Exhibit 10.4

EXECUTION VERSION

SECURITY AGREEMENT

THIS SECURITY AGREEMENT dated as of October 11, 2016 (as amended, modified,
restated or supplemented from time to time, this “Security Agreement”) is by and
among the parties identified as “Grantors” on the signature pages hereto and
such other parties as may become Grantors hereunder after the date hereof
(individually a “Grantor”, and collectively the “Grantors”) and Visium
Healthcare Partners, LP, as administrative agent (in such capacity, the
“Administrative Agent”) for the Secured Parties (defined below).

W I T N E S S E T H

WHEREAS, a credit facility has been established in favor of Venus Concept Canada
Corp., an Ontario corporation (“Venus Canada”), and Venus Concept USA Inc., a
Delaware corporation (“Venus USA” and together with Venus Canada, each a
“Borrower” and collectively, the “Borrowers”), pursuant to the terms of that
certain Credit Agreement dated as of October 11, 2016 (as amended, modified,
restated, supplemented or extended from time to time, the “Credit Agreement”)
among the Borrowers, Venus Concept Ltd., an Israeli corporation, as a Guarantor,
the other Guarantors, the Lenders from time to time party thereto and the
Administrative Agent;

WHEREAS, it is required under the terms of the Credit Agreement that the
Grantors shall have granted the security interests and undertaken the
obligations contemplated by this Security Agreement; and

WHEREAS, this Security Agreement is required under the terms of the Credit
Agreement.

NOW, THEREFORE, in consideration of these premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

1. Definitions.

(a) Capitalized terms used and not otherwise defined herein shall have the
meanings provided in the Credit Agreement.

(b) The following terms shall have the meanings assigned thereto in the UCC
(defined below): Accession, Account, As-Extracted Collateral, Chattel Paper,
Commercial Tort Claim, Consumer Goods, Deposit Account, Document, Electronic
Chattel Paper, Equipment, Farm Products, Fixtures, General Intangible, Goods,
Instrument, Inventory, Investment Property, Letter-of-Credit Right, Manufactured
Home, Money, Payment Intangibles, Proceeds, Securities Account, Securities
Entitlement, Securities Intermediary, Software, Standing Timber, Supporting
Obligation and Tangible Chattel Paper.

(c) As used herein, the following terms shall have the meanings set forth below:

“Administrative Agent” has the meaning provided in the introductory paragraph
hereof.

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“Borrower” and “Borrowers” have the respective meanings provided in the recitals
hereof.

“Collateral” has the meaning provided in Section 2 hereof.

“Credit Agreement” has the meaning provided in the recitals hereof.

“Grantor” and “Grantors” have the respective meanings provided in the
introductory paragraph hereof.

“Material IP Rights” means IP Rights that (a) are material to the operations,
business, property or condition (financial or otherwise) of the Grantors or
their licensee(s) or (b) the loss of which could reasonably be expected to have
a Material Adverse Effect.

“Secured Obligations” means, without duplication, (a) all Obligations and
(b) all costs and expenses incurred in connection with enforcement and
collection of the Obligations, including the fees, charges and disbursements of
counsel.

“Secured Parties” means, collectively, the Administrative Agent, the Lenders and
the Indemnitees, and “Secured Party” means any one of them.

“Security Agreement” has the meaning provided in the introductory paragraph
hereof.

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York except as such term may be used in connection with the
perfection of the Collateral and then the applicable jurisdiction with respect
to such affected Collateral shall apply.

“Venus Canada” has the meaning provided in the recitals hereof. “Venus USA” has
the meaning provided in the recitals hereof.

2. Grant of Security Interest in the Collateral. To secure the prompt payment
and performance in full when due, whether by lapse of time, acceleration,
mandatory prepayment or otherwise, of the Secured Obligations, each Grantor
hereby grants to the Administrative Agent, for the benefit of the Secured
Parties, a continuing security interest in any and all right, title and interest
of such Grantor in and to all of the following, whether now owned or existing or
owned, acquired or arising hereafter (collectively, the “Collateral”):

(a) all Accounts;

(b) all Chattel Paper;

(c) all Commercial Tort Claims, including those identified on Schedule 2(c)
attached hereto;

(d) all Copyrights;

 

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(e) all Copyright Licenses;

(f) all Deposit Accounts;

(g) all Documents;

(h) all Domain Names;

(i) all Drug Applications;

(j) all Equipment;

(k) all Fixtures;

(l) all General Intangibles;

(m) all Goods;

(n) all Governmental Licenses;

(o) all Instruments;

(p) all Inventory;

(q) all Investment Property;

(r) all IP Rights;

(s) all Letter-of-Credit Rights;

(t) all Money;

(u) all Patents;

(v) all Patent Licenses;

(w) all Payment Intangibles;

(x) all Proprietary Databases;

(y) all Proprietary Software;

(z) all Software;

(aa) all Supporting Obligations;

(bb) all Trademarks;

(cc) all Trademark Licenses;

 

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(dd) all Trade Secrets;

(ee) all Websites;

(ff) all Website Agreements; and

(gg) all Accessions and all Proceeds of any and all of the foregoing.

Notwithstanding anything to the contrary contained herein, the security
interests granted under this Security Agreement shall not extend to (i) any
Excluded Property and (ii) any Pledged Collateral (as defined in the U.S. Pledge
Agreement).

The Grantors and the Administrative Agent, on behalf of the Secured Parties,
hereby acknowledge and agree that the security interest created hereby in the
Collateral (i) constitutes continuing collateral security for all of the Secured
Obligations, whether now existing or hereafter arising and (ii) is not and shall
not be construed as an assignment of any IP Rights.

3. Provisions Relating to Accounts. Anything herein to the contrary
notwithstanding, each of the Grantors shall remain liable under each of the
Accounts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. Neither the Administrative Agent nor
any Secured Party shall have any obligation or liability under any Account (or
any agreement giving rise thereto) by reason of or arising out of this Security
Agreement or the receipt by the Administrative Agent or any Secured Party of any
payment relating to such Account pursuant hereto, nor shall the Administrative
Agent or any Secured Party be obligated in any manner to perform any of the
obligations of a Grantor under or pursuant to any Account (or any agreement
giving rise thereto), to make any payment, to make any inquiry as to the nature
or the sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts that may have been assigned
to it or to which it may be entitled at any time or times.

4. Representations and Warranties. Each Grantor hereby represents and warrants
to the Administrative Agent, for the benefit of the Secured Parties, that:

(a) Ownership. Each Grantor is the legal and beneficial owner of, or has rights
to use, its Collateral and has the right to pledge, sell, assign or transfer the
same.

(b) Security Interest/Priority. This Security Agreement creates a valid security
interest in favor of the Administrative Agent, for the benefit of the Secured
Parties, in the Collateral of such Grantor and, when properly perfected by the
filing of a UCC financing statement or other evidence of the interests granted
herein with appropriate Governmental Authorities, shall constitute a valid,
perfected, first priority (subject only to the Liens on the Permitted Senior
Revolving Credit Priority Collateral in favor of the Permitted Senior Revolving
Credit Lender, if any, and Liens permitted under Section 8.01(i) of the Credit
Agreement) security interest in such Collateral, to the extent such security
interest can be perfected by filing a financing statement under the UCC or other
evidence, free and clear of all Liens except for Permitted Liens. With respect
to any Collateral (excluding any

 

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Excluded Accounts) consisting of a Deposit Account, Securities Entitlement or
held in a Securities Account, upon execution and delivery by the applicable
Grantor, the applicable depository bank or Securities Intermediary and the
Administrative Agent of an agreement granting control to the Administrative
Agent over such Collateral, the Administrative Agent shall have a valid and
perfected, first priority security interest in such Collateral.

(c) Types of Collateral. None of the Collateral consists of, or is the
Accessions or the Proceeds of, As-Extracted Collateral, Consumer Goods, Farm
Products, Manufactured Homes or Standing Timber.

(d) Accounts. (i) Each Account of the Grantors and the papers and documents
relating thereto are genuine and in all material respects accurate and what they
purport to be, (ii) each Account arises out of (A) a bona fide sale of goods
sold and delivered by such Grantor (or is in the process of being delivered),
(B) services theretofore actually rendered by such Grantor to, the account
debtor named therein or (C) a Subscription Agreement, (iii) no Account of a
Grantor is evidenced by any Instrument or Chattel Paper unless such Instrument
or Chattel Paper, to the extent requested by the Administrative Agent, has been
endorsed over and delivered to, or submitted to the control of, the
Administrative Agent, (iv) no surety bond was required or given in connection
with any Account of a Grantor or the contracts or purchase orders out of which
they arose and (v) the right to receive payment under each Account is
assignable.

(e) Equipment and Inventory. With respect to any Equipment and/or Inventory of a
Grantor, each such Grantor has exclusive possession and control of such
Equipment and Inventory of such Grantor except for (i) Equipment leased by such
Grantor as a lessee, (ii) Equipment or Inventory in transit with common carriers
or (iii) Equipment in the possession of contract manufacturers and other service
providers. No Inventory of a Grantor is held by a Person other than a Grantor
pursuant to consignment, sale or return, sale on approval or similar
arrangement.

(f) No Other Instruments, Etc. As of the Funding Date, no Grantor holds any
Instruments, Documents or Tangible Chattel Paper required to be pledged and
delivered to the Administrative Agent pursuant to Section 5(b) of this Security
Agreement other than as set forth on Schedule 4(f) hereto. All such Instruments,
Documents and Tangible Chattel Paper have been delivered to the Administrative
Agent.

(g) Contracts; Agreements; Licenses. The Grantors have no Material Contracts
which are non-assignable by their terms (other than those certain agreements set
forth in Schedule 4(g) attached hereto), or as a matter of law, or which prevent
the granting of a security interest therein.

(h) Consents; Etc. Except for (i) the filing or recording of UCC financing
statements, (ii) the filing of appropriate notices with the United States Patent
and Trademark Office and the United States Copyright Office and patent,
trademark and copyright offices and other appropriate Governmental Authorities
in other countries or political subdivisions thereof, (iii) obtaining control to
perfect the Liens created by this Security Agreement (to the extent required
under Section 5(b) and Section 5(d) hereof) and

 

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(iv) consents, authorizations, filings or other actions which have been obtained
or made, no consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any other
Person (including, without limitation, any stockholder, member or creditor of
such Grantor), is required for (A) the grant by such Grantor of the security
interest in the Collateral granted hereby or for the execution, delivery or
performance of this Security Agreement by such Grantor, (B) the perfection of
such security interest (to the extent such security interest can be perfected by
filing under the UCC, the granting of control (to the extent required under
Section 5(b) and Section 5(d) hereof) or by filing an appropriate notice with
the United States Patent and Trademark Office or the United States Copyright
Office or patent, trademark and copyright offices and other appropriate
Governmental Authorities in other countries or political subdivisions thereof)
or (C) other than with respect to the licenses set forth on Schedule 4(g)
attached hereto, the exercise by the Administrative Agent or the Secured Parties
of the rights and remedies provided for in this Security Agreement.

(i) Commercial Tort Claims. Such Grantor has no Commercial Tort Claims other
than those listed on Schedule 2(c).

5. Covenants. Each Grantor covenants that, so long as any of the Secured
Obligations (other than contingent indemnification obligations for which no
claim has been asserted) remains outstanding and until all of the Commitments
relating thereto have been terminated, such Grantor shall:

(a) Other Liens. Defend the Collateral against Liens thereon other than
Permitted Liens.

(b) Instruments/Tangible Chattel Paper/Documents. If any amount in excess of
$150,000 payable under or in connection with any of the Collateral shall be or
become evidenced by any Instrument or Tangible Chattel Paper, or if any property
constituting Collateral shall be stored or shipped subject to a Document, ensure
that such Instrument, Tangible Chattel Paper or Document is either in the
possession of such Grantor at all times or, if requested by the Administrative
Agent to perfect its security interest in such Collateral, is delivered to the
Administrative Agent, duly endorsed in a manner reasonably satisfactory to the
Administrative Agent. Such Grantor shall ensure that any Collateral consisting
of Tangible Chattel Paper is marked with a legend reasonably acceptable to the
Administrative Agent indicating the Administrative Agent’s security interest in
such Tangible Chattel Paper.

(c) Perfection of Security Interest. Execute and deliver to the Administrative
Agent such agreements, assignments or instruments (including affidavits,
notices, reaffirmations and amendments and restatements of existing documents,
as the Administrative Agent shall reasonably request) and do all such other
things as the Administrative Agent may reasonably deem necessary, appropriate or
convenient (i) to assure to the Administrative Agent the effectiveness,
perfection and priority of its security interests in the Collateral hereunder,
including (A) such instruments as the Administrative Agent may from time to time
reasonably request in order to perfect and maintain the security interests
granted hereunder in accordance with the UCC, (B) with regard to

 

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Copyrights and Copyright Licenses, a Notice of Grant of Security Interest in
Copyrights for filing with the United States Copyright Office in the form of
Exhibit 5(c)(i) attached hereto, (C) with regard to Patents and Patent Licenses,
a Notice of Grant of Security Interest in Patents for filing with the United
States Patent and Trademark Office in the form of Exhibit 5(c)(ii) attached
hereto and (D) with regard to Trademarks registered with the United States
Patent and Trademark Office and all applications for Trademarks filed with the
United States Patent and Trademark Office and Trademark Licenses, a Notice of
Grant of Security Interest in Trademarks for filing with the United States
Patent and Trademark Office in the form of Exhibit 5(c)(iii) attached hereto,
(ii) to consummate the transactions contemplated hereby and (iii) to otherwise
protect and assure the Administrative Agent of its rights and interests
hereunder. To that end, each Grantor authorizes the Administrative Agent to file
one or more financing statements (including authorization to describe the
Collateral as “all assets” or words of similar meaning) disclosing the
Administrative Agent’s security interest in any or all of the Collateral of such
Grantor without such Grantor’s signature thereon, and further each Grantor also
hereby irrevocably makes, constitutes and appoints the Administrative Agent, its
nominee or any other Person whom the Administrative Agent may designate, as such
Grantor’s attorney-in-fact with full power and for the limited purpose to sign
in the name of such Grantor any such financing statements (including renewal
statements), amendments and supplements, notices or any similar documents that
in the Administrative Agent’s reasonable discretion would be necessary,
appropriate or convenient in order to perfect and maintain perfection of the
security interests granted hereunder, such power, being coupled with an
interest, being and remaining irrevocable so long as the Secured Obligations
(other than contingent indemnification obligations for which no claim has been
asserted) remain unpaid and until the Commitments relating thereto shall have
been terminated. Each Grantor hereby agrees that a carbon, photographic or other
reproduction of this Security Agreement or any such financing statement is
sufficient for filing as a financing statement by the Administrative Agent
without notice thereof to such Grantor wherever the Administrative Agent may in
its sole discretion desire to file the same. In the event for any reason the law
of any jurisdiction other than New York becomes or is applicable to the
Collateral of any Grantor or any part thereof, or to any of the Secured
Obligations, such Grantor agrees to execute and deliver all such instruments and
to do all such other things as the Administrative Agent in its sole discretion
reasonably deems necessary, appropriate or convenient to preserve, protect and
enforce the security interests of the Administrative Agent under the law of such
other jurisdiction (and, if a Grantor shall fail to do so promptly upon the
request of the Administrative Agent, then the Administrative Agent may execute
any and all such requested documents on behalf of such Grantor pursuant to the
power of attorney granted hereinabove). If any Collateral is in the possession
or control of a Grantor’s agents (other than contract manufacturers and other
service providers in the ordinary course of business) and the Administrative
Agent so requests, such Grantor agrees to notify such agents in writing of the
Administrative Agent’s security interest therein and, upon the Administrative
Agent’s request, instruct them to hold all such Collateral for the account of
the Secured Parties. Each Grantor agrees to mark its books and records to
reflect the security interest of the Administrative Agent in the Collateral.

 

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(d) Control. Execute and deliver (and cause to be executed and delivered) all
agreements, assignments, instruments or other documents as the Administrative
Agent shall reasonably request for the purpose of obtaining and maintaining
control within the meaning of the UCC with respect to any Collateral consisting
of Deposit Accounts and securities accounts, in each case other than Excluded
Accounts (in accordance with Section 8.19 of the Credit Agreement), Investment
Property (excluding securities accounts), Letter-of-Credit Rights and Electronic
Chattel Paper.

(e) Collateral held by Warehouseman, Bailee, etc. If any Collateral with a value
greater than $250,000 is at any time in the possession or control of a
warehouseman, bailee, agent or processor of such Grantor and is expected to
remain in possession and control of such third party, (i) notify the
Administrative Agent of such possession or control and (ii) upon the
Administrative Agent’s request, (A) notify such Person of the Administrative
Agent’s security interest in such Collateral, (B) instruct such Person to hold
all such Collateral for the Administrative Agent’s account and, upon the
occurrence of an Event of Default and during the continuation thereof, subject
to the Administrative Agent’s instructions and (C) use commercially reasonable
efforts to obtain an acknowledgment from such Person that it is holding such
Collateral for the benefit of the Administrative Agent.

(f) Treatment of Accounts. Not grant or extend the time for payment of any
Account, or compromise or settle any Account for less than the full amount
thereof, or release any Person or property, in whole or in part, from payment
thereof, or allow any credit or discount thereon, in each case other than as
normal and customary in the ordinary course of a Grantor’s business or as
required by law.

(g) Insurance. Insure, repair and replace the Collateral of such Grantor to the
extent set forth in the Credit Agreement. All insurance proceeds shall be
subject to the security interest of the Administrative Agent hereunder.

(h) Commercial Tort Claims.

(i) Promptly notify the Administrative Agent in writing of the initiation of any
Commercial Tort Claim before any Governmental Authority by or in favor of such
Grantor.

(ii) Execute and deliver such statements, documents and notices and do and cause
to be done all such things as the Administrative Agent may reasonably deem
necessary, appropriate or convenient, or as are required by law, to create,
preserve, perfect and maintain the Administrative Agent’s security interest in
any Commercial Tort Claim.

(i) Collateral Access Agreements. For any real property leased by such Grantor
that is subject to a Collateral Access Agreement in favor of the Administrative
Agent, (i) promptly notify the Administrative Agent following receipt of written
notice delivered to such Grantor under such lease of a change in the identity of
the lessor and (ii) use commercially reasonable efforts to obtain such
replacement or new Collateral Access Agreements for such real property as the
Administrative Agent may request as a result of such change in the identity of
the lessor.

 

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6. Advances. On failure of any Grantor to perform any of the covenants and
agreements contained herein or in any other Loan Document, the Administrative
Agent may, at its sole option and in its sole discretion, perform the same and
in so doing may expend such sums as the Administrative Agent may reasonably deem
advisable in the performance thereof, including, without limitation, the payment
of any insurance premiums, the payment of any taxes, a payment to obtain a
release of a Lien or potential Lien, expenditures made in defending against any
adverse claim and all other expenditures that the Administrative Agent may make
for the protection of the security hereof or that may be compelled to make by
operation of law. All such sums and amounts so expended shall be repayable by
the Grantors, on demand, on a joint and several basis (subject to Section 22
hereof) promptly upon timely notice thereof and demand therefor, shall
constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the Default Rate. No such performance of any
covenant or agreement by the Administrative Agent on behalf of any Grantor, and
no such advance or expenditure therefor, shall relieve the Grantors of any
Default or Event of Default. The Administrative Agent may make any payment
hereby authorized in accordance with any bill, statement or estimate procured
from the appropriate public office or holder of the claim to be discharged,
without inquiry into the accuracy of such bill, statement or estimate or into
the validity of any tax assessment, sale, forfeiture, tax lien, title or claim
except to the extent such payment is being contested in good faith by a Grantor
in appropriate proceedings and against which adequate reserves are being
maintained in accordance with GAAP.

7. Remedies.

(a) General Remedies. Upon the occurrence of an Event of Default and during the
continuation thereof, the Administrative Agent shall have, in addition to the
rights and remedies provided herein, in the Loan Documents, in any other
documents relating to the Secured Obligations, or by law (including, without
limitation, levy of attachment, garnishment and the rights and remedies set
forth in the UCC of the jurisdiction applicable to the affected Collateral), the
rights and remedies of a secured party under the UCC of the jurisdiction
applicable to the affected Collateral and, further, the Administrative Agent
may, with or without judicial process or the aid and assistance of others to the
extent permitted by applicable law, (i) enter on any premises on which any of
the Collateral may be located and, without resistance or interference by the
Grantors, take possession of the Collateral, (ii) dispose of any Collateral on
any such premises, (iii) require the Grantors to assemble and make available to
the Administrative Agent at the expense of the Grantors any Collateral at any
place and time designated by the Administrative Agent that is reasonably
convenient to both parties, (iv) remove any Collateral from any such premises
for the purpose of effecting the sale or other disposition thereof and/or (v) at
any place and time or times, sell and deliver any or all Collateral held by or
for it at public or private sale, by one or more contracts, in one or more
parcels, for cash, upon credit or otherwise, at such prices and upon such terms
as the Administrative Agent deems advisable, in its sole discretion (subject to
any and all mandatory legal requirements). Each of the Grantors acknowledges
that any private sale referenced above may be at prices and on terms less
favorable to the seller than the prices and terms that might have been obtained
at a public sale. In addition to all other sums due the Administrative Agent and
the Secured Parties with respect to the Secured Obligations, the Grantors shall
pay the Administrative Agent and each of the Secured Parties all reasonable
costs and expenses incurred by the Administrative Agent or any such Secured
Party, in enforcing its remedies hereunder

 

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including, but not limited to, reasonable attorneys’ fees and court costs, in
obtaining or liquidating the Collateral, in enforcing payment of the Secured
Obligations, or in the prosecution or defense of any action or proceeding by or
against the Administrative Agent or the Secured Parties or the Grantors
concerning any matter arising out of or connected with this Security Agreement,
any Collateral or the Secured Obligations, including, without limitation, any of
the foregoing arising in, arising under or related to a case under Debtor Relief
Laws. To the extent the rights of notice cannot be legally waived hereunder,
each Grantor agrees that any requirement of reasonable notice shall be met if
such notice, specifying the place of any public sale or the time after which any
private sale is to be made, is personally served on or mailed, postage prepaid,
to the Borrower in accordance with the notice provisions of Section 11.02 of the
Credit Agreement at least ten (10) Business Days before the time of sale or
other event giving rise to the requirement of such notice. The Administrative
Agent may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned. The Administrative
Agent shall not be obligated to make any sale or other disposition of the
Collateral regardless of notice having been given. To the extent permitted by
law, any Secured Party may be a purchaser at any such sale. To the extent
permitted by applicable law, each of the Grantors hereby waives all of its
rights of redemption with respect to any such sale. Subject to the provisions of
applicable law, the Administrative Agent and the Secured Parties may postpone or
cause the postponement of the sale of all or any portion of the Collateral by
announcement at the time and place of such sale, and such sale may, without
further notice, to the extent permitted by law, be made at the time and place to
which the sale was postponed, or the Administrative Agent may further postpone
such sale by announcement made at such time and place.

(b) Remedies Relating to Accounts. Upon the occurrence of an Event of Default
and during the continuation thereof, whether or not the Administrative Agent has
exercised any or all of its rights and remedies hereunder, (i) each Grantor will
promptly upon request of the Administrative Agent instruct all account debtors
to remit all payments in respect of Accounts to a mailing location selected by
the Administrative Agent and (ii) the Administrative Agent shall have the right
to enforce any Grantor’s rights against its customers and account debtors, and
the Administrative Agent or its designee may notify (or require such Grantor to
notify) any Grantor’s customers and account debtors that the Accounts of such
Grantor have been assigned to the Administrative Agent or of the Administrative
Agent’s security interest therein and may (either in its own name or in the name
of a Grantor or both) demand, collect (including without limitation by way of a
lockbox arrangement), receive, take receipt for, sell, sue for, compound,
settle, compromise and give acquittance for any and all amounts due or to become
due on any Account, and, in the Administrative Agent’s discretion, file any
claim or take any other action or proceeding to protect and realize upon the
security interest of the Secured Parties in the Accounts. Each Grantor
acknowledges and agrees that the Proceeds of its Accounts remitted to or on
behalf of the Administrative Agent in accordance with the provisions hereof
shall be solely for the Administrative Agent’s own convenience and that such
Grantor shall not have any right, title or interest in such Accounts or in any
such other amounts except as expressly provided herein. The Administrative Agent
and the other Secured Parties shall have no liability or responsibility to any
Grantor for acceptance of a

 

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check, draft or other order for payment of money bearing the legend “payment in
full” or words of similar import or any other restrictive legend or endorsement
or be responsible for determining the correctness of any remittance.
Furthermore, upon the occurrence of an Event of Default and during the
continuation thereof, (i) the Administrative Agent shall have the right, but not
the obligation, to make test verifications of the Accounts in any manner and
through any medium that it reasonably considers advisable, and the Grantors
shall furnish all such assistance and information as the Administrative Agent
may require in connection with such test verifications, (ii) upon the
Administrative Agent’s request and at the expense of the Grantors, the Grantors
shall cause independent public accountants or others satisfactory to the
Administrative Agent to furnish to the Administrative Agent reports showing
reconciliations, aging and test verifications of and trial balances for, the
Accounts and (iii) the Administrative Agent in its own name or in the name of
others may communicate with account debtors on the Accounts to verify with them
to the Administrative Agent’s satisfaction the existence, amount and terms of
any Accounts.

(c) Access. In addition to the rights and remedies hereunder, upon the
occurrence of an Event of Default and during the continuation thereof, the
Administrative Agent shall have the right to enter and remain upon the various
premises of the Grantors without cost or charge to the Administrative Agent and
use the same, together with materials, supplies, books and records of the
Grantors for the purpose of collecting and liquidating the Collateral, or for
preparing for sale and conducting the sale of the Collateral, whether by
foreclosure, auction or otherwise. In addition, the Administrative Agent may
remove Collateral, or any part thereof, from such premises and/or any records
with respect thereto, in order to effectively collect or liquidate such
Collateral.

(d) Nonexclusive Nature of Remedies. Failure by the Administrative Agent or the
Secured Parties to exercise any right, remedy or option under this Security
Agreement, any other Loan Document, any other documents relating to the Secured
Obligations, or as provided by law, or any delay by the Administrative Agent or
the Secured Parties in exercising the same, shall not operate as a waiver of any
such right, remedy or option. No waiver hereunder shall be effective unless it
is in writing, signed by the party against whom such waiver is sought to be
enforced and then only to the extent specifically stated, which in the case of
the Administrative Agent or the Secured Parties shall only be granted as
provided herein. To the extent permitted by law, neither the Administrative
Agent, the Secured Parties, nor any party acting as attorney for the
Administrative Agent or the Secured Parties, shall be liable hereunder for any
acts or omissions or for any error of judgment or mistake of fact or law other
than their gross negligence or willful misconduct hereunder. The rights and
remedies of the Administrative Agent and the Secured Parties under this Security
Agreement shall be cumulative and not exclusive of any other right or remedy
that the Administrative Agent or the Secured Parties may have.

(e) Retention of Collateral. To the extent permitted by applicable law, in
addition to the rights and remedies hereunder, the Administrative Agent may, in
compliance with Sections 9-620 and 9-621 of the UCC (or any successor section)
or otherwise complying with the requirements of applicable law of the relevant
jurisdiction, accept or retain all or any portion of the Collateral in
satisfaction of the Secured Obligations. Unless and until the Administrative
Agent shall have provided such notices, however, the Administrative Agent shall
not be deemed to have accepted or retained any Collateral in satisfaction of any
Secured Obligations for any reason.

 

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(f) Deficiency. In the event that the proceeds of any sale, collection or
realization are insufficient to pay all amounts to which the Administrative
Agent or the Secured Parties are legally entitled, the Grantors shall be jointly
and severally liable for the deficiency (subject to Section 22 hereof), together
with interest thereon at the Default Rate, together with the costs of collection
and the reasonable fees, charges and disbursements of counsel. Any surplus
remaining after the full payment and satisfaction of the Secured Obligations
shall be returned to the Grantors or to whomsoever a court of competent
jurisdiction shall determine to be entitled thereto.

8. Rights of the Administrative Agent.

(a) Power of Attorney. In addition to other powers of attorney contained herein,
each Grantor hereby designates and appoints the Administrative Agent, on behalf
of the Secured Parties, and each of its designees or agents, as attorney-in-fact
of such Grantor, irrevocably and with power of substitution, with authority to
take any or all of the following actions upon the occurrence and during the
continuation of an Event of Default:

(i) to demand, collect, settle, compromise and adjust, and give discharges and
releases concerning the Collateral, all as the Administrative Agent may
reasonably deem appropriate;

(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Collateral and enforcing any other right in respect
thereof;

(iii) to defend, settle or compromise any action, suit or proceeding brought
and, in connection therewith, give such discharge or release as the
Administrative Agent may reasonably deem appropriate;

(iv) to receive, open and dispose of mail addressed to a Grantor and endorse
checks, notes, drafts, acceptances, money orders, bills of lading, warehouse
receipts or other instruments or documents evidencing payment, shipment or
storage of the goods giving rise to the Collateral on behalf of and in the name
of such Grantor, or securing, or relating to such Collateral;

(v) to pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against the Collateral;

(vi) to direct any parties liable for any payment in connection with any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to the Administrative Agent or as the Administrative Agent
shall direct;

 

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(vii) to receive payment of and receipt for any and all monies, claims and other
amounts due and to become due at any time in respect of or arising out of any
Collateral;

(viii) to maintain (including determining not to renew, pursue or further file)
and enforce all IP Rights, forming any part of the Collateral;

(ix) to sell, assign, transfer, license, make any agreement in respect of, or
otherwise deal with or exercise rights in respect of, any Collateral or the
goods or services that have given rise thereto, as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes;

(x) to adjust and settle claims under any insurance policy relating thereto;

(xi) to execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, security and pledge agreements,
affidavits, notices and other agreements, instruments and documents that the
Administrative Agent may reasonably deem appropriate in order to perfect and
maintain the security interests and liens granted in this Security Agreement and
in order to fully consummate all of the transactions contemplated therein;

(xii) to institute any foreclosure proceedings that the Administrative Agent may
reasonably deem appropriate; and

(xiii) to do and perform all such other acts and things as the Administrative
Agent may deem appropriate or convenient in connection with the Collateral.

This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations (other than contingent
indemnification obligations for which no claim has been asserted) shall remain
outstanding and until all of the Commitments relating thereto shall have been
terminated. The Administrative Agent shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and options
expressly or implicitly granted to the Administrative Agent in this Security
Agreement and shall not be liable for any failure to do so or any delay in doing
so. The Administrative Agent shall not be liable for any act or omission or for
any error of judgment or any mistake of fact or law in its individual capacity
or its capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of attorney is conferred on
the Administrative Agent solely to protect, preserve and realize upon its
security interest in the Collateral.

(b) Assignment by the Administrative Agent. The Administrative Agent may from
time to time assign the Secured Obligations to a successor Administrative Agent
appointed in accordance with the Credit Agreement, and such successor shall be
entitled to all of the rights and remedies of the Administrative Agent under
this Security Agreement in relation thereto.

 

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(c) Releases of Collateral. If any Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall promptly execute and deliver to such Grantor all releases
and other documents and take such other action, reasonably necessary for the
release of the Liens created hereby or by any other Collateral Document on such
Collateral.

(d) The Administrative Agent’s Duty of Care. Other than the exercise of
reasonable care to assure the safe custody of the Collateral while being held by
the Administrative Agent hereunder and to account for all proceeds thereof, the
Administrative Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Grantors shall be
responsible for preservation of all rights in the Collateral, and the
Administrative Agent shall be relieved of all responsibility for the Collateral
upon surrendering it or tendering the surrender of it to the Grantors. The
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which the Administrative Agent
accords its own property, which shall be no less than the treatment employed by
a reasonable and prudent agent in the industry, it being understood that the
Administrative Agent shall not have responsibility for taking any necessary
steps to preserve rights against any parties with respect to any of the
Collateral. In the event of a public or private sale of Collateral pursuant to
Section 7 hereof, the Administrative Agent shall have no responsibility for
(i) ascertaining or taking action with respect to any matters relating to any
Collateral, whether or not the Administrative Agent has or is deemed to have
knowledge of such matters or (ii) taking any steps to clean, repair or otherwise
prepare the Collateral for sale.

9. Application of Proceeds. Upon the acceleration of the Obligations pursuant to
Section 9.02 of the Credit Agreement, any payments in respect of the Secured
Obligations and any proceeds of the Collateral, when received by the
Administrative Agent or any of the Secured Parties in cash or its equivalent,
will be applied in reduction of the Secured Obligations in the order set forth
in Section 9.03 of the Credit Agreement, and each Grantor irrevocably waives the
right to direct the application of such payments and proceeds and acknowledges
and agrees that the Administrative Agent shall have the continuing and exclusive
right to apply any and all such payments and proceeds in the Administrative
Agent’s sole discretion, notwithstanding any entry to the contrary upon any of
its books and records.

10. Continuing Agreement.

(a) This Security Agreement shall be a continuing agreement in every respect and
shall remain in full force and effect so long as any of the Secured Obligations
(other than contingent indemnification obligations for which no claim has been
asserted) remains outstanding and until all of the Commitments relating thereto
have been terminated. Upon payment or other satisfaction of all Secured
Obligations (other than contingent indemnification obligations for which no
claim has been asserted) and termination of the Commitments related thereto,
this Security Agreement and the liens and security interests of the
Administrative Agent hereunder shall be automatically terminated and the
Administrative Agent shall, upon the request and at the expense of the Grantors,
execute

 

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and deliver all UCC termination statements and/or other documents reasonably
requested by the Grantors evidencing such termination and return to Grantors all
Collateral in its possession. Notwithstanding the foregoing, all releases and
indemnities provided hereunder shall survive termination of this Security
Agreement.

(b) This Security Agreement shall continue to be effective or be automatically
reinstated, as the case may be, if at any time payment, in whole or in part, of
any of the Secured Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Secured Party as a preference,
fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided, that, in the event
payment of all or any part of the Secured Obligations is rescinded or must be
restored or returned, all costs and expenses (including, without limitation,
reasonable attorneys’ fees and disbursements) incurred by the Administrative
Agent or any Secured Party in defending and enforcing such reinstatement shall
be deemed to be included as a part of the Secured Obligations.

11. Amendments and Waivers. This Security Agreement and the provisions hereof
may not be amended, waived, modified, changed, discharged or terminated except
as set forth in Section 11.01 of the Credit Agreement.

12. Successors in Interest. This Security Agreement shall create a continuing
security interest in the Collateral and shall be binding upon each Grantor, its
successors and assigns, and shall inure, together with the rights and remedies
of the Administrative Agent and the Secured Parties hereunder, to the benefit of
the Administrative Agent and the Secured Parties and their successors and
permitted assigns; provided, however, none of the Grantors may assign its rights
or delegate its duties hereunder without the prior written consent of the
requisite Lenders under the Credit Agreement.

13. Notices. All notices required or permitted to be given under this Security
Agreement shall be given as provided in Section 11.02 of the Credit Agreement.

14. Counterparts. This Security Agreement may be executed in counterparts (and
by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. Delivery of an executed counterpart of a signature page of this
Security Agreement by facsimile or other electronic imaging means (e.g. “pdf” or
“tif”) shall be effective as delivery of a manually executed counterpart of this
Security Agreement.

15. Headings. Section headings herein are included for convenience of reference
only and shall not affect the interpretation of this Security Agreement.

16. Governing Law; Submission to Jurisdiction; Waiver of Venue, Service of
Process, Waiver of Right to Jury Trial. The terms of Section 11.14 of the Credit
Agreement and Section 11.15 of the Credit Agreement with respect to governing
law, submission to jurisdiction, waiver of venue, service of process and waiver
of the right to a jury trial are each incorporated herein by reference, mutatis
mutandis, and the parties hereto agree to such terms.

 

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17. Severability. If any provision of this Security Agreement is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Security Agreement shall not be affected or
impaired thereby and (b) the parties shall endeavor in good faith negotiations
to replace the illegal, invalid or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the illegal, invalid or unenforceable provisions. The invalidity of a provision
in a particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

18. Entirety. This Security Agreement, the other Loan Documents and the other
documents relating to the Secured Obligations represent the entire agreement of
the parties hereto and thereto, and supersede all prior agreements and
understandings, oral or written, if any, including any proposal letters or
correspondence relating to the Loan Documents, any other documents relating to
the Secured Obligations, or the transactions contemplated herein and therein.

19. Survival. All representations and warranties of the Grantors hereunder shall
survive the execution and delivery of this Security Agreement, the other Loan
Documents and the other documents relating to the Secured Obligations, the
delivery of the Notes and the extension of credit thereunder or in connection
therewith. It is understood and agreed that, notwithstanding the foregoing,
representations and warranties shall only be made (or deemed to be made) by the
Grantors hereunder on the date hereof and on each date thereafter on which the
representations and warranties set forth herein are required to be made (or
deemed to be made).

20. Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Collateral (including, without
limitation, real and other personal property and securities owned by a Grantor)
or by a guarantee, endorsement or property of any other Person, then to the
extent permitted by applicable law the Administrative Agent shall have the right
to proceed against such other property, guarantee or endorsement upon the
occurrence and during the continuation of any Event of Default, and the
Administrative Agent shall have the right, in its sole discretion, to determine
which rights, security, liens, security interests or remedies the Administrative
Agent shall at any time pursue, relinquish, subordinate, modify or take with
respect thereto, without in any way modifying or affecting any of them or the
Secured Obligations or any of the rights of the Administrative Agent or the
Secured Parties under this Security Agreement, under any of the other Loan
Documents or under any other document relating to the Secured Obligations.

21. Rights of Required Lenders. All rights of the Administrative Agent
hereunder, if not exercised by the Administrative Agent, may be exercised by the
Required Lenders.

22. Joint and Several Obligations of Grantors.

(a) Subject to subsection (b) of this Section 22, each of the Grantors is
accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by the Secured Parties, for the mutual
benefit, directly and indirectly, of each of the Grantors and in consideration
of the undertakings of each of the Grantors to accept joint and several
liability for the obligations of each of them.

 

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(b) Notwithstanding any provision to the contrary contained herein, in any other
of the Loan Documents or in any other documents relating to the Secured
Obligations, the obligations of each Guarantor (other than the Parent) under the
Credit Agreement, the other Loan Documents and the other documents relating to
the Secured Obligations shall be limited to an aggregate amount equal to the
largest amount that would not render such obligations subject to avoidance under
Section 548 of the United States Bankruptcy Code or any comparable provisions of
any applicable state law.

23. Joinder. At any time after the date of this Security Agreement, one or more
additional Domestic Subsidiaries may become party hereto by executing and
delivering to the Administrative Agent a Joinder Agreement. Immediately upon
such execution and delivery of such Joinder Agreement (and without any further
action), each such additional Domestic Subsidiary will become a party to this
Security Agreement as a “Grantor” and have all the rights and obligations of a
Grantor hereunder and this Security Agreement and the schedules hereto shall be
deemed amended by such Joinder Agreement.

24. Intercreditor Agreement. The Liens, security interests and rights granted
pursuant to this Security Agreement are subject to the terms and conditions of
any intercreditor agreement entered into by and between the Administrative Agent
and the Permitted Senior Revolving Credit Lender, if any.

[Signature Pages Follow]

 

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Each of the parties hereto has caused a counterpart of this Security Agreement
to be duly executed and delivered as of the date first above written.

 

GRANTOR:    

VENUS CONCEPT USA INC.,

a Delaware corporation

          By:   /s/ Domenic Serafino

       Name: Domenic Serafino        Title: President

 

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Accepted and agreed to as of the date first above written.

 

ADMINISTRATIVE AGENT:    

VISIUM HEALTHCARE PARTNERS, LP,

a Delaware limited partnership

    By:  

VISIUM HEALTHCARE ADVISORS, LP,

its General Partner

      By:  

JG ASSET II, LLC,

its General Partner

                 By:   /s/ Mark Gottleib

                         Name: Mark Gottleib         Title: Authorized Signatory

 

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