Document:

ex10-2.htm

Exhibit 10.2

 

AMENDMENT AGREEMENT

 

This AMENDMENT AGREEMENT (this “Agreement”), dated as of March 28, 2012 (the “Amendment Date”), is made by and among GENTA INCORPORATED, a Delaware corporation (the “Company”), and the undersigned parties whose names are set forth on Exhibit A attached hereto (each a “Holder” and collectively the “Holders”).

 

WHEREAS, the Company has previously issued certain (a) June 2008 Notes, (b) April 2009 Notes, (c) July 2009 Notes, (d) September 2009 Notes, (e) 2010 Notes and (f) 2011 Notes (the notes described in each of the foregoing clauses (a), (b), (c), (d), (e) and (f) as defined below and collectively, the “Existing Notes”);

 

WHEREAS, the Company has, contemporaneously with the issuance of certain of the Existing Notes, also previously issued certain warrants for the purchase of additional notes and/or the common stock of the Company;

 

WHEREAS, the Company now desires to issue a new class of senior secured convertible promissory notes (the “2012 Notes”) pursuant to the terms of that certain Securities Purchase Agreement, dated as of even date herewith, by and among the Company and the purchasers whose names are set forth on Exhibit A thereto (the “2012 Securities Purchase Agreement”);

 

WHEREAS, the undersigned holders represent the required threshold to amend each of (a) the June 2008 Notes, (b) the April 2009 Notes, (c) the April 2009 Stock Warrants, (c) the July 2009 Notes, (d) the September 2009 Notes, (e) the 2010 Notes, (f) the 2010 Stock Warrants, (g) the December 2010 Stock Warrants, (h) the September 2011 Purchase Agreement, (i) the 2011 Notes, (j) the H Note Warrants and (k) the 2011 Stock Warrants (all such documents as defined below and collectively, the “Outstanding Transaction Documents” and each, an “Outstanding Transaction Document”);

 

WHEREAS, the undersigned Holders have agreed to amend certain provisions of each of the Outstanding Transaction Documents, in each instance in the manner set forth below;

 

NOW, THEREFORE, in consideration of the premises and mutual covenants herein below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1. Definitions.  Capitalized terms used herein and not defined shall have the meanings set forth in the 2012 Securities Purchase Agreement.  For the purposes hereof, the following terms shall have the following meanings:

 

(a)           “2010 Notes” means the Company’s 12% Senior Unsecured Convertible Promissory B Notes issued pursuant to that certain Securities Purchase Agreement, dated as of March 5, 2010 (the “March 2010 Purchase Agreement”) (the “B Notes”), the Company’s 12% Senior Unsecured Convertible Promissory C Notes issued pursuant to the March 2010 Purchase Agreement (the “C Notes”), the Company’s 12% Senior Secured Convertible Promissory D Notes issued pursuant to the March 2010 Purchase Agreement (the “D Notes”) and the Company’s 12% Senior Unsecured Convertible Promissory E Notes issued pursuant to the March 2010 Purchase Agreement (the “E Notes”).

 

  

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(b)           “2010 Stock Warrants” means the Company’s common stock purchase warrants issued by the Company to the holders thereof pursuant to the terms of that certain Note Conversion and Amendment Agreement dated as of March 5, 2010.

 

(c)           “H Note Warrants” means the Cash Collateralized Warrants (as defined in the September 2011 Purchase Agreement) issued by the Company to the holders thereof pursuant to the terms of the September 2011 Purchase Agreement.

 

(d)           “2011 Stock Warrants” means, collectively, the Company’s common stock purchase warrants issued by the Company to the holders thereof pursuant to the terms of that certain Note Conversion and Amendment Agreement dated as of September 2, 2011.

 

(e)           “2011 Notes” means the Company’s 15% Senior Secured Convertible Promissory G Notes issued pursuant to that certain Securities Purchase Agreement, dated as of September 9, 2011 (the “September 2011 Purchase Agreement”) (the “G Notes”) and the Company’s 15% Senior Secured Cash Collateralized Convertible Promissory H Notes issued pursuant to the September 2011 Purchase Agreement (the “H Notes”).

 

(f)           “April 2009 Notes” means the Company’s 8% Senior Secured Convertible Promissory Notes due September 9, 2013, as amended, issued pursuant to that certain Securities Purchase Agreement dated April 2, 2009.

 

(g)           “April 2009 Stock Warrants” means, collectively, the Company’s common stock purchase warrants issued by the Company to the holders thereof pursuant to the terms of that certain Securities Purchase Agreement, dated as of April 2, 2009.

 

(h)           “December 2010 Stock Warrants” means, collectively, the Company’s common stock purchase warrants issued by the Company to the holders thereof pursuant to the terms of that certain Amendment Agreement, dated as of December 14, 2010.

 

(i)           “Effective Time” means the date and time of the First Closing under the 2012 Securities Purchase Agreement.

 

(j)           “June 2008 Notes” means the Company’s 15% Senior Secured Convertible Promissory Notes due September 9, 2013, as amended, issued pursuant to that certain Securities Purchase Agreement dated June 5, 2008.

 

(k)          “July 2009 Notes” means the Company’s 8% Unsecured Subordinated Convertible Promissory Notes due September 9, 2013, as amended, issued pursuant to that certain Securities Purchase Agreement dated July 7, 2009.

 

(l)           “September 2009 Notes” means the Company’s 8% Unsecured Subordinated Convertible Promissory Notes due September 9, 2013, as amended, issued pursuant to that certain Securities Purchase Agreement dated September 4, 2009.

 

  

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(m)         “Unsecured Notes” means the June 2008 Notes, April 2009 Notes, September 2009 Notes and 2010 Notes.

 

2. Amendment to the September 2011 Purchase Agreement.

 

(a)           The Company and the undersigned Purchasers (as defined in the September 2011 Purchase Agreement), representing the required threshold to amend the provisions of the September 2011 Purchase Agreement, hereby agree to amend the September 2011 Purchase Agreement as follows:

 

(i)             Section 1.3(a) of the September 2011 Purchase Agreement is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“No later than the Closing Date, the Company shall take all action necessary to reserve (and hereby covenants to continue to reserve), free of preemptive rights and other similar contractual rights, a number of its authorized but unissued shares of Common Stock equal to 100% of the aggregate number of shares of Common Stock then issuable upon conversion or otherwise in respect of the Notes issued or issuable under this Agreement (including any Conversion Notes issuable upon exercise of the Debt Warrants or any Notes issued by way of payment of interest in kind).”

 

(ii)            Section 1.3(b) of the September 2011 Purchase Agreement is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“[Reserved]”; and

 

(iii)           Section 3.19 of the September 2011 Purchase Agreement is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“The Company covenants and agrees that so long any Notes or Debt Warrants remain outstanding, without the written consent of the Requisite Purchasers, the Company shall not effect any reverse stock split.”

 

3. Amendment to the April 2009 Stock Warrants.

 

(a)           The Company, together with each party hereto that is also a holder of an April 2009 Warrant hereby agrees to amend each such April 2009 Stock Warrant as follows:

 

(i)             Section 2(b) of each April 2009 Stock Warrant is hereby amended, such that immediately following the Effective Time, the following sentence shall be added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share, the Exercise Price will be adjusted to the par value of the Common Stock.”

 

  

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4. Amendment to the 2010 Stock Warrants.

 

(a)           The Company, together with each party hereto that is also a holder of a 2010 Stock Warrant hereby agree to amend each such 2010 Stock Warrant as follows:

 

(i)             Section 1(b) of each 2010 Stock Warrant is hereby amended, such that immediately following the Effective Time, the following sentence shall be added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share, the Exercise Price will be adjusted to the par value of the Common Stock.”

 

5. Amendment to the December 2010 Stock Warrants.

 

(a)           The Company, together with each party hereto that is also a holder of a December 2010 Stock Warrant hereby agree to amend each such December 2010 Stock Warrant as follows:

 

(i)             Section 1(b) of each December 2010 Stock Warrant is hereby amended, such that immediately following the Effective Time, the following sentence shall be added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share, the Exercise Price will be adjusted to the par value of the Common Stock.”

 

  

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6. Amendment to the 2011 Stock Warrants.

 

(a)           The Company, together with each party hereto that is also a holder of a 2011 Stock Warrant hereby agree to amend each such 2011 Stock Warrant as follows:

 

(i)             Section 1(b) of each 2011 Stock Warrant is hereby amended, such that immediately following the Effective Time, the following sentence shall be added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Exercise Price to a price per share of Common Stock that is lower than the par value of such a share, the Exercise Price will be adjusted to the par value of the Common Stock.”

 

7. Amendment to the H Note Warrants.

 

(a)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the H Note Warrants, hereby agree to amend the all of the Company’s outstanding H Note Warrants as follows:

 

(i)             The first sentence of Section 1(a) of each H Note Warrant is hereby amended, such that immediately following the Effective Time, the sentence, as amended, shall read, in its entirety:

 

“Process.  Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Issue Date and on or before the Termination Date by delivery to the Company (the date of such delivery, the “Exercise Date”) of a duly executed facsimile copy of the Notice of Exercise annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company).”

 

8. Amendment to the June 2008 Notes.

 

(a)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the June 2008 Notes, hereby agree to amend the all of the Company’s outstanding June 2008 Notes as follows:

 

(i)             Section 3.2 of each June 2008 Note is hereby amended, such that immediately following the Effective Time, the following sentence shall be added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share, the Conversion Price will be adjusted to the par value of the Common Stock.”

 

  

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(b)           Each of the undersigned Holders of the currently outstanding June 2008 Notes consents to the issuance of each of the Securities (as defined in the 2012 Securities Purchase Agreement), and acknowledge that, upon the issuance thereof, the 2012 Notes shall be senior in all respects, and the right of payment in respect of the June 2008 Notes shall be subordinate and subject in right of payment to the prior right of payment in full enjoyed by the holders of the 2012 Notes in respect of such 2012 Notes.

 

9. Amendment to the April 2009 Notes.

 

(a)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the April 2009 Notes, hereby agree to amend all of the Company’s outstanding April 2009 Notes as follows:

 

(i)             Section 1.3 of each April 2009 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Payment of Principal; No Prepayment.  The principal amount hereof and all accrued interest hereon shall be paid in full in cash on the Maturity Date or, if earlier, upon acceleration or redemption of this Note in accordance with the terms hereof.  Notwithstanding the foregoing, at any time after the 2nd anniversary of the Issuance Date, the Holder shall have the right, upon the delivery to the Company of a written instrument, allowing such prepayment, signed by the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including Notes that have been issued by way of payment in kind), upon ten (10) days prior written notice to the Maker, to require the Maker to redeem the Notes by paying to the Holders in cash, the then-outstanding principal amount of the Notes, plus accrued and unpaid interest through the date of such redemption.  Any amount of principal repaid hereunder may not be reborrowed.  Except as set forth in Section 3.6, the Maker may not prepay any portion of the principal amount of this Note without the prior written consent of the Holder, which may be withheld in the Holder’s sole and absolute discretion.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it receives a written instrument allowing prepayment from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind.”

 

  

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(ii)            Section 2.2 of each April 2009 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Remedies Upon An Event of Default.  If an Event of Default shall have occurred and shall be continuing, the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including Notes that have been issued as payment in kind) may, at any time, at their option declare the entire unpaid principal balance of the Notes, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that following such a declaration made in the manner and by the Holders contemplated above, each Holder may, in its sole and absolute discretion, (a) demand the redemption of the Notes pursuant to Section 3.6(a) hereof (to the extent permitted by Section 3.6(a) hereof), (b) demand that the principal amount of the Notes then outstanding and all accrued and unpaid interest thereon shall be converted into shares of Common Stock at the Conversion Price per share on the Trading Day immediately preceding the date the Holders demand conversion pursuant to this clause, or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under the Notes, the Purchase Agreement, the other Transaction Documents or applicable law; provided, further, however, that upon the occurrence of an Event of Default described in clauses (k) or (l), the entire unpaid principal balance of the Notes, together with all interest accrued hereon, shall automatically become due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  No course of delay on the part of one or more Holders required pursuant to the terms hereof shall operate as a waiver thereof or otherwise prejudice the rights of the Holder(s).  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.”

 

(iii)           Section 3.5 of each April 2009 Note is hereby amended, such that immediately following the Effective Time, the following sentence is added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share, the Conversion Price will be adjusted to the par value of the Common Stock.”

 

  

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(iv)           Sections 3.6(a), (b) and (c) of each April 2009 Note is hereby amended, such that immediately following the Effective Time, the provisions, as amended, shall read, in their entirety:

 

“(a)  Prepayment Upon an Event of Default. Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; the Holder shall have the right, at the Holder’s option, to require the Maker to prepay all or a portion of this Note in cash at a price equal to the sum of (i) the greater of (A) one hundred percent (100%) of the aggregate principal amount of this Note plus all accrued and unpaid interest and (B) the aggregate principal amount of this Note plus all accrued but unpaid interest hereon, divided by the Conversion Price on (x) the date the Prepayment Price (as defined below) is demanded or otherwise due or (y) the date the Prepayment Price is paid in full, whichever is less, multiplied by the Daily VWAP on (x) the date the Prepayment Price is demanded or otherwise due, and (y) the date the Prepayment Price is paid in full, whichever is greater, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note and the other Transaction Documents (the “Prepayment Price”). The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind, declaring that an Event of Default has occurred.”

 

“(b)    Mechanics of Prepayment at Option of Holder in Connection with a Change of Control. No sooner than fifteen (15) days nor later than ten (10) days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Change of Control”) to the Holder of this Note and to each Other Holder of the Other Notes. At any time after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered at least ten (10) days prior to a Change of Control, at any time within ten (10) days prior to a Change of Control) and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any holder of the Notes then outstanding may, require the Maker to prepay, effective immediately prior to the consummation of such Change of Control, all of the holder’s Notes then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Change of Control”) to the Maker, which Notice of Prepayment at Option of Holder Upon Change of Control shall indicate (i) the principal amount of the Notes that such holder is electing to have prepaid and (ii) the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Change of Control from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the combined principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind, declaring that a Change of Control, and therefore an Event of Default, has occurred.”

 

  

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“(c)     Mechanics of Prepayment at Option of Holder Upon Other Event of Default. Within one (1) business day after the occurrence of an Event of Default other than a Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Event of Default”) to each Holder of the Notes. At any time after the earlier of a Holder’s receipt of a Notice of Event of Default and such Holder becoming aware of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any Holder of this Note may require the Maker to prepay all (but not less than all) of the Notes held by such Holder by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Event of Default”) to the Maker, which Notice of Prepayment at Option of Holder Upon Event of Default shall indicate the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Event of Default from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind, declaring that an Event of Default has occurred.”

 

  

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(b)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the April 2009 Notes, hereby consent to, and acknowledge that, upon the Effective Time, the 2012 Notes shall be senior in all respects, and the right of payment in respect of the April 2009 Notes shall be subordinate and subject in right of payment to the prior right of payment in full enjoyed by the holders of the 2012 Notes in respect of such 2012 Notes.

 

10. Amendment to the July 2009 Notes.

 

(a)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the July 2009 Notes, hereby agree to amend all of the Company’s outstanding July 2009 Notes as follows:

 

(i)             Section 1.3 of each July 2009 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Payment of Principal; No Prepayment.  The principal amount hereof and all accrued interest hereon shall be paid in full in cash on the Maturity Date or, if earlier, upon acceleration or redemption of this Note in accordance with the terms hereof.  Notwithstanding the foregoing, at any time after the one year anniversary of the Issuance Date, the Holder shall have the right, upon the delivery to the Company of a written instrument, allowing such prepayment, signed by the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including Notes that have been issued by way of payment in kind) , upon ten (10) days prior written notice to the Maker, to require the Maker to redeem the Notes by paying to the Holders in cash, the then-outstanding principal amount of the Notes plus accrued and unpaid interest through the date of such redemption.  Any amount of principal repaid hereunder may not be reborrowed.  Except as set forth in Section 3.6, the Maker may not prepay any portion of the principal amount of this Note without the prior written consent of the Holder, which may be withheld in the Holder’s sole and absolute discretion.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it receives a written instrument allowing prepayment from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind.”

 

  

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(ii)            Section 2.2 of each July 2009 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Remedies Upon An Event of Default.  If an Event of Default shall have occurred and shall be continuing, the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including Notes that have been issued as payment in kind) may, at any time, at their option declare the entire unpaid principal balance of the Notes, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that following such a declaration made in the manner and by the Holders contemplated above, each Holder may, in its sole and absolute discretion, (a) demand the redemption of the Notes pursuant to Section 3.6(a) hereof (to the extent permitted by Section 3.6(a) hereof), (b) demand that the principal amount of the Notes then outstanding and all accrued and unpaid interest thereon shall be converted into shares of Common Stock at the Conversion Price per share on the Trading Day immediately preceding the date the Holders demand conversion pursuant to this clause, or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note, the Purchase Agreement, the other Transaction Documents or applicable law; provided, further, however, that upon the occurrence of an Event of Default described in clauses (k) or (l), the entire unpaid principal balance of the Notes, together with all interest accrued hereon, shall automatically become due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  No course of delay on the part of one or more Holders required pursuant to the terms hereof shall operate as a waiver thereof or otherwise prejudice the rights of the Holder(s).  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.”

 

(iii)           Section 3.5 of each July 2009 Note is hereby amended, such that immediately following the Effective Time, the following sentence is added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share, the Conversion Price will be adjusted to the par value of the Common Stock”

 

  

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(iv)           Sections 3.6(a), (b) and (c) of each July 2009 Note is hereby amended, such that immediately following the Effective Time, the provisions, as amended, shall read, in its entirety:

 

“(a)   Prepayment Upon an Event of Default.  Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; the Holder shall have the right, at the Holder’s option, to require the Maker to prepay all or a portion of this Note in cash at a price equal to the sum of (i) the greater of (A) one hundred percent (100%) of the aggregate principal amount of this Note plus all accrued and unpaid interest and (B) the aggregate principal amount of this Note plus all accrued but unpaid interest hereon, divided by the Conversion Price on (x) the date the Prepayment Price (as defined below) is demanded or otherwise due or (y) the date the Prepayment Price is paid in full, whichever is less, multiplied by the Daily VWAP on (x) the date the Prepayment Price is demanded or otherwise due, and (y) the date the Prepayment Price is paid in full, whichever is greater; provided that if the Event of Default is under Section 2.1(l) or (k) of this Note, the Daily VWAP shall be as of the date immediately prior to the occurrence of such Event of Default, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note and the other Transaction Documents (the “Prepayment Price”).  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind, declaring that an Event of Default has occurred.”

 

  

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“(b)   Mechanics of Prepayment at Option of Holder in Connection with a Change of Control. No sooner than fifteen (15) days nor later than ten (10) days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Change of Control”) to the Holder of this Note and to each Other Holder of the Other Notes. At any time after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered at least ten (10) days prior to a Change of Control, at any time within ten (10) days prior to a Change of Control) and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any holder of the Notes then outstanding may, require the Maker to prepay, effective immediately prior to the consummation of such Change of Control, all of the holder’s Notes then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Change of Control”) to the Maker, which Notice of Prepayment at Option of Holder Upon Change of Control shall indicate (i) the principal amount of the Notes that such holder is electing to have prepaid and (ii) the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Change of Control from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time. The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the combined principal amount of the then outstanding Notes,  including the Notes that have been issued by way of payment of interest in kind, declaring that a Change of Control, and therefore an Event of Default, has occurred.”

 

  

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“(c)   Mechanics of Prepayment at Option of Holder Upon Other Event of Default. Within one (1) business day after the occurrence of an Event of Default other than a Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Event of Default”) to each Holder of the Notes. At any time after the earlier of a Holder’s receipt of a Notice of Event of Default and such Holder becoming aware of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any Holder of this Note may, require the Maker to prepay all (but not less than all) of the Notes held by such Holder by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Event of Default”) to the Maker, which Notice of Prepayment at Option of Holder Upon Event of Default shall indicate the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Event of Default from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time. The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind, declaring that an Event of Default has occurred.”

 

  

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(b)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the July 2009 Notes, hereby consent to, and acknowledge that, upon the Effective Time, the 2012 Notes shall be senior in all respects, and the right of payment in respect of the July 2009 Notes shall be subordinate and subject in right of payment to the prior right of payment in full enjoyed by the holders of the 2012 Notes in respect of such 2012 Notes.

 

11.     Amendment to the September 2009 Notes.

 

(a)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the September 2009 Notes, hereby agree to amend all of the Company’s outstanding September 2009 Notes as follows:

 

(i)             Section 1.3 of each September 2009 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Payment of Principal; No Prepayment.  The principal amount hereof and all accrued interest hereon shall be paid in full in cash on the Maturity Date or, if earlier, upon acceleration or redemption of this Note in accordance with the terms hereof.  Notwithstanding the foregoing, at any time after the one year anniversary of the Issuance Date, the Holder shall have the right, upon the delivery to the Company of a written instrument, allowing such prepayment, signed by the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including Notes that have been issued by way of payment in kind), upon ten (10) days prior written notice to the Maker, to require the Maker to redeem the Notes by paying to the Holders in cash, the then-outstanding principal amount of the Notes plus accrued and unpaid interest through the date of such redemption.  Any amount of principal repaid hereunder may not be reborrowed.  Except as set forth in Section 3.6, the Maker may not prepay any portion of the principal amount of this Note without the prior written consent of the Holder, which may be withheld in the Holder’s sole and absolute discretion.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it receives a written instrument allowing prepayment from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind.”

 

  

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(ii)            Section 2.2 of each September 2009 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Remedies Upon An Event of Default.  If an Event of Default shall have occurred and shall be continuing, the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including Notes that have been issued as payment in kind) may, at any time, at their option declare the entire unpaid principal balance of the Notes, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that following such a declaration made in the manner and by the Holders contemplated above, each Holder may, in its sole and absolute discretion, (a) demand the redemption of the Notes pursuant to Section 3.6(a) hereof (to the extent permitted by Section 3.6(a) hereof), (b) demand that the principal amount of the Notes then outstanding and all accrued and unpaid interest thereon shall be converted into shares of Common Stock at the Conversion Price per share on the Trading Day immediately preceding the date the Holders demand conversion pursuant to this clause, or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note, the Purchase Agreement, the other Transaction Documents or applicable law; provided, further, however, that upon the occurrence of an Event of Default described in clauses (k) or (l), the entire unpaid principal balance of the Notes, together with all interest accrued hereon, shall automatically become due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  No course of delay on the part of one or more Holders required pursuant to the terms hereof shall operate as a waiver thereof or otherwise prejudice the rights of the Holder(s).  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.”

 

(iii)           Section 3.5 of each September 2009 Note is hereby amended, such that immediately following the Effective Time, the following sentence is added to the end of such section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share, the Conversion Price will be adjusted to the par value of the Common Stock.”

 

  

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(iv)           Sections 3.6(a), (b) and (c) of each September 2009 Note is hereby amended, such that immediately following the Effective Time, the provisions, as amended, shall read, in its entirety:

 

“(a)     Prepayment Upon an Event of Default.  Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; the Holder shall have the right, at the Holder’s option, to require the Maker to prepay all or a portion of this Note in cash at a price equal to the sum of (i) the greater of (A) one hundred percent (100%) of the aggregate principal amount of this Note plus all accrued and unpaid interest and (B) the aggregate principal amount of this Note plus all accrued but unpaid interest hereon, divided by the Conversion Price on (x) the date the Prepayment Price (as defined below) is demanded or otherwise due or (y) the date the Prepayment Price is paid in full, whichever is less, multiplied by the Daily VWAP on (x) the date the Prepayment Price is demanded or otherwise due, and (y) the date the Prepayment Price is paid in full, whichever is greater; provided that if the Event of Default is under Section 2.1(l) or (k) of this Note, the Daily VWAP shall be as of the date immediately prior to the occurrence of such Event of Default, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note and the other Transaction Documents (the “Prepayment Price”). The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind, declaring that an Event of Default has occurred.”

 

  

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“(b)   Mechanics of Prepayment at Option of Holder in Connection with a Change of Control. No sooner than fifteen (15) days nor later than ten (10) days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Change of Control”) to the Holder of this Note and to each Other Holder of the Other Notes. At any time after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered at least ten (10) days prior to a Change of Control, at any time within ten (10) days prior to a Change of Control) and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any holder of the Notes then outstanding may, require the Maker to prepay, effective immediately prior to the consummation of such Change of Control, all of the holder’s Notes then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Change of Control”) to the Maker, which Notice of Prepayment at Option of Holder Upon Change of Control shall indicate (i) the principal amount of the Notes that such holder is electing to have prepaid and (ii) the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Change of Control from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time. The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the combined principal amount of the then outstanding Notes,  including the Notes that have been issued by way of payment of interest in kind, declaring that a Change of Control, and therefore an Event of Default, has occurred.”

 

“(c)    Mechanics of Prepayment at Option of Holder Upon Other Event of Default. Within one (1) business day after the occurrence of an Event of Default other than a Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Event of Default”) to each Holder of the Notes. At any time after the earlier of a Holder’s receipt of a Notice of Event of Default and such Holder becoming aware of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding Notes (including the Notes that have been issued by way of payment of interest in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any Holder of this Note may, require the Maker to prepay all (but not less than all) of the Notes held by such Holder by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Event of Default”) to the Maker, which Notice of Prepayment at Option of Holder Upon Event of Default shall indicate the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Event of Default from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding Notes, including the Notes that have been issued by way of payment of interest in kind, declaring that an Event of Default has occurred.”

 

  

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(b)           The Company and the undersigned holders, representing the required threshold to amend the provisions of the September 2009 Notes, hereby consent to, and acknowledge that, upon the Effective Time, the 2012 Notes shall be senior in all respects, and the right of payment in respect of the September 2009 Notes shall be subordinate and subject in right of payment to the prior right of payment in full enjoyed by the holders of the 2012 Notes in respect of such 2012 Notes.

 

12.     Amendment to the 2010 Notes.

 

(a)           The Company and the undersigned holders, representing the required threshold to amend the provisions of each 2010 Note, hereby agree to amend all of the Company’s outstanding 2010 Notes as follows:

 

(i)             Section 1.3 of each 2010 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety (for the purpose of this amended provision, where “[B/C/D/E] Notes” is displayed in the text below, it will refer to whichever class of note is being amended (i.e., [B/C/D/E] Notes as amended in the B Note shall mean the B Note, [B/C/D/E] Notes as amended in the C Note shall mean the C Note, etc.)):

 

“Payment of Principal; No Prepayment. The principal amount hereof and all accrued and unpaid interest hereon shall be paid in full in cash on the Maturity Date or, if earlier, upon acceleration or redemption of this Note in accordance with the terms hereof.  Notwithstanding the foregoing, at any time after the two year anniversary of the Issuance Date, the Holder shall have the right, upon the delivery to the Company of a written instrument, allowing such prepayment, signed by the Holders holding at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind and the [B/C/D/E] Notes issuable upon exercise of warrants (for clarity, even if any such warrants have not yet been exercised, the underlying [B/C/D/E] Notes will be considered outstanding for this purpose)),  upon ten (10) days prior written notice to the Maker, to require the Maker to redeem the [B/C/D/E] Notes by paying to the Holders in cash, the then-outstanding principal amount of the Notes plus accrued and unpaid interest through the date of such redemption.  Any amount of principal repaid hereunder may not be reborrowed.  The Maker may not prepay any portion of the principal amount of this Note without the prior written consent of the Holder, which may be withheld in the Holder’s sole and absolute discretion.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it receives a written instrument allowing prepayment from the Holders of at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes, including the [B/C/D/E] Notes that have been issued by way of payment of interest in kind.”

 

  

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(ii)            Section 2.2 of each 2010 Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety (for the purpose of this amended provision, where “[B/C/D/E] Notes” is displayed in the text below, it will refer to whichever class of note is being amended (i.e., [B/C/D/E] Notes as amended in the B Note shall mean the B Note, [B/C/D/E] Notes as amended in the C Note shall mean the C Note, etc.)):

 

“Remedies Upon An Event of Default.  Upon the occurrence of any Event of Default, the Maker shall, as promptly as possible but in any event within one (1) Trading Day of the occurrence of such Event of Default, notify the Holder of the occurrence of such Event of Default, describing the event or factual situation giving rise to the Event of Default and specifying the relevant subsection or subsections of Section 2.1 hereof under which such Event of Default has occurred.  If an Event of Default shall have occurred and shall be continuing, the Holders holding at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind) may, at any time, at their option declare the entire unpaid principal balance of the [B/C/D/E] Notes, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that following such a declaration made in the manner and by the Holders contemplated above, each Holder may, in its sole and absolute discretion, (a) demand the redemption of the [B/C/D/E] Notes pursuant to Section 3.6(a) hereof, (b) demand that the principal amount of the [B/C/D/E] Notes then outstanding and all accrued and unpaid interest thereon shall be converted into shares of Common Stock at the Conversion Price per share on the Trading Day immediately preceding the date the Holders demand conversion pursuant to this clause, or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this Note, the Purchase Agreement, the other Transaction Documents or applicable law; provided, further, however, that upon the occurrence of an Event of Default described in clauses (k) or (l), the entire unpaid principal balance of the [B/C/D/E] Notes, together with all interest accrued hereon, shall automatically become due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  No course of delay on the part of one or more Holders required pursuant to the terms hereof shall operate as a waiver thereof or otherwise prejudice the rights of the Holder(s).  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.”

 

  

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(iii)           Section 3.5 of each 2010 Note is hereby amended, such that immediately following the Effective Time, the following sentence shall be added to the end of this section:

 

“Notwithstanding the foregoing, in no event shall any adjustment pursuant to the terms hereof reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share.  In the event that an adjustment pursuant to the terms hereof would, absent this provision, reduce the Conversion Price to a price per share of Common Stock that is lower than the par value of such a share, the Conversion Price will be adjusted to the par value of the Common Stock”

 

(iv)           Sections 3.6(a), (b) and (c) of each 2010 Note is hereby amended, such that immediately following the Effective Time, the provisions, as amended, shall read, in its entirety (for the purpose of this amended provision, where “[B/C/D/E] Notes” is displayed in the text below, it will refer to whichever class of note is being amended (i.e., [B/C/D/E] Notes as amended in the B Note shall mean the B Note, [B/C/D/E] Notes as amended in the C Note shall mean the C Note, etc.)):

 

“(a)    Prepayment Upon an Event of Default.  Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; the Holder shall have the right, at the Holder’s option, to require the Maker to prepay all or a portion of this Note in cash at a price equal to the sum of (i) the greater of (A) one hundred percent (100%) of the aggregate principal amount of this Note plus all accrued and unpaid interest and (B) (I) the aggregate principal amount of this Note plus all accrued but unpaid interest hereon, divided by (II) the Conversion Price on (x) the date the Prepayment Price (as defined below) is demanded or otherwise due or (y) the date the Prepayment Price is paid in full, whichever is less, multiplied by (III) the Daily Closing Price on (1) the date the Prepayment Price is demanded or otherwise due, or (2) the date the Prepayment Price is paid in full, or (3) the date immediately prior to the occurrence of such Event of Default, whichever is greatest, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this Note and the other Transaction Documents (the “Prepayment Price”).  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind and the [B/C/D/E] Notes issuable upon exercise of warrants (for clarity, even if any such warrants have not yet been exercised, the underlying [B/C/D/E] Notes will be considered outstanding for this purpose)), declaring that an Event of Default has occurred.”

 

  

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“(b)    Mechanics of Prepayment at Option of Holder in Connection with a Change of Control.  No sooner than fifteen (15) days prior to nor later than ten (10) days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Change of Control”) to the Holder of this Note and to each Other Holder of the Other Notes.  At any time after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered at least ten (10) days prior to a Change of Control, at any time within ten (10) days prior to a Change of Control) and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any holder of the Notes then outstanding may, require the Maker to prepay, effective immediately prior to the consummation of such Change of Control, all of the holder’s Notes then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Change of Control”) to the Maker, which Notice of Prepayment at Option of Holder Upon Change of Control shall indicate (i) the principal amount of the Notes that such holder is electing to have prepaid and (ii) the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Change of Control from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time. The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the combined principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind and the [B/C/D/E] Notes issuable upon exercise of warrants (for clarity, even if any such warrants have not yet been exercised, the underlying [B/C/D/E] Notes will be considered outstanding for this purpose)), declaring that a Change of Control, and therefore an Event of Default, has occurred.”

 

  

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“(c)    Mechanics of Prepayment at Option of Holder Upon Other Event of Default. Within one (1) Trading Day after the occurrence of an Event of Default other than a Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Event of Default”) to each Holder of the Notes. At any time after the earlier of a Holder’s receipt of a Notice of Event of Default and such Holder becoming aware of an Event of Default and after receiving a written notice from Company indicating that the Company received written notice from the Holders holding at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind) declaring that: (A) an Event of Default has occurred; and (B) the Holders may take any action they are legally entitled to take; any Holder of this Note may, require the Maker to prepay all (but not less than all) of the Notes held by such Holder by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Event of Default”) to the Maker, which Notice of Prepayment at Option of Holder Upon Event of Default shall indicate the applicable Prepayment Price, as calculated pursuant to Section 3.6(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Event of Default from more than one Holder of the Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.6, the Maker shall prepay from each Holder of the Notes electing to have its Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the Notes held by such Holder relative to the principal amount of the Notes outstanding) of all the Notes being prepaid at such time. The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two-thirds of the principal amount of the then outstanding [B/C/D/E] Notes (including [B/C/D/E] Notes that have been issued by way of payment in kind and the [B/C/D/E] Notes issuable upon exercise of warrants (for clarity, even if any such warrants have not yet been exercised, the underlying [B/C/D/E] Notes will be considered outstanding for this purpose)), declaring that an Event of Default has occurred.”

 

(b)           The Company and the undersigned holders, representing the required threshold to amend the provisions of each of the 2010 Notes, hereby consent to, and acknowledge that, upon the Effective Time, the 2012 Notes shall be senior in all respects, and the right of payment in respect of each of the 2010 Notes shall be subordinate and subject in right of payment to the prior right of payment in full enjoyed by the holders of the 2012 Notes in respect of such 2012 Notes.

 

  

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13.     Amendment to the 2011 Notes.

 

(a)           The Company and the undersigned holders, representing the required threshold to amend the provisions of each 2011 Note, hereby agree to amend all of the Company’s outstanding 2011 Notes as follows:

 

(i)             Section 1.3(c) of each G Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“The Maker shall have the obligation, upon the  written notice of the Holders of at least two-thirds of the combined principal amount of the then outstanding G Notes, including the G Notes that have been issued by way of payment of interest in kind and the G Notes issuable upon exercise of the warrants for the purchase of additional G Notes (for clarity, the underlying G Notes of unexercised warrants for the purchase of additional G Notes will be considered outstanding for purposes of this section), and upon the written notice of the Holder of this Note, to redeem all or any portion of this G Note by paying to the Holder, within ten (10) calendar days from the date such notice is sent, in cash, the portion of the then-outstanding principal amount of this G Note, plus accrued and unpaid interest through the date of such redemption, as specified in the notice (the “Put Option”).  Any such notices shall be effective only if delivered to the Maker on or after September 9, 2012.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it receives such notice of the exercise of the Put Option from the Holders of at least two-thirds of the principal amount of the then outstanding G Notes, including the G Notes that have been issued by way of payment of interest in kind and the G Notes issuable upon exercise of the warrants for the purchase of additional G Notes.”

 

  

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(ii)            Section 1.3(c) of each H Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“The Maker shall have the obligation, upon the written notice of the Holders of at least two-thirds of the principal amount of the then outstanding H Notes, including H Notes that have been issued by way of payment of interest in kind and the H Notes issuable upon the exercise of the warrants for the purchase of additional H Notes (for clarity, the underlying H Notes of unexercised warrants for the purchase of additional H Notes will be considered outstanding for this purpose), and upon the written notice of the Holder of this Note, to redeem all or any portion of the this Note by paying to the Holder, within ten (10) calendar days from the date such notice is sent, in cash, the portion of the then-outstanding principal amount of this H Note, plus accrued and unpaid interest through the date of such redemption, as specified in the notice (the “Put Option”).  Any such notices shall be effective only if delivered to the Maker on or after March 9, 2012.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it receives such notice of the exercise of the Put Option from the Holders of at least two-thirds of the principal amount of the then outstanding H Notes, including the H Notes that have been issued by way of payment of interest in kind and the H Notes issuable upon exercise of the warrants for the purchase of additional H Notes.”

 

(iii)           A new Section 1.3(d) will be added to each H Note that was originally issued pursuant to the September 2011 Purchase Agreement (for clarity, this provision will not be added to H Notes that have been issued by way of payment in kind), such that immediately following the Effective Time, the new provision shall read, in its entirety:

 

“This Note will be paid in full in cash on March 30, 2012, with the cash that is held in the Cash Collateral Account.”

 

  

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(iv)           Section 2.2 of each G Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Remedies Upon An Event of Default.  Upon the occurrence of any Event of Default, the Maker shall, as promptly as possible but in any event within one (1) Trading Day of the occurrence of such Event of Default, notify the Holder of the occurrence of such Event of Default, describing the event or factual situation giving rise to the Event of Default and specifying the relevant subsection or subsections of Section 2.1 hereof under which such Event of Default has occurred.  If an Event of Default shall have occurred and shall be continuing, the Agent, at any time prior to the full release of the security interest in the Collateral, and thereafter, the Holder of this G Note, after receiving a written notice from the Holders of at least two thirds of the combined principal amount of the then outstanding G Notes, including the G Notes that have been issued by way of payment of interest in kind and the G Notes issuable upon exercise of the warrants for the purchase of additional G Notes (for clarity, the underlying G Notes of unexercised warrants for the purchase of additional G Notes will be considered outstanding for purposes of this section) declaring that an Event of Default has occurred and that the Holders may exercise their rights under this Section 2.2, may at any time declare the entire unpaid principal balance of this G Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that upon the occurrence of an Event of Default described above, the Agent, at any time prior to the full release of the security interest in the Collateral, and thereafter, the Holder, in each case in its sole and absolute discretion, may: (a) demand the redemption of this G Note pursuant to Section 3.5(a) hereof; (b) demand that the principal amount of this G Note then outstanding and all accrued and unpaid interest thereon shall be converted into shares of Common Stock at the Conversion Price per share on the Trading Day immediately preceding the date the Holder demands conversion pursuant to this clause; or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this G Note, the Purchase Agreement, the other Transaction Documents or applicable law; provided, further, however, that upon the occurrence of an Event of Default described in clauses (k) or (l), the entire unpaid principal balance of the G Notes, together with all interest accrued hereon, shall automatically become due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  No course of delay on the part of the Agent or Holder shall operate as a waiver thereof or otherwise prejudice the rights of the Agent or Holder.  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.  Prior to the full release of the security interest in the Collateral, all payments received by Holder in respect of the Collateral shall be received in trust on behalf of the Agent for the benefit of all Holders of G Notes, H Notes and I Notes, shall be segregated from other funds of Holder, and shall be forthwith paid over to the Agent in the same form as so received (with any necessary endorsement).  For purposes of this G Note, the term “I Notes” shall mean those Senior Secured Convertible Promissory Notes of the Maker, issued pursuant to that certain Securities Purchase Agreement, dated March 28, 2012 (the “2012 Purchase Agreement”), including any additional Senior Secured Convertible Promissory Notes issued in kind or upon exercise of those debt warrants issued pursuant to the 2012 Purchase Agreement.”

 

  

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(v)            Section 2.2 of each H Note is hereby amended, such that immediately following the Effective Time, the provision, as amended, shall read, in its entirety:

 

“Remedies Upon An Event of Default.  Upon the occurrence of any Event of Default, the Maker shall, as promptly as possible but in any event within one (1) Trading Day of the occurrence of such Event of Default, notify the Holders of the occurrence of such Event of Default, describing the event or factual situation giving rise to the Event of Default and specifying the relevant subsection or subsections of Section 2.1 hereof under which such Event of Default has occurred.  If an Event of Default shall have occurred and shall be continuing, the Agent, at any time prior to the full release of the security interest in the Collateral, and thereafter, the Holder of this H Note, after receiving a written notice from the Holders of at least two thirds of the combined principal amount of the then outstanding H Notes, including the H Notes that have been issued by way of payment of interest in kind and the H Notes issuable upon exercise of the warrants for the purchase of additional H Notes (for clarity, the underlying H Notes of unexercised warrants for the purchase of additional H Notes will be considered outstanding for purposes of this section) declaring that an Event of Default has occurred and that the Holders may exercise their rights under this Section 2.2, may at any time may at any time declare the entire unpaid principal balance of this H Note, together with all interest accrued hereon, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that upon the occurrence of an Event of Default described above, the Agent, at any time prior to the full release of the security interest in the Collateral, and thereafter, the Holder, in each case in its sole and absolute discretion, may: (a) demand the redemption of this H Note pursuant to Section 3.5(a) hereof; (b) demand that the principal amount of this H Note then outstanding and all accrued and unpaid interest thereon shall be converted into shares of Common Stock at the Conversion Price per share on the Trading Day immediately preceding the date the Holder demands conversion pursuant to this clause; or (c) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this H Note, the Purchase Agreement, the other Transaction Documents or applicable law; provided, further, however, that upon the occurrence of an Event of Default described in clauses (k) or (l), the entire unpaid principal balance of the H Notes, together with all interest accrued hereon, shall automatically become due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker.  No course of delay on the part of the Agent or Holder shall operate as a waiver thereof or otherwise prejudice the rights of the Agent or Holder.  No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.  Prior to the full release of the security interest in the Collateral, all payments received by Holder in respect of the Collateral shall be received in trust on behalf of the Agent for the benefit of all Holders of G Notes, H Notes and I Notes, shall be segregated from other funds of Holder, and shall be forthwith paid over to the Agent in the same form as so received (with any necessary endorsement).  For purposes of this Note, the term “I Notes” shall mean those Senior Secured Convertible Promissory Notes of the Maker, issued pursuant to that certain Securities Purchase Agreement, dated March 28, 2012 (the “2012 Purchase Agreement”), including any additional Senior Secured Convertible Promissory Notes issued in kind or upon exercise of those debt warrants issued pursuant to the 2012 Purchase Agreement.”

 

  

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(vi)           Sections 3.4 (a)(viii) and 3.4(a)(x) of each G Note shall be deleted in their entirety and replaced with “[Reserved]”.

 

(vii)          Sections 3.5(a), (b) and (c) of each 2011 Note are hereby amended, such that immediately following the Effective Time, the provisions, as amended, shall read, in its entirety as stated below(for the purpose of this amended provision, where “[G/H] Notes” is displayed in the text below, it will refer to whichever class of note is being amended (i.e., [G/H] Notes as amended in the G Note shall mean the G Note, [G/H] Notes as amended in the H Note shall mean the H Note, etc.)):

 

“(a)   Prepayment Upon an Event of Default. Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default, the Agent, at any time prior to the full release of the security interest in the Collateral, and thereafter, the Holder, shall have the right, after receiving a written notice from the Holders of at least two thirds of the combined principal amount of the then outstanding [G/H] Notes, including the [G/H] Notes that have been issued by way of payment of interest in kind and the Notes issuable upon exercise of warrants to purchase additional [G/H] Notes (for clarity, the underlying [G/H] Notes of unexercised warrants to purchase additional [G/H] Notes will be considered outstanding for purposes of this section) declaring that an Event of Default has occurred and the Holders may exercise their rights under this Section 3.5(a), at the Holder’s option to require the Maker to prepay all or a portion of this [G/H] Note in cash at a price equal to the sum of (i) the greater of (A) one hundred percent (100%) of the aggregate principal amount of this [G/H] Note plus all accrued and unpaid interest and (B) (I) the aggregate principal amount of this [G/H] Note plus all accrued but unpaid interest hereon, divided by (II) the Conversion Price on (x) the date the Prepayment Price (as defined below) is demanded or otherwise due or (y) the date the Prepayment Price is paid in full, whichever is less, multiplied by (III) the Daily Closing Price on (1) the date the Prepayment Price is demanded or otherwise due, or (2) the date the Prepayment Price is paid in full, or (3) the date immediately prior to the occurrence of such Event of Default, whichever is greatest, and (ii) all other amounts, costs, expenses and liquidated damages due in respect of this [G/H] Note and the other Transaction Documents (the “Prepayment Price”).  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least two thirds of the combined principal amount of the then outstanding [G/H] Notes, including the [G/H] Notes that have been issued by way of payment of interest in kind and the [G/H] Notes issuable upon exercise of the warrants to purchase additional [G/H] Notes declaring that an Event of Default has occurred.”

 

  

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“(b)   Mechanics of Prepayment at Option of Holder in Connection with a Change of Control. No sooner than fifteen (15) days prior to nor later than ten (10) days prior to the consummation of a Change of Control, but not prior to the public announcement of such Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Change of Control”) to the Holder of this Note and to each Other Holder of the Other Notes. At any time after receipt of a Notice of Change of Control (or, in the event a Notice of Change of Control is not delivered at least ten (10) days prior to a Change of Control, at any time within ten (10) days prior to a Change of Control), any holder of the Notes then outstanding may, after receiving a written notice from Company indicating that the Company received written notice from the Holders of at least two thirds of the combined principal amount of the then outstanding [G/H] Notes, including the [G/H] Notes that have been issued by way of payment of interest in kind and the [G/H] Notes issuable upon exercise of the warrants to purchase additional [G/H] Notes (for clarity, the underlying [G/H] Notes of unexercised warrants to purchase additional [G/H] Notes will be considered outstanding for purposes of this section) declaring that a Change of Control has occurred and that the Holders may exercise their rights under this Section 3.5(b), require the Maker to prepay, effective immediately prior to the consummation of such Change of Control, all of the holder’s [G/H] Notes then outstanding by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Change of Control”) to the Maker, which Notice of Prepayment at Option of Holder Upon Change of Control shall indicate (i) the principal amount of the [G/H] Notes that such holder is electing to have prepaid and (ii) the applicable Prepayment Price, as calculated pursuant to Section 3.5(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Change of Control from more than one Holder of the [G/H] Notes and the Maker can prepay some, but not all, of the Notes pursuant to this Section 3.5, the Maker shall prepay from each Holder of the [G/H] Notes electing to have its [G/H] Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the [G/H] Notes held by such Holder relative to the principal amount of the [G/H] Notes outstanding) of all the [G/H] Notes being prepaid at such time.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least a majority of the combined principal amount of the then outstanding [G/H] Notes,  including the [G/H] Notes that have been issued by way of payment of interest in kind and the [G/H] Notes issuable upon exercise of the warrants to purchase additional [G/H] Notes declaring that a Change of Control has occurred.”

 

  

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“(c)    Mechanics of Prepayment at Option of Holder Upon Other Event of Default. Within one (1) Trading Day after the occurrence of an Event of Default other than a Change of Control, the Maker shall deliver written notice thereof via facsimile and overnight courier (“Notice of Event of Default”) to each Holder of the [G/H] Notes. At any time after the earlier of a Holder’s receipt of a Notice of Event of Default and such Holder becoming aware of an Event of Default, any Holder of this [G/H] Note may, after receiving a written notice from the Holders of at least two thirds of the combined principal amount of the then outstanding [G/H] Notes, including the [G/H] Notes that have been issued by way of payment of interest in kind and the Notes issuable upon exercise of warrants to purchase additional [G/H] Notes (for clarity, the underlying [G/H] Notes of unexercised warrants to purchase additional [G/H] Notes will be considered outstanding for purposes of this section) declaring that an Event of Default has occurred and that the Holders may exercise their rights under this Section 3.5(c), require the Maker to prepay all (but not less than all) of the Notes held by such Holder by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of Holder Upon Event of Default”) to the Maker, which Notice of Prepayment at Option of Holder Upon Event of Default shall indicate the applicable Prepayment Price, as calculated pursuant to Section 3.5(a) above. In the event the Maker receives a Notice of Prepayment at Option of Holder Upon Event of Default from more than one Holder of the [G/H] Notes and the Maker can prepay some, but not all, of the [G/H] Notes pursuant to this Section 3.5, the Maker shall prepay from each Holder of the [G/H] Notes electing to have its [G/H] Notes prepaid at such time an amount equal to such Holder’s pro-rata amount (based on the principal amount of the [G/H] Notes held by such Holder relative to the principal amount of the [G/H] Notes outstanding) of all the [G/H] Notes being prepaid at such time.  The Company shall provide the Holders written notice within one (1) Trading Day from the date that it received written notice from the Holders of at least a majority of the combined principal amount of the then outstanding [G/H] Notes, including the [G/H] Notes that have been issued by way of payment of interest in kind and the [G/H] Notes issuable upon exercise of the warrants to purchase additional [G/H] Notes declaring that a Change of Control has occurred.”

 

(vi)  Section 3.4(a) of each 2011 Note is hereby amended, such that immediately following the Effective Time, the following sentence is added at the end of such section:

 

“Until the Note has been paid in full or converted in full, the Conversion Price shall be subject to adjustment from time to time as set forth below (but shall not be increased, other than pursuant to Section 3.4(a)(i) hereof); provided, however, that if any adjustment would cause the Conversion Price to be below the par value of the Company’s Common Stock, which is $0.001 per share (“Par Value”), then the Conversion Price shall adjust to Par Value.”

 

  

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(b)           The Company and the undersigned holders, representing the required threshold to amend the provisions of each of the 2011 Notes, hereby consent to, and acknowledges that, upon the Effective Time, the 2012 Notes shall be pari passu in all respects with each of the G Notes and each of the H Notes, and the right of payment in respect of the 2011 Notes shall be pari passu with the right of payment enjoyed by the holders of the 2012 Notes in respect of such 2012 Notes.

 

14. Additional Conversion Limitations of Existing Notes.

 

(a)           For the purpose of amending the conversion limitation section in each of the Existing Notes described in this Section 14, the Company and each of the undersigned holders, representing the required threshold to amend the provisions of the currently outstanding June 2008 Notes, April 2009 Notes, July 2009 Notes, September 2009 Notes, 2010 Notes and 2011 Notes hereby agree to amend and restate Section 3.1(c) of each, such that, immediately following the Effective Time, such provisions shall read, in their entirety as provided in the following subsection (i):

 

(i)             This Note has limitations as to the amount of principal that can be converted by the Holder during certain periods of time.  See Section 14(b) of the Amendment Agreement dated March 28, 2012 for the conversion limitation governing this Note.

 

(b)           The conversion limitations for each of the currently outstanding June 2008 Notes, April 2009 Notes, July 2009 Notes, September 2009 Notes, 2010 Notes and 2011 Notes are as follows:

 

(i)             Each Existing Note shall not be convertible by the Holder on any day until one complete Conversion Week has elapsed since the Effective Time.  Each Existing Note shall only be convertible by the Holder on any day to the extent that such conversion does not exceed the Conversion Cap during the Limitation Period, as described below.

 

(ii)            “Limitation Period” shall mean the period of time commencing at the time of the First Closing and ending on the date that is the earlier of:  (i) 30 days prior to the Maturity Date of such Existing Note; or (ii) the date the Company enters into any agreement, without obtaining written approval by the Holders of more than a majority of the principal amount of the 2012 Notes, including the 2012 Notes that have been issued by way of payment of interest in kind and the 2012 Notes issuable upon exercise of the Purchase Options (for clarity, even if the Purchase Options have not been exercised, the underlying 2012 Notes will still be considered outstanding for this purpose), with respect to any capital-raising transaction or offer to sell to, issue to or exchange with (or make any other type of distribution to) any third party or parties: (x) Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, including convertible debt securities; or (y) any instrument representing liabilities for borrowed money.  During the Limitation Period, the Holder hereby agrees that such Holder will not convert any Existing Note on any day of a Monday through Sunday calendar week (each a "Conversion Week") to the extent that, together with all prior conversions under the Outstanding Notes (as defined below except without the 5X Adjustment, 50X Adjustment or Prior/New Note Adjustment) during such Conversion Week, if any, the total principal amount of the Outstanding Notes (as defined below except without the 5X Adjustment, 50X Adjustment or Prior/New Note Adjustment) that has been converted during such Conversion Week (rounded to the nearest $0.01) exceeds the product of (a) the outstanding principal amount of the Outstanding Notes (as defined below), multiplied by (b) the Conversion Cap for such Conversion Week.

 

  

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(iii)           In determining the "Conversion Cap" for any Conversion Week, if the quotient of (A) the VWCP (as adjusted to reflect any stock splits, stock dividends or similar recapitalizations occurring on or before the Conversion Date) for the three Trading Days during the previous Monday through Sunday calendar week ending on the last Trading Day prior to the applicable Conversion Week, divided by (B) the applicable Conversion Price of this Note on the first Trading Day of such Conversion Week is:  (1) less than one, then the Conversion Cap shall be 0%; (2) greater than or equal to one and less than two, then the Conversion Cap shall be 0.00850%; (3) greater than or equal to two and less than three, then the Conversion Cap shall be 0.01700%; (4) greater than or equal to three and less than four, then the Conversion Cap shall be 0.03230%; (5) greater than or equal to four and less than five, then the Conversion Cap shall be 0.04760%; (6) greater than or equal to five and less than six, then the Conversion Cap shall be 0.06290%: (7) greater than or equal to six and less than seven, then the Conversion Cap shall be 0.07820%; (8) greater than or equal to seven and less than eight, then the Conversion Cap shall be 0.09350%; (9) greater than or equal to eight and less than nine, then the Conversion Cap shall be 0.10880%; (10) greater than or equal to nine and less than ten, then the Conversion Cap shall be 0.12410%; (11) greater than or equal to ten and less than eleven, then the Conversion Cap shall be 0.13940%; (12) greater than or equal to eleven and less than twelve, then the Conversion Cap shall be 0.17000%; (13) greater than or equal to twelve and less than thirteen, then the Conversion Cap shall be 0.25500%; (14) greater than or equal to thirteen and less than fourteen, then the Conversion Cap shall be 0.34000%; (15) greater than or equal to fourteen and less than fifteen, then the Conversion Cap shall be 0.42500%; (16) greater than or equal to fifteen and less than sixteen, then the Conversion Cap shall be 0.51000%; (17) greater than or equal to sixteen and less than seventeen, then the Conversion Cap shall be 0.59500%; (18) greater than or equal to seventeen and less than eighteen, then the Conversion Cap shall be 0.68000%; (19) greater than or equal to eighteen and less than nineteen, then the Conversion Cap shall be 0.76500%; (20) greater than or equal to nineteen and less than twenty, then the Conversion Cap shall be 0.85000%; or (21) greater than or equal to twenty, then the Conversion Cap shall be 0.93500%.  For purposes of this calculation, "Outstanding Notes" means all of the outstanding principal and interest due under the Company's 2012 Notes and Existing Notes (for clarity, the H Notes that are paid in full pursuant to Section 13(a)(iii) of this Agreement will not be considered Existing Notes for the purpose of this Outstanding Note definition) held by the Holder as of the First Closing, provided that:  (i) the outstanding balance (principal and accrued interest) due under the 2012 Notes shall, solely for this purpose, equal (A) five times the actual principal and interest amount due under such 2012 Notes, including 2012 Notes that have been issued by way of payment of interest in kind and (B) five times the amount of principal of 2012 Notes issuable to such Holder pursuant to such Holder’s exercise of its Purchase Options (the adjustments in this clause (i) to be referred to as the “5X Adjustment”); (ii) the outstanding balance (principal and accrued interest) due under the 2011 Notes shall, solely for this purpose, equal (I) fifty times the actual principal and interest amount due under such 2011 Notes, including convertible promissory notes that have been issued by way of payment of interest in kind and (II) fifty times the amount of principal of 2011 Notes issuable to such Holder upon exercise of the H Note Warrants and the Senior Secured Convertible Promissory G Note Purchase Warrant (the “G Warrant”) (the adjustments in this clause (ii) to be referred to as the “50X Adjustment”); and (iii) an additional outstanding principal balance (solely for the purpose of the Outstanding Notes definition) will be added to the Outstanding Notes, with such amount equal to the product of: (I) the lesser of: (A) the product of (y) the principal amount of the Notes purchased by the Holder in the First Closing (not including any Notes underlying the Purchase Option), multiplied by (z) 19; (B) the principal amount of Unsecured Notes held by the Holder at the First Closing; and (C) $1,200,000.00; multiplied by (II) 2.75 (the adjustments in this clause (iii) to be referred to as the “Prior/New Note Adjustment”).  By way of example only: (A) if the Holder is to purchase $1 million principal amount of 2012 Notes upon the First Closing of the Purchase Agreement, holds $5 million principal amount of 2011 Notes, a G Warrant to purchase $1 million principal of G Notes and $0.5 million principal amount of Unsecured Notes, then that Holder’s total outstanding principal of Outstanding Notes would be equal to $331.875 million (i.e., five times $1 million principal amount of the 2012 Notes (to be issued) plus five times the $5 million of principal amount of 2012 Notes underlying the Purchase Option (to be issued), plus fifty times $5 million principal of 2011 Notes, plus fifty times $1 million principal of G Notes underlying the G Warrant, plus $0.5 million principal amount of Unsecured Notes, plus $1.375 million of Unsecured Notes (by way of the Prior/New Note Adjustment)($0.5 million times 2.75)); and if the VWCP is then ten times the Conversion Price, then the Holder would be permitted to convert in that Conversion Week up to $462,633.75 principal amount of such holders notes (i.e., 0.1394% times $331,875,000); (B) if the Holder purchases $0 principal amount of 2012 Notes upon the First Closing of the Purchase Agreement, holds $5 million principal amount of 2011 Notes and $0.5 million principal amount of Unsecured Notes, then that Holder’s total outstanding principal of Outstanding Notes would be equal to $250.5 million (i.e., five times $0 principal amount of the 2012 Notes, plus five times $0 principal amount of 2012 Notes underlying the Purchase Option, plus fifty times $5 million principal of 2011 Notes, plus $0.5 million principal amount of Unsecured Notes, plus $0 for the Prior/New Note Adjustment); and if the VWCP is then ten times the Conversion Price, then the Holder would be permitted to convert in that Conversion Week up to $349,197 of such holders notes (i.e., 0.1394% times $250,500,000); (C) if the Holder purchases $0 principal amount of 2012 Notes upon the First Closing of the Purchase Agreement, holds $0 principal amount of 2011 Notes and $0.5 million principal amount of Unsecured Notes, then that Holder’s total outstanding principal of Outstanding Notes would be equal to $0.5 million (i.e., five times $0 principal amount of the 2012 Notes, plus five times $0 principal amount of Notes underlying the Purchase Option, plus fifty times $0 principal of 2011 Notes, plus $0.5 million principal amount of Unsecured Notes, plus $0 for the Prior/New Note Adjustment); and if the VWCP is then ten times the Conversion Price, then the Holder would be permitted to convert in that Conversion Week up to $697 of such holders notes (i.e., 0.1394% times $500,000); and (D) if the Holder purchases $0.1 million principal amount of Notes at the First Closing, holds $0 principal amount of 2011 Notes and $0.75 million principal amount of Unsecured Notes, then that Holder’s total outstanding principal amount of Outstanding Notes would be equal to $5.8125 million (i.e., five times $0.1 million principal amount of the Notes (to be issued), plus five times $0.5 million principal amount of Notes underlying the warrants to purchase additional Notes, plus fifty times $0 principal amount of 2011 Notes, plus $0.75 million principal amount of Unsecured Notes, plus $2.0625 million for the Prior/New Note Adjustment ($0.75 million times 2.75); and if the VWCP is then ten times the Conversion Price, then the Holder would be permitted to convert in that Conversion Week up to $8,102.63 of such Holder’s notes (i.e., 0.1394% times $5,812,500).

  

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15. Outstanding Securities.  Each undersigned Holder represents and warrants that as of the date hereof, such Holder holds the Company’s securities in the amounts set forth on such Holder’s signature page hereto.

 

16. Specific Performance; Consent to Jurisdiction; Venue.

 

(a)           The Company and the Holders acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached.  It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof without the requirement of posting a bond or providing any other security, this being in addition to any other remedy to which any of them may be entitled by law or equity.

 

(b)           The parties agree that venue for any dispute arising under this Agreement will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue.  The parties irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York.  The Company and each Holder consent to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing in this Section 15(b) shall affect or limit any right to serve process in any other manner permitted by law.  The Company and the Holders hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Agreement or the Existing Notes, shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party.  The parties hereby waive all rights to a trial by jury.

 

  

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17. Entire Agreement; Amendment. This Agreement contains the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein, neither the Company nor any Holder makes any representation, warranty, covenant or undertaking with respect to such matters, and this Agreement supersedes all prior understandings and agreements with respect to said subject matter, all of which are merged herein.  No provision of this Agreement may be waived or amended other than by a written instrument signed by the Company and the Requisite Purchasers (as defined in the 2012 Securities Purchase Agreement); provided, that if any of the rights under this Agreement of any party to any Outstanding Transaction Document are materially diminished or the obligations under this Agreement of any party to any Outstanding Transaction Document is materially increased by such waiver or amendment, in each case in a manner that is not similar in all material respects to the effect on the rights or obligations of other parties, then such waiver or amendment shall not be effective with respect to such adversely affected party without the written consent of such adversely affected party.  The parties hereto acknowledge that any amendment or waiver effected in accordance with this section shall be binding upon each such party (and their permitted assigns), including, without limitation, an amendment or waiver that has an adverse effect on any or all parties.  Except as amended herein, each of the Outstanding Transaction Documents shall remain in full force and effect.

 

18. Notices.  Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, by telecopy, facsimile or electronic transmission to the address(es) or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

	
If to the Company or its Subsidiaries:

	
Genta Incorporated

	 	
200 Connell Drive

	 	
Berkeley Heights, NJ 07922

	 	
Attention: Raymond P. Warrell, Jr., M.D.

	 	
Telephone No.: (908) 286-9800

	 	
Telecopy No.: (908) 464-1705

	 	
Email:Warrell@genta.com

	 	 
	 	 
	
with copies to:

	
Morgan, Lewis & Bockius LLP

	 	
502 Carnegie Center

	 	
Princeton, NJ 08540

	 	
Attention: Emilio Ragosa

	 	
Telephone No.: (609) 919-6633

	 	
Telecopy No.: (609) 919-6701

	 	
Email: eragosa@morganlewis.com

	 	 
	
If to any Holder:

	

At the address of such Holder set forth on Exhibit A to this Agreement, with copies to Holder’s counsel as set forth on  Exhibit A  or as specified in writing by such Holder, with a copy to:

	 	 
	
With a copy to:

	
Ropes & Gray LLP

	 	
Three Embarcadero Center

	 	
San Francisco, CA 94111

	 	
Attention: Ryan Murr

	 	
Telephone No.: (415) 315-6395

	 	
Telecopy No.: (415) 315-6365

	 	
Email: ryan.murr@ropesgray.com

 

  

34

  

 

Any party hereto may from time to time change its address for notices by giving written notice of such changed address to the other party hereto.

 

19. Waivers.  No waiver by a party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

 

20. Headings.  The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

 

21. Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.  The Holders may assign the rights under this Agreement without the consent of the Company.

 

22. No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

23. Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction.  This Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

 

24. Counterparts.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart.

 

25. Publicity.  The Company agrees that it will not disclose, and will not include in any public announcement, the names of the Holders without the consent of the Holders, which consent shall not be unreasonably withheld or delayed, or unless and until such disclosure is required by law, rule or applicable regulation, and then only to the extent of such requirement.  Notwithstanding the foregoing, the Holders consent to being identified in any filings the Company makes with the SEC to the extent required by law or the rules and regulations of the SEC.

 

  

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26. Severability.  The provisions of this Agreement are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement and this Agreement shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

 

27. Further Assurances.  From and after the date of this Agreement, upon the request of the Holders or the Company, the Company and each Holder shall execute and deliver such instruments, documents and other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

 

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IN WITNESS WHEREOF, the parties have caused this NOTE CONVERSION AND AMENDMENT AGREEMENT to be executed as of the Effective Date.

 

	 	

GENTA INCORPORATED

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	
Name:         Raymond P. Warrell, Jr., M.D.

	 
	 	
Title:           Chairman and Chief Executive Officer

	 

 

[SIGNATURE PAGES CONTINUE]

 

  

  

  

 

[HOLDER SIGNATURE PAGES TO THE

AMENDMENT AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Note Conversion and Amendment Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

	Name of Holder:	 

 

	Signature of Authorized Signatory of Holder:	 

 

	Name of Authorized Signatory:	 

 

	Title of Authorized Signatory:	 

 

	Email Address of Holder:	 

 

	Fax Number of Holder:	 

 

	Principal Amount of June 2008 Notes Currently Held:	 

 

	Principal Amount of September 2011 Notes Currently Held:	 

 

	Principal Amount of April 2012 Notes Currently Held:	 

 

	Principal Amount of B Notes Currently Held:	 

 

	Principal Amount of C Notes Currently Held:	 

 

	Principal Amount of D Notes Currently Held:	 

 

	Principal Amount of E Notes Currently Held:	 

 

	Principal Amount of G Notes Currently Held:	 

 

	Principal Amount of H Notes Currently Held:	 

 

	Address for Notice of Holder:	 

 

 

 

Address for Delivery of Securities for Holder (if not same as address for notice):

 

  

  

  

 

EXHIBIT A

 

HOLDERSex10-3.htm

Exhibit 10.3

 

 

 

AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

 

Dated as of March 30, 2012

 

between

 

THE GRANTORS REFERRED TO HEREIN

 

as Grantors

 

and

 

TANG CAPITAL PARTNERS, L.P.

 

as Agent

 

  

  

  

 

AMENDED AND RESTATED GENERAL SECURITY AGREEMENT

 

Amended and Restated General Security Agreement dated as of March 30, 2012 (the “Agreement”) between Genta Incorporated, a Delaware corporation (the “Company”), the other Persons listed on the signature pages hereof as Grantors and the Additional Grantors (as defined in Section 18) (the Company, the Persons so listed and the Additional Grantors being, collectively, the “Grantors”) and Tang Capital Partners, L.P., as agent (together with any successor agent, the “Agent”) for the Purchasers (as defined in the Securities Purchase Agreements (as defined below)). This Agreement amends and restates in its entirety that certain General Security Agreement dated as of September 9, 2011 between the Grantors and Agent for certain of the Purchasers (the “Existing Security Agreement”).     

 

Preliminary Statements

 

A.           The Company has entered into a securities purchase agreement dated as of September 2, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2011 Securities Purchase Agreement”) with the Purchasers party thereto and the Agent and a Securities Purchase Agreement dated as of March 28, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2012 Securities Purchase Agreement” and collectively with the 2011 Securities Purchase Agreement, the “Securities Purchase Agreements”) with the Purchasers party thereto and the Agent.  For purposes of this Agreement, the term “Notes” shall mean (i) the Senior Secured Convertible Promissory Notes issued pursuant to the 2011 Securities Purchase Agreement, (ii) the Senior Cash Collateralized Convertible Promissory Notes issued pursuant to the 2011 Securities Purchase Agreement, (iii) the Senior Secured Convertible Promissory Notes (including any Additional Closing Notes) issued pursuant to the 2012 Securities Purchase Agreement, (iv) any Senior Secured Convertible Promissory Notes issued upon exercise of the Debt Warrants issued pursuant to the 2011 Securities Purchase Agreement and (v) any additional Senior Secured Convertible Promissory Notes or Senior Secured Cash Collateralized Convertible Promissory Notes issued in payment of accrued and unpaid interest on any of the promissory notes described in clauses (i) through (iv) above.

 

B.           The Grantors are entering into this Agreement in order to grant to the Agent for the ratable benefit of the Purchasers a security interest in all of their right, title and interest in and to the Collateral (as defined herein) now owned or hereafter acquired.

 

C.           The parties intend that all security interests granted pursuant to this Agreement, shall be pari passu notwithstanding the date, order or method of attachment or perfection of any such lien or security interest or the provisions of any applicable law.

 

D.           Each Grantor is the owner of the shares (the “Initial Pledged Shares”) of stock set forth opposite such Grantor’s name on and as otherwise described in Part I of Schedule I hereto and issued by the corporations and entities named therein and of the indebtedness (the “Initial Pledged Debt”) set forth opposite such Grantor’s name on and as otherwise described in Part II of Schedule I hereto and issued by the issuers named therein.

 

  

2.

  

 

E.          It is a condition precedent to the purchase of the Notes by the Purchasers pursuant to the Securities Purchase Agreement that the Grantors shall have granted the assignment and security interest and made the pledge and assignment contemplated by this Agreement.

 

F.           Each Grantor will derive substantial direct and indirect benefit from the transactions contemplated by the Note Purchase Documents (as defined below).

 

G.           Now, Therefore, in consideration of the premises and in order to induce the Purchasers to purchase the Notes from the Company as set forth in the 2012 Securities Purchase Agreement and for other good and valuable consideration, each Grantor hereby agrees with the Agent for the ratable benefit of the Purchasers as follows:

 

Definitions

 

As used in this Agreement, the following terms shall have the meanings set forth below. Terms used herein and not otherwise defined herein are used in this Agreement as defined in the Securities Purchase Agreements and the Notes. Further, unless otherwise defined in this Agreement or in the Securities Purchase Agreements or the Notes, terms defined in the UCC are used in this Agreement as such terms are defined in the UCC.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States of America or other applicable jurisdictions from time to time in effect affecting the rights of creditors generally.

 

“Event of Default” means an event of default under any of the Note Purchase Documents.

 

“Governmental Authority” means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality, central bank or public body, (c) any court, administrative tribunal or public utility or (d) any other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

 

“Laws” or “Law” means all international, foreign, federal, state and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law.

 

“Liabilities” means all advances to, and debts, liabilities, obligations, covenants and duties of, Company or any other Grantor arising under any Note Purchase Document or otherwise with respect to the Notes, including without limitation the Agent’s Fees and Expenses (as defined in the 2012 Securities Purchase Agreement), whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest that accrues after the commencement of any proceeding under any Debtor Relief Laws by or against Company or any other Grantor or any Subsidiary or Affiliate of Company or any other Grantor, regardless of whether such interest is an allowed claim in such proceeding.

 

  

3.

  

 

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement (including in the nature of, cash collateral accounts or security interests), encumbrance, lien (statutory or other), fixed or floating charge or preference, priority or other security interest of any kind or nature whatsoever (including any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the Uniform Commercial Code or comparable Laws of any jurisdiction), including the interest of a purchaser of accounts receivable.

 

“Note Purchase Documents” means the Securities Purchase Agreements, the Notes and the Security Documents, and each certificate, fee letter, and other instrument or agreement from time to time executed by Company or any of its Subsidiaries and delivered in connection with the Securities Purchase Agreements.

 

“Permitted Liens” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company) have been established in accordance with Generally Accepted Accounting Principles (“GAAP”); (b) Liens imposed by law which were incurred in the ordinary course of the Company’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Company and its consolidated subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien; (c) encumbrances consisting of licenses of the Grantors’ intellectual property that are created in connection with joint ventures, collaborations, or partnership activities of Grantors and are approved in advance in writing by the holders of 55% of the then outstanding principal amount of the Notes; (d) Liens granted pursuant to this Agreement; and (e) so long as such financing statement remains in effect, Liens on the collateral described in that certain financing statement No. 2010 0006167 filed on January 4, 2010 with the Delaware Department of State (as in effect on the date hereof) naming the Company as debtor and Dell Financial Services L.L.C. as secured party.

 

“Purchasers” means, collectively, the Purchasers as such term is defined in the 2012 Securities Purchase Agreement and the 2011 Securities Purchase Agreement, together with their successors and assigns.

 

“Security Documents” means this Agreement and the Intellectual Property Security Agreement (as defined below).

 

  

4.

  

 

“UCC” means the Uniform Commercial Code as in effect, from time to time, in the State of New York, provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New York, “UCC” means the Uniform Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority.

 

SECTION 1.    Grant of Security. Each Grantor hereby (a) ratifies, restates and confirms the security interest granted in favor of the Agent, for the benefit of the Purchasers (as defined in the Existing Security Agreement) pursuant to the Existing Security Agreement and (b) assigns and pledges to the Agent for the ratable benefit of the Purchasers, and hereby grants to the Agent for the ratable benefit of the Purchasers as security for all Secured Obligations (as defined below), a security interest in, such Grantor’s right, title and interest in and to the following, in each case, as to each type of property described below, whether now owned or hereafter acquired by such Grantor, wherever located, and whether now or hereafter existing or arising, and all proceeds and products thereof (collectively, the “Collateral”):

 

(a)           all equipment in all of its forms, all fixtures and all parts thereof and all accessions thereto (any and all such equipment, fixtures, parts and accessions being the “Equipment”);

 

(b)           all inventory in all of its forms (including, but not limited to raw materials and work in process therefor, finished goods thereof and materials used or consumed in the manufacture, production, preparation or shipping thereof, goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which such Grantor has an interest or right as consignee) and goods that are returned to or repossessed or stopped in transit by such Grantor), and all accessions thereto and products thereof and documents therefor (any and all such inventory, accessions, products and documents being the “Inventory”);

 

(c)           all goods other than Equipment and Inventory and all accessions thereto (any and all such goods and accessions being the “Other Goods”);

 

(d)           all accounts, chattel paper, instruments, deposit accounts, documents, letter-of-credit rights, general intangibles and other obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services and whether or not earned by performance, and all rights now or hereafter existing in and to all security agreements, leases and other contracts securing or otherwise relating to any such accounts, chattel paper, instruments, deposit accounts, documents, letter-of-credit rights, general intangibles or obligations (any and all such accounts, chattel paper, instruments, deposit accounts, documents, letter-of-credit rights, general intangibles and obligations, to the extent not referred to in clause (e) or (f) below, being the “Receivables”, and any and all such security agreements, leases and other contracts being the “Related Contracts”);

 

(e)           the following (the “Security Collateral”):

 

(i)           the Initial Pledged Shares and the certificates, if any, representing the Initial Pledged Shares, and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Shares;

 

  

5.

  

 

(ii)          the Initial Pledged Debt and the instruments, if any, evidencing the Initial Pledged Debt, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the Initial Pledged Debt;

 

(iii)         all additional shares of stock from time to time acquired by such Grantor in any manner (such shares, together with the Initial Pledged Shares, being the “Pledged Shares”), and the certificates, if any, representing such additional shares, and all dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such shares;

 

(iv)          all additional indebtedness from time to time owed to such Grantor (such indebtedness, together with the Initial Pledged Debt, being the “Pledged Debt”) and the instruments, if any, evidencing such indebtedness, and all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such indebtedness; and

 

(v)           all other investment property (including, without limitation, all (A) securities, whether certificated or uncertificated, (B) security entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity accounts in which such Grantor has now, or acquires from time to time hereafter, any right, title or interest in any manner, and the certificates or instruments, if any, representing or evidencing such investment property, and all dividends, interest, distributions, value, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such investment property;

 

(f)           the following (collectively, the “Account Collateral”):

 

(i)           any cash collateral account of such Grantor, all financial assets from time to time credited thereto (including, without limitation, all investments from time to time credited thereto), and all dividends, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such financial assets;

 

(ii)          all deposit accounts or any other cash collateral of such Grantor from time to time, all funds held therein and all certificates and instruments, if any, from time to time representing or evidencing such deposit accounts;

 

(iii)         all notes, certificates of deposit, checks and other instruments from time to time delivered to or otherwise possessed by the Agent for or on behalf of such Grantor, including, without limitation, those delivered or possessed in substitution for or in addition to any or all of the then existing Account Collateral; and

 

  

6.

  

 

(iv)          all interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of the then existing Account Collateral;

 

(g)           the following (collectively, the “Intellectual Property Collateral”):

 

(i)           all United States, international and foreign patents, patent applications and statutory invention registrations, including, without limitation, the patents and patent applications set forth in Schedule IV hereto (as such Schedule IV may be supplemented from time to time by supplements to this Agreement, each such supplement being in substantially the form of Exhibit C hereto (an “IP Security Agreement Supplement”), executed and delivered by such Grantor to the Agent from time to time), together with all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations thereof, all inventions therein, all rights therein provided by international treaties or conventions and all improvements thereto, and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto (the “Patents”);

 

(ii)          all trademarks (including, without limitation, service marks), certification marks, collective marks, trade dress, logos, domain names, product configurations, trade names, business names, corporate names and other source identifiers, whether or not registered, whether currently in use or not, including, without limitation, all common law rights and registrations and applications for registration thereof, including, without limitation, the trademark registrations and trademark applications set forth in Schedule IV hereto (as such Schedule IV may be supplemented from time to time by IP Security Agreement Supplements executed and delivered by such Grantor to the Agent from time to time), and all other marks registered in the U.S. Patent and Trademark Office or in any office or agency of any State or Territory of the United States or any foreign country, and all rights therein provided by international treaties or conventions, all reissues, extensions and renewals of any of the foregoing, together in each case with the goodwill of the business connected therewith and symbolized thereby, and all rights corresponding thereto throughout the world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto (the “Trademarks”);

 

(iii)         all copyrights, copyright applications, copyright registrations and like protections in each work of authorship, whether statutory or common law, whether published or unpublished, any renewals or extensions thereof, all copyrights of works based on, incorporated in, derived from, or relating to works covered by such copyrights, including, without limitation, the copyright registrations and copyright applications set forth in Schedule IV hereto (as such Schedule IV may be supplemented from time to time by IP Security Agreement Supplements executed and delivered by such Grantor to the Agent from time to time), together with all rights corresponding thereto throughout the world and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto (the “Copyrights”);

 

(iv)          all confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production processes and techniques, inventions, research and development information, technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information (the “Trade Secrets”);

 

  

7.

  

 

(v)           all computer software programs and databases (including, without limitation, source code, object code and all related applications and data files), firmware, and documentation and materials relating thereto, and all rights with respect to the foregoing, together with any and all options, warranties, service contracts, program services, test rights, maintenance rights, improvement rights, renewal rights and indemnifications and any substitutions, replacements, additions or model conversions of any of the foregoing (the “Computer Software”);

 

(vi)          all license agreements, permits, authorizations and franchises, whether with respect to the Patents, Trademarks, Copyrights, Trade Secrets or Computer Software, or with respect to the patents, trademarks, copyrights, trade secrets, computer software or other proprietary right of any other Person, including, without limitation, the material license agreements set forth in Schedule IV hereto (as such Schedule IV may be supplemented from time to time by IP Security Agreement Supplements executed and delivered by such Grantor to the Agent from time to time), and all income, royalties and other payments now or hereafter due and/or payable with respect thereto, subject, in each case, to the terms of such license agreements, permits, authorizations and franchises, (the “Licenses”); and

 

(vii)         any and all claims for damages for past, present and future infringement, misappropriation or breach with respect to the Patents, Trademarks, Copyrights, Trade Secrets, Computer Software or Licenses, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages;

 

(h)           any commercial tort claims of such Grantor, including any existing commercial tort claims more particularly described on Schedule V hereto (the “Existing Commercial Tort Claims”); and

 

(i)           all proceeds of, collateral for and supporting obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and supporting obligations that constitute property of the types described in clauses (a) through (h) of this Section 1 and this clause (i)) and, to the extent not otherwise included, all (i) payments under insurance (whether or not the Agent is the loss payee thereof), or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral and (ii) money.

 

Notwithstanding the foregoing provisions of this Section 1, the grant of a security interest as provided herein shall not extend to, and the term “Collateral” shall not include, as to any Grantor, (i) any intent to use application at the U.S. Patent and Trademark Office with respect to intellectual property to the extent an assignment for security purposes would void the same; and (ii) more than 65% of the issued and outstanding voting capital stock of any corporation, limited liability company, or other entity organized under the laws of a jurisdiction other than the United States.

 

  

8.

  

 

            If any Grantor shall at any time acquire a commercial tort claim, such Grantor shall immediately notify the Agent in a writing signed by such Grantor of the brief details thereof and grant to the Agent for the ratable benefit of the Purchasers in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Agent.

SECTION 2.    Security for Obligations. This Agreement secures the payment and performance of all Liabilities, together with the prompt payment of all expenses, including, without limitation, reasonable attorney costs and disbursements incurred by the Agent or the Purchasers incidental to the collection of the Liabilities and the enforcement or protection of the Agent’s security interest in the Collateral (collectively, the “Secured Obligations”).

SECTION 3.    Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in such Grantor’s 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, (b) the exercise by the Agent of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral and (c) neither the Agent nor any Purchaser shall have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement or any other Note Purchase Document or any other agreement, nor shall the Agent nor any Purchaser be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

 

SECTION 4.    Delivery and Control of Security Collateral.

 

(a)           All certificates or instruments representing or evidencing Security Collateral shall be delivered to and held by or on behalf of the Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to the Agent. The Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, to transfer to or to register in the name of the Agent or any of its nominees any or all of the Security Collateral, subject only to the revocable rights specified in Section 11(a). In addition, the Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, to exchange certificates or instruments representing or evidencing Security Collateral for certificates or instruments of smaller or larger denominations.

 

  

9.

  

 

(b)           With respect to any Security Collateral in which any Grantor has any right, title or interest and that constitutes an uncertificated security  and is issued to such Grantor or its nominee directly, such Grantor shall notify the Agent immediately and at the Agent’s request and option, cause the issuer thereof either (i) to register the Agent as the registered owner, for the purpose of security, of such security or (ii) to agree in an authenticated record with such Grantor and the Agent that such issuer will comply with instructions with respect to such security originated by the Agent without further consent of such Grantor, such authenticated record to be in form and substance reasonably satisfactory to the Agent. If any Security Collateral, whether certificated or uncertificated, is now or hereafter acquired by any Grantor or its nominee through a securities intermediary or commodity intermediary, such Grantor shall immediately notify the Agent thereof and, at the Agent’s request and option, pursuant to an agreement in form and substance reasonably satisfactory to the Agent, either (i) cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply, in each case without further consent of such Grantor or such nominee, at any time with entitlement orders or other instructions from the Agent to such securities intermediary as to such securities or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by the Agent to such commodity intermediary, or (ii) in the case of financial assets or other investment property held through a securities intermediary, arrange for the Agent to become the entitlement holder with respect to such investment property, with such Grantor being permitted, only with the consent of the Agent, to exercise rights to withdraw or otherwise deal with such investment property.  The Agent shall not provide any directions to, or deliver any instructions or entitlement orders to any issuer pursuant to this Section 4(b) unless an Event of Default has occurred and is continuing.  Furthermore, the Agent shall promptly rescind such direction, instruction or entitlement order and notify such parties at any time when no Event of Default has occurred and is continuing.

 

SECTION 5.    Representations and Warranties. Each Grantor represents and warrants as follows:

 

(a)           Such Grantor’s exact legal name, as defined in Section 9-503(a) of the UCC, is correctly set forth on the signature pages of this Agreement. Such Grantor is an organization of the type specified on the signature pages of this Agreement and is organized under the laws of the jurisdiction specified on the signature pages of this Agreement.

 

(b)           All of the Equipment and Inventory (other than Equipment and Inventory constituting mobile goods and Equipment and Inventory in transit in the ordinary course of business) of such Grantor are located at the places specified therefor in Schedule II hereto, as such Schedule II may be amended from time to time pursuant to Section 7(a). The chief executive office of such Grantor and the original copies of each Related Contract to which such Grantor is a party and all originals of all chattel paper that evidence Receivables of such Grantor, are located at the address specified therefor in Schedule III hereto, as such Schedule III may be amended from time to time pursuant to Section 9(a). Such Grantor is located (within the meaning of Section 9-307 of the UCC) in the state or jurisdiction set forth in Schedule III hereto. Such Grantor’s federal tax identification number is set forth opposite such Grantor’s name in Schedule III hereto. All Security Collateral consisting of certificated securities and instruments have been delivered to the Agent. All originals of all chattel paper that evidence Receivables have been delivered to the Agent, in each case to the extent that delivery thereof to the Agent is required under Section 4. None of the Receivables are evidenced by a promissory note or other instrument that has not been delivered to the Agent.

 

(c)           Such Grantor is the legal and beneficial owner of the Collateral of such Grantor free and clear of any Lien, claim, option or right of others, except for the security interests created under this Agreement and Permitted Liens.  No effective financing statement or other instrument similar in effect covering all or any part of such Collateral or listing such Grantor or any trade name of such Grantor as debtor is on file in any recording office, except such as may have been filed in favor of the Agent relating to the Note Purchase Documents and Permitted Liens. Such Grantor has the trade names listed on Schedule IV hereto.

 

  

10.

  

 

(d)           Such Grantor has exclusive possession and control of the Equipment and Inventory other than Inventory or Equipment stored at any leased premises or warehouse (which leased premises or warehouse is so indicated by an asterisk on Schedule II hereto, as such Schedule II may be amended from time to time pursuant to Section 7(a)).

 

(e)           The Pledged Shares pledged by such Grantor hereunder have been duly authorized and validly issued and are fully paid and non assessable. The Pledged Debt issued to any Grantor and pledged by such Grantor hereunder has been duly authorized, authenticated or issued and delivered, is the legal, valid and binding obligation of the obligor, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, is evidenced by one or more promissory notes (which notes have been delivered to the Agent), and is not in default.

 

(f)           The Initial Pledged Shares constitute the percentage of the issued and outstanding shares of stock of the issuers thereof indicated on Schedule I hereto as of the date hereof. The Initial Pledged Debt constitutes all of the outstanding indebtedness owed to such Grantor by the issuers thereof and is outstanding, as of the date hereof, in the principal amount indicated on Schedule I hereto as of the date hereof.

 

(g)           All of the investment property owned by such Grantor as of the date hereof is listed on Schedule I hereto.

 

(h)           Other than the execution and delivery of deposit account control agreements and securities account control agreements, all filings and other actions necessary or reasonably desirable to perfect and protect the security interest in the Collateral of such Grantor created under this Agreement have been or are concurrently herewith being duly made or taken and are in full force and effect, and this Agreement creates in favor of the Agent for the benefit of the Purchasers a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral of such Grantor, securing the payment of the Secured Obligations.

 

(i)           Other than the execution and delivery of deposit account control agreements and securities account control agreements, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or any other third party is required for (i) the grant by such Grantor of the assignment, pledge and security interest granted hereunder or for the execution, delivery or performance of this Agreement by such Grantor, (ii) the perfection or maintenance of the assignment, pledge and security interest created hereunder (including the first priority nature of such assignment, pledge or security interest), except for the filing of financing and continuation statements under the UCC, which financing statements upon due filing will be in full force and effect, the recordation of the Intellectual Property Security Agreements referred to in Section 10(f) with the U.S. Patent and Trademark Office and the U.S. Copyright Office, and the actions described in Section 4 with respect to the Security Collateral, or (iii) for the exercise by the Agent of its voting or other rights provided for in this Agreement or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition of any portion of the Security Collateral by laws affecting the offering and sale of securities generally.

 

  

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(j)           Such Grantor has at all times operated its business in compliance in all material respects with all applicable provisions of Law, including the federal Fair Labor Standards Act, as amended, and with all applicable provisions of federal, state and local statutes and ordinances dealing with the control, shipment, storage or disposal of hazardous materials or substances.

 

(k)          As to itself and its Intellectual Property Collateral:

 

(i)           To the best of such Grantor’s knowledge, the rights of such Grantor in or to the Intellectual Property Collateral do not conflict with, misappropriate or infringe upon the intellectual property rights of any third party, and no claim has been asserted that the use of such Intellectual Property Collateral does or may infringe upon the intellectual property rights of any third party.

 

(ii)          Such Grantor is the exclusive owner or non-exclusive licensee of the entire and unencumbered right, title and interest in and to the Intellectual Property Collateral and is entitled to use all such Intellectual Property Collateral without limitation, subject only to the license terms of the Licenses.  Schedule IV hereto identifies, for each item of Intellectual Property Collateral, the exclusive owner and, if licensed, the Licenses applicable thereto.

 

(iii)         The Intellectual Property Collateral set forth on Schedule IV hereto includes all of the patents, patent registrations, patent applications, trademark registrations and applications, copyright registrations and applications and Licenses owned by such Grantor.

 

(iv)          The Intellectual Property Collateral, including any patents of another Person subject to a License, is subsisting and has not been adjudged invalid or unenforceable in whole or part, and to the best of such Grantor’s knowledge, is valid and enforceable. Such Grantor is not aware of any uses of any item of Intellectual Property Collateral that would reasonably be expected to lead to such item becoming invalid or unenforceable. Each of the Patents properly identifies each and every inventor of the claims thereof as determined in accordance with the laws of the jurisdiction in which such Patent is issued or such Patent is pending.  Each inventor named on such Patents owned by the Grantor has executed an agreement assigning all of his, her or its rights, title and interests in and to such Patent and the inventions or design embodied and claimed therein, to the Grantor.  No inventor named on any such Patent that is owned by the Grantor has any contractual obligation or other obligation that would preclude any such assignment of such inventor to the Grantor.

 

(v)           Such Grantor has made or performed all filings, recordings and other acts and has paid all required fees and taxes to maintain and protect its interest in each and every item of Intellectual Property Collateral in full force and effect, and to protect and maintain its interest therein including, without limitation, recordations of any of its interests in the Patents and Trademarks with the U.S. Patent and Trademark Office, except with respect to any items of Intellectual Property Collateral which such Grantor, in the reasonable exercise of its business judgment, deems not to be material to the ongoing business of such Grantor. Such Grantor has used proper statutory notice in connection with its use of each patent, trademark and copyright of the Intellectual Property Collateral.

 

  

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(vi)          No action, suit, investigation, litigation or proceeding has been asserted or is pending or threatened against such Grantor (i) based upon or challenging or seeking to deny or restrict the use of any of the Intellectual Property Collateral, or (ii) alleging that any services provided by, processes used by, or products manufactured or sold by, such Grantor infringe upon or misappropriate any material item of patent, trademark, copyright or any other proprietary right of any third party. To the best of such Grantor’s knowledge, no Person is engaging in any activity that infringes upon or misappropriates the Intellectual Property Collateral or upon the rights of such Grantor therein. Except as set forth on Schedule IV hereto, such Grantor has not granted any license, release, covenant not to sue, non-assertion assurance, or other right to any Person with respect to any material part of the Intellectual Property Collateral. The consummation of the transactions contemplated by the Note Purchase Documents and other related documents will not result in the termination or material impairment of any material item of the Intellectual Property Collateral.

 

(vii)         To the Grantor’s knowledge, the Grantor owns, licenses, or otherwise possesses legally enforceable rights to use all intellectual property necessary to conduct the business of such Grantor as currently conducted or proposed to be conducted and material to the business of the Company.

 

(viii)        With respect to each License material to the business of such Grantor: (A) such License is valid and binding and in full force and effect against such Grantor and represents the entire agreement between the respective licensor and licensee with respect to the subject matter of such License; (B) such Grantor has not received any notice of termination or cancellation under such License; (C) such Grantor has not received any notice of a breach or default under such License, which breach or default has not been cured; (D) such Grantor has not granted to any other third party any rights, adverse or otherwise, under such License, other than pursuant to a License set forth in Schedule IV hereto; and (E) neither such Grantor nor to the best of such Grantor’s knowledge, any other party to such License is in breach or default of such License in any material respect, and no event has occurred that, with notice or lapse of time or both, would constitute such a breach or default or permit termination, modification or acceleration under such License.

 

SECTION 6.    Further Assurances.

 

(a)           Each Grantor agrees that from time to time, at the expense of such Grantor, such Grantor will promptly execute and deliver, or otherwise authenticate, all further instruments and documents, and take all further action, that may be necessary or reasonably desirable, or that the Agent may request, in order to perfect and protect any pledge, assignment or security interest granted or purported to be granted by such Grantor hereunder or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor. Without limiting the generality of the foregoing, each Grantor will promptly with respect to Collateral of such Grantor: (i) at the reasonable request of the Agent, mark conspicuously each chattel paper included in Receivables and each of its records pertaining to such Collateral with a legend, in form and substance reasonably satisfactory to the Agent, indicating that such chattel paper or Collateral is subject to the security interest granted hereby; provided that no such legend shall be required if such Collateral is delivered to the Agent pursuant to clause (ii) below; (ii) if any such Collateral shall be evidenced by a promissory note or other instrument or chattel paper, deliver and pledge to the Agent hereunder such note or instrument or chattel paper duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to the Agent; (iii) execute or authenticate and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or reasonably desirable, or as the Agent may reasonably request, in order to perfect and preserve the security interest granted or purported to be granted by such Grantor hereunder; (iv) deliver and pledge to the Agent for benefit of the Purchasers certificates representing Security Collateral that constitutes certificated securities, accompanied by undated stock or bond powers executed in blank; and (v) deliver to the Agent evidence that all other action that the Agent may deem reasonably necessary or reasonably desirable in order to perfect and protect the security interest created by such Grantor under this Agreement has been taken. Without limiting the generality of the foregoing, each Grantor will, within 10 days after the date hereof, enter into deposit account control agreements and securities account control agreements in form and substance satisfactory to the Agent relating to any Collateral of such Grantor.

 

  

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(b)           Each Grantor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relating to all or any part of the Collateral of such Grantor without the signature of such Grantor where permitted by law. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.

 

(c)           Each Grantor will furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral of such Grantor and such other reports in connection with such Collateral as the Agent may reasonably request, all in reasonable detail.

 

(d)           With respect to any Related Contracts entered into after the date hereof, with respect to which the account debtor is the United States or any department, agency, or instrumentality of the United States, each Grantor party to such Related Contract agrees to cause the security interest granted to the Agent in such Related Contract to be duly acknowledged under the Assignment of Claims Act of 1940 (31 U.S.C. 3727).

 

SECTION 7.    As to Equipment and Inventory.

 

(a)           Each Grantor will keep the Equipment and Inventory of such Grantor (other than Inventory sold in the ordinary course of business, Equipment and Inventory constituting mobile goods or Equipment and Inventory in transit in the ordinary course of such Grantor’s business) at the places therefor specified in Section 5(a) or, upon 30 days’ prior written notice to the Agent, at such other places in a jurisdiction where all action required by Section 6 shall have been taken with respect to such Equipment and Inventory (and, upon the taking of such action in such jurisdiction, Schedule II hereto shall be automatically amended to include such other places).

 

(b)           Each Grantor will cause the Equipment of such Grantor (other than any Equipment not material to the business of such Grantor) to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear and tear excepted, and in accordance with any manufacturer’s manual, and will forthwith, or in the case of any loss or damage to any of such Equipment as soon as practicable after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith that are necessary or reasonably desirable to such end.

 

  

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(c)           Each Grantor will pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including, without limitation, claims for labor, materials and supplies) against, the Equipment and Inventory of such Grantor, except to the extent payment thereof is not required by the Securities Purchase Agreement. In producing its Inventory, each Grantor will comply with all requirements of applicable law, including, without limitation, the Fair Labor Standards Act.

 

SECTION 8.    Insurance.

 

(a)           Each Grantor will, at its own expense, maintain insurance with respect to the business, property, Equipment and Inventory of such Grantor in such amounts, against such risks, in such form and with financially sound and reputable insurers, as is customary with companies of a similar size and line of business in similar geographic areas and shall otherwise be reasonably satisfactory to the Agent. Each policy of each Grantor for general liability insurance shall provide for the Agent as additional insured, and each policy for property damage insurance shall provide for all losses to be paid directly to the Agent. Each such policy shall in addition (i) name such Grantor and the Agent as insured parties thereunder (without any representation or warranty by or obligation upon the Agent) as their interests may appear, (ii) contain the agreement by the insurer that any loss thereunder shall be payable to the Agent, (iii) provide that there shall be no recourse against the Agent for payment of premiums or other amounts with respect thereto and (iv) provide that at least 30 days’ prior written notice of cancellation shall be given to the Agent by the insurer. Each Grantor will, if so requested by the Agent, deliver to the Agent original or duplicate policies or certificates of such insurance provided by the insurance companies and, as often as the Agent may reasonably request, a report of a reputable insurance broker with respect to such insurance. Further, each Grantor will, at the request of the Agent, duly execute and deliver instruments of assignment of such insurance policies to comply with the requirements of this Section 8 and use reasonable efforts to cause the insurers to acknowledge notice of such assignment.

 

(b)           Reimbursement under any liability insurance maintained by any Grantor pursuant to this Section 8 may be paid directly to the Person who shall have incurred liability covered by such insurance. In case of any loss involving damage to Equipment or Inventory when subsection (c) of this Section 8 is not applicable, the applicable Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance properly received by or released to such Grantor shall be used by such Grantor, except as otherwise required hereunder or by the Securities Purchase Agreement, to pay or as reimbursement for the costs of such repairs or replacements.

 

  

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(c)           So long as no Event of Default shall have occurred and be continuing, all insurance payments received by the Agent in connection with any loss, damage or destruction of any Inventory or Equipment will be released by the Agent to the applicable Grantor for the repair, replacement or restoration thereof, subject to such terms and conditions with respect to the release thereof as the Agent may reasonably require. To the extent that (i) the amount of any such insurance payments exceeds the cost of any such repair, replacement or restoration, or (ii) such insurance payments are not otherwise required by the applicable Grantor to complete any such repair, replacement or restoration required hereunder, the Agent will not be required to release the amount thereof to such Grantor and may hold or continue to hold such amount as additional security for the Secured Obligations of such Grantor (except that the Agent will release to such Grantor any such amount if and to the extent that any prepayment of the Notes is required under the Securities Purchase Agreements in connection with the receipt of such amount and such prepayment has been made). Upon the occurrence and during the continuance of any Event of Default, all insurance payments in respect of such Equipment or Inventory shall be paid to the Agent and shall, in the Agent’s sole discretion, (i) be released to the applicable Grantor to be applied as set forth in the first sentence of this subsection (c) or (ii) be held as additional Collateral hereunder or applied as specified in Section 16(b).

 

SECTION 9.    Place of Perfection; Records; Collection of Receivables.

 

(a)           No Grantor will change its name, type of legal entity, federal tax identification number, organizational identification number or location from those set forth in Section 5(a) and Section 5(b) without first giving at least 30 days’ advance written notice to the Agent and taking all action required by the Agent for the purpose of perfecting or protecting the liens granted by this Agreement. Each Grantor will also keep the originals of the Related Contracts to which such Grantor is a party and all originals of all chattel paper that evidence Receivables of such Grantor, at the location therefor specified in Section 5(a) or, upon 30 days’ prior written notice to the Agent, at such other location in a jurisdiction where all actions required by Section 6 shall have been taken with respect to the Collateral of such Grantor (and, upon the taking of such action in such jurisdiction, Schedule III hereto shall be automatically amended to include such other location). Each Grantor will hold and preserve its records relating to the Collateral, the Related Contracts and chattel paper and will permit representatives of the Agent at any time during normal business hours and with reasonable prior notice to inspect and make abstracts from such records and other documents.

 

(b)           Except as otherwise provided in this subsection (b), each Grantor will continue to collect, at its own expense, all amounts due or to become due to such Grantor under the Receivables and the Related Contracts. In connection with such collections, such Grantor may take (and, at the Agent’s direction upon the occurrence and during the continuance of an Event of Default, will take) such action as such Grantor or the Agent may deem reasonably necessary or advisable to enforce collection of the Receivables and the Related Contracts; provided that the Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default, to notify the obligors (each individually, a “Contract Obligor” and collectively, the “Contract Obligors”) under any Receivables or Related Contracts of the assignment of such Receivables or Related Contracts to the Agent and to direct such Contract Obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to the Agent or to any financial institution designated by the Agent as the Agent’s agent therefor and, upon such notification and at the expense of such Grantor, to enforce collection of any such Receivables or Related Contracts, and to adjust, settle or compromise the amount or payment thereof. Upon the occurrence and during the continuance of an Event of Default, (i) all amounts and proceeds (including instruments) received by such Grantor in respect of the Receivables and the Related Contracts of such Grantor shall be received in trust for the benefit of the Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Agent in the same form as so received (with any necessary endorsement or assignment) to be held as cash collateral and shall be applied as provided in Section 16(b) and (ii) such Grantor will not adjust, settle or compromise the amount or payment of any Receivable, release wholly or partly any Contract Obligor thereof, or allow any credit or discount thereon. No Grantor will permit or consent to the subordination of its right to payment under any of the Receivables or the Related Contracts to any other indebtedness or obligations of the Contract Obligor thereof.

 

  

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SECTION 10.  As to Intellectual Property Collateral.

 

(a)           With respect to each item of its Intellectual Property Collateral (except with respect to any items of Intellectual Property Collateral which such Grantor, in its reasonable business judgment, deems not to be material to the ongoing business of such Grantor), each Grantor agrees to take, at its expense, all necessary steps, including, without limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authority, to (i) maintain the validity and enforceability of each such item of Intellectual Property Collateral and maintain each such item of Intellectual Property Collateral in full force and effect, and (ii) pursue the registration and maintenance of each patent, trademark, or copyright registration or application, now or hereafter included in the Intellectual Property Collateral of such Grantor, including, without limitation, the payment of required fees and taxes, the filing of new patent applications, the filing of responses to office actions issued by the U.S. Patent and Trademark Office, the U.S. Copyright Office or other governmental authorities, the filing of applications for renewal or extension, the filing of affidavits under Sections 8 and 15 of the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-part, reissue and renewal applications or extensions, the payment of maintenance fees and the participation in interference, reexamination, opposition, cancellation, infringement and misappropriation proceedings. Each Grantor shall give the Agent prompt written notice of any applications or registrations of the Intellectual Property Collateral of such Grantor filed with the U.S. Patent and Trademark Office, including the date of such filing and the registration or application numbers, if any, and each Grantor shall give the Agent not less than 30 days prior written notice of the filing of any applications or registrations of the Intellectual Property Collateral of such Grantor filed with the U.S. Copyright Office, including the title of such Intellectual Property Collateral to be registered, as such title will appear on such applications or registrations, and the date such applications or registrations will be filed. No Grantor shall, without the written consent of the Agent, discontinue use of or otherwise abandon any Intellectual Property Collateral, or abandon any right to file an application for letters patent, trademark, or copyright, unless such Grantor shall have previously determined that such use or the pursuit or maintenance of such Intellectual Property Collateral is no longer desirable in the conduct of such Grantor’s business, in which case, such Grantor will give prompt notice of any such abandonment to the Agent.

 

(b)           Except as provided in this Section regarding the discontinuation of use or abandonment of any Intellectual Property Collateral, each Grantor agrees promptly to notify the Agent if such Grantor learns (i) that any item of the Intellectual Property Collateral may have become abandoned, placed in the public domain, invalid or unenforceable, or of any adverse determination or development regarding such Grantor’s ownership of any of the Intellectual Property Collateral or its right to register the same or to keep and maintain and enforce the same, or (ii) of any adverse determination or the institution of any proceeding (including, without limitation, the institution of any proceeding in the U.S. Patent and Trademark Office or any court) regarding any item of the Intellectual Property Collateral.

 

  

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(c)            In the event that any Grantor becomes aware that any item of the Intellectual Property Collateral material to the business of such Grantor is being infringed or misappropriated by a third party, such Grantor shall promptly notify the Agent and shall take such actions, at its expense, as such Grantor or the Agent deems reasonable and appropriate under the circumstances to protect such Intellectual Property Collateral, including, without limitation, suing for infringement or misappropriation and for an injunction against such infringement or misappropriation.

 

(d)           Each Grantor shall use proper statutory notice in connection with its use of each item of its Intellectual Property Collateral. Except with respect of any item of Intellectual Property Collateral, which such Grantor, in the reasonable exercise of its business judgment, deems not to be material to the ongoing business of such Grantor, no Grantor shall do or permit any act or knowingly omit to do any act whereby any of its Intellectual Property Collateral may lapse or become invalid or unenforceable or placed in the public domain.

 

(e)           Except with respect to any item of Intellectual Property Collateral, which such Grantor, in the reasonable exercise of its business judgment, deems not to be material to the ongoing business of such Grantor, each Grantor shall take all steps which it or the Agent deems reasonable and appropriate under the circumstances to preserve and protect each item of its Intellectual Property Collateral, including, without limitation, maintaining the quality of any and all products or services used or provided in connection with any of the Trademarks, consistent with the quality of the products and services as of the date hereof, and taking all steps necessary to ensure that all licensed users of any of the Trademarks use such consistent standards of quality.

 

(f)           Each Grantor (i) shall perform and comply with its obligations under the Licenses, and (ii) shall not amend, modify, supplement, restate, waive, cancel or terminate (or consent to any cancellation or termination of), in whole or in part, any provision of or right under the Licenses.  Each Grantor shall promptly notify the Agent in the event that a Grantor receives any notice of termination or any threat to terminate any License, or becomes aware of circumstances constituting breach by a party to a License.

 

(g)           With respect to its Intellectual Property Collateral, each Grantor agrees to execute an agreement, in substantially the form set forth in Exhibit B hereto (as amended, and together the IP Security Agreement Supplements, the “Intellectual Property Security Agreement”), for recording the security interest granted hereunder to the Agent in such Intellectual Property Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such Intellectual Property Collateral.

 

  

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(h)           Each Grantor agrees that, should it obtain an ownership interest in any item of the type set forth in Section 1(g) which is not on the date hereof a part of the Intellectual Property Collateral (the “After-Acquired Intellectual Property”), (i) the provisions of Section 1 shall automatically apply thereto, (ii) any such After-Acquired Intellectual Property and, in the case of trademarks, the goodwill of the business connected therewith or symbolized thereby, shall automatically become part of the Intellectual Property Collateral subject to the terms and conditions of this Agreement with respect thereto, (iii) such Grantor shall give prompt written notice thereof to the Agent in accordance herewith and (iv) such Grantor shall execute and deliver to the Agent an IP Security Agreement Supplement covering such After-Acquired Intellectual Property as “Additional Collateral” thereunder and as defined therein, and shall record such IP Security Agreement Supplement with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest hereunder in such After-Acquired Intellectual Property.

 

SECTION 11.   Voting Rights; Dividends; Etc.

 

(a)           So long as no Event of Default shall have occurred and be continuing:

 

(i)           Each Grantor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Security Collateral of such Grantor or any part thereof for any purpose; provided that such Grantor will not exercise or refrain from exercising any such right if such action would have a material adverse effect on the value of the Security Collateral or any part thereof.

 

(ii)          Each Grantor shall be entitled to receive and retain any and all dividends, interest and other distributions paid in respect of the Security Collateral of such Grantor if and to the extent that the payment thereof is not otherwise prohibited by the terms of the Note Purchase Documents; provided that any and all dividends, interest and other distributions paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Security Collateral received after the date hereof, shall be, and shall be forthwith delivered to the Agent to hold as, Security Collateral and shall, if received by such Grantor, be received in trust for the benefit of the Agent, be segregated from the other property or funds of such Grantor and be forthwith delivered to the Agent as Security Collateral in the same form as so received (with any necessary endorsement or assignment).

 

(iii)         The Agent will execute and deliver (or cause to be executed and delivered) to each Grantor all such proxies and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights that it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments that it is authorized to receive and retain pursuant to paragraph (ii) above.

 

(b)           Upon the occurrence and during the continuance of an Event of Default:

 

(i)           All rights of each Grantor (x) to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 11(a)(i) shall, upon notice to such Grantor by the Agent, cease and (y) to receive the dividends, interest and other distributions that it would otherwise be authorized to receive and retain pursuant to Section 11(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in the Agent, which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to receive and hold as Security Collateral such dividends, interest and other distributions.

 

  

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(ii)          All dividends, interest and other distributions that are received by any Grantor contrary to the provisions of paragraph (i) of this Section 11(b) shall be received in trust for the benefit of the Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Agent as Security Collateral in the same form as so received (with any necessary endorsement or assignment).

 

SECTION 12.   Transfers and Other Liens; Additional Shares.

 

(a)           Each Grantor agrees that, except as permitted pursuant to Section 4.1(e) of the Notes, it will not (i) sell, assign or otherwise dispose of, or grant any option with respect to, any of the Collateral, other than sales, assignments and other dispositions of Collateral, and options relating to Collateral, permitted under the terms of the Securities Purchase Agreement and the Notes, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of such Grantor except for the pledge, assignment and security interest created under this Agreement and Permitted Liens.

 

(b)           Each Grantor agrees that it will (i) cause each issuer of the Pledged Shares pledged by such Grantor not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by such issuer, except to such Grantor, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities.

 

SECTION 13.   Agent Appointed Attorney in Fact. Each Grantor hereby irrevocably appoints the Agent such Grantor’s true and lawful attorney in fact, with full irrevocable power and authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time, upon the occurrence and during the continuance of an Event of Default, in the Agent’s discretion, to take any action and to execute any instrument that the Agent may deem necessary or advisable to accomplish the purposes of this Agreement, including, without limitation:

 

(a)           to obtain and adjust insurance required to be paid to the Agent pursuant to Section 8,

 

(b)           to ask for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral,

 

(c)           to receive, endorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) or (b) above, and

 

(d)           to file any claims or take any action or institute any proceedings that the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Agent with respect to any of the Collateral.

 

  

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SECTION 14.   Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Agent may, as the Agent deems necessary to protect the security interest granted hereunder in the Collateral or to protect the value thereof, but without any obligation to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by such Grantor under Section 17(b).

 

SECTION 15.   The Agent’s Duties.

 

(a)           The powers conferred on the Agent hereunder are solely to protect the Purchasers’ interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not any Purchaser has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which it accords its own property.

 

(b)           Anything contained herein to the contrary notwithstanding, the Agent may from time to time, when the Agent deems it to be necessary, appoint one or more subagents (each a “Subagent”) for the Agent hereunder with respect to all or any part of the Collateral. In the event that the Agent so appoints any Subagent with respect to any Collateral, (i) the assignment and pledge of such Collateral and the security interest granted in such Collateral by each Grantor hereunder shall be deemed for purposes of this Agreement to have been made to such Subagent, in addition to the Agent, for the ratable benefit of the Purchasers, as security for the Secured Obligations of such Grantor, (ii) such Subagent shall automatically be vested, in addition to the Agent, with all rights, powers, privileges, interests and remedies of the Agent hereunder with respect to such Collateral, and (iii) the term “Agent,” when used herein in relation to any rights, powers, privileges, interests and remedies of the Agent with respect to such Collateral, shall include such Subagent; provided that no such Subagent shall be authorized to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Agent.

 

  

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SECTION 16.   Remedies.  If any Event of Default shall have occurred and be continuing:

 

(a)           The Agent may, without any other notice to or demand upon the applicable Grantor, exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party under the UCC and also may: (i) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or part of the Collateral as directed by the Agent and make it available to the Agent at a place and time to be designated by the Agent that is reasonably convenient to both parties; (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially reasonable; (iii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to such Grantor in respect of such occupation; and (iv) exercise any and all rights and remedies of any of the Grantors under or in connection with the Receivables and the Related Contracts or otherwise in respect of the Collateral, including, without limitation, any and all rights of such Grantor to demand or otherwise require payment of any amount under, or performance of any provision of, the Receivables and the Related Contracts. Each Grantor agrees that, to the extent notice of sale shall be required by law, except for Collateral that is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market in which case a shorter notice period shall be reasonable, at least ten days’ notice to such Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The 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.

 

(b)           Any cash held by or on behalf of the Agent and all cash proceeds received by or on behalf of the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Agent pursuant to Section 17) in whole or in part by the Agent for the ratable benefit of the Purchasers against, all or any part of the Secured Obligations, in the following manner:

 

(i)           first, to the Agent for the Agent’s Fees and Expenses and any other amounts as shall be required to reimburse the Agent for all reasonable costs and expenses incidental to the collection of the Liabilities and the enforcement or protection of the Agent’s security interest in the Collateral; and

 

(ii)          second, to the payment in full of the other Secured Obligations, in each case equally and ratably in accordance with their respective amounts thereof then due and owing or as the Purchasers (including the Agent in respect of its Notes) holding the same may otherwise agree.

 

Any surplus of such cash or cash proceeds held by or on the behalf of the Agent and remaining after payment in full of all the Secured Obligations shall be paid over to the applicable Grantor or to whosoever may be lawfully entitled to receive such surplus.

 

(c)           All payments received by any Grantor in respect of the Collateral shall be received in trust for the benefit of the Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Agent in the same form as so received (with any necessary endorsement or assignment).

 

  

22.

  

 

(d)           The Agent may, without notice to any Grantor except as required by law and at any time or from time to time, charge, set off and otherwise apply all or any part of the Secured Obligations against any funds held in any deposit account of such Grantor.

 

(e)           In the event of any sale or other disposition of any of the Intellectual Property Collateral of any Grantor, the goodwill of the business connected with and symbolized by any Trademarks subject to such sale or other disposition shall be included therein, and such Grantor shall supply to the Agent or its designee such Grantor’s know-how and expertise, and documents and things relating to any Intellectual Property Collateral subject to such sale or other disposition, and such Grantor’s customer lists and other records and documents relating to such Intellectual Property Collateral and to the manufacture, distribution, advertising and sale of products and services of such Grantor.

 

(f)           If the Agent shall determine to exercise its right to sell all or any of the Security Collateral of any Grantor pursuant to this Section 16, and such Security Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under Securities Act of 1933, as amended (as so amended the “Act”), the Agent may, in its discretion (subject only to applicable requirements of law), sell such Security Collateral or part thereof by private sale in such manner and under such circumstances as the Agent may deem necessary or advisable, but subject to the other requirements of this Section 16(f), and shall not be required to effect such registration or cause the same to be effected. Without limiting the generality of the foregoing, in any such event the Agent may, in its sole discretion, (i) in accordance with applicable securities laws, proceed to make such private sale notwithstanding that a registration statement for the purpose of registering such Security Collateral or part thereof could be or shall have been filed under the Act; (ii) approach and negotiate with a single possible purchaser to effect such sale; and (iii) restrict such sale to a purchaser who will represent and agree that such purchaser is purchasing for its own account, for investment, and not with a view to the distribution or sale of such Security Collateral or part thereof. In addition to a private sale as provided above in this Section 16(f), if any of such Security Collateral shall not be freely distributable to the public without registration under the Act at the time of any proposed sale hereunder, then the Agent shall not be required to effect such registration or cause the same to be effected but may, in its sole discretion (subject only to applicable requirements of law), require that any sale hereunder (including a sale at auction) be conducted subject to such restrictions as the Agent may, in its sole discretion, deem necessary or appropriate in order that such sale (notwithstanding any failure so to register) may be effected in compliance with the Debtor Relief Laws and other laws affecting the enforcement of creditors’ rights and the Act and all applicable state securities laws.

 

  

23.

  

 

(g)           To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to fail to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against account debtors or other persons obligated on Collateral or to fail to remove Liens on or any adverse claims against Collateral, (d) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent, to obtain the services of brokers, investment bankers, consultants and other professionals to assist the Administrative Agent in the collection or disposition of any of the Collateral.  Each Grantor acknowledges that the purpose of this Section 16(g) is to provide non-exhaustive indications of what actions or omissions by the Agent would fulfill the Agent’s duties under the UCC or any other relevant jurisdiction in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed to fail to fulfill such duties solely on account of not being indicated in this Section 16.  Without limitation upon the foregoing, nothing contained in this Section 16 shall be construed to grant any rights to any Grantor or to impose any duties on the Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 16(g).

 

SECTION 17.    Indemnity and Expenses.

 

(a)           Each Grantor agrees to indemnify, defend and save and hold harmless the Agent and each other Purchaser and each of their respective Affiliates and their respective officers, directors, employees, agents, trustees and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or resulting from this Agreement, except to the extent such claim, damage, loss, liability or expense resulted from such Indemnified Party’s gross negligence or willful misconduct.

 

(b)           Each Grantor will upon demand pay to the Agent the Agent’s Fees and Expenses and the amount of any and all other documented fees and expenses, including, without limitation, the reasonable fees and expenses of counsel and of any experts and agents, that the Agent may incur in connection with (i) the custody, preservation, use or operation of, or the sale of, collection from or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of the Agent or the other Purchasers hereunder or (iii) the failure by such Grantor to perform or observe any of the provisions hereof.

 

  

24.

  

 

SECTION 18.        Amendments; Waivers; Additional Grantors; Etc.

 

(a)           No amendment or waiver of any provision of this Agreement, and no consent to any departure by any Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No failure on the part of the Agent or any other Purchaser to exercise, and no delay in exercising any right hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.

 

(b)           Upon the execution and delivery by any Person of a security agreement supplement in substantially the form of Exhibit A hereto (each a “Security Agreement Supplement”), (i) such Person shall be referred to as an “Additional Grantor” and shall be and become a Grantor hereunder and each reference in this Agreement and the other Note Purchase Documents to “Grantor” shall also mean and be a reference to such Additional Grantor, and (ii) the supplemental schedules I, II, III, IV, and V attached to each Security Agreement Supplement shall be incorporated into and become a part of and supplement Schedules I, II, III, IV, and V, respectively, hereto, and the Agent may attach such supplemental schedules to such Schedules; and each reference to such Schedules shall mean and be a reference to such Schedules as supplemented pursuant to each Security Agreement Supplement.

 

SECTION 19.        Notices; Etc. All notices and other communications provided for hereunder shall be in writing and mailed, telecopied, e-mailed, or delivered to its address, telecopier number or e-mail address set forth opposite such Grantor’s or the Agent’s name on the signature pages hereto or on the signature page to the Security Agreement Supplement pursuant to which it became a party hereto; or, as to any party, at such other address, telecopier number or e-mail address as shall be designated by such party in a written notice to the other parties. All such notices and other communications shall, when mailed, telecopied, e-mailed, or delivered, be effective when deposited in the mails or telecopied, sent by e-mail, or delivered, respectively, addressed as aforesaid; except that notices and other communications to the Agent shall not be effective until received by the Agent. Delivery by telecopier or by e-mail of an executed counterpart of any amendment or waiver of any provision of this Agreement or of any Security Agreement Supplement or Schedule hereto shall be effective as delivery of an original executed counterpart thereof.

 

SECTION 20.        Continuing Security Interest; Assignments under the Securities Purchase Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the payment in full of the Secured Obligations, (b) be binding upon each Grantor, its successors and assigns and (c) inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Purchasers and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any Purchaser may assign or otherwise transfer all or any portion of its rights and obligations under the Securities Purchase Agreement as permitted thereunder to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Purchaser herein or otherwise, in each case as provided in the Securities Purchase Agreement.

 

  

25.

  

 

SECTION 21.        Termination. Upon the payment in full of the Secured Obligations, the pledge, assignment and security interest granted hereby shall terminate and all rights to the Collateral shall revert to the applicable Grantor. Upon any such termination, the Agent will, at the applicable Grantor’s expense, execute and deliver to such Grantor such documents as such Grantor shall reasonably request to evidence such termination.

 

SECTION 22.        Security Interest Absolute. The obligations of each Grantor under this Agreement are independent of the Secured Obligations or any other obligations of any other Grantor under or in respect of the Note Purchase Documents, and a separate action or actions may be brought and prosecuted against each Grantor to enforce this Agreement, irrespective of whether any action is brought against any other Grantor or whether such other Grantor is joined in any such action or actions. All rights of the Agent and the other Purchasers and the pledge, assignment and security interest hereunder, and all obligations of each Grantor hereunder, shall be irrevocable, absolute and unconditional irrespective of, and each Grantor hereby irrevocably waives (to the maximum extent permitted by applicable law) any defenses it may now have or may hereafter acquire in any way relating to, any or all of the following:

 

(a)           any lack of validity or enforceability of any Note Purchase Document or any other agreement or instrument relating thereto;

 

(b)           any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations or any other obligations of any other Grantor under or in respect of the Note Purchase Documents or any other amendment or waiver of or any consent to any departure from any Note Purchase Document, including, without limitation, any increase in the Secured Obligations resulting from the extension of additional credit to Company or otherwise;

 

(c)           any taking, exchange, release or non perfection of any Collateral or any other collateral, or any taking, release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Secured Obligations;

 

(d)           any manner of application of any Collateral or any other collateral, or proceeds thereof, to all or any of the Secured Obligations, or any manner of sale or other disposition of any Collateral or any other collateral for all or any of the Secured Obligations;

 

(e)           any change, restructuring or termination of the corporate structure or existence of any Grantor;

 

(f)           any failure of any Purchaser to disclose to any Grantor any information relating to the business, condition (financial or otherwise), operations, performance, assets, nature of assets, liabilities or prospects of any other Grantor now or hereafter known to such Purchaser (each Grantor waiving any duty on the part of the Purchasers to disclose such information);

 

(g)           the failure of any other Person to execute this Agreement or any other Note Purchase Document, guaranty or agreement or the release or reduction of liability of any Grantor or any guarantor or surety with respect to the Secured Obligations; or

 

(h)           any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by any Purchaser that might otherwise constitute a defense available to, or a discharge of, such Grantor or any other Grantor or a third party grantor of a security interest.

 

  

26.

  

 

This Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by any Purchaser or by any other Person upon the insolvency, bankruptcy or reorganization of any Grantor or otherwise, all as though such payment had not been made.

 

SECTION 23.        Marshaling.  Neither the Agent nor any Purchaser shall be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the rights and remedies of the Agent or any other Purchaser hereunder and of the Agent or any other Purchaser in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising.  To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

 

SECTION 24.        Suretyship Waivers.  Each Grantor waives demand, notice, protest, notice of acceptance of this Agreement, notice of credit extended, Collateral received or delivered or other action taken in reliance hereon and all other demands and notices of any description.  With respect to both the Secured Obligations and the Collateral, each Grantor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as the Agent may deem advisable.  The Agent shall have no duty as to the collection or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation of any rights pertaining thereto beyond the safe custody thereof as set forth in Section 15(a).  Each Grantor further waives any and all other suretyship defense

 

SECTION 25.        Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be effective as delivery of an original executed counterpart of this Agreement.

 

  

27.

  

 

SECTION 26.        Governing Law. This Agreement shall be governed by, and construed in accordance with, the law of the State of New York without regard to principles thereof regarding conflict of laws.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

28.

  

 

 

In Witness Whereof, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

 

	 	

Genta Incorporated,

	 
	 	

a Delaware corporation

	 
	 	 	 
	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

Address for Notices:

 

Genta Incorporated

200 Connell Drive

Berkeley Heights, NJ 07922

Attention: Raymond P. Warrell, Jr., M.D.

Telephone No.: (908) 286-9800

Telecopy No.: (908) 464-1705

Email: Warrell@genta.com

 

SECURITY AGREEMENT

 

  

  

  

 

In Witness Whereof, the Agent has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

 

	 	Tang Capital Partners, L.P.,	 
	 	

as Agent

	 
	 	 	 
	 	 	 
	
 

	
By: 

	 	 
	 	 	Name 	 
	 	 	Title 	 

 

Address for Notices:

 

c/o Tang Capital Management, LLC

4401 Eastgate Mall

San Diego, CA 92121

Telephone No.: (858) 200-3412

Telecopy No.: (858) 200-3837

Email: Kevin@tangcapital.com

 

SECURITY AGREEMENT

 

  

  

  

Schedules

 

	Schedule I 	- 	 	Pledged Shares and Pledged Debt
	Schedule II 	-	 	Locations of Equipment and Inventory
	Schedule III 	- 	 	Chief Executive Office and Federal Tax Identification Number
	Schedule IV 	- 	 	Patents, Trademarks and Trade Names, Copyrights and Licenses
	Schedule V 	- 	 	Existing Commercial Tort Claims

 

Exhibits

 

	Exhibit A	- 	 	
Form of Security Agreement Supplement

	Exhibit B	-	 	
Form of Intellectual Property Security Agreement

	Exhibit C	- 	 	
Form of Intellectual Property Security Agreement Supplement

 

 

SECURITY AGREEMENT

 

  

  

  

 

Schedule I to the

Security Agreement

 

PLEDGED SHARES AND PLEDGED DEBT

 

Part I

 

	

Grantor

	 	

Stock Issuer

	 	

Class of Stock

	 	

Par Value

	 	

Stock Certificate No(s)

	 	

Number of Shares

	 	

Percentage of Outstanding Shares

	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

Schedule I to Security Agreement

 

  

  

  

 

Part II

 

	

Grantor

	 	

Debt Issuer

	 	

Description

	 	

Maturity

	 	

Outstanding 

Principal 

Amount

	  	 	  	 	  	 	  	 	  

 

 

Schedule I to Security Agreement

 

  

  

  

 

                                                                                                            Schedule II to the

Security Agreement

 

LOCATIONS OF EQUIPMENT AND INVENTORY

 

	
Grantor(s)

	  	
Locations of Equipment:

	  	
Locations of Inventory:

	
Genta Incorporated

	  	
200 Connell Drive, Berkeley Heights, NJ 07922

	  	
Almac, 4204 Technology Drive, Durham NC 27704

	  	  	  	  	  
	  	  	  	  	
Chesapeake Biological Laboratory, 1111 South Paca Street, Baltimore MD 21230

	  	  	  	  	  
	  	  	  	  	
Southern Testing, 3809 Airport Drive, Wilson NC 27896

	  	  	  	  	  
	  	  	  	  	
Halls Warehouse Corp, 501 Kentile Road, South Plainfield NJ 07080

	  	  	  	  	  
	  	  	  	  	
Cardinal Health, SPS, 15 Ingram Blvd, Suite 100, La Vergne, TN 37086

	  	  	  	  	  
	  	  	  	  	
Aptuit Europe Limited, Tenth Avenue, Deeside Industrial Park, Deeside, Flintshire CH5 2VA United Kingdom

 

 

SCHEDULE II TO SECURITY AGREEMENT

 

  

  

  

 

Schedule III to the

Security Agreement

 

CHIEF EXECUTIVE OFFICE, LOCATION

AND FEDERAL TAX IDENTIFICATION NUMBER

 

	
Grantor

	  	
Location

	  	
Chief Executive Office

	  	
Federal Tax Identification Number

	
Genta Incorporated

	  	
200 Connell Drive, Berkeley Heights, NJ 07922

	  	
Raymond P. Warrell, Jr., M.D.

	  	
33-0326866

 

SCHEDULE III TO SECURITY AGREEMENT

 

  

  

  

 

Schedule IV to the

Security Agreement

 

PATENTS, TRADEMARKS AND

TRADE NAMES, COPYRIGHTS AND LICENSES

 

PATENTS

 

	
Grantor

	  	
Patents

	  	
Country

	  	
Applic. No.

	  	
Filing Date

	  	  	  	  	  	  	  	  	  

 

See attached.

 

FEDERAL TRADEMARKS

 

	
Grantor

	  	
Trademarks

	  	
Serial No.

	  	
Reg. No.

	  	
Filing Date

	  	
Reg. Date

	  	  	  	  	  	  	  	  	  	  	  

 

See attached.

 

STATE TRADEMARKS

 

	
Grantor

	  	
Trademark

	  	
State

	  	
Reg. No

	  	
Reg. Date

	  	  	  	  	  	  	  	  	  

 

See attached.

 

FOREIGN TRADEMARKS

 

	
Grantor

	  	
Trademark

	  	
Country

	  	
Reg. No

	  	
Filing Date

	  	  	  	  	  	  	  	  	  

 

See attached.

 

TRADE NAMES

 

	
Grantor

	  	
Trade Name

	  	
State/Country

	  	
Reg. No

	  	
Issue Date

	  	  	  	  	  	  	  	  	  

 

See attached.

 

SCHEDULE IV TO SECURITY AGREEMENT

 

  

  

  

 

COPYRIGHTS

 

	
Grantor

	  	
Copyrights

	  	
Country

	  	
Reg. No

	  	
Reg. Date

	  	  	  	  	  	  	  	  	  

 

See attached.

 

MATERIAL LICENSES

 

	
Grantor

	  	
Licenses

	  	
Title

	  	
Date

	  	
Parties

	  	  	  	  	  	  	  	  	  

 

See attached.

 

EXCEPTION PURSUANT TO SECTION 5(K)(VI) OF THE SECURITY AGREEMENT

 

	
Grantor

	  	
Title

	  	
Date

	  	
Parties

	  	  	  	  	  	  	  

 

SCHEDULE IV TO SECURITY AGREEMENT

 

  

  

  

 

Schedule V to the

Security Agreement

 

EXISTING COMMERCIAL TORT CLAIMS

 

None.

 

 

SCHEDULE V TO SECURITY AGREEMENT

 

  

  

  

 

Exhibit A to the

Security Agreement

 

FORM OF SECURITY AGREEMENT SUPPLEMENT

 

___________, 200_

 

Tang Capital Partners, L.P.,

as the Agent for the

Purchasers referred to in the

Securities Purchase Agreement referred to below

_______________________________

_______________________________

Attn:  __________________________

 

GENTA INCORPORATED

 

Ladies and Gentlemen:

 

Reference is made to (i) the Securities Purchase Agreement dated as of September 2, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2011 Securities Purchase Agreement”), among Genta Incorporated, a Delaware corporation, as the Company, the Purchasers party thereto, and Tang Capital Partners, L.P., as Agent, and the Securities Purchase Agreement dated as of March 28, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2012 Securities Purchase Agreement” and together with the 2011 Securities Purchase Agreement, the “Securities Purchase Agreements”) among Genta Incorporated, a Delaware corporation, as the Company, the Purchasers party thereto, and the Agent and (ii) the Amended and Restated General Security Agreement dated as of March 30, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) between the Grantors from time to time party thereto and the Agent for the Purchasers. Terms defined in the Security Agreement and not otherwise defined herein are used herein as defined in the Security Agreement.

 

SECTION 1.    Grant of Security. The undersigned hereby assigns and pledges to the Agent for the ratable benefit of the Purchasers, and hereby grants to the Agent for the ratable benefit of the Purchasers, a security interest in, all of its right, title and interest in and to all of the Collateral of the undersigned, whether now owned or hereafter acquired by the undersigned, wherever located and whether now or hereafter existing or arising, including, without limitation, the property and assets of the undersigned set forth on the attached supplemental schedules to the Schedules to the Security Agreement.

 

SECTION 2.    Security for Obligations. The pledge and assignment of, and the grant of a security interest in, the Collateral by the undersigned under this Security Agreement Supplement and the Security Agreement secures the payment and performance of all Liabilities, together with the prompt payment of all expenses, including, without limitation, reasonable attorney costs and disbursements incurred by the Agent or the Purchasers incidental to the collection of the Liabilities and the enforcement or protection of the Agent’s security interest in the Collateral.

 

 

SECURITY AGREEMENT SUPPLEMENT

 

  

  

  

 

SECTION 3.    Supplements to Security Agreement Schedules. The undersigned has attached hereto supplemental Schedules I, II, III, IV, and V to Schedules I, II, III, IV, and V, respectively, to the Security Agreement, and the undersigned hereby certifies, as of the date first above written, that such supplemental schedules have been prepared by the undersigned in substantially the form of the equivalent Schedules to the Security Agreement and are complete and correct in all material respects.

 

SECTION 4.   Representations and Warranties. The undersigned hereby makes each representation and warranty set forth in Section 5 of the Security Agreement (as supplemented by the attached supplemental schedules) to the same extent as each other Grantor.

 

SECTION 5.   Obligations Under the Security Agreement. The undersigned hereby agrees, as of the date first above written, to be bound as a Grantor by all of the terms and provisions of the Security Agreement to the same extent as each of the other Grantors. The undersigned further agrees, as of the date first above written, that each reference in the Security Agreement to an “Additional Grantor” or a “Grantor” shall also mean and be a reference to the undersigned.

 

SECTION 6.   Governing Law. This Security Agreement Supplement shall be governed by, and construed in accordance with, the law of the State of New York without regard to principles thereof regarding conflict of laws.

 

 

SECURITY AGREEMENT SUPPLEMENT

 

  

  

  

 

	 	

Very truly yours,

	 
	 	 	 
	 	

[Name Of Additional Grantor]

	 
	 	 	 
	 	 	 
	
 

	
By: 

	 	 	 
	 	 	 	

Title:

	 
	 	 	 	 	 
	 	 	 	Address for Notices:	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

 

SECURITY AGREEMENT SUPPLEMENT

  

  

  

 

Exhibit B to the

Security Agreement

 

FORM OF AMENDED AND RESTATED INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

This Amended and Restated Intellectual Property Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “IP Security Agreement”) dated as of March 30, 2012, is made by the Persons listed on the signature pages hereof (collectively, the “Grantors”) in favor of Tang Capital Partners, L.P., as Agent (the “Agent”) for the Purchasers (as defined below).  This Agreement amends and restates in its entirety that certain Intellectual Property Security Agreement dated as of September 9, 2011 between the Grantors and the Agent (the “Original IP Security Agreement”).

WHEREAS, Genta Incorporated, a Delaware corporation, has entered into a Securities Purchase Agreement dated as of September 2, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2011 Securities Purchase Agreement”) with the Purchasers party thereto, and Tang Capital Partners, L.P., as Agent, and a Securities Purchase Agreement dated as of March 28, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2012 Securities Purchase Agreement” and collectively with the 2011 Securities Purchase Agreement, the “Securities Purchase Agreements”), with the Purchasers party thereto, and Tang Capital Partners, L.P., as Agent. The Purchasers under the 2011 Securities Purchase Agreement and the 2012 Securities Purchase Agreement are collectively referred to herein as the “Purchasers”. Terms defined in the Securities Purchase Agreements and not otherwise defined herein are used herein as defined in the Securities Purchase Agreements.

WHEREAS, as a condition precedent to the purchase of the Notes by the Purchasers under the 2011 Securities Purchase Agreement, each Grantor has executed and delivered that certain General Security Agreement dated as of September 9, 2011 between the Grantors and the Agent (the “Original Security Agreement”).

WHEREAS, as a condition precedent to the Purchase of the Notes by the Purchasers under the 2012 Securities Purchase Agreement, each Grantor has executed and delivered that certain Amended and Restated General Security Agreement dated as of March 30, 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”) between the Grantors and the Agent, which Security Agreement amends and restates the Original Security Agreement.

WHEREAS, under the terms of the Security Agreement, the Grantors have granted a security interest in, among other property, certain intellectual property of the Grantors to the Agent for the ratable benefit of the Purchasers, and have agreed as a condition thereof to execute this IP Security Agreement covering such intellectual property for recording with the U.S. Patent and Trademark Office, the United States Copyright Office and other governmental authorities. The parties intend that all security interests granted pursuant to this IP Security Agreement (including those granted under the Original IP Security Agreement), shall be pari passu notwithstanding the date, order or method of attachment or perfection of any such lien or security interest or the provisions of any applicable law

 

 

SECURITY AGREEMENT SUPPLEMENT

 

  

  

  

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

SECTION 1.      Grant of Security. Each Grantor hereby grants to the Agent for the ratable benefit of the Purchasers a security interest in and to all of such Grantor’s right, title and interest in and to the following (the “Collateral”):

(i)           the United States, international, and foreign patents, patent applications and patent licenses set forth in Schedule A hereto (as such Schedule A may be supplemented from time to time by supplements to the Security Agreement and this IP Security Agreement, each such supplement being in substantially the form of Exhibit C to the Security Agreement (an “IP Security Agreement Supplement”), executed and delivered by such Grantor to the Agent from time to time), together with all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations thereof, and all rights therein provided by international treaties or conventions (the “Patents”);

 

(ii)          the United States and foreign trademark and service mark registrations, applications, and licenses set forth in Schedule B hereto (as such Schedule B may be supplemented from time to time by IP Security Agreement Supplements executed and delivered by such Grantor to the Agent from time to time) (the “Trademarks”);

 

(iii)         the copyrights, United States and foreign copyright registrations and applications and copyright licenses set forth in Schedule C hereto (as such Schedule C may be supplemented from time to time by IP Security Agreement Supplements executed and delivered by such Grantor to the Agent from time to time) (the “Copyrights”);

 

(iv)          any and all claims for damages for past, present and future infringement, misappropriation or breach with respect to the Patents, Trademarks and Copyrights, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages; and

 

(v)           any and all proceeds of the foregoing.

 

SECTION 2.      Security for Obligations. The pledge and assignment of, and the grant of a security interest in, the Collateral by each Grantor under this IP Security Agreement secures the payment of the Secured Obligations (as defined in the Security Agreement) now or hereafter existing, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest (including any interest that accrues after the commencement of bankruptcy), premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise.

 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT 

 

  

  

  

 

SECTION 3.      Recordation. Each Grantor authorizes and requests that the Register of Copyrights, the Commissioner of Patents and Trademarks and any other applicable government officer record this IP Security Agreement.

 

SECTION 4.      Execution in Counterparts. This IP Security Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

SECTION 5.      Grants, Rights and Remedies. This IP Security Agreement has been entered into in conjunction with the provisions of the Security Agreement. Each Grantor does hereby acknowledge and confirm that the grant of the security interest hereunder to, and the rights and remedies of, the Agent with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which are incorporated herein by reference as if fully set forth herein.

 

SECTION 6.      Governing Law. This IP Security Agreement shall be governed by, and construed in accordance with, the law of the State of New York without regard to principles thereof regarding conflict of laws.

 

 

IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

 

	 	

Genta Incorporated,

	 
	 	

a Delaware corporation

	 
	 	 	 
	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

Address for Notices:

 

Genta Incorporated

200 Connell Drive

Berkeley Heights, NJ 07922

Attention: Raymond P. Warrell, Jr., M.D.

Telephone No.: (908) 286-9800

Telecopy No.: (908) 464-1705

 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT 

 

  

  

  

 

In Witness Whereof, the Agent has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

 

	 	

Tang Capital Partners, L.P.,

	 
	 	

as Agent

	 
	 	 	 
	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

Address for Notices:

 

	 	 	 
	 	 	 
	 	 	 

 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT 

  

  

  

 

Schedule A to the

IP Security Agreement

 

PATENTS

 

	
Grantor

	  	
Patents

	  	
Country

	  	
Applic. No.

	  	
Filing Date

	  
	
See attached.

	  	  	  	  	  	  	  	  	  

 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

SCHEDULE A

  

  

  

 

Schedule B to the

IP Security Agreement

 

FEDERAL TRADEMARKS

 

	
Grantor

	  	
Trademarks

	  	
Serial No.

	  	
Reg. No.

	  	
Filing Date

	  	
Reg. Date

	  
	
See attached.

	  	  	  	  	  	  	  	  	  	  	  

 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

SCHEDULE B

 

  

  

  

 

Schedule C to the

IP Security Agreement

 

COPYRIGHTS

 

	
Grantor

	  	
Copyrights

	  	
Country

	  	
Reg. No

	  	
Reg. Date

	  
	
See attached.

	  	  	  	  	  	  	  	  	  

 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT

SCHEDULE C

  

  

  

 

Exhibit C to the

Security Agreement

 

FORM OF INTELLECTUAL PROPERTY

SECURITY AGREEMENT SUPPLEMENT

 

This Intellectual Property Security Agreement Supplement (this “IP Security Agreement Supplement”) dated as of ___________, 2012, is made by the Person listed on the signature page hereof (the “Grantor”) in favor of Tang Capital Partners, L.P., as Agent (the “Agent”) for the Purchasers (as defined below).

Whereas, Genta Incorporated, a Delaware corporation, has entered into a Securities Purchase Agreement dated as of September 2, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2011 Securities Purchase Agreement”) with the Purchasers party thereto, and Tang Capital Partners, L.P., as Agent, and a Securities Purchase Agreement dated as of March [ ], 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “2012 Securities Purchase Agreement” and collectively with the 2011 Securities Purchase Agreement, the “Securities Purchase Agreements”), with the Purchasers party thereto and Tang Capital Partners, L.P., as Agent. The Purchasers under the 2011 Securities Purchase Agreement and the 2012 Securities Purchase Agreement are collectively referred to herein as the “Purchasers”. Terms defined in the Securities Purchase Agreements and not otherwise defined herein are used herein as defined in the Securities Purchase Agreements.

Whereas, pursuant to the Securities Purchase Agreements, the Grantor and certain other Persons have executed and delivered that certain Amended and Restated General Security Agreement dated as of March [  ], 2012 between the Grantor, such other Persons and the Agent (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”). To create a short form version of the Security Agreement covering certain intellectual property of the Grantor and such other Persons for recording with the U.S. Patent and Trademark Office, the United States Copyright Office and other governmental authorities, the Grantor and such other Persons have executed and delivered that certain Amended and Restated Intellectual Property Security Agreement made by the Grantor and such other Persons to the Agent dated as of March [  ], 2012 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “IP Security Agreement”).

Whereas, under the terms of the Security Agreement and the IP Security Agreement, the Grantor has granted a security interest in the Additional Collateral (as defined in Section 1 below) of the Grantor to the Agent for the ratable benefit of the Purchasers and has agreed as a condition thereof to execute this IP Security Agreement Supplement for recording with the U.S. Patent and Trademark Office, the United States Copyright Office and other governmental authorities.

Now, Therefore, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

 

  

  

  

 

SECTION 1.   Confirmation of Grant of Security. The Grantor hereby acknowledges and confirms the grant of a security interest to the Agent for the ratable benefit of the Purchasers under the Security Agreement and the IP Security Agreement in and to all of the Grantor’s right, title and interest in and to the following (the “Additional Collateral”):

(i)           The United States, international, and foreign patents, patent applications, and patent licenses set forth in Schedule A hereto, together with all reissues, divisions, continuations, continuations-in-part, extensions and reexaminations thereof, and all rights therein provided by international treaties or conventions (the “Patents”);

 

(ii)          The United States and foreign trademark and service mark registrations, applications, and licenses set forth in Schedule B hereto (the “Trademarks”);

 

(iii)         The copyrights, United States and foreign copyright registrations and applications and copyright licenses set forth in Schedule C hereto (the “Copyrights”);

 

(iv)          any and all claims for damages for past, present and future infringement, misappropriation or breach with respect to the Patents, Trademarks and Copyrights, with the right, but not the obligation, to sue for and collect, or otherwise recover, such damages; and

 

(v)           any and all proceeds of the foregoing.

 

SECTION 2.   Supplement to Security Agreement and IP Security Agreement.  Schedule IV to the Security Agreement and Schedules A, B and C to the IP Security Agreement are each, effective as of the date hereof, hereby supplemented to add to such Schedules the Additional Collateral.

 

SECTION 3.   Recordation. The Grantor authorizes and requests that the Register of Copyrights, the Commissioner of Patents and Trademarks and any other applicable government officer to record this IP Security Agreement Supplement.

 

SECTION 4.   Governing Law. This IP Security Agreement Supplement shall be governed by, and construed in accordance with, the law of the State of New York without regard to principles thereof regarding conflict of laws.

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

 

  

  

  

 

In Witness Whereof, the Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.

 

	 	

[Name Of Grantor]

	 
	 	 	 	 
	
 

	
By: 

	 	 
	 	 	Name:	 
	 	 	Title:	 

 

Address for Notices:

 

	 	 	 
	 	 	 
	 	 	 

 

INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

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