and
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that the Original Agreement, as amended and restated by this Agreement: (i) is
and shall continue to be in full force and effect, without offset or
counterclaim; (ii) is and shall continue to be valid and enforceable; and (c) is
not and shall not be impaired or affected in any respect by the execution and
delivery of this Agreement or by the execution and delivery of, or the
consummation of the transactions contemplated by, the Loan Documents, the
execution of which shall not be deemed a satisfaction, cancellation, or novation
of any Obligation of Debtor under the Original Agreement or any other Loan
Document (as defined in the Original Agreement). Debtor further acknowledges and
agrees that any reference to the "Security Agreement" in the other Loan
documents shall mean and be references to the Original Agreement as amended and
restated by this Agreement (and as further amended, amended and restated,
modified, renewed, extended or replaced from time to time in accordance with the
terms hereof). Debtor hereby ratifies and reaffirms the validity and
enforceability of all of the liens and security interests heretofore granted to
any Secured Party as collateral security for the Obligations and acknowledges
that all such liens and security interests and all collateral heretofore granted
as security for the Obligations under the Original Agreement continues to be and
remains collateral for the Obligations from and after the date hereof pursuant
to the Original Agreement as amended and restated by this Agreement.
(c) Anything herein to the contrary notwithstanding, (i) Debtor shall
remain liable under any Pledged Collateral Agreements and any other contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by
Secured Parties or any Collateral Agent of any of the rights hereunder shall not
release Debtor from any of its duties or obligations under any Pledged
Collateral Agreements or other such contracts, agreements and other documents,
and (iii) neither the Secured Parties nor any Collateral Agent shall have any
obligation or liability under any Pledged Collateral Agreements or other such
contracts, agreements and other documents by reason of this Agreement, nor shall
Secured Parties or any Collateral Agent be obligated to perform any of the
obligations or duties of Debtor thereunder or to take any action to collect or
enforce any Pledged Collateral Agreements or other such contract, agreement or
other document.
(d) This Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until terminated in accordance with
Section 18 hereof.
(e) The Majority Secured Parties may appoint a Secured Party, or an
affiliate of a Secured Party, who has proposed itself available for
consideration therefor or consented thereto upon nomination by any other Secured
Party, to perform the duties and obligations set forth in subsection (f) below
(the "Collateral Agent") at any time, and whether before, during or after the
occurrence of an Event of Default. Following the appointment of Collateral
Agent, and agreement upon any fees and other arrangements required by it,
including any indemnification agreement it may require, by the Majority Secured
Parties, Collateral Agent's duties and obligations shall commence upon the date
specified in the notice of acceptance to be submitted by Collateral Agent. Each
Secured Party hereby authorizes Collateral Agent to take such action as agent on
its behalf and to exercise such powers and perform such duties under this
Agreement and the other Loan Documents as are delegated to Collateral Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto. The duties and obligations of Collateral Agent are strictly limited to
those expressly provided for herein, and any additional duties and
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obligations expressly agreed upon by Collateral Agent and the Majority Secured
Parties, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against Collateral Agent. Nothing in this Agreement shall, or shall be construed
to, constitute Collateral Agent a trustee or fiduciary for any Secured Party. In
performing its functions and duties hereunder, Collateral Agent shall act solely
as the agent of Secured Parties and does not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency or trust with or
for Debtor. Notwithstanding anything to the contrary contained herein,
Collateral Agent shall not be required to take any action which is contrary to
this Agreement or applicable law.
(f) The duties and obligations of Collateral Agent hereunder shall
consist of (i) exercising or refraining from exercising any rights, remedies or
powers of Secured Parties under the Loan Documents or under applicable law in
respect of the Loans or all or any portion of any Collateral, (ii) selling,
releasing, surrendering, realizing upon or otherwise dealing with, in any manner
and in any order, all or any portion of any Collateral, (iii) making any demands
or giving any notices under Loan Documents, (iv) effecting amendments to and
granting waivers under the Loan Documents, (v) distributing payments to Secured
Parties of amounts paid to it by Debtor under any Loan Documents or received by
it in connection with the Collateral, (vi) holding on behalf of Secured Parties
any instruments or other possessory Collateral, and (vii) engaging and replacing
(in consultation with Secured Parties and with the prior approval of the
Majority Secured Parties), instructing and remunerating on behalf of Secured
Parties all consultants, experts and other Persons to be engaged by Secured
Parties, including legal counsel for Secured Parties, in each case in accordance
with the instructions of the Majority Secured Parties.
(g) Neither Collateral Agent nor any of its directors, officers,
employees or agents shall be responsible to any Secured Party for any action
taken or omitted to be taken by it or them hereunder or in connection herewith,
except for its or their own gross negligence or willful misconduct. Collateral
Agent shall use the level of care it uses with respect to its own property of a
similar nature to assure the safe custody of Collateral in its possession.
Beyond the exercise of such level of care to assure the safe custody of
Collateral in its possession as Collateral Agent, and the accounting for any
monies actually received by Collateral Agent in such capacity, Collateral Agent
shall have no duty or liability to exercise or preserve any rights, privileges
and powers pertaining to the Collateral.
(h) Each Secured Party's interest in the Collateral shall be on a
parity with the interests of all other Secured Parties, and the interest of each
Secured Party in the Collateral shall be equal to its Pro Rata Share (except to
the extent the Secured Parties agree to any other ratable interest therein). Any
Secured Party holding any instruments, certificated investment property or other
Collateral hereunder shall do so as agent for and for the ratable benefit of all
Secured Parties.
(i) Anything herein to the contrary notwithstanding, in no event shall
the Collateral include, and Debtor shall not be deemed to have granted a
security interest in, any of Debtor's right, title or interest in any of the
outstanding voting capital stock or other ownership interests of a Controlled
Foreign Corporation (as defined below) in excess of 65% of the voting power of
all classes of capital stock or other ownership interests of such Controlled
Foreign
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Corporation entitled to vote; provided that (A) immediately upon the amendment
of the Internal Revenue Code to allow the pledge of a greater percentage of the
voting power of capital stock or other ownership interests in a Controlled
Foreign Corporation without adverse tax consequences, the Collateral shall
include, and Debtor shall be deemed to have granted a security interest in, such
greater percentage of capital stock or other ownership interests of each
Controlled Foreign Corporation; and (B) if no adverse tax consequences to Debtor
shall arise or exist in connection with the pledge of any Controlled Foreign
Corporation, the Collateral shall include, and Debtor shall be deemed to have
granted a security interest in, such Controlled Foreign Corporation. As used
herein, "Controlled Foreign Corporation" shall mean a "controlled foreign
corporation" as defined in the Internal Revenue Code.
(j) Secured Parties agree that, notwithstanding anything to the
contrary herein, the security interest granted herein to Secured Parties in and
to restricted account No. 1610630624 held at JPMorgan Chase Bank, NA and the
cash and cash equivalents held therein (collectively, the "Restricted Account")
shall be subject, subordinate and junior in all respects to the liens and
security interests granted to JPMorgan Chase Bank, NA in the Restricted Account
to secure Debtor's reimbursement obligation as of the date hereof with respect
to a letter of credit issued by JPMorgan Chase Bank, NA, for the benefit of Two
Lincolnshire Office Venture, LLC in connection with the Company's lease of the
premises at Two Marriott Drive, Lincolnshire, Illinois. The subordinations and
priorities specified hereinabove with respect to any such Collateral are
expressly conditioned upon the nonavoidability and perfection of the lien or
security interest of JPMorgan Chase Bank, NA and, if such lien or security
interest is not perfected or is avoidable, for any reason, then the
subordinations and relative priority agreements provided for herein shall not be
effective as to the Restricted Account. Debtor agrees that immediately upon any
event or circumstance resulting in the release of the Restricted Account by
JPMorgan Chase Bank, NA. (A) to cause such Person to take all action necessary
to evidence such release immediately upon the occurrence of such event or
circumstance, (B) to furnish to Secured Parties or any Collateral Agent at least
ten (10) days prior written notice of any anticipated event or circumstance that
would result in the release of the Restricted Account, and (iii) to cooperate
with Secured Parties and any Collateral Agent in obtaining control (as defined
in the UCC) of the Restricted Account.
Section 3. Financing Statements and Other Action.
(a) Debtor hereby authorizes Secured Parties or Collateral Agent to
file at any time and from time to time any financing statements describing the
Collateral, and Debtor shall execute and deliver to Secured Parties or any
Collateral Agent, and Debtor hereby authorizes Secured Parties or any Collateral
Agent to file (with or without Debtor's signature), at any time and from time to
time, all amendments to financing statements, assignments, continuation
financing statements, termination statements, security agreements relating to
intellectual property Collateral, account control agreements, collateral access
agreements, landlord waivers and other documents and instruments, in form
reasonably satisfactory to Majority Secured Parties or any Collateral Agent, and
to take such other action, in each case as any Secured Parties or Collateral
Agent may reasonably request, to perfect and continue perfection of, maintain
the priority of or provide notice of the security interest of Secured Parties in
the Collateral and to accomplish the purposes of this Agreement. Without
limiting the generality of the foregoing, Debtor ratifies and authorizes the
filing by Secured Parties or Collateral Agent of (i) any financing statements
filed
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prior to the date hereof, and (ii) any financing statements describing the
Collateral as "all assets" or "all personal property".
(b) Debtor will cooperate with Secured Parties and any Collateral
Agent in obtaining control (as defined in the UCC) of Collateral consisting of
such deposit accounts, investment property, letter of credit rights and
electronic chatter paper as the Majority Secured Parties or any Collateral Agent
may request.
(c) Upon request of the Majority Secured Parties or any Collateral
Agent, Debtor will join with Secured Parties or any Collateral Agent in
notifying any third party who has possession of any Collateral of Secured
Parties' security interest therein and obtaining an acknowledgment from the
third party that it is holding the Collateral for the benefit of Secured
Parties; provided, however, this Section 3(c) shall not apply with respect to
Collateral consisting of machines used by individuals for the purpose of home
healthcare treatments.
(d) Upon request of the Majority Secured Parties or any Collateral
Agent, Debtor (i) shall cause certificates to be issued in respect of any
uncertificated Pledged Collateral, (ii) shall exchange certificated Pledged
Collateral for certificates of larger or smaller denominations, and (iii) shall
cause any securities intermediaries to show on their books that Secured Parties
or Collateral Agent are the entitlement holder with respect to any Pledged
Collateral.
(e) Upon request of the Majority Secured Parties or any Collateral
Agent, Debtor will not create any chattel paper without placing a legend on the
chattel paper acceptable to the Majority Secured Parties or any Collateral Agent
indicating that Secured Parties and any Collateral Agent have a security
interest in the chattel paper.
Section 4. Representations and Warranties. Debtor represents and
warrants to Secured Parties that:
(a) This Agreement creates a security interest which is enforceable
against the Collateral in which Debtor now has rights and will create a security
interest which is enforceable against the Collateral in which Debtor hereafter
acquires rights at the time Debtor acquires any such rights; and (ii) Secured
Parties have a perfected and first priority security interest in the Collateral,
in which Debtor now has rights, and will have a perfected and first priority
security interest in the Collateral in which Debtor hereafter acquires rights at
the time Debtor acquires any such rights, in each case securing the payment and
performance of the Obligations.
(b) Debtor's chief executive office and principal place of business
(as of the date of this Agreement) is located at the address set forth in
Schedule 1; Debtor's jurisdiction of organization and organizational ID number
is set forth in Schedule 1; Debtor's exact legal name is as set forth in the
first paragraph of this Agreement; and all other locations where Debtor conducts
business or Collateral is kept (as of the date of this Agreement) are set forth
in Schedule 1. All trade names and trade styles under which Debtor conducts its
business operations as of the date hereof are set forth in Schedule 2, and,
except as set forth in Schedule 2, Debtor has not, at any time in the past: (i)
been known as or used any other corporate, trade or fictitious name; (ii)
changed its name; (iii) been the surviving or resulting corporation in a
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merger or consolidation; or (iv) acquired through asset purchase or otherwise
any business of any Person.
(c) Debtor has rights in or the power to transfer the Collateral, and
Debtor is the sole and complete owner of the Collateral or has the right to use
the Collateral pursuant to a valid and enforceable license, free from any Lien
other than Permitted Liens.
(d) All of Debtor's United States and foreign patents and patent
applications, copyrights (registered and material unregistered), applications
for copyright registrations, trademarks, service marks and trade names
(registered and material unregistered), and applications for registration of
such trademarks, service marks and trade names, are set forth in Schedule 2.
(e) No control agreements exist with respect to any Collateral other
than control agreements in favor of Secured Parties.
(f) Debtor does not have or hold any chattel paper, letter-of-credit
rights or commercial tort claims except as disclosed in writing to Secured
Parties.
(g) The names and addresses of all financial institutions and other
Persons at which Debtor maintains its deposit and securities accounts, and the
account numbers and account names of such accounts, are set forth in Schedule 1.
(h) Schedule 3 lists Debtor's ownership interests in each of its
Subsidiaries as of the date hereof.
(i) Debtor is and will be the legal record and beneficial owner of all
Pledged Collateral, and has and will have good and marketable title thereto.
(j) Except as disclosed in writing to Secured Parties, there are no
Pledged Collateral Agreements which affect or relate to the voting or giving of
written consents with respect to any of the Pledged Collateral. Each Pledged
Collateral Agreement contains the entire agreement between the parties thereto
with respect to the subject matter thereof, has not been amended or modified,
and is in full force and effect in accordance with its terms. To the best
knowledge of Debtor, there exists no violation or default under any Pledged
Collateral Agreement by Debtor or the other parties thereto. Debtor has not
knowingly waived or released any of its rights under or otherwise consented to a
departure from the terms and provisions of any Pledged Collateral Agreement.
(k) Debtor is not and will not become a lessee under any real property
lease or party to any other agreement governing the location of Collateral at
the premises of another Person pursuant to which the lessor or such other Person
may obtain any rights in any of the Collateral except as disclosed in writing to
Secured Parties, and no such lease or other such agreement now prohibits,
restrains, impairs or will prohibit, restrain or impair Debtor's right to remove
any Collateral from the premises at which such Collateral is situated, except
for the usual and customary restrictions contained in such leases of real
property and in such other agreements.
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Section 5. Covenants. So long as any of the Obligations remain
unsatisfied, or Secured Parties shall have any Commitments, Debtor agrees that:
(a) Debtor shall appear in and defend any action, suit or proceeding
which may affect its title to, or right or interest in, any Collateral Agent's
or Secured Parties' right or interest in, the Collateral, and shall do and
perform all reasonable acts that may be necessary and appropriate to maintain,
preserve and protect the Collateral.
(b) Debtor shall comply with all laws, regulations and ordinances, and
all policies of insurance, relating to the possession, operation, maintenance
and control of the Collateral.
(c) Debtor shall give prompt written notice to Secured Parties (and in
any event not later than ten (10) days prior to any change described below in
this subsection) of: (i) any change in the location of Debtor's chief executive
office or principal place of business; (ii) any change in the locations set
forth in Schedule 1; (iii) any change in its name; (iv) any changes in its
identity or structure in any manner which might make any financing statement
filed hereunder incorrect or misleading; and (v) any change in its jurisdiction
of organization; provided that Debtor shall not locate any Collateral outside of
the United States nor shall Debtor change its jurisdiction of organization to a
jurisdiction outside of the United States.
(d) Debtor shall carry and maintain in full force and effect, at its
own expense and with financially sound and reputable insurance companies (not
Affiliates of Debtor), insurance with respect to the Collateral in such amounts,
with such deductibles and covering such risks as is customarily carried in
accordance with sound business practice by companies engaged in the same or
similar businesses and owning similar properties in the localities where Debtor
operates, and in any event in amount, adequacy and scope satisfactory to the
Board of Directors of Debtor. Insurance on the Collateral shall name the Secured
Parties and any Collateral Agent as additional insured and as loss payee. Upon
the request of Majority Secured Parties or any Collateral Agent, Debtor shall
furnish Secured Parties or any Collateral Agent from time to time with full
information as to the insurance carried by it and, if so requested, copies of
all such insurance policies. Debtor shall also furnish to Secured Parties from
time to time upon the request of the Majority Secured Parties or any Collateral
Agent a certificate of Debtor's insurance broker or other insurance specialist
stating that all premiums then due on the policies relating to insurance on the
Collateral have been paid and that such policies are in full force and effect.
All insurance policies required under this subsection (d) shall provide that
they shall not be terminated or cancelled nor shall any such policy be
materially changed without at least 30 days' prior written notice (or 10 days'
prior written notice in the event of cancellation for non-payment of premium) to
Debtor and Secured Parties or any Collateral Agent. Receipt of notice of
termination or cancellation of any such insurance policies or reduction of
coverages or amounts thereunder shall entitle Secured Parties or any Collateral
Agent to renew any such policies, cause the coverages and amounts thereof to be
maintained at levels required pursuant to the first sentence of this subsection
(d) or otherwise to obtain similar insurance in place of such policies, in each
case at the expense of Debtor. If the Collateral shall be materially damaged or
destroyed, in whole or in part, by fire or other casualty, Debtor shall give
prompt notice thereof to Secured Parties or any Collateral Agent. Additionally,
Debtor shall in any event promptly give Secured Parties or any Collateral Agent
notice of all reports made to insurance companies in
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respect of any claim in excess of $100,000. No settlement on account of any loss
covered by insurance shall be made for less than insured value without the
consent of Majority Secured Parties.
(e) Debtor shall keep accurate and complete books and records with
respect to the Collateral, disclosing Secured Parties' security interest
hereunder.
(f) Debtor shall not surrender or lose possession of (other than to
any Collateral Agent or any of the Secured Parties), sell, lease, or otherwise
dispose of or transfer any of the Collateral or any right or interest therein,
except as expressly permitted by the Loan Documents.
(g) Debtor shall keep the Collateral free of all Liens except
Permitted Liens.
(h) Debtor shall pay and discharge all taxes, fees, assessments and
governmental charges or levies imposed upon it with respect to the Collateral
prior to the date on which penalties attach thereto, except to the extent such
taxes, fees, assessments or governmental charges or levies are being contested
in good faith by appropriate proceedings and are adequately reserved against in
accordance with GAAP.
(i) Debtor shall maintain and preserve its legal existence, its rights
to transact business and all other rights, franchises and privileges necessary
or desirable in the normal course of its business and operations and the
ownership of the Collateral, except in connection with any transactions
expressly permitted by the Loan Agreement.
(j) Upon the request of the Majority Secured Parties or any Collateral
Agent, Debtor shall (i) immediately deliver to such Secured Party or Collateral
Agent, or their designated agent, appropriately endorsed or accompanied by
appropriate instruments of transfer or assignment, all documents and
instruments, all certificated securities with respect to any Pledged Collateral,
all letters of credit and all accounts and other rights to payment at any time
evidenced by promissory notes, trade acceptances or other instruments, and (ii)
cause certificates to be issued in respect of any uncertificated Pledged
Collateral, (iii) provide such notice, obtain such acknowledgments and take all
such other action, with respect to any investment property, chattel paper,
documents and letter-of credit rights, as the Majority Secured Parties or
Collateral Agent, as the case may be, shall reasonably specify.
(k) Debtor shall: (i) with such frequency as the Majority Secured
Parties or any Collateral Agent may require, furnish to Secured Parties or any
Collateral Agent such lists of customers and other information relating to the
accounts and other rights to payment as the Majority Secured Parties or any
Collateral Agent shall reasonably request; (ii) give only normal discounts,
allowances and credits as to accounts and other rights to payment, in the
ordinary course of business, according to normal trade practices utilized by
Debtor, and enforce all accounts and other rights to payment strictly in
accordance with their terms, except that Debtor may grant any extension of the
time for payment or enter into any agreement to make a rebate or otherwise to
reduce the amount owing on or with respect to, or compromise or settle for less
than the full amount thereof, any account or other right to payment, in the
ordinary course of business, according to normal and prudent trade practices
utilized by Debtor; and (iii) Debtor shall upon
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the request of the Majority Secured Parties or any Collateral Agent (A) at any
time, notify all or any designated portion of the account debtors and other
obligors on the accounts and other rights to payment of the security interest
hereunder, and (B) upon the occurrence and during the continuance of an Event of
Default, notify the account debtors and other obligors on the accounts and other
rights to payment or any designated portion thereof that payment shall be made
directly to Secured Parties or any Collateral Agent or to such other Persons or
locations as the Majority Secured Parties or any Collateral Agent shall specify.
(l) Debtor shall, at such times as the Majority Secured Parties shall
reasonably request, prepare and deliver to Secured Parties a report of all
inventory, in form and substance satisfactory to the Majority Secured Parties.
(m) Debtor shall (i) notify Secured Parties or any Collateral Agent of
any material claim made or asserted against the Collateral by any Person and of
any change in the composition of the Collateral or other event which could
materially adversely affect the value of the Collateral or Secured Parties' Lien
thereon; (ii) furnish to Secured Parties or any Collateral Agent such statements
and schedules further identifying and describing the Collateral and such other
reports and other information in connection with the Collateral as the Majority
Secured Parties or any Collateral Agent may reasonably request, all in
reasonable detail; and (iii) upon reasonable request of the Majority Secured
Parties or any Collateral Agent make such demands and requests for information
and reports as Debtor is entitled to make in respect of the Collateral.
(n) If and when Debtor shall obtain rights to any new patents,
trademarks, service marks, trade names or registered or material unregistered
copyrights, or otherwise acquire or become entitled to the benefit of, or apply
for registration of, any of the foregoing, Debtor (i) shall promptly notify
Secured Parties or any Collateral Agent, as the case may be, thereof and (ii)
hereby authorizes Secured Parties or any Collateral Agent, as the case may be,
to modify, amend, or supplement Schedule 2 and from time to time to include any
of the foregoing and make all necessary or appropriate filings with respect
thereto. Debtor shall promptly execute and deliver appropriate documents (in
form and substance reasonably satisfactory to the Majority Secured Parties) with
respect to any such current or future registered copyrights for recording in the
U.S. Copyright Office.
(o) Without limiting the generality of subsection (n), Debtor shall
not register with the U.S. Copyright Office any unregistered copyrights (whether
in existence on the date hereof or thereafter acquired, arising, or developed)
unless Debtor provides Secured Parties or any Collateral Agent, as the case may
be, with written notice of its intent to register such copyrights not less than
30 days prior to the date of the proposed registration.
(p) At the request of the Majority Secured Parties or any Collateral
Agent, Debtor will obtain from each Person from whom Debtor leases any premises
at which any Collateral is at any time present such collateral access,
subordination, waiver, consent and estoppel agreements, as the Majority Secured
Parties or such Collateral Agent may require, in form and substance satisfactory
to the Majority Secured Parties or such Collateral Agent.
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(q) Debtor shall give Secured Parties or any Collateral Agent, as the
case may be, immediate notice of the acquisition of any instruments or
securities, or the establishment of any new deposit account or any new
securities account with respect to any Pledged Collateral.
(r) (i) Debtor shall comply with all of its obligations under any
Pledged Collateral Agreements to which it is a party and shall enforce all of
its rights thereunder. (ii) Debtor will take all actions necessary to cause each
Pledged Collateral Agreement relating to Collateral consisting of any and all
limited liability and general partnership interests and limited liability
company interests of any type or nature ("Partnership and LLC Collateral") to
provide specifically at all times that: (A) no Partnership and LLC Collateral
shall be a security governed by Article 8 of the applicable Uniform Commercial
Code; and (B) no consent of any member, manager, partner or other Person shall
be a condition to the admission as a member or partner of any transferee that
acquires ownership of the Partnership and LLC Collateral as a result of the
exercise by Secured Parties or any Collateral Agent of any remedy hereunder or
under applicable law. Additionally, Debtor agrees that no Partnership and LLC
Collateral (A) shall be dealt in or traded on any securities exchange or in any
securities market, (B) shall constitute an investment company security, or (C)
shall be held by Debtor in a securities account. (iii) Debtor shall not vote to
enable or take any other action to: (A) amend or terminate, or waive compliance
with any of the terms of, any Pledged Collateral Agreement, certificate or
articles of incorporation, bylaws or other organizational documents in any way
that changes the rights of Debtor with respect to any Partnership and LLC
Collateral or other Collateral constituting investment property in a manner
adverse to the Secured Parties or that adversely affects the validity,
perfection or priority of Secured Parties' security interest therein.
(s) Debtor shall immediately notify Secured Parties or any Collateral
Agent if Debtor holds or acquires (i) any commercial tort claims, (ii) any
chattel paper, including any interest in any electronic chattel paper, other
than chattel paper arising in the ordinary course of Debtor's business in
connection with leases by Debtor to its customers of its inventory, or (iii) any
letter-of-credit rights.
(t) In the event that Debtor acquires rights in any Subsidiary after
the date hereof, it shall deliver to Secured Parties and any Collateral Agent a
completed supplement to Schedule 3, reflecting such new Subsidiary and Debtor
shall comply with the Section 5.02(m) of the Loan Agreement. Notwithstanding the
foregoing, it is understood and agreed that the security interest of Secured
Parties shall attach to any such Subsidiary immediately upon Debtor's
acquisition of rights therein and shall not be affected by the failure of Debtor
to deliver any such supplement to Schedule 3 or to comply with Section 5.02(m)
of the Loan Agreement.
Section 6. Rights of Secured Parties.
(a) Until Secured Parties exercise their rights hereunder to collect
the accounts and other rights to payment, Debtor shall endeavor in the first
instance diligently to collect all amounts due or to become due on or with
respect to the accounts and other rights to payment. At the request of the
Majority Secured Parties or any Collateral Agent, upon the occurrence and during
the continuance of any Event of Default, all remittances received by Debtor
shall be held in trust for Secured Parties and, in accordance with the Majority
Secured Parties' or any Collateral Agent's instructions, remitted to Secured
Parties or any Collateral
11
Agent or deposited to an account of Secured Parties or any Collateral Agent in
the form received (with any necessary endorsements or instruments of assignment
or transfer).
(b) At the request of the Majority Secured Parties or any Collateral
Agent, upon the occurrence and during the continuance of any Event of Default,
Secured Parties shall be entitled to receive all distributions and payments of
any nature with respect to any Pledged Collateral or instrument Collateral, and
all such distributions or payments received by the Debtor shall be held in trust
for Secured Parties and, in accordance with the Majority Secured Parties' or any
Collateral Agent's instructions, remitted to Secured Parties or any Collateral
Agent or deposited to an account designated by the Majority Secured Parties or
any Collateral Agent in the form received (with any necessary endorsements or
instruments of assignment or transfer). Further, upon the occurrence and during
the continuance of any Event of Default any such distributions and payments with
respect to any Pledged Collateral held in any securities account shall be held
and retained in such securities account, in each case as part of the Collateral
hereunder, and the Majority Secured Parties or any Collateral Agent shall have
the right, following prior written notice to the Debtor, to vote and to give
consents, ratifications and waivers with respect to any Pledged Collateral and
instruments, and to exercise all rights of conversion, exchange, subscription or
any other rights, privileges or options pertaining thereto, as if Secured
Parties or any Collateral Agent were the absolute owner thereof; provided that
Secured Parties or any Collateral Agent shall have no duty to exercise any of
the foregoing rights afforded to it or them and shall not be responsible to the
Debtor or any other Person for any failure to do so or delay in doing so.
Section 7. Authorization; Collateral Agent Appointed Attorney-in-Fact.
Any Collateral Agent shall have the right to, in the name of Debtor, or in the
name of Secured Parties or Collateral Agent or otherwise, upon notice to but
without the requirement of assent by Debtor, and Debtor hereby constitutes and
appoints Collateral Agent (and any of Collateral Agent's officers, employees or
agents designated by Collateral Agent) as Debtor's true and lawful
attorney-in-fact, with full power and authority to: (i) sign and file any of the
financing statements and other documents and instruments which must be executed
or filed to perfect or continue perfected, maintain the priority of or provide
notice of Secured Parties' security interest in the Collateral (including any
notices to or agreements with any securities intermediary); (ii) assert, adjust,
xxx for, compromise or release any claims under any policies of insurance; (iii)
give notices of control, default or exclusivity (or similar notices) under any
account control agreement or similar agreement with respect to exercising
control over deposit accounts or securities accounts; and (iv) execute any and
all such other documents and instruments, and do any and all acts and things for
and on behalf of Debtor, which Collateral Agent or the Majority Secured Parties
may deem reasonably necessary or advisable to maintain, protect, realize upon
and preserve the Collateral and Secured Parties' security interest therein and
to accomplish the purposes of this Agreement. The foregoing power of attorney is
coupled with an interest and irrevocable so long as the Obligations have not
been paid and performed in full. In the event that a Collateral Agent is not
appointed, each Secured Party, acting upon the direction of the Majority Secured
Parties, is hereby authorized to exercise the authority set forth in, and act as
attorney-in-fact as contemplated by, this Section 7. Collateral Agent and the
Secured Parties agree that, except upon and during the continuance of an Event
of Default, the power of attorney, or any rights granted to Collateral Agent or
any designated Secured Party, pursuant to clauses (ii), (iii) and (iv), shall
not be exercised. Debtor hereby ratifies, to the extent permitted by law, all
that
12
Collateral Agent or any such Secured Party shall lawfully and in good faith do
or cause to be done by virtue of and in compliance with this Section 7.
Section 8. Events of Default. Any of the following events which shall
occur and be continuing shall constitute an "Event of Default":
(a) Any "Event of Default" as defined in the Loan Agreement or in any
other Loan Document shall have occurred and be continuing;
(b) Any material impairment in the value of the Collateral or any
impairment of the priority of Secured Parties' Liens hereunder.
(c) Any levy upon, seizure or attachment of any of the Collateral, the
aggregate value of which exceeds $100,000, which shall not have been rescinded
or withdrawn.
(d) Any loss, theft or substantial damage to, or destruction of, any
material portion of the Collateral (unless within 10 days after the occurrence
of any such event, Debtor furnishes to Secured Parties evidence satisfactory to
the Majority Secured Parties that the amount of any such loss, theft, damage to
or destruction of the Collateral is fully insured under policies naming Secured
Parties as additional named insureds or loss payees).
Section 9. Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, each Secured Party shall have, in addition to all other rights and
remedies granted to it in this Agreement, the Loan Agreement or any other Loan
Document, all rights and remedies of a secured party under the UCC and other
applicable laws. Without limiting the generality of the foregoing, (i) Secured
Parties or any Collateral Agent in each case as directed by Majority Secured
Parties may peaceably and without notice enter any premises of Debtor, take
possession of any the Collateral, remove or dispose of all or part of the
Collateral on any premises of Debtor or elsewhere, or, in the case of equipment,
render it nonfunctional, and otherwise collect, receive, appropriate and realize
upon all or any part of the Collateral, and demand, give receipt for, settle,
renew, extend, exchange, compromise, adjust, or xxx for all or any part of the
Collateral, as the Majority Secured Parties may determine; (ii) Secured Parties
or any Collateral Agent in each case as directed by Majority Secured Parties may
require Debtor to assemble all or any part of the Collateral and make it
available to Secured Parties at any place and time designated by Secured
Parties, and may withdraw (or cause to be withdrawn) any and all funds and other
Collateral from any deposit accounts or securities accounts; (iii) Secured
Parties or any Collateral Agent in each case as directed by Majority Secured
Parties may use or transfer any of Debtor's rights and interests in any
intellectual property Collateral, by license, by sublicense (to the extent
permitted by an applicable license) or otherwise, on such conditions and in such
manner as the Majority Secured Parties may determine, (iv) Secured Parties or
any Collateral Agent in each case as directed by Majority Secured Parties may
secure the appointment of a receiver of the Collateral or any part thereof (to
the extent and in the manner provided by applicable law); and (v) Secured
Parties or any Collateral Agent, in each case as directed by Majority Secured
Parties, may sell, resell, lease, use, assign, license, sublicense, transfer or
otherwise dispose of any or all of the Collateral in its then condition or
following any
13
commercially reasonable preparation or processing (utilizing in connection
therewith any of Debtor's assets, without charge or liability to Secured Parties
therefor) at public or private sale, by one or more contracts, in one or more
parcels, at the same or different times, for cash or credit, or for future
delivery without assumption of any credit risk, all as Majority Secured Parties
deem advisable; provided, however, that Debtor shall be credited with the net
proceeds of sale only when such proceeds are finally collected by Secured
Parties. Debtor recognizes that Secured Parties or any Collateral Agent may be
unable to make a public sale of any or all of the Pledged Collateral, by reason
of prohibitions contained in applicable securities laws or otherwise, and
expressly agrees that a private sale to a restricted group of purchasers for
investment and not with a view to any distribution thereof shall be considered a
commercially reasonable sale. Secured Parties or any Collateral Agent shall have
the right upon any such public sale, and, to the extent permitted by law, upon
any such private sale, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption, which right or equity of
redemption Debtor hereby releases, to the extent permitted by law. Any Secured
Party or any Collateral Agent shall give Debtor such notice of any private or
public sales as may be required by the UCC or other applicable law.
(b) For the purpose of enabling Secured Parties to exercise their
rights and remedies under this Section 9 or otherwise in connection with this
Agreement, effective upon the occurrence and during the continuance of an Event
of Default, Debtor hereby grants to Secured Parties and Collateral Agent, if
any, an irrevocable, non-exclusive and assignable license (exercisable without
payment or royalty or other compensation to Debtor) to use, license or
sublicense any intellectual property Collateral to the extent such grant is not
prohibited with respect to such intellectual property Collateral.
(c) Neither Collateral Agent nor any Secured Party shall have any
obligation to clean up or otherwise prepare the Collateral for sale. Neither
Collateral Agent nor any Secured Party shall have any obligation to attempt to
satisfy the Obligations by collecting them from any other Person liable for
them, and Collateral Agent and the Majority Secured Parties may release, modify
or waive any Collateral provided by any other Person to secure any of the
Obligations, all without affecting Collateral Agent's or any Secured Party's
rights against Debtor. Debtor waives any right it may have to require Collateral
Agent or any Secured Party to pursue any third Person for any of the
Obligations. Collateral Agent and Secured Parties may comply with any applicable
state or federal law requirements in connection with a disposition of the
Collateral and compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral. Collateral Agent and
Secured Parties may sell the Collateral without giving any warranties as to the
Collateral. Collateral Agent and Secured Parties may specifically disclaim any
warranties of title or the like. This procedure will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral. If
Secured Parties sell any of the Collateral upon credit, Debtor will be credited
only with payments actually made by the purchaser, received by Collateral Agent
and Secured Parties and applied to the indebtedness of the purchaser. In the
event the purchaser fails to pay for the Collateral, Collateral Agent or Secured
Parties may resell the Collateral, and Debtor shall be credited with the
proceeds of the sale.
(d) To the extent Debtor uses the proceeds of any of the Obligations
to purchase Collateral, Debtor's repayment of the Obligations shall apply on a
"first-in, first-out"
14
basis so that the portion of the Obligations used to purchase a particular item
of Collateral shall be paid in the chronological order the Debtor purchased the
Collateral.
(e) The cash proceeds actually received from the sale or other
disposition or collection of Collateral, and any other amounts received in
respect of the Collateral the application of which is not otherwise provided for
herein, shall be applied FIRST, to the payment of the fees, costs and expenses
of any Collateral Agent and Secured Parties in exercising or enforcing its
rights hereunder and in collecting or attempting to collect any of the
Collateral, and to the payment of all other amounts payable to Secured Parties
with respect to the Loan Documents (other than principal and interest); and
SECOND, to the payment of all other Obligations in the following order unless a
specific determination is made by the Majority Lenders with respect thereto (i)
FIRST, to any other fees, costs, expenses and other amounts (other than
principal and interest) due the Lenders under the Loan Documents; (ii) SECOND,
to accrued and unpaid interest due the Lenders; (iii) THIRD, to the outstanding
principal amount of the Five Million Closing Date Loan, the Cash Closing Date
Loan and the Additional Loans, and (iv) FOURTH, to the outstanding principal
amount of the $9.3 Million Closing Date Loan. Any surplus thereof which exists
after payment and performance in full of the Obligations shall be promptly paid
over to Debtor or otherwise disposed of in accordance with the UCC or other
applicable law. Debtor shall remain liable to Secured Parties for any deficiency
which exists after any sale or other disposition or collection of Collateral.
Section 10. Certain Waivers. Debtor waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the Collateral,
whether before or after sale hereunder, and all rights, if any, of marshalling
of the Collateral or other collateral or security for the Obligations; (ii) any
right to require any Collateral Agent or any Secured Party (A) to proceed
against any Person, (B) to exhaust any other collateral or security for any of
the Obligations, (C) to pursue any remedy in any Secured Party's or any
Collateral Agent's power, or (D) to make or give any presentments, demands for
performance, notices of nonperformance, protests, notices of protests or notices
of dishonor in connection with any of the Collateral; and (iii) all claims,
damages, and demands against any Secured Party or any Collateral Agent arising
out of the repossession, retention, sale or application of the proceeds of any
sale of the Collateral.
Section 11. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given:
(i) upon personal delivery to the party to be notified; (ii) when sent by
confirmed telex or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day; (iii) five (5) days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid; or (iv) two (2) days after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the parties hereto at their
respective addresses or facsimile numbers set forth below their names on the
signature pages hereof, or, in the case of any Collateral Agent, as specified by
Collateral Agent in writing to Debtor and Secured Parties, or, all cases, as
notified by such party from time to time at least ten (10) days prior to the
effectiveness of such notice.
Section 12. No Waiver; Cumulative Remedies. No failure on the part of
any Secured Party or any Collateral Agent to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial
15
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies under this Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be
available to such Secured Party or Collateral Agent.
Section 13. Binding Effect. This Agreement shall be binding upon,
inure to the benefit of and be enforceable by Debtor, any Secured Party, any
Collateral Agent appointed hereunder and their respective successors and
assigns. Any Collateral Agent is expressly designated to be a third party
beneficiary hereof. Debtor may not assign, transfer, hypothecate or otherwise
convey its rights, benefits, obligations or duties hereunder without the prior
express written consent of the Secured Parties. Any such purported assignment,
transfer, hypothecation or other conveyance by Debtor without the prior express
written consent of the Secured Parties shall be void. Debtor acknowledges and
agrees that in connection with an assignment of, or grant of a participation in,
the Obligations, Secured Parties may assign, or grant participations in, all or
a portion of their rights and obligations hereunder. Upon any assignment of
Secured Parties' rights hereunder, such assignee or assignees shall have, to the
extent of such assignment, all rights of Secured Parties hereunder. Debtor
agrees that, upon any such assignment, such assignee may enforce directly,
without joinder of Secured Parties, the rights of Secured Parties set forth in
this Agreement. Any such assignee shall be entitled to enforce Secured Parties'
rights and remedies under this Agreement to the same extent as if it were an
original secured party named herein.
Section 14. Governing Law; Waiver of Jury Trial; Submission to
Jurisdiction.
(a) This Agreement shall be construed in accordance with and governed
by the internal laws of the State of New York (as permitted by Section 5-1401 of
the New York General Obligations Law (or any similar successor provision))
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of New
York to the rights and duties of the parties, except as required by mandatory
provisions of law and to the extent the validity or perfection of the security
interests hereunder, or the remedies hereunder, in respect of any Collateral are
governed by the law of a jurisdiction other than New York.
(b) THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, THIS WAIVER BEING A MATERIAL INDUCEMENT FOR EACH SUCH PARTY TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(c) For purposes of any suit, action or other legal proceeding
relating to this Agreement or the other Loan Documents or the enforcement of any
provision of this Agreement or the Loan Documents, each party hereto hereby
expressly and irrevocably submits and consents to the exclusive jurisdiction of
the courts of the State of New York sitting in the borough of Manhattan and the
United States District Court for the Southern District of New York for the
purposes of any such suit, action or legal proceeding, including to enforce any
settlement, order or award; and agrees that such state and federal courts shall
be deemed to be a
16
convenient forum; and waives and agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in such court any
claim that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient forum,
that the venue of such proceeding is improper or that the Loan Documents or the
subject matter thereof may not be enforced in or by such court.
(d) Each party hereto agrees to the entry of an order to enforce any
resolution, settlement, order or award made pursuant to this Section by the
courts of the State of New York sitting in the borough of Manhattan or the
United States District Court for the Southern District of New York and in
connection therewith hereby waives, and agrees not to assert by way of motion,
as a defense, or otherwise, any claim that such resolution, settlement, order or
award is inconsistent with or violative of the laws or public policy of the laws
of the State of New York or any other jurisdiction.
Section 15. Entire Agreement; Amendment. This Agreement and the other
Loan Documents contain the entire agreement of the parties with respect to the
subject matter hereof and supersede any prior agreements, commitments, drafts,
communication, discussions and understandings, oral or written, with respect
thereto. No amendment to this Agreement, or any waiver of any provision hereof,
shall be effective unless it is in writing and signed by the Majority Secured
Parties (or any Collateral Agent with the written consent of the Majority
Secured Parties) and (in the case of any amendment) the Debtor; provided,
however, that without the consent of all Secured Parties, no amendment, waiver
or consent shall do any of the following: (i) subject the Secured Parties to any
additional obligations; (ii) reduce any amount payable to the Secured Parties
hereunder; (iii) postpone any date fixed for any payment in respect of any
amount payable to any Secured Parties hereunder; (iv) change the definition of
"Majority Secured Parties" or any definition or provision of this Agreement
requiring the approval of the Secured Parties or some other specified amount of
Secured Parties; or (vi) amend the provisions of this Section 15; and provided,
further, that no amendment, waiver or consent shall, unless in writing and
signed by the Collateral Agent, affect the rights, duties or obligations of the
Collateral Agent under or in respect of this Agreement. Any such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
Section 16. Severability. If any provision of this Agreement shall be
prohibited by or invalid under any applicable law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.
Section 17. Counterparts. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
Section 18. Termination. Upon payment and performance in full of all
Obligations (other than inchoate indemnity obligations and any other obligations
which by their
17
terms are to survive the termination of the Loan Documents) and termination of
the Commitments, the security interest created under this Agreement shall
terminate and each Secured Party and Collateral Agent shall promptly execute and
deliver to Debtor such documents and instruments reasonably requested by Debtor
as shall be necessary to evidence termination of all security interests given by
Debtor to such Secured Party or Collateral Agent hereunder.
18
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
DEBTOR:
AKSYS, LTD.
By /s/
---------------------------------------
Name:
Title:
Address:
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: ____________________________________
Fax: 000-000-0000
WITH A COPY TO:
Xxxxx X. Xxxx P.C.
Xxxxxxxx & Xxxxx LLP
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: 000-000-0000
S-1
SECURED PARTIES:
DURUS LIFE SCIENCES MASTER FUND LTD.
By /s/
---------------------------------------
Name:
Title:
Address:
Durus Life Sciences Master Fund Ltd.
c/o International Fund Services (Ireland)
Ltd.
0xx Xxxxx, Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx
Xxxxxx 0, Xxxxxxx
Attention: Xxxxx Xxxxx
Fax: (000) 00-00-000-0000
WITH A COPY TO:
Xxxxx Xxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
AND WITH A COPY TO:
Xxxx X. Xxxx, Esq.
Xxxxxxx, Xxxx & Xxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
S-2
SCHEDULE 1
to the Security Agreement
1. Jurisdiction of Organization
2. Organizational ID Number
3. Chief Executive Office and Principal Place of Business
4. Other locations where Debtor conducts business or Collateral is kept
5. Deposit Accounts and Security Accounts
Schedule 1-1.
SCHEDULE 2
to the Security Agreement
1. PATENTS AND PATENT APPLICATIONS.
2. COPYRIGHTS (REGISTERED AND UNREGISTERED) AND COPYRIGHT APPLICATIONS.
3. TRADEMARKS, SERVICE MARKS AND TRADE NAMES AND TRADEMARK, SERVICE XXXX AND
TRADE NAME APPLICATIONS.
Schedule 2-1.
SCHEDULE 3
to the Security Agreement
PLEDGED SUBSIDIARIES
1. Pledged Collateral consisting of interests in each limited
liability company that is a subsidiary of Debtor as follows:
SUBSIDIARY NUMBER OF UNITS DATE OF ISSUANCE OF UNITS
2. Pledged Collateral consisting of interests in each general
partnership, limited partnership, limited liability partnership or other
partnership that is a subsidiary of Debtor as follows:
TYPE OF
PARTNERSHIP INTEREST NUMBER OF UNITS OR
(E.G., GENERAL, DATE OF ISSUANCE OTHER OWNERSHIP
SUBSIDIARY LIMITED) OR FORMATION INTERESTS
3. Pledged Collateral consisting of capital stock of each corporate
subsidiary of Debtor being represented by stock certificates as follows:
NO. AND CLASS
SUBSIDIARY CERTIFICATE NO. CERTIFICATE DATE OF SHARES
Schedule 3-1.
