Document:

ex_10d1.htm

Exhibit 10.1

CHANGE IN TERMS AGREEMENT

	
Principal

$500,000.00

	
Loan Date

11-23-2010

	
Maturity

05-23-2012

	
Loan No

823002500

	
Call/Coll

     56

	
Account

	
Officer

MH

	
Initials

	
References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing “***” has been omitted due to text length limitations.

	
Borrower:

	
INNSUITES HOSPITALITY TRUST, YUMA HOSPITAILTY PROPERTIES LIMITED PARTNERSHIP and RRF LIMITED PARTNERSHIP

1625 E. NORTHERN AVENUE, STE #105

PHOENIX, AZ  85020

	
Lender:

	
RepublicBankAZ, N.A.

909 E. Missouri Avenue

Phoenix, AZ  85014

	  	  	  	  

	
Principal Amount:  $500,000.00

	
Date of Agreement:  MAY 12, 2011

DESCRIPTION OF EXISTING INDEBTEDNESS.  THAT CERTAIN PROMISSORY NOTE DATED NOVEMBER 23, 2010, EXECUTED BY BORROWER IN FAVOR OF LENDER, IN THE ORIGINAL PRINCIPAL AMOUNT OF $500,000.00 (THE “NOTE”).  THE NOTE AND CHANGE IN TERMS AGREEMENT ARE HEREINAFTER REFERRED TO AS THE “NOTE”.

DESCRIPTION OF COLLATERAL.  THAT CERTAIN DEED OF TRUST DATED NOVEMBER 23, 2010, EXECUTED BY BORROWER, AS TRUSTOR, AND LENDER, AS BENEFICIARY AND TRUSTEE, FILED NOVEMBER 29, 2010, IN THE OFFICE OF THE COUNTY RECORDER OF YUMA COUNTY, ARIZONA, AS FILE #2010-30593;

AS WELL AS THAT CERTAIN COMMERCIAL SECURITY AGREEMENT DATED NOVEMBER 23, 2010, EXECUTED BY BORROWER, AS GRANTOR, AND LENDER, AS SECURED PARTY, EVIDENCED BY THAT CERTAIN UCC-1 FINANCING STATEMENT FILED NOVEMBER 29, 2010, IN THE OFFICIAL RECORDS OF THE SECRETARY OF STATE OF ARIZONA, AS FILE #201016331028;

AS WELL AS THAT CERTAIN COMMERCIAL SECURITY AGREEMENT DATED NOVEMBER 23, 2010, EXECUTED BY BORROWER, AS GRANTOR, AND LENDER, AS SECURED PARTY, EVIDENCED BY THAT CERTAIN UCC-1 FINANCING STATEMENT FILED DECEMBER 3, 2010, IN THE OFFICIAL RECORDS OF THE SECRETARY OF STATE OF OHIO, AS FILE #OH00146645061.

DESCRIPTION OF CHANGE IN TERMS.

	
1.  

	
THE MATURITY DATE OF SAID NOTE AND REVOLVING LINE OF CREDIT IS HEREBY EXTENDED FROM MAY 23, 2011 TO MAY 23, 2012.

	
2.  

	
THE MARGIN USED TO DETERMINE THE INTEREST RATE IS HEREBY REDUCED FROM 2.750 PERCENTAGE POINTS OVER THE INDEX TO 1.000 PERCENTAGE POINT OVER THE INDEX.  THE INDEX AND FLOOR RATE SHALL REMAIN UNCHANGED.

ALL OTHER TERMS AND CONDITIONS OF SAID NOTE SHALL REMAIN THE SAME.

PROMISE TO PAY.  INNSUITES HOSPITALITY TRUST, YUMA HOSPITALITY PROPERTIES LIMITED PARTNERSHIP AND RRF LIMITED PARTNERSHIP (“Borrower”) jointly and severally promise to pay to RepublicBankAZ, N.A. (“Lender”), or order, in lawful money of the United States of America, the principal amount of Five Hundred Thousand & 00/100 Dollars ($500,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance.  Interest shall be calculated from the date of each advance until repayment of each advance.

PAYMENT.  Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on May 23, 2012.  In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning June 23, 2011, with all subsequent interest payments to be due on the same day of each month after that.  Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any late charges; and then to any unpaid collection costs.  Borrower will pay to Lender at Lender’s address shown above or at such other place as Lender may designate in writing.

VARIABLE INTEREST RATE.  The interest rate on this loan is subject to change from time to time based on changes in an independent index which is the highest published prime rate as published in the Wall Street Journal (the “Index”).  The Index is not necessarily the lowest rate charged by Lender on its loans.  If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying Borrower.  Lender will tell Borrower the current Index rate upon Borrower’s request.  The interest rate change will note occur more often than each daily.  Borrower understands that Lender may make loans based on other rates as well.  The Index is currently 3.250% per annum.  Interest on the unpaid principal balance of this loan will be calculated as described in the “INTEREST CALCULATION METHOD” paragraph using a rate of 1.000 percentage point over the Index, adjusted if necessary for any minimum and maximum rate limitations described below, resulting in an initial rate of 6.000% per annum based on a year of 360 days.  NOTICE:  Under no circumstances will the interest rate on this loan be less than 6.000% per annum and no more than the maximum rate allowed by applicable law.

INTEREST CALCULATION METHOD.  Interest on this loan is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this loan is computed using this method.  This calculation method results in a higher effective interest rate than the numeric rate stated in the loan documents.  (Initial Here  /s/ JW )

EFFECTIVE RATE.  Borrower agrees to an effective rate of interest that is the rate specified in this Agreement plus any additional rate resulting from any other charges in the nature of interest paid or to be paid in connection with this Agreement.

PREPAYMENT.  Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law.  Except for the foregoing, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments of accrued unpaid interest.  Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked “paid in full”, “without recourse”, or similar language.   If Borrower sends such a payment, Lender may accept it without losing any or Lender’s rights under this Agreement, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  RepublicBankAZ, N.A., 909 E. Missouri Avenue  Phoenix, AZ  85014.

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 5.000% of the regularly scheduled payment or $10.00, whichever is greater.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this loan shall be increased by adding an additional 10.000 percentage point margin (“Default Rate Margin”).  The Default Rate Margin shall also apply to each succeeding interest rate change that would have applied had there been no default.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement:

Payment Default.  Borrower fails to make any payment when due under the Indebtedness.

Other Defaults:  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Any guarantor of Borrower defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of any guarantor’s or Borrower’s property or ability to perform their respective obligations under this Agreement or any of the Related Documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower’s existence as a going business or the death of any partner, the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the Indebtedness.  This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.    Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness evidenced by this Note.

Events Affecting General Partner of Borrower.  Any of the preceding events occurs with respect to any general partner of Borrower or any general partner dies or becomes incompetent.

Change in Ownership. The resignation or expulsion of any general partner with an ownership interest of twenty-five percent (25%) or more in Borrower.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

Adverse Change.  A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.

Insecurity.  Lender in good faith believes itself insecure.

Cure Provisions.  If any default, other than a default in payment is curable and if Borrower has not been given notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default: (1) cures the default within thirty (30) days; or (2) if the cure requires more than thirty (30) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

LENDER’S RIGHTS. Upon default, Lender may declare the entire unpaid principal balance under this Agreement and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS’ FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Agreement if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender’s attorneys’ fees and Lender’s legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  However, Borrower will only pay attorneys’ fees of an attorney not Lender’s salaried employee, to whom the matter is referred after Borrower's default.  If not prohibited by applicable law, Borrower will also pay any court costs, in addition to all other sums provided by law.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW.  This Agreement will be governed by the federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Arizona without regard to its conflicts of law provisions.  This Agreement has been accepted by Lender in the State of Arizona.

DISHONORED ITEM FEE.  Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower’s loan and the check or preauthorized charge with which Borrower pays is later dishonored.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorized Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts.

COLLATERAL.  Borrower acknowledges this Agreement is secured by the following collateral described in the security instruments listed herein:

(A) A DEED OF TRUST DATED NOVEMBER 23, 2010, TO A TRUSTEE IN FAVOR OF LENDER ON REAL PROPERTY LOCATED IN YUMA COUNTY, STATE OF ARIZONA.

(B) ACCOUNTS DESCRIBED IN COMMERCIAL SECURITY AGREEMENTS DATED NOVEMBER 23, 2010.

LINE OF CREDIT.  This Agreement evidences a revolving line of credit.  Advances under this Agreement may be requested orally by Borrower or as provided in this paragraph.  All oral requests shall be confirmed in writing on the day of the request.  All communications, instructions, or directions by telephone or otherwise to Lender are to be directed to Lender’s office shown above.  The following person or persons are authorized to request advances and authorize payments under the line of credit until Lender receives from Borrower, at Lender’s address shown above, written notice of revocation of such authority:  JAMES WIRTH, PRESIDENT of INNSUITES HOSPITALITY TRUST.  Borrower agrees to be liable for all sums either: (A) advanced in accordance with the instructions of an authorized person or (B) credited to any of Borrower’s accounts with Lender.  The unpaid principal balance owing on this Agreement at any time may be evidenced by endorsements on this Agreement or by Lender’s internal records, including daily computer print-outs.

CONTINUING VALIDITY.  Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect.  Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future changes in terms.  Nothing in this Agreement will constitute a satisfaction of the obligation(s).  It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing.  Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement.  If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it.  This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.

SUCCESSORS AND ASSIGNS.  Subject to any limitations stated in this Agreement on transfer of Borrower’s interest, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns.  If ownership of the Collateral becomes vested in a person other than Borrower, Lender, without notice to Borrower, may deal with Borrower’s successors with reference to this Agreement and the Indebtedness by way of forbearance or extension without releasing Borrower from the obligations of this Agreement or liability under the Indebtedness.

NOTIFY US OF INACCURATE INFORMATION WE REPORT TO CONSUMER REPORTING AGENCIES.  Please notify us if we report any inaccurate information about your account(s) to a consumer reporting agency.  Your written notice describing the specific inaccuracy(ies) should be sent to us at the following address:  RepublicBankAZ, N.A.  909 E. Missouri Avenue  Phoenix, AZ 85014.

MISCELLANEOUS PROVISIONS.  If any part of this Agreement cannot be enforced, this fact will not affect the rest of the Agreement.  Lender may delay or forgo enforcing any of its rights or remedies under this Agreement without losing them.  Each Borrower understands and agrees that, with or without notice to Borrower, Lender may with respect to any other Borrower (a) make one or more additional secured or unsecured loans or otherwise extend additional credit; (b) alter, compromise, renew, extend, accelerate, or otherwise change one or more times the time for payment or other terms of any indebtedness, including increases and decreases of the rate of interest on the indebtedness; (c) exchange, enforce, waive, subordinate, fail or decide not to perfect, and release any security, with or without the substitution of new collateral; (d) apply such security and direct the order or manner of sale thereof, including without limitation, any non-judicial sale permitted by the terms of the controlling security agreements, as Lender in its discretion may determine; (e) release, substitute, agree not to sue, or deal with any one or more of Borrower’s sureties, endorsers, or other guarantors on any terms or in any manner Lender may choose; and (f) determine how, when and what application of payments and credits shall be made on any other indebtedness owing by such other Borrower.  Borrower and any other person who signs, guarantees or endorses this Agreement, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Agreement, and unless otherwise expressly stated in writing, no party who signs this Agreement, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party, partner, or guarantor or collateral; or impair, fail to realize upon or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Agreement are joint and several.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PRIOR TO SIGNING THIS AGREEMENT, EACH BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.  EACH BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

CHANGE IN TERMS SIGNERS:

 

	
INNSUITES HOSPITALITY TRUST

	
By:

	
/s/ James F. Wirth

	  
	  	
JAMES F. WIRTH, President of INNSUITES HOSPITALITY TRUST

	
 

YUMA HOSPITALITY PROPERTIES LIMITED PARTNERSHIP

	
INNSUITES HOSPITALITY TRUST, General Partner of YUMA HOSPITALITY PROPERTIES LIMITED PARTNERSHIP

	
By:

	
/s/ James F. Wirth

	  
	  	
JAMES F. WIRTH, President of INNSUITES HOSPITALITY TRUST

	
 

RRF LIMITED PARTNERSHIP

	
INNSUITES HOSPITALITY TRUST, General Partner of RRF LIMITED PARTNERSHIP

	
By:

	
/s/ James F. Wirth

	  
	  	
JAMES F. WIRTH, President of INNSUITES HOSPITALITY TRUST

	
  

 

	
 

/s/ James F. Wirth

	  
	  	
JAMES F. WIRTH, GUARANTORexhibit_10-1.htm

EXECUTION VERSION

Repurchase Right Agreement

Repurchase Right Agreement, dated as of May 27, 2011 (this “Agreement”), by and between PhotoMedex, Inc., a Nevada corporation (the “Company”), and Perseus Partners VII, L.P., a Delaware limited partnership (“Perseus,” and together with the Company, the “Parties”).

Introduction

The Company and Perseus are parties to a Securities Purchase Agreement, dated as of August 4, 2008 (as amended by Amendment No. 1, dated February 27, 2009, and Amendment No. 2, dated March 18, 2010, and as the same may be further amended, modified and supplemented from time to time, the “Securities Purchase Agreement”).  Capitalized terms used in this Agreement but not otherwise defined in this Agreement shall have the meanings ascribed thereto in the Securities Purchase Agreement.

As of the date of this Agreement Perseus, together with its former director appointees to the Board, holds: (i) secured convertible promissory notes having an aggregate principal amount of $21,447,590, together with interest thereon payable as specified therein, which notes are convertible into shares of the common stock, par value $0.01 per share, of the Company (the “Company Common Stock”) (such secured convertible promissory notes, together with any additional secured convertible promissory notes issued as interest thereon, together with such additional interest as may be accrued on such existing and additional secured convertible promissory notes, the “Notes”); (ii) a warrant to purchase 301,288 shares of Company Common Stock (the “Warrant”); (iii) an option, held by a former director appointee of Perseus to the Board, to purchase 625 shares of Common Stock (the “Option”); and (iv) certain rights, held by former director appointees of Perseus to the Board, to receive shares of Common Stock in lieu of cash as consideration for service on the Board (“Service Share Rights”).  The Notes, the Warrant, the Option, the Service Share Rights and any shares of Company Common Stock issued upon conversion or exercise thereof are referred to collectively as the “Repurchase Securities”.

The Parties desire to enter into this Agreement pursuant to which the Company will have the right to repurchase all of the Repurchase Securities that are held by Perseus or any of its former director appointees to the Board, Affiliates, successors or assigns (the “Perseus Group”) on the terms and conditions set forth in this Agreement.

In consideration of the foregoing and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and Perseus hereby agree as follows:

1.           Repurchase Right of the Company.  The Company shall have the right (the “Repurchase Right”), exercisable only as provided in Section 2 below, to repurchase all (but not less than all) of the Repurchase Securities, in connection with the completion of a Repurchase Transaction (as hereinafter defined in Section 6 of this Agreement), for an aggregate purchase

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price equal to the Repurchase Price (as hereinafter defined in Section 6 of this Agreement) and upon the further terms and conditions set forth in this Agreement.

2.           Exercise of Repurchase Right.  The Company may exercise the Repurchase Right to repurchase the Repurchase Securities only in connection with, and up to three business days prior to or simultaneously with, the completion of a Repurchase Transaction.  The Repurchase Right shall terminate on the earliest of: (i) except with respect to a Repurchase Transaction described in clause (y) of the definition thereof, (A) the Company’s entering into a definitive agreement providing for a Change of Control or (B) any offer or proposal by a third party to enter into or consummate a transaction which would result in a Change of Control, which proposal is publicly recommended by the Board of Directors of the Company, (ii) the completion of a Repurchase Transaction unless the Repurchase Right has previously been or is simultaneously exercised and completed; or (iii) January 31, 2012 (the date on which the earliest of such events occurs, the “Repurchase Right Termination Date”).  For purposes of clarification, neither the Company’s entering into a definitive agreement providing for a Repurchase Transaction described in clause (y) of the definition thereof nor the public recommendation by the Company’s Board of Directors of a proposal for a Repurchase Transaction described in clause (y) of the definition thereof, shall, in itself, terminate the Company’s Repurchase Right.  To exercise the Repurchase Right the Company shall deliver a written notice of its election (an “Election Notice”) to exercise its Repurchase Right to Perseus, which notice shall (i) specify the existence of and include a reasonable description of the terms of the Repurchase Transaction that permits the Company to exercise its Repurchase Right, (ii) specify the date on which the repurchase contemplated by this Section 2 will be completed (the “Repurchase Right Exercise Date”), which date shall be simultaneously with, or up to three business days prior to, the completion of the applicable Repurchase Transaction, and (iii) be delivered not less than one business day prior to the Repurchase Right Exercise Date.  On the Repurchase Right Exercise Date specified in the Election Notice:

(a)           The Company shall deliver, or cause to be delivered, the Repurchase Price to Perseus by wire transfer of immediately available funds to an account designated in writing to the Company by Perseus;

(b)           Perseus shall deliver to the Company all Repurchase Securities held by it or any other members of the Perseus Group, free and clear of any Liens, other than such Liens as may be imposed by federal or state securities laws, in consideration of the Repurchase Price;

(c)           Each of the Transaction Documents shall automatically terminate and any and all rights, liabilities, obligations and duties of each of the parties thereunder shall be of no further force or effect; provided, that the provisions in the last sentence of Section 5.5 of the Securities Purchase Agreement (the “Surviving Provision”) shall survive such termination.  In furtherance of the foregoing, each member of the Perseus Group and the Company shall be deemed to have released all liabilities, obligations and duties of each of the other parties thereunder, other than the Surviving Provision, immediately following the effectuation of the Repurchase Right in accordance with the provisions of this Section 2; and

 

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(d)           Effective on the Repurchase Right Exercise Date and subject to the effectuation of the Repurchase Right in accordance with the provisions of this Section 2, all Liens that encumber any of the properties, securities or other assets of the Company pursuant to the provisions of the Transaction Documents, or as a result of any actions taken pursuant to the provisions of any of the Transaction Documents, will be hereby released and terminated.  In furtherance of the foregoing, Perseus shall deliver to the Company UCC-3 termination statements and notices to the U.S. Patent and Trademark Office providing for the release and termination of any such Liens, and shall otherwise take all such additional actions as may be reasonably necessary to cause any such Liens to be released and terminated, to the full satisfaction of the Company, on or prior to the Repurchase Right Exercise Date.

3.           Restriction on Perseus and its Affiliates.  Until that date which is the earliest to occur of the Repurchase Right Termination Date or a termination of this Agreement upon the mutual agreement of the Parties, Perseus hereby agrees that it shall not, and it shall cause all other members of the Perseus Group not to: (i) sell, assign, pledge, hypothecate, encumber or otherwise transfer, whether or not for consideration, any of the Repurchase Securities and/or (ii) sell, assign or transfer any of their respective rights, claims, benefits or interests in, to and under the Transaction Documents.

4.           Further Assurances.

(a)           The Parties shall cooperate with each other and each shall use commercially reasonable efforts to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, (i) effectuating the Repurchase Right of the Company and those obligations of the Parties set forth in Section 2 hereof, (ii) granting such Party’s consent or approval under the Transaction Documents to the execution by the Company of definitive agreements for a Repurchase Transaction and the consummation of a Repurchase Transaction (which consent or approval shall be expressly subject to the condition that the Repurchase Right is exercised and completed in accordance with the terms of Section 2, no later than the date of completion of such Repurchase Transaction) and (iii) subject to the prior receipt of a written undertaking of the Company to exercise and complete the Repurchase Right in accordance with the terms of Section 2 no later than the date of completion of the applicable Repurchase Transaction, voting all Repurchase Securities (to the extent entitled to vote thereon) in favor of the execution by the Company of definitive agreements for a Repurchase Transaction and the consummation of a Repurchase Transaction.  In addition, Perseus shall cause its controlled Affiliates to take all action and to do all things necessary, proper, or advisable in order to consummate and make effective the transactions contemplated by this Agreement, including, without limitation, those actions described in the preceding sentence.

(b)           The Parties hereby acknowledge and agree that any participant in a Repurchase Transaction with the Company shall be permitted by the Parties to file, and

 

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shall not be prohibited by the Parties hereto from filing, liens created pursuant to such Repurchase Transaction with respect to the assets, rights and property of the Company, and any UCC financing statements, notices and other security interest filings necessary to perfect such liens, with any governmental authority, provided that such liens are junior and subordinate in right, priority, operation, effect and all other respects to any and all Liens and security interests in favor of the members of the Perseus Group and all such UCC financing statements, notices and other security interest filings shall reflect such junior and subordinate status.

5.           Representations and Warranties.

(a)           The Company hereby represents and warrants to Perseus as follows:

(i)           The Company has corporate power and authority to enter into and consummate the transactions contemplated by this Agreement.  The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby have been, or will be prior to the Repurchase Right Exercise Date, duly authorized by the Board.

(ii)           This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforceability may be limited by (x) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, and (y) the effect of rules of Law governing the availability of specific performance and other equitable remedies.

(iii)           The execution, delivery and performance by the Company of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, do not and will not: (x) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents; (y) conflict with, violate or result in a breach of any provision of, or constitute a default under (or an event that with notice or lapse of time or both would become a default under), or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound, or affected; or (z) result in a violation of any Law or Order of any Governmental Entity to which the Company is subject, except in the case of clause (y) above for any consent requirements for which a requisite consent has been obtained or will be obtained prior to the Repurchase Right Exercise Date, and in the case of clauses (y) and (z) above, for such conflicts or violations that, individually or in the aggregate, are not material and do not otherwise adversely affect the ability of the Company to consummate the transactions contemplated by this Agreement.

(b)           Perseus hereby represents and warrants to the Company as follows:

 

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(i)           Perseus has limited partnership power and authority to enter into and to consummate the transactions contemplated by this Agreement.  The execution, delivery and performance by Perseus of this Agreement and the consummation by Perseus of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of Perseus.

(ii)           This Agreement has been duly executed and delivered by Perseus and constitutes a legal, valid and binding obligation of Perseus enforceable against Perseus in accordance with its terms, except as enforceability may be limited by (x) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, and (y) the effect of rules of Law governing the availability of specific performance and other equitable remedies.

(iii)           The execution, delivery and performance by Perseus of this Agreement and the consummation by Perseus of the transactions contemplated hereby do not and will not: (x) result in a violation of the organizational documents of Perseus or; (y) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which Perseus is a party; or (z) result in a violation of any Law (including federal and state securities laws) or Order applicable to Perseus, except in the case of clause (y) above for any consent requirements for which a requisite consent has been obtained or will be obtained prior to the Repurchase Right Exercise Date, and in the case of clauses (y) and (z) above, for such conflicts or violations that, individually or in the aggregate are not material and do not otherwise adversely affect the ability of Perseus to consummate the transactions contemplated by this Agreement.

(iv)           Perseus and the other members of the Perseus Group are the owners of, and have valid and marketable title to, and on the Repurchase Right Exercise Date will continue to be the owners of, and have valid and marketable title to, all of the Repurchase Securities, free and clear of any Liens, other than such Liens as may be imposed by federal or state securities laws or created pursuant to this Agreement.  Perseus and the other members of the Perseus Group have not sold, assigned or transferred, whether or not for consideration any of their respective rights, claims, benefits or interests in, to and under the Transaction Documents.

(v)           Neither Perseus nor any other member of the Perseus Group nor the Repurchase Securities are, or will be on the Repurchase Right Exercise Date, subject to any contract, understanding or other similar agreement which would (x) require Perseus or any other member of the Perseus Group to obtain any consent, approval, authorization or permit of, any Person, in order to consummate the transactions contemplated by this Agreement, or (y) limit the ability of or prevent Perseus and the other members of the Perseus Group from consummating the transactions contemplated by this Agreement.

 

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6.           Definitions.  The following capitalized terms have the following meanings:

“Repurchase Price” shall mean an amount equal to $19,500,000, and which amount shall increase by $250,000 on each of October 16, 2011, November 16, 2011, December 16, 2011, and January 16, 2012; i.e., on October 16, 2011, the Repurchase Price shall become $19,750,000, on November 16, 2011, the Repurchase Price shall become $20,000,000, on December 16, 2011, the Repurchase Price shall become $20,250,000, and on January 16, 2012, the Repurchase Price shall become $20,500,000.

“Repurchase Transaction” shall mean a transaction which occurs on, or follows by not more than three (3) business days, the Repurchase Right Exercise Date, and (x) is a financing, refinancing or similar transaction entered into by the Company or an Affiliate of the Company which results in neither (i) a Change of Control nor (ii) any consideration being paid to the holders of Company Common Stock in respect of their shares, or (y) results in a Change of Control in which the Company is the surviving entity and no consideration is paid to the holders of Company Common Stock in respect of their shares, except that such holders may receive, in connection with any such Repurchase Transaction, cash consideration in lieu of fractional shares, or warrants or rights to acquire Company Common Stock for a per share exercise price that is greater than the Market Price as of the date of this Agreement.  For the avoidance of doubt, any increase in the market price per share of the Company Common Stock (as adjusted for stock splits, stock dividends, combinations of shares or other similar events), or any increase in the enterprise value of the Company, as a result of the consummation of the Repurchase Transaction shall not, in itself, be deemed to be consideration received by the holders of Company Common Stock in respect of their shares for purposes of this Section 6.

7.           Fees and Expenses Incurred by Counsel for Perseus.  The Company will reimburse Perseus for the fees and expenses of Covington & Burling LLP, counsel to Perseus, incurred in connection with the review and negotiation of this Agreement and the transactions contemplated hereby, review of any proposed documentation or disclosure regarding any Repurchase Transaction and any related filings with the Securities and Exchange Commission, subject to receipt of reasonable documentation, promptly upon demand by the Company made upon Perseus, it being understood that in connection with the execution of this Agreement, Covington & Burling LLP, counsel to Perseus, will provide a statement of its accrued fees and expenses to date as well as a reasonable provision for future fees and expenses in connection with completion of the transactions contemplated hereby; provided, however, that in no event shall the obligations of the Company under this Section 7 involve the payment of fees and expenses which are in excess of $40,000 in the aggregate.

8.           Effectiveness of Agreement.  This Agreement shall become effective upon the execution and delivery of a counterpart hereto by each of the Company and Perseus.

9.           Entire Agreement.  This Agreement, together with the Securities Purchase Agreement, the Transaction Documents, and the contents of the email transmission sent by counsel for Perseus to counsel for the Company, on May 27, 2011, at 5:59 p.m. eastern, contains

 

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the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the Parties acknowledge have been merged into such agreements and documents.

10.           Governing Law; Jurisdiction; Waiver of Jury Trial.  ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.  THE COMPANY AND PERSEUS HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR PERSEUS, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY, AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR PERSEUS, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) 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 CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.  THE COMPANY AND PERSEUS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

11.           Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement, it being understood that both Parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or email attachment, such signature shall create a valid and binding obligation of the Party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or email-attached signature page were an original thereof.

 

12.           Headings. The headings of this Agreement are for convenience of reference only, are not part of this Agreement and do not affect its interpretation.

13.           Amendment and Waivers.  No provision of this Agreement may be waived or amended except in a written instrument signed by each of the Company and Perseus.  No waiver 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 subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either Party to exercise any right hereunder in any manner impair the exercise of any such right.

 

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14.           Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section prior to 6:30 p.m. (Eastern time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (Eastern time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications are:

If to the Company:               PhotoMedex, Inc.

147 Keystone Drive

Montgomery, PA  18936

Attn:  President and Chief Executive Officer

Facsimile:  (215) 619-3209

Email:  dmcgrath@photomedex.com

With a copy, that shall not

constitute notice, to:            Kaye Scholer LLP

425 Park Avenue

New York, NY  10022

Attn:  Stephen C. Koval and William M. Lonergan

Facsimile:  (212) 836-8689

Email:  skoval@kayescholer.com and wlonergan@kayescholer.com

If to Perseus:                         Perseus Partners VII, L.P.

c/o Perseus L.L.C.

2099 Pennsylvania Avenue, N.W., Suite 900

Washington, D.C.  20006

Attn:  Kenneth M. Socha

Facsimile:  (202) 429-0588

Email:  ksocha@perseusllc.com

 

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and to

Perseus Partners VII, L.P.

c/o Perseus L.L.C.

1325 Avenue of the Americas, 25th Floor

New York, NY  10019

Attn:  John M. Glazer

Facsimile:  (212) 651-6399

Email:  jglazer@perseusllc.com

With a copy, that shall not

constitute notice, to:            Covington & Burling LLP

The New York Times Building

620 Eighth Avenue

New York, NY  10018

Attn:  Andrew W. Ment

Facsimile:  (646) 441-9012

Email:  ament@cov.com

15.           Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns.

[Signature Page Follows]

 

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In witness whereof, the Company and Perseus have caused this Repurchase Right Agreement to be duly executed as of the date first above written.

PHOTOMEDEX, INC.

By: /s/ Dennis M. McGrath                 

       Name: Dennis M. McGrath

       Title: President/CEO

PERSEUS PARTNERS VII, L.P.

By:  Perseus Partners VII GP, L.P.,

         its general partner

By:  Perseus Partners VII GP, L.L.C.,

         its general partner

By: /s/ Kenneth M. Socha                  

       Name: Kenneth M. Socha

       Title: Senior Managing Director

 

 

[Signature Page to Repurchase Right Agreement]

 

32144873.DOC

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