EXHIBIT 10.24
[PNCBANK LOGO]
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND RESTATED SECURITY AGREEMENT (this "AGREEMENT"), dated
as of this 16th day of November, 2001, is made by Escalon Medical Corp. (the
"GRANTOR"), with an address at 351 E. Conestoga Road, Wayne, Pennsylvania 19087,
in favor of PNC BANK, NATIONAL ASSOCIATION (the "BANK"), with an address at 1600
Market Street, Philadelphia, Pennsylvania 19103.
On the terms hereof, the Bank and the Grantor desire to amend and
restate the Security Agreement, dated as of January 14, 2000, between the Bank
and the Grantor.
NOW, THEREFORE, the Grantor and the Bank, intending to be legally
bound, hereby agree as follows:
1. DEFINITIONS.
(a) "COLLATERAL" shall include all personal property of the Grantor,
including the following, all whether now owned or hereafter acquired or arising
and wherever located: (i) accounts (including health-care-insurance receivables
and credit card receivables); (ii) securities entitlements, securities accounts,
commodity accounts, commodity contracts and investment property; (iii) deposit
accounts; (iv) instruments (including promissory notes); (v) documents
(including warehouse receipts); (vi) chattel paper (including electronic chattel
paper and tangible chattel paper); (vii) inventory, including raw materials,
work in process, or materials used or consumed in Grantor's business, items held
for sale or lease or furnished or to be furnished under contracts of service,
sale or lease, goods that are returned, reclaimed or repossessed; (viii) goods
of every nature, including stock-in-trade, goods on consignment, standing timber
that is to be cut and removed under a conveyance or contract for sale, the
unborn young of animals, crops grown, growing, or to be grown, manufactured
homes, computer programs embedded in such goods and farm products; (ix)
equipment, including machinery, vehicles and furniture; (x) fixtures; (xi)
agricultural liens; (xii) as-extracted collateral; (xiii) commercial tort
claims, if any, described on Exhibit "A" hereto; (xiv) letter of credit rights;
(xv) general intangibles, of every kind and description, including payment
intangibles, software, computer information, source codes, object codes, records
and data, all existing and future customer lists, choses in action, claims
(including claims for indemnification or breach of warranty), books, records,
patents and patent applications, copyrights, trademarks, tradenames,
tradestyles, trademark applications, goodwill, blueprints, drawings, designs and
plans, trade secrets, contracts, licenses, license agreements, formulae, tax and
any other types of refunds, returned and unearned insurance premiums, rights and
claims under insurance policies; (xvi) all supporting obligations of all of the
foregoing property; (xvii) all property of the Grantor now or hereafter in the
Bank's possession or in transit to or from, or under the custody or control of,
the Bank or any affiliate thereof; (xviii) all cash and cash equivalents
thereof; and (xix) all cash and noncash proceeds (including insurance proceeds)
of all of the foregoing property, all products thereof and all additions and
accessions thereto, substitutions therefor and replacements thereof. The
Collateral shall also include any and all other tangible or intangible property
that is described as being part of the Collateral pursuant to one or more Riders
to Security Agreement that may be attached hereto or delivered in connection
herewith, including the Rider to Security Agreement - Copyrights, the Rider to
Security Agreement - Patents, the Rider to Security Agreement - Trademarks and
the Rider to Security Agreement - Cash Collateral Account.
(b) "OBLIGATIONS" shall include all loans, advances, debts,
liabilities, obligations, covenants and duties owing by the Grantor to the Bank
or to any other direct or indirect subsidiary of The PNC Financial Services
Group, Inc., of any kind or nature, present or future (including any interest
accruing thereon after maturity, or after the filing of any petition in
bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to the Grantor, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect (including those acquired by assignment
or participation), absolute or contingent, joint or several, due or to become
due, now existing or hereafter arising, whether or not (i) evidenced by any
note, guaranty or other instrument, (ii) arising under any agreement, instrument
or document, (iii) for the payment of money, (iv) arising by reason of an
extension of credit, opening of a letter of credit, loan, equipment lease or
guarantee, (v) under any interest or currency swap, future, option or other
interest rate protection or similar agreement, (vi) under or by reason of any
foreign currency transaction, forward, option or other similar transaction
providing for the purchase of one currency in exchange for the sale of another
currency, or in any other manner, (vii) arising out of overdrafts on deposit or
other accounts or out of electronic funds transfers (whether by wire transfer or
through automated clearing houses or otherwise) or out of the return unpaid of,
or other failure of the Bank to receive final payment for, any check, item,
instrument, payment order or other deposit or credit to a deposit or other
account, or out of the Bank's non-receipt of or inability to collect funds or
otherwise not being made whole in connection with depository or other similar
arrangements; and any amendments, extensions, renewals and increases of or to
any of the foregoing, and all costs and expenses of the Bank incurred in the
documentation, negotiation, modification, enforcement, collection and otherwise
in connection with any of the foregoing, including reasonable attorneys' fees
and expenses.
(c) "UCC" means the Uniform Commercial Code, as adopted and enacted and
as in effect from time to time in the State whose law governs pursuant to the
Section of this Agreement entitled "Governing Law and Jurisdiction." Terms used
herein which are defined in the UCC and not otherwise defined herein shall have
the respective meanings ascribed to such terms in the UCC. To the extent the
definition of any category or type of collateral is modified by any amendment,
modification or revision to the UCC, such modified definition will apply
automatically as of the date of such amendment, modification or revision.
2. GRANT OF SECURITY INTEREST. To secure the Obligations, the Grantor, as
debtor, hereby assigns and grants to the Bank, as secured party, a continuing
lien on and security interest in the Collateral.
3. CHANGE IN NAME OR LOCATIONS. The Grantor hereby agrees that if the location
of the Collateral changes from the locations listed on Exhibit "A" hereto and
made part hereof, or if the Grantor changes its name, its type of organization,
its state of organization (if Grantor is a registered organization), its
principal residence (if Grantor is an individual), its chief executive office
(if Grantor is a general partnership or non-registered organization) or
establishes a name in which it may do business that is not listed as a tradename
on Exhibit "A" hereto, the Grantor will immediately notify the Bank in writing
of the additions or changes.
4. REPRESENTATIONS AND WARRANTIES. The Grantor represents, warrants and
covenants to the Bank that: (a) all information, including its type of
organization, jurisdiction of organization, chief executive office, and (for
individuals only) principal residence are as set forth on Exhibit "A" hereto and
are true and correct on the date hereof; (b) the Grantor has good, marketable
and indefeasible title to the Collateral, has not made any prior sale, pledge,
encumbrance, assignment or other disposition of any of the Collateral, and the
Collateral is free from all encumbrances and rights of setoff of any kind except
the lien in favor of the Bank created by this Agreement; (c) except as herein
provided, the Grantor will not hereafter without the Bank's prior written
consent sell, pledge, encumber, assign or otherwise dispose of any of the
Collateral or permit any right of setoff, lien or security interest to exist
thereon except to the Bank; (d) the Grantor will defend the Collateral against
all claims and demands of all persons at any time claiming the same or any
interest therein; (e) each account and general intangible, if included in the
definition of Collateral, is genuine and enforceable in accordance with its
terms and the Grantor will defend the same against all claims, demands, setoffs
and counterclaims at any time asserted; (f) at the time any account or general
intangible becomes subject to this Agreement, such account or general intangible
will be a good and valid account representing a bona fide sale of goods or
services by the Grantor and such goods will have been shipped to the respective
account debtors or the services will have been performed for the respective
account debtors, and, except as may occur in the ordinary course of
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business, no such account or general intangible will be subject to any claim for
credit, allowance or adjustment by any account debtor or any setoff, defense or
counterclaim and (g) it owns no copyrights, copyright licenses, patents, patent
licenses, trademarks or trademark licenses except as described on the Riders
hereto.
5. GRANTOR'S COVENANTS. The Grantor covenants that it shall:
(a) from time to time and at all reasonable times, allow the Bank, by
or through any of its officers, agents, attorneys, or accountants, to examine or
inspect the Collateral, and obtain valuations and audits of the Collateral, at
the Grantor's expense, wherever located. The Grantor shall do, obtain, make,
execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Bank may require to vest in and assure to the
Bank its rights hereunder and in or to the Collateral, and the proceeds thereof,
including waivers from landlords, warehousemen and mortgagees. The Grantor
agrees that the Bank has the full power and authority to collect, compromise,
endorse, sell or otherwise deal with the Collateral in its own name or that of
the Grantor at any time upon an Event of Default;
(b) keep the Collateral in good order and repair at all times and
immediately notify the Bank of any event causing a material loss or decline in
value of the Collateral, whether or not covered by insurance, and the amount of
such loss or depreciation;
(c) only use or permit the Collateral to be used in accordance with all
applicable federal, state, county and municipal laws and regulations; and
(d) have and maintain insurance at all times with respect to all
Collateral against risks of fire (including so-called extended coverage), theft,
sprinkler leakage, and other risks (including risk of flood if any Collateral is
maintained at a location in a flood hazard zone) as the Bank may require, in
such form, in such amount, for such period and written by such companies as may
be satisfactory to the Bank in its sole discretion. Each such casualty insurance
policy shall contain a standard Lender's Loss Payable Clause issued in favor of
the Bank under which all losses thereunder shall be paid to the Bank as the
Bank's interest may appear. Such policies shall expressly provide that the
requisite insurance cannot be altered or canceled without at least thirty (30)
days prior written notice to the Bank and shall insure the Bank notwithstanding
the act or neglect of the Grantor. Upon the Bank's demand, the Grantor shall
furnish the Bank with duplicate original policies of insurance or such other
evidence of insurance as the Bank may require. In the event of failure to
provide insurance as herein provided, the Bank may, at its option, obtain such
insurance and the Grantor shall pay to the Bank, on demand, the cost thereof.
Proceeds of insurance may be applied by the Bank to reduce the Obligations or to
repair or replace Collateral, all in the Bank's sole discretion.
6. NEGATIVE PLEDGE; NO TRANSFER. The Grantor will not sell or offer to sell or
otherwise transfer or grant or allow the imposition of a lien or security
interest upon the Collateral (except for sales of inventory and collections of
accounts in the Grantor's ordinary course of business), will not allow any third
party to gain control of all or any part of the Collateral, and will not use any
portion thereof in any manner inconsistent with this Agreement or with the terms
and conditions of any policy of insurance thereon.
7. COVENANTS FOR ACCOUNTS. If accounts are included in the definition of
Collateral:
(a) The Grantor will, on the Bank's demand, make notations on its books
and records showing the Bank's security interest and make available to the Bank
shipping and delivery receipts evidencing the shipment of the goods that gave
rise to an account, completion certificates or other proof of the satisfactory
performance of services that gave rise to an account, a copy of the invoice for
each account and copies of any written contract or order from which an account
arose. The Grantor shall promptly notify the Bank if an account becomes
evidenced or secured by an instrument or chattel paper and upon the Bank's
request, will promptly deliver any such instrument or chattel paper to the Bank,
including any letter of credit delivered to the Grantor to support a shipment of
inventory by the Grantor.
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(b) The Grantor will promptly advise the Bank whenever an account
debtor refuses to retain or returns any goods from the sale of which an account
arose and will comply with any instructions that the Bank may give regarding the
sale or other disposition of such returns. From time to time upon the Bank's
request, the Grantor will report to the Bank all credits given to account
debtors on all accounts.
(c) The Grantor will immediately notify the Bank if any account arises
out of contracts with the United States or any department, agency or
instrumentality thereof, and will execute any instruments and take any steps
required by the Bank so that all monies due and to become due under such
contract shall be assigned to the Bank and notice of the assignment given to and
acknowledged by the appropriate government agency or authority under the Federal
Assignment of Claims Act.
(d) At any time after the occurrence of an Event of Default, and
without notice to the Grantor, the Bank may direct any persons who are indebted
to the Grantor on any Collateral consisting of accounts or general intangibles
to make payment directly to the Bank of the amounts due. The Bank is authorized
to collect, compromise, endorse and sell any such Collateral in its own name or
in the Grantor's name and to give receipts to such account debtors for any such
payments and the account debtors will be protected in making such payments to
the Bank. Upon the Bank's written request, the Grantor will establish with the
Bank and maintain a lockbox account ("LOCKBOX") with the Bank and a depository
account(s) ("CASH COLLATERAL ACCOUNT") with the Bank subject to the provisions
of this subparagraph and such other related agreements as the Bank may require,
and the Grantor shall notify its account debtors to remit payments directly to
the Lockbox. Thereafter, funds collected in the Lockbox shall be transferred to
the Cash Collateral Account, and funds in the Cash Collateral Account shall be
applied by the Bank, daily, to reduce the outstanding Obligations.
8. FURTHER ASSURANCES. By its signature hereon, the Grantor hereby irrevocably
authorizes the Bank to execute (on behalf of the Grantor) and file against the
Grantor one or more financing, continuation or amendment statements pursuant to
the UCC in form satisfactory to the Bank, and the Grantor will pay the cost of
preparing and filing the same in all jurisdictions in which such filing is
deemed by the Bank to be necessary or desirable in order to perfect, preserve
and protect its security interests. If required by the Bank, the Grantor will
execute all documentation necessary for the Bank to obtain and maintain
perfection of its security interests in the Collateral. At the Bank's request,
the Grantor will execute, in form satisfactory to the Bank, a Rider to Security
Agreement - Copyrights (if any Collateral consists of registered or unregistered
copyrights), a Rider to Security Agreement - Patents (if any Collateral consists
of patents or patent applications), a Rider to Security Agreement - Trademarks
(if any Collateral consists of trademarks, tradenames, tradestyles or trademark
applications). If any Collateral consists of letter of credit rights, electronic
chattel paper, deposit accounts or supporting obligations not maintained with
the Bank or one of its affiliates, or any securities entitlement, securities
account, commodities account, commodities contract or other investment property,
then at the Bank's request the Grantor will execute, and will cause the
depository institution or securities intermediary upon whose books and records
the ownership interest of the Grantor in such Collateral appears, to execute
such Pledge Agreements, Notification and Control Agreements or other agreements
as the Bank deems necessary in order to perfect, prioritize and protect its
security interest in such Collateral, in each case in a form satisfactory to the
Bank.
9. EVENTS OF DEFAULT. The Grantor shall, at the Bank's option, be in default
under this Agreement upon the happening of any of the following events or
conditions (each, an "EVENT OF DEFAULT"): (a) any Event of Default (as defined
in any of the Obligations); (b) any default under any of the Obligations that
does not have a defined set of "Events of Default" and the lapse of any notice
or cure period provided in such Obligations with respect to such default; (c)
demand by the Bank under any of the Obligations that have a demand feature; (d)
the failure by the Grantor to perform any of its obligations under this
Agreement which is not cured within fifteen (15) days after the earlier of
Grantor's knowledge thereof and Grantor's receipt of written notice thereof from
the Bank; (e) any written representation or warranty made or furnished by
Grantor to the Bank is false, erroneous or misleading in any material respect;
(f) an uninsured material loss, theft, damage, or destruction to any of the
Collateral, or the entry of any
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judgment against the Grantor or any lien against or the making of any levy,
seizure or attachment of or on the Collateral; provided that, in the case of
entry of any such judgment, such entry shall not in and of itself constitute an
Event of Default unless the same is not discharged, released or dismissed within
thirty (30) days of the entry thereof; (g) the failure of the Bank to have a
perfected first priority security interest in the Collateral, unless such
failure is solely due to either the Bank's failure to file Uniform Commercial
Code Financing Statements in the office of the Secretary of State of the
Grantor's State of organization detailed on Exhibit A hereto or the Bank's
filing of a termination of such Financing Statement; (h) any indication or
evidence received by the Bank that the Grantor may have directly or indirectly
been engaged in any type of activity which, in the Bank's discretion, might
result in the forfeiture of any property of the Grantor to any governmental
entity, federal, state or local; or (i) in the opinion of the Bank, there shall
be a material adverse change in the financial condition of the Grantor.
10. REMEDIES. Upon the occurrence of any such Event of Default and at any time
thereafter, the Bank may declare all Obligations secured hereby immediately due
and payable and shall have, in addition to any remedies provided herein or by
any applicable law or in equity, all the remedies of a secured party under the
UCC. The Bank's remedies include, but are not limited to, the right to (a)
peaceably by its own means or with judicial assistance enter the Grantor's
premises and take possession of the Collateral without prior notice to the
Grantor or the opportunity for a hearing, (b) render the Collateral unusable,
(c) dispose of the Collateral on the Grantor's premises, (d) require the Grantor
to assemble the Collateral and make it available to the Bank at a place
designated by the Bank, and (e) notify the United States Postal Service to send
the Grantor's mail to the Bank. Unless the Collateral is perishable or threatens
to decline speedily in value or is of a type customarily sold on a recognized
market, the Bank will give the Grantor reasonable notice of the time and place
of any public sale thereof or of the time after which any private sale or any
other intended disposition thereof is to be made. The requirements of
commercially reasonable notice shall be met if such notice is sent to the
Grantor at least ten (10) days before the time of the intended sale or
disposition. Expenses of retaking, holding, preparing for disposition, disposing
or the like shall include the Bank's reasonable attorneys' fees and legal
expenses, incurred or expended by the Bank to enforce any payment due it under
this Agreement either as against the Grantor, or in the prosecution or defense
of any action, or concerning any matter growing out of or connection with the
subject matter of this Agreement and the Collateral pledged hereunder. The
Grantor waives all relief from all appraisement or exemption laws now in force
or hereafter enacted.
11. POWER OF ATTORNEY. The Grantor does hereby make, constitute and appoint any
officer or agent of the Bank as the Grantor's true and lawful attorney-in-fact,
with power to (a) endorse the name of the Grantor or any of the Grantor's
officers or agents upon any notes, checks, drafts, money orders, or other
instruments of payment or Collateral that may come into the Bank's possession in
full or part payment of any Obligations; (b) sue for, compromise, settle and
release all claims and disputes with respect to, the Collateral; and (c) sign,
for the Grantor, such documentation required by the UCC, or supplemental
intellectual property security agreements; granting to the Grantor's said
attorney full power to do any and all things necessary to be done in and about
the premises as fully and effectually as the Grantor might or could do. The
Grantor hereby ratifies all that said attorney shall lawfully do or cause to be
done by virtue hereof. This power of attorney is coupled with an interest, and
is irrevocable.
12. PAYMENT OF EXPENSES. At its option, the Bank may discharge taxes, liens,
security interests or such other encumbrances as may attach to the Collateral,
may pay for required insurance on the Collateral and may pay for the
maintenance, appraisal or reappraisal, and preservation of the Collateral, as
determined by the Bank to be necessary. The Grantor will reimburse the Bank on
demand for any payment so made or any expense incurred by the Bank pursuant to
the foregoing authorization, and the Collateral also will secure any advances or
payments so made or expenses so incurred by the Bank.
13. NOTICES. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder ("NOTICES") must be in writing
and will be effective upon receipt. Notices may be given in any manner to which
the parties may separately agree, including electronic mail. Without limiting
the foregoing, first-class mail, facsimile transmission and commercial courier
service are hereby agreed to as acceptable methods for giving Notices.
Regardless of the manner in which provided,
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Notices may be sent to a party's address as set forth above or to such other
address as any party may give to the other for such purpose in accordance with
this section.
14. PRESERVATION OF RIGHTS. No delay or omission on the Bank's part to exercise
any right or power arising hereunder will impair any such right or power or be
considered a waiver of any such right or power, nor will the Bank's action or
inaction impair any such right or power. The Bank's rights and remedies
hereunder are cumulative and not exclusive of any other rights or remedies which
the Bank may have under other agreements, at law or in equity.
15. ILLEGALITY. If any provision contained in this Agreement should be invalid,
illegal or unenforceable in any respect, it shall not affect or impair the
validity, legality and enforceability of the remaining provisions of this
Agreement.
16. CHANGES IN WRITING. No modification, amendment or waiver of, or consent to
any departure by the Grantor from, any provision of this Agreement will be
effective unless made in a writing signed by the Bank and Grantor, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Grantor will entitle the
Grantor to any other or further notice or demand in the same, similar or other
circumstance.
17. ENTIRE AGREEMENT. This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement and supersedes all other
prior agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
18. COUNTERPARTS. This Agreement may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of signature page to this Agreement by facsimile transmission shall
be effective as delivery of a manually executed counterpart. Any party so
executing this Agreement by facsimile transmission shall promptly deliver a
manually executed counterpart, provided that any failure to do so shall not
affect the validity of the counterpart executed by facsimile transmission.
19. SUCCESSORS AND ASSIGNS. This Agreement will be binding upon and inure to the
benefit of the Grantor and the Bank and their respective heirs, executors,
administrators, successors and assigns; provided, however, that the Grantor may
not assign this Agreement in whole or in part without the Bank's prior written
consent and the Bank at any time may assign this Agreement in whole or in part.
20. INTERPRETATION. In this Agreement, unless the Bank and the Grantor otherwise
agree in writing, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to statutes are
to be construed as including all statutory provisions consolidating, amending or
replacing the statute referred to; the word "or" shall be deemed to include
"and/or", the words "including", "includes" and "include" shall be deemed to be
followed by the words "without limitation"; references to articles, sections (or
subdivisions of sections) or exhibits are to those of this Agreement; and
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications to such instruments,
but only to the extent such amendments and other modifications are not
prohibited by the terms of this Agreement. Section headings in this Agreement
are included for convenience of reference only and shall not constitute a part
of this Agreement for any other purpose. Unless otherwise specified in this
Agreement, all accounting terms shall be interpreted and all accounting
determinations shall be made in accordance with GAAP. If this Agreement is
executed by more than one Grantor, the obligations of such persons or entities
will be joint and several.
21. INDEMNITY. The Grantor agrees to indemnify each of the Bank, each legal
entity, if any, who controls the Bank and each of their respective directors,
officers and employees (the "INDEMNIFIED PARTIES") and to hold each Indemnified
Party harmless from and against any and all claims, damages, losses, liabilities
and expenses (including all fees and charges of internal or external counsel
with whom any Indemnified Party may consult and all expenses of litigation and
preparation therefor) which any
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Indemnified Party may incur or which may be asserted against any Indemnified
Party by any person, entity or governmental authority (including any person or
entity claiming derivatively on behalf of the Grantor), in connection with or
arising out of or relating to the matters referred to in this Agreement or the
Obligations or the use of the proceeds of any loan, whether (a) arising from or
incurred in connection with any breach of a representation, warranty or covenant
by the Grantor, or (b) arising out of or resulting from any suit, action, claim,
proceeding or governmental investigation, pending or threatened, whether based
on statute, regulation or order, or tort, or contract or otherwise, before any
court or governmental authority; provided, however, that the foregoing indemnity
agreement shall not apply to any claims, damages, losses, liabilities and
expenses solely attributable to an Indemnified Party's gross negligence or
willful misconduct. The indemnity agreement contained in this Section shall
survive the termination of this Agreement, payment of the Obligations and
assignment of any rights hereunder. The Grantor may participate at its expense
in the defense of any such claim.
22. GOVERNING LAW AND JURISDICTION. This Agreement has been delivered to and
accepted by the Bank and will be deemed to be made in the State where the Bank's
office indicated above is located. THIS AGREEMENT WILL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
LAWS OF THE STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCEPT
THAT THE LAWS OF THE STATE WHERE ANY COLLATERAL IS LOCATED (IF DIFFERENT FROM
THE STATE WHERE SUCH OFFICE OF THE BANK IS LOCATED) SHALL GOVERN THE CREATION,
PERFECTION AND FORECLOSURE OF THE LIENS CREATED HEREUNDER ON SUCH PROPERTY OR
ANY INTEREST THEREIN. The Grantor hereby irrevocably consents to the exclusive
jurisdiction of any state or federal court in the county or judicial district
where the Bank's office indicated above is located; provided that nothing
contained in this Agreement will prevent the Bank from bringing any action,
enforcing any award or judgment or exercising any rights against the Grantor
individually, against any security or against any property of the Grantor within
any other county, state or other foreign or domestic jurisdiction. The Bank and
the Grantor agree that the venue provided above is the most convenient forum for
both the Bank and the Grantor. The Grantor waives any objection to venue and any
objection based on a more convenient forum in any action instituted under this
Agreement.
23. SELF HELP REMEDIES. THE GRANTOR BEING FULLY AWARE OF THE RIGHT TO NOTICE AND
A HEARING ON THE QUESTION OF THE VALIDITY OF ANY CLAIMS THAT MAY BE ASSERTED
AGAINST THE GRANTOR BY THE BANK UNDER THIS AGREEMENT, AND RELATED AGREEMENTS AND
DOCUMENTS, BEFORE THE GRANTOR CAN BE DEPRIVED OF ANY PROPERTY IN THE GRANTOR'S
POSSESSION, HEREBY WAIVES THESE RIGHTS AND AGREES THAT, AFTER THE OCCURRENCE OF
AN EVENT OF DEFAULT, THE BANK MAY EMPLOY SELF-HELP OR ANY LEGAL OR EQUITABLE
PROCESS PROVIDED BY LAW TO TAKE POSSESSION OF ANY SUCH PROPERTY WITHOUT FIRST
OBTAINING A FINAL JUDGMENT OR WITHOUT FIRST GIVING THE GRANTOR NOTICE AND THE
OPPORTUNITY TO BE HEARD ON THE VALIDITY OF THE CLAIM UPON WHICH SUCH TAKING IS
MADE. THE GRANTOR WAIVES ALL RELIEF FROM ALL APPRAISEMENT OR EXEMPTION LAWS NOW
IN FORCE OR HEREAFTER ENACTED.
24. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE BANK IRREVOCABLY WAIVES
ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
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DOCUMENTS. THE GRANTOR AND THE BANK ACKNOWLEDGE THAT THE FOREGOING WAIVER IS
KNOWING AND VOLUNTARY.
THE GRANTOR ACKNOWLEDGES THAT IT HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS AGREEMENT, INCLUDING THE WAIVER OF JURY TRIAL, AND HAS BEEN ADVISED BY
COUNSEL AS NECESSARY OR APPROPRIATE.
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
WITNESS / ATTEST: ESCALON MEDICAL CORP.
/s/ By: /s/
- --------------------------------------- ----------------- --------
(SEAL)
Print Name: H.M. Rimmer Print Name: Richard J. DePiano
--------------------------- -------------------
Title: Sr. Vice President of Finance Title: CEO
-------------------------------- -------------------------
(Include title only if an officer of
entity signing to the right)
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EXHIBIT "A"
TO SECURITY AGREEMENT
1. Grantor's form of organization (i.e., corporation, partnership, limited
liability company):
Corporation
2. Grantor's State of organization, if a registered organization (i.e.,
corporation, limited partnership or limited liability company):
Pennsylvania
3. Grantor's principal residence, if a natural person or general
partnership:
351 E. Conestoga Road
Wayne, PA 19087
Chester County
4. Address of Grantor's chief executive office, including the County:
351 E. Conestoga Road
Wayne, PA 19087
Chester County
5. Grantor's EIN, if not a natural person:
6. Grantor's SSN, if a natural person:
7. Grantor's organization ID# (if any exists):
3027704
8. Address for books and records, if different:
2440 S. 179th Street
New Berlin, WI 53146
Waukescha, County
9. Addresses of other Collateral locations, including Counties, and name
and address of landlord or owner if location is not owned by Grantor:
2440 S. 179th Street
New Berlin, WI 53146
Waukescha, County
Landlord: Liberty Lane Center
c/o Judson & Associates, S.C.
1285 Sunnyridge Road
Pewaukee, WI 53072
9
5001 Route 42
Turnersville, NJ 08012
Gloucester County
Landlord: Joseph J. Master and Louise Master
P.O. Box 1115
Turnersville, NJ 08012
3000 Marcus Avenue
Lake Suceers, NY 11042
Nassau County
Landlord: We're Associates Company
100 Jericho Quadrangle
Jericho, NJ 11753
10. Other names or tradenames now or formerly used by the Grantor:
Intelligent Surgical Lasers, Inc.
Escalon Vascular Access, Inc.
EOI Corp.
Escalon Ophthamics, Inc.
11. List of all existing Commercial Tort Claims (by case title with court
and brief description of claim):
None
10
RIDER TO SECURITY AGREEMENT - TRADEMARKS
THIS RIDER TO SECURITY AGREEMENT ("RIDER") is executed as of this 16
day of November, 2001, by and between ESCALON MEDICAL CORP. (the "GRANTOR") with
an address at 351 E. Conestoga Road, Wayne, Pennsylvania 19087 and PNC BANK,
NATIONAL ASSOCIATION (the "BANK"), with an address at 1600 Market Street,
Philadelphia, Pennsylvania 19103. This Rider is incorporated into and made part
of that certain Security Agreement ("SECURITY AGREEMENT") between the Grantor
and the Bank dated November 16, 2001, and also into certain other financing
documents and security agreements executed by and between the Grantor and the
Bank (all such documents including this Rider being collectively referred to as
"LOAN DOCUMENTS"). All capitalized terms not otherwise defined in this Rider
shall have the same meanings ascribed to such terms in the other Loan Documents.
The Grantor has adopted, used and is using (or has filed applications,
other than intent-to-use applications, for the registration of) the trademarks,
service marks and trade names listed on Schedule "A" attached hereto and made
part hereof (all such marks or names hereinafter referred to as the
"TRADEMARKS").
The Bank desires to acquire a lien and security interest on the
Trademarks and the registration thereof, together with all the goodwill of the
Grantor associated therewith and represented thereby, as security for all of the
Obligations (as defined in the Security Agreement) to the Bank, and the Bank
desires to have its security interest in such Trademarks confirmed by a document
identifying same and in such form that it may be recorded in the United States
Patent and Trademark Office.
NOW, THEREFORE, with the foregoing background deemed incorporated by
reference and made part hereof, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. GRANT OF SECURITY INTEREST. In consideration of and
pursuant to the terms of the Loan Documents, and for other good, valuable and
sufficient consideration, the receipt and sufficiency of which is hereby
acknowledged, and to secure payment and performance of the Obligations, the
Grantor grants a lien and security interest to the Bank in all its present and
future right, title and interest in and to the Trademarks, together with all the
goodwill and other tangible assets of the Grantor associated with and
represented by the Trademarks, and the non-intent-to-use applications for and
registration thereof and the right (but not the obligation) to sue for past,
present and future infringements, and the proceeds thereof, including, without
limitation, license royalties and proceeds of infringement suits.
2. REPRESENTATIONS AND WARRANTIES. The Grantor represents,
warrants and covenants that: (a) the Trademarks are subsisting and have not been
abandoned, suspended, voluntarily terminated or canceled by the Grantor, have
not been adjudged invalid or unenforceable, and to the best of the Grantor's
knowledge, there is no reason why the Trademarks should be adjudged invalid or
unenforceable; (b) each of the Trademarks is valid and enforceable; (c) the
Grantor is the sole and exclusive owner of the entire and unencumbered right,
title and interest in and to each of the Trademarks, and each of the Trademarks
is free and clear of any liens, charges and encumbrances, including, without
limitation, pledges, assignments, licenses and covenants by the Grantor not to
sue third persons; (d) the Grantor has
the unqualified right to enter into this Rider and perform its terms; (e) the
Grantor has used, and will continue to use for the duration of this Rider,
proper notice, as required by 15 U.S.C. Sections 1051-1127 in connection with
its use of the Trademarks; (f) the Grantor has used, and will continue to use
for the duration of this Rider, consistent standards of quality in products
leased or sold under the Trademarks; and (g) the Grantor will not (and will not
permit any licensee thereof to) do any act or knowingly omit to do any act
whereby any of the Trademarks may become invalidated, abandoned, unenforceable,
avoided, avoidable or otherwise diminished in value, and shall notify the Bank
immediately if it knows of any reason or has any reason to know of any grounds
under which any of the foregoing may occur.
3. VERIFICATION OF QUALITY CONTROL. The Grantor hereby grants to the
Bank and its employees and agents the right to visit the Grantor's locations
which lease, sell, or store products under any of the Trademarks and to inspect
the products and quality control records relating thereto at reasonable times
during regular business hours to ensure the Grantor's compliance with paragraph
2(f).
4. COVENANTS. The Grantor further covenants that until all of the
Obligations have been satisfied in full: (a) the Grantor shall maintain the
Trademarks in full force and effect; (b) the Grantor will not enter into any
agreement which is inconsistent with the Grantor's obligations under this Rider
or which restrict or impair the Bank's rights hereunder; and (c) if the Grantor
acquires rights to any new non-intent-to-use Trademarks, the provisions of this
Rider shall automatically apply thereto and the Grantor shall give the Bank
prompt written notice thereof along with an amended Schedule A; provided,
however, that notwithstanding anything to the contrary contained in this
Agreement, the Grantor shall have the right to enter into agreements in the
ordinary course of business with respect to the Trademarks.
5. EXCLUSIVE USE OF TRADEMARKS. So long as this Rider is in effect and
so long as the Grantor has not received notice from the Bank that an Event of
Default has occurred under the Loan Documents and that the Bank has elected to
exercise its rights to assignment hereunder, the Grantor shall continue to have
the exclusive right to use the Trademarks including licenses thereof, and the
Bank shall have no right to use the Trademarks or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Trademarks to anyone else.
6. NEGATIVE PLEDGE. The Grantor agrees not to sell, assign (by
operation of law or otherwise) or further encumber its rights and interest in
the Trademarks without prior written consent of the Bank. The Grantor shall
defend the Trademarks against and shall take other action as is necessary to
remove any lien, security interest, claim, right or other encumbrance of any
nature whatsoever in or to the Trademarks, and will defend the right, title and
interest of the Bank in and to any of the Grantor's rights under the Trademarks
against the claims or demands of all persons whatsoever.
7. NO ADDITIONAL TRADEMARKS. As of the date hereof, the Grantor does
not own any Trademarks, or have any Trademarks registered in or the subject of
pending applications in the United States Patent and Trademark Office or any
similar office or agency in any other country or any political subdivision
thereof, other than those grants, registrations or applications for
registrations listed on Schedule A annexed hereto and made a part hereof.
8. PLEDGE OF ADDITIONAL TRADEMARKS. In the event the Grantor, either
itself or through any agent, employee, licensee or designee shall:
(a) file or record an application for the registration of any
Trademark with the United States Patent and Trademark Office or any similar
office or agency of the United States, any State thereof, or any other country
or any political subdivision thereof; or
(b) file or record any assignment of any Trademark which the
Grantor may acquire, own or license from a third party, with the United States
Patent and Trademark Office or any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof;
the Grantor shall promptly, but in no event more than fifteen (15) days
subsequent to such filing, notify the Bank thereof, and, upon request of the
Bank shall promptly, but in no event more than twenty (20) days subsequent to
such notice, execute and deliver any and all assignments, agreements,
instruments, documents and papers as the Bank may reasonably request to evidence
the Bank's interest in such Trademark and the goodwill of the Grantor associated
thereto or represented thereby. The Grantor hereby grants the Bank a power of
attorney, irrevocable until the Obligations are fully paid and satisfied, to
modify this Rider by amending Schedule A, as applicable, to include any future
Trademarks or Licenses, including, without limitation, registrations or
applications appurtenant thereto, covered by this Rider.
9. REMEDIES UPON DEFAULT. (a) Anything herein contained to the contrary
notwithstanding, if and while the Grantor shall be in default hereunder or an
Event of Default exists under the Loan Documents, the Grantor hereby covenants
and agrees that the Bank, as the holder of a security interest under the Uniform
Commercial Code, may take such action permitted under the Loan Documents or
permitted by law, in its exclusive discretion, to foreclose upon the Trademarks
covered hereby.
(b) For such purposes, and in the event of the Grantor's
default hereunder or an Event of Default under the Loan Documents and while such
default or Event of Default exists, the Grantor hereby authorizes and empowers
the Bank to make, constitute and appoint any officer or agent of the Bank as the
Bank may select, in its exclusive discretion, as the Grantor's true and lawful
attorney-in-fact, with the power to endorse the Grantor's name on all
applications, documents, papers and instruments necessary for the Bank to use
the Trademarks or to grant or issue any exclusive or non-exclusive license under
the Trademarks to anyone else, or necessary for the Bank to assign, pledge,
convey or otherwise transfer title in or dispose of the Trademarks to anyone
else. The Grantor hereby ratifies all that such attorney shall lawfully do or
cause to be done by virtue hereof, except for the gross negligence or willful
misconduct of such attorney. This power of attorney shall be irrevocable for the
life of this Rider and the Loan Documents, and until all the Obligations are
satisfied in full.
(c) The Grantor expressly acknowledges that this Rider shall
be recorded with the Patent and Trademark Office in Washington, D.C.
Contemporaneously herewith, the Grantor shall also execute and deliver to the
Bank such documents as the Bank shall reasonably request to permanently assign
all rights in the Trademarks to the Bank, which documents shall be held by the
Bank, until the occurrence of an Event of Default hereunder or
under the Loan Documents. After such occurrence, the Bank may, at its sole
option, record such documents with the Patent and Trademark Office.
10. SUBJECT TO SECURITY AGREEMENT. This Rider shall be subject to the
terms, provisions, and conditions set forth in the Security Agreement and may
not be modified without the written consent of the party against whom
enforcement is being sought.
11. INCONSISTENT WITH SECURITY AGREEMENT. All rights and remedies
herein granted to the Bank shall be in addition to any rights and remedies
granted to the Bank under the Loan Documents. In the event of an inconsistency
between this Rider and the Security Agreement, the language of the Security
Agreement shall control. The terms and conditions of the Security Agreement are
hereby incorporated herein by reference.
12. TERMINATION OF AGREEMENT. Upon payment and performance of all
Obligations under the Loan Documents, the Bank shall execute and deliver to the
Grantor all documents necessary to re-vest all rights in and to the Trademarks
in the Grantor and/or terminate any interest of the Bank therein.
13. PROSECUTION OF TRADEMARK APPLICATIONS. (a) Subject to the terms of
the Loan Documents, the Grantor shall have the duty to prosecute diligently any
trademark application with respect to the Trademarks pending as of the date of
this Rider or thereafter, until the Obligations shall have been satisfied in
full, to preserve and maintain all rights in the registration and grant of the
Trademarks, to halt any infringement of the Trademarks, and upon reasonable
request of the Bank, the Grantor shall make federal application on registrable
but unregistered trademarks belonging to the Grantor. Any reasonable expenses
incurred in connection with such applications or defense of said Trademarks
shall be borne by the Grantor. The Grantor shall not abandon any Trademark
without the written consent of the Bank.
(b) The Grantor shall have the right to bring suit in its own
name to enforce the Trademarks, in which event the Bank may, if the Grantor
deems it necessary or after an Event of Default under the Loan Documents, be
joined as a nominal party to such suit if the Bank shall have been satisfied
that it is not thereby incurring any risk of liability because of such joinder.
The Grantor shall promptly, upon demand, reimburse and indemnify the Bank for
all damages, reasonable costs and reasonable expenses, including attorneys'
fees, incurred by the Bank in the fulfillment of the provisions of this
paragraph.
14. RESPONSIBILITY AND LIABILITY. The Grantor assumes all
responsibility and liability arising from the use of the Trademarks, and hereby
indemnifies and holds the Bank and each director, officer, employee, affiliate
and agent thereof, harmless from and against any claim, suit, loss, damage or
expense (including attorneys' fees and expenses) arising out of any alleged
defect in any product manufactured, promoted or sold by the Grantor in
connection with any of the Trademarks or otherwise arising out of the Grantor's
operation of its business from the use of the Trademarks. In any suit,
proceeding or action brought by the Bank under any License for any sum owing
thereunder, or to enforce any provisions of such License, the Grantor will
indemnify and keep the Bank harmless from and against all expense, loss or
damage suffered by reason of any defense, set off, recoupment, claim,
counterclaim, reduction or liability whatsoever of the obligee thereunder or
arising out of a breach of the Grantor of any obligation thereunder or arising
out of any agreement, indebtedness or liability at any time owing to or in favor
of such
obligee or its successors from the Grantor, and all such Obligations of the
Grantor shall be and remain enforceable against and only against the Grantor and
shall not be enforceable against the Bank.
15. BANK'S RIGHTS. The Bank may, in its sole discretion, pay any amount
or do any act required of the Grantor hereunder or requested by the Bank to
preserve, defend, protect, maintain, record or enforce the Grantor's obligations
contained herein, the Obligations of the Grantor to the Bank, the Trademarks, or
the right, title and interest granted the Bank herein, and which the Grantor
fails to do or pay, and any such payment shall be deemed an advance by the Bank
to the Grantor and shall be payable on demand together with interest thereon at
the default rate specified in the Loan Documents.
16. PROTECTION OF THE TRADEMARKS. The Grantor agrees that if it learns
of any use by any person or any term or design likely to cause confusion with
any Trademark, or of any claim of any lien, security interest, claim, right or
other encumbrance of any nature whatsoever in or to the Trademarks, the Grantor
shall promptly notify the Bank of such use, lien, security interest, claim,
right or other encumbrance and, if requested by the Bank, shall join with the
Bank, at the Grantor's expense, in such action as the Bank, in its reasonable
discretion, may deem advisable for the protection of the Bank's interest in and
to the Trademarks, it being understood that the foregoing shall not preclude the
Grantor from bringing an action against a person for the protection of the
Grantor's interest in and to such Trademarks.
17. ADDITIONAL REMEDIES. Upon the occurrence of an Event of Default
under the Loan Documents, the Bank may, without any obligation to do so,
complete any obligation of the Grantor hereunder, in the Grantor's name or in
the Bank's name, but at the Grantor's expense, and the Grantor hereby agrees to
reimburse the Bank in full for all reasonable expenses, including reasonable
attorney's fees, incurred by the Bank in protecting, defending and maintaining
the Trademarks.
18. GOVERNING LAW. This Rider will be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the laws of the
State where the Bank's office indicated above is located, excluding its conflict
of laws rules, except that the federal laws of the United States of America
shall govern to the extent applicable.
19. COUNTERPARTS. This Rider may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart. Any party so
executing this Agreement by facsimile transmission shall promptly deliver a
manually executed counterpart, provided that any failure to do so shall not
affect the validity of the counterpart executed by facsimile transmission.
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
WITNESS / ATTEST: ESCALON MEDICAL CORP.
/s/ By: /s/
- ---------------------------------- -------------------------- -------
(SEAL)
Print Name: H.M. Rimmer Print Name: Richard J. DePiano
---------------------- ---------------------------
Title: SVP Finance Title: CEO
--------------------------- --------------------------------
(Include title only if an officer
of entity signing to the right)
PNC BANK, NATIONAL ASSOCIATION
By: /s/
------------------------------------
Print Name: Frank P. Devine
---------------------------
Title: Assistant Vice President
--------------------------------
SCHEDULE A - TRADEMARKS
<Table>
<Caption>
APPLICATION OR REGISTRATION OR
TRADEMARK REGISTRATION NO. COUNTRY FILING DATE
- --------- ---------------- ------- ---------------
Trademark "ESCALON" 1,746,993 US 5/13/92
Trademark "ESCALON" 1,768,979 US 5/13/92
Trademark "OCUFIT SR" 1,917,083 US 1/21/93
Trademark "PD ACCESS" 2,327,005 US 5/8/96
Trademark "PD ACCESS" 371.328 CTM 11/11/96
Trademark "PD ACCESS" 126745/96 Japan 11/11/96
Trademark "SMARTNEEDLE" 75/620,674 US 1/13/99
Trademark "SMARTNEEDLE" 469,023 SWIT 1/12/99
Trademark "SMARTNEEDLE" 4,398,260 Japan 1/13/99
Trademark "SMARTNEEDLE" 1239573 CTM 1/15/99
Trademark "SMARTNEEDLE" 1,022,096 Canada 1/13/99
Trademark "NB2000" 76/144,850 US 10/11/00
</Table>
TRADEMARK ASSIGNMENT
WHEREAS, ESCALON MEDICAL CORP. (the "GRANTOR") is the owner of the
entire right, title and interest in and to the United States trademarks, trade
names and registrations listed on Schedule A attached hereto and made a part
hereof (collectively, the "TRADEMARKS"), which are registered in the United
States Patent and Trademark Office or which are subject of pending applications
in the United States Patent and Trademark Office; and
WHEREAS, PNC BANK, NATIONAL ASSOCIATION, having a place of business at
1600 Market Street, Philadelphia, Pennsylvania 19103, identified as the "BANK"
under that certain Rider to Security Agreement - Trademarks (the "RIDER") of
even date herewith (the "GRANTEE") is desirous of acquiring said Trademarks;
WHEREAS, the Grantee has a security interest in the assets of the
Grantor adequate to carry on the business of the Grantor; and
WHEREAS, the Rider provides that this Assignment shall become effective
upon the occurrence of an Event of Default as defined in the Security Agreement
dated as of November 16, 2001 by and between the Grantor and the Grantee.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the Grantor, for itself and its successors and assigns does hereby
collaterally transfer, assign and set over unto Grantee, its successors,
transferees and assigns, all of its present and future right, title and interest
in and to the Trademarks, the goodwill of the business associated with such
Trademarks and all proceeds thereof and all rights and proceeds associated
therewith.
IN WITNESS WHEREOF, the undersigned has caused this Trademark
Assignment to be executed by its duly authorized officer on this 16th day of
November, 2001.
WITNESS / ATTEST: ESCALON MEDICAL CORP.
/s/ By: /s/
- ------------------------------------ ----------------- ---------
(SEAL)
Print Name: H.M. Rimmer Print Name: Richard J. DePiano
------------------------ --------------------
Title: SVP Finance Title: CEO
----------------------------- -------------------------
(Include title only if an officer of
entity signing to the right)
RIDER TO SECURITY AGREEMENT - PATENTS
THIS RIDER TO SECURITY AGREEMENT ("RIDER") is executed as of this 16th
of November, 2001, by and between ESCALON MEDICAL CORP. (the "GRANTOR") with an
address at 351 E. Conestoga Road, Wayne, Pennsylvania and PNC BANK, NATIONAL
ASSOCIATION (the "BANK"), with an address at 1600 Market Street, Philadelphia,
Pennsylvania 19103. This Rider is incorporated into and made part of that
certain Security Agreement ("SECURITY AGREEMENT") between the Grantor and the
Bank dated November 16, 2001, and also into certain other financing documents
and security agreements executed by and between the Grantor and the Bank or by
and between the Borrower (as defined in the Security Agreement) and the Bank
(all such documents including this Rider being collectively referred to as "LOAN
DOCUMENTS"). All capitalized terms not otherwise defined in this Rider shall
have the same meanings ascribed to such terms in the other Loan Documents.
As collateral security for the Obligations (as defined in the Security
Agreement) under the Loan Documents, the Grantor has agreed to grant a security
interest in and to assign to the Bank the Patent Collateral (as hereinafter
defined). The Bank desires to have its lien and security interest in such Patent
Collateral confirmed by a document identifying such security interest and in
such form as may be recorded in the United States Patent and Trademark Office.
NOW, THEREFORE, with the foregoing background deemed incorporated by
reference and made part hereof, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. GRANT OF SECURITY INTEREST. In consideration of and pursuant to the
terms of the Security Agreement and for other good, valuable and sufficient
consideration, the receipt and sufficiency of which is hereby acknowledged, and
to secure the Obligations, the Grantor does hereby assign and grant to the Bank
a lien and security interest in (a) all of the Grantor's right, title and
interest in and to (i) the United States Letters Patent and the inventions
described and claimed therein set forth on Schedule A hereto and any future
patents of Grantor (hereinafter referred to collectively as the "PATENTS"); (ii)
the applications for Letters Patent and the inventions described and claimed
therein set forth on Schedule A hereto and any United States Letters Patent
which may be issued upon any of said applications and any future patent
applications of Grantor (hereinafter referred to collectively as the
"APPLICATIONS"); (iii) any reissue, extension, division or continuation of the
Patents or the Applications (such reissues, extensions, divisions and
continuations being herein referred to collectively as the "REISSUED PATENTS");
(iv) all future royalties or other fees paid or payment or payments made or to
be made to the Grantor in respect of the Patents; and (v) proceeds of any and
all of the foregoing (the Patents, Applications, Reissued Patents and Royalties
and proceeds being herein referred to collectively as the "PATENT RIGHTS"); and
(b) all rights, interests, claims and demands that the Grantor has or may have
in existing and future profits and damages for past and future infringements of
the Patent Rights (such rights, interests, claims and demands being herein
called the "CLAIMS") (the Patent Rights and Claims collectively referred to as
the "PATENT COLLATERAL").
2. REPRESENTATIONS AND WARRANTIES. The Grantor warrants and represents
to the Bank that: (a) the Grantor is the true and lawful exclusive owner of the
Patent Rights set forth on Schedule A, including all rights and interests herein
granted; (b) the Patent Collateral is valid and enforceable; (c) the Grantor has
full power and authority to execute and deliver this Rider; (d) the Grantor has
no notice of any suits or actions commenced or threatened against it, or notice
of claims asserted or threatened against it, with reference to the Patent Rights
and the interests granted herein; and (e) the Patent Rights and all interests
granted herein are so granted free from all liens, charges, claims, options,
licenses, pledges and encumbrances of every kind and character.
3. COVENANTS. The Grantor further covenants that: (a) until all of the
Obligations have been satisfied in full, the Grantor will not enter into any
agreement, including without limitation, license agreements, which are
inconsistent with the Grantor's obligations under this Rider; and (b) if the
Grantor acquires rights to any new Patent Collateral, the provisions of this
Rider shall automatically apply thereto and the Grantor shall give the Bank
prompt written notice thereof along with an amended Schedule A; provided,
however, that notwithstanding anything to the contrary contained in this
Agreement, the Grantor shall have the right to enter into agreements in the
ordinary course of business with respect to the Patent Collateral.
4. MAINTENANCE OF PATENT COLLATERAL. The Grantor further covenants
that: until all of the Obligations have been satisfied in full, it will (i) not
enter into any agreement, including without limitation, license agreements,
which are inconsistent with the Grantor's undertakings and covenants under this
Rider or which restrict or impair the Bank's rights hereunder and (ii) maintain
the Patent Collateral in full force and effect.
5. NEGATIVE PLEDGE. The Grantor shall not sell, assign or further
encumber its rights and interest in the Patent Collateral without prior written
consent of the Bank.
6. REMEDIES UPON DEFAULT. (a) Anything herein contained to the contrary
notwithstanding, if and while the Grantor shall be in default hereunder or an
Event of Default exists under the Loan Documents, the Grantor hereby covenants
and agrees that the Bank, as the holder of a security interest under the Uniform
Commercial Code, may take such action permitted under the Loan Documents or
permitted by law, in its exclusive discretion, to foreclose upon the Patent
Collateral covered hereby.
(b) For such purposes, and in the event of the Grantor's
default hereunder or an Event of Default under the Loan Documents and while such
default or Event of Default exists, the Grantor hereby authorizes and empowers
the Bank to make, constitute and appoint any officer or agent of the Bank as the
Bank may select, in its exclusive discretion, as the Grantor's true and lawful
attorney-in-fact, with the power to endorse the Grantor's name on all
applications, documents, papers and instruments necessary for the Bank to use
the Patent Collateral or to grant or issue any exclusive or non-exclusive
license under the Patent Collateral to anyone else, or necessary for the Bank to
assign, pledge, convey or otherwise transfer title in or dispose of the Patent
Collateral itself or to anyone else. The Grantor hereby ratifies all that such
attorney shall lawfully do or cause to be done by virtue hereof, except for the
gross
negligence or willful misconduct of such attorney. This power of attorney
shall be irrevocable for the life of this Rider and the Loan Documents, and
until all the Obligations are satisfied in full.
(c) The Grantor expressly acknowledges that this Rider shall
be recorded with the Patent and Trademark Office in Washington, D.C.
Contemporaneously herewith, the Grantor shall also execute and deliver to the
Bank such documents as the Bank shall reasonably require to permanently assign
all rights in the Patent Collateral to the Bank, which documents shall be held
by the Bank, in escrow, until the occurrence of an Event of Default hereunder or
under the Loan Documents. After such occurrence, the Bank may, at its sole
option, record such escrowed documents with the Patent and Trademark Office.
7. PROSECUTION OF PATENT APPLICATIONS. (a) The Grantor shall, at its
own expense, diligently maintain all patents and diligently file and prosecute
all patent applications relating to the inventions described and claimed in the
Patent Collateral in the United States Patent and Trademark Office, and shall
pay or cause to be paid in their customary fashion all fees and disbursements in
connection therewith, and shall not abandon any such application prior to the
exhaustion of all administrative and judicial remedies or disclaim or dedicate
any Patent without the prior written consent of the Bank. The Grantor shall not
abandon any Patent Collateral without the prior written consent of the Bank.
(b) Any and all fees, costs and expenses, including reasonable
attorneys' fees and expenses incurred by the Bank in connection with the
preparation, modification, enforcement or termination of this Rider and all
other documents relating hereto and the consummation of this transaction, the
filing and recording of any documents (including all taxes in connection
therewith) in public offices, the payment or discharge of any taxes, counsel
fees, maintenance fees, encumbrances or costs otherwise incurred in defending or
prosecuting any actions or proceedings arising out of or related to the Patent
Collateral shall be paid by the Grantor on demand by the Bank.
(c) The Grantor shall have the right to bring suit in the name
of the Grantor to enforce the Patent Collateral, in which case the Bank may, at
the Bank's option, be joined as a nominal party to such suit if the Bank shall
be satisfied that such joinder is necessary and that the Bank is not thereby
incurring any risk of liability by such joinder. The Grantor shall promptly,
upon demand, reimburse and indemnify, defend and hold harmless the Bank for all
damages, costs and expenses, including reasonable attorneys' fees, incurred by
the Bank pursuant to this paragraph and all other actions and conduct of the
Grantor with respect to the Patent Rights during the term of this Rider.
8. SUBJECT TO SECURITY AGREEMENT. This Rider shall be subject to the
terms, provisions, and conditions set forth in the Security Agreement and may
not be modified without the written consent of the party against whom
enforcement is being sought.
9. INCONSISTENT WITH SECURITY AGREEMENT. All rights and remedies herein
granted to the Bank shall be in addition to any rights and remedies granted to
the Bank under the Loan Documents. In the event of an inconsistency between this
Rider and the Security
Agreement, the language of the Security Agreement shall control. The terms and
conditions of the Security Agreement are hereby incorporated herein by
reference.
10. TERMINATION OF AGREEMENT. Upon payment and performance of all
Obligations under the Loan Documents, the Bank shall execute and deliver to the
Grantor all documents necessary to terminate the Bank's security interest in the
Patent Collateral.
11. FEES AND EXPENSES. Any and all reasonable fees, costs and expenses,
of whatever kind or nature, including the reasonable attorneys' fees and legal
expenses incurred by the Bank in connection with the preparation of this Rider
and all other documents relating hereto and the consummation of this
transaction, the filing or recording of any documents (including all taxes in
connection therewith) in public offices, the payment or discharge of any taxes,
reasonable counsel fees, maintenance fees, encumbrances or costs otherwise
incurred in protecting, maintaining, preserving the Patent Collateral, or in
defending or prosecuting any actions or proceedings arising out of or related to
the Patent Collateral, in each case in accordance with the terms of this Rider,
shall be borne and paid by the Grantor on demand by the Bank and until so paid
shall be added to the principal amount of the Obligations to the Bank and shall
bear interest at the contract rate therefor.
12. ADDITIONAL REMEDIES. Upon the occurrence of an Event of Default
under the Loan Documents, the Bank may, without any obligation to do so,
complete any obligation of the Grantor hereunder, in the Grantor's name or in
the Bank's name, but at the Grantor's expense, and the Grantor hereby agrees to
reimburse the Bank in full for all reasonable expenses, including reasonable
attorney's fees, incurred by the Bank in protecting, defending and maintaining
the Patent Collateral.
13. GOVERNING LAW. THIS RIDER WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT
OF LAWS RULES, EXCEPT THAT THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA
SHALL GOVERN TO THE EXTENT APPLICABLE.
14. COUNTERPARTS. This Rider may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Rider by facsimile transmission shall be
effective as delivery of a manually executed counterpart. Any party so executing
this Agreement by facsimile transmission shall promptly deliver a manually
executed counterpart, provided that any failure to do so shall not affect the
validity of the counterpart executed by facsimile transmission.
WITNESS the due execution hereof as a document under seal, as
of the date first written above.
WITNESS / ATTEST: ESCALON MEDICAL CORP.
/s/ By: /s/
- --------------------------------- -------------------- --------
(SEAL)
Print Name: H.M. Rimmer Print Name: Richard J. DePiano
---------------------- ----------------------
Title: SVP Finance Title: CEO
-------------------------- ---------------------------
(Include title only if an officer
of entity signing to the right)
PNC BANK, NATIONAL ASSOCIATION
By: /s/
------------------------------
Print Name: Frank P. Devine
----------------------
Title: Assistant Vice President
---------------------------
SCHEDULE A - PATENTS
<Table>
<Caption>
PATENT APPLICATION NO. TITLE ISSUE (FILING) DATE
- ---------------------- ----- -------------------
Patent # Issued/ Date
Trademark Product Application Issued/applied
2975833 Eye Stabilizing mechanism Issued 11/10/99
662704 Eye Stabilizing mechanism Issued 9/7/95
2106574 Debridement bodily cavities Applied 8/3/00
2112841 Eye Stabilizing mechanism Applied 1/5/94
2115006 P-I Prophylactic Agent Applied 4/28/90
2165071 Ocular insert Issued 8/15/00
4670006 Fluid Air infusion Issued 6/2/87
4712550 Retinal Trak Issued 12/15/87
4878487 Illum. Tissue Manipulation Issued 11/7/89
5147647 Ocular insert for the Fornix Issued 9/15/92
5181922 Ocular coats #1 Issued 1/26/93
5311745 Ocular Insert Issued 10/22/99
5322691 Ocular Insert Issued 6/21/94
5334163 Intraocular gas Issued 8/2/94
5336215 Eye Stabilizing mechanism Issued 8/9/94
5366474 Ocular coats #2 Issued 11/22/94
5395618 Ocular Insert w/anchoring Issued 3/7/95
5541951 High power end pumping Issued 7/30/96
5548234 Control Pockel's cell Issued 8/20/96
5561678 Time-Sharing Laser Issued 10/1/96
5466233 Ocufit Tack for drug delivery Issued 11/14/95
92907746.9 Debridement bodily cavities Applied 8/3/00
4013118C2 P-I Prophylactic Agent Issued 4/9/98
5989579 Ocular Insert w/anchoring Issued 11/23/99
56112 Ocular insert for the Fornix Issued 4/21/92
2955137 Ocular Insert w/anchoring Issued 10/22/99
94923238.3 Ocular Insert w/anchoring Applied 6/20/94
09/707,641 Retractable micro-surgical tool Applied 11/6/00
09/619,120 Retractable ophthalmic surgical tool Applied 7/19/00
4,764,930 Multiwavelength Laser Source Issued 8/16/88
4,901,718 3-D Laser Beam Delivery Issued 2/20/90
1,724,927 3-D Laser Beam Delivery Issued
603532 3-D Laser Beam Delivery Issued
4,848,340 Eyetracker & Method of Use Issued 7/18/89
1,322,779 Eyetracker & Method of Use Issued
4,881,808 Imaging System for Surgical Lasers Issued 11/21/89
4,907,586 Method for Reshaping the Eye Issued 3/13/90
4,988,348 Method for Reshaping the Cornea Issued 1/29/91
2,013,388 High power Diode Pump Laser Issued 10/26/93
5,062,702 Device for Mapping Corneal Topography Issued 11/5/91
</Table>
<Table>
<Caption>
PATENT APPLICATION NO. TITLE ISSUE (FILING) DATE
- ---------------------- ----- -------------------
5,221,988 Pockle Cell Damping System Issued 6/22/93
5,246,435 Method for Removing Cataractous Material Issued 9/21/93
5,439,482 Apparatus for Removing Cataractous Mat. Issued 8/8/95
5,336,215 Eye Stabilizing mechanism for use in
Ophthalmic Laser Surgery Issued 8/9/94
662,704 Eye Stabilizing mechanism for use in
Ophthalmic Laser Surgery Issued 1/23/96
NI-083061 Intrastromal Photo-Refractive
Keratectomy Issued 12/21/96
5,541,951 Device & Method for High Power End Pumping Issued 7/30/96
5,548,234 System and Method for Control of a Pockels'
Cell Issued 8/20/96
5,561,678 Time-Sharing Laser Issued 10/1/96
10813.34a Eye Stabilizing mechanism for use in
Ophthalmic Laser Surgery Pending
10813.40c Intrastromal Photo-Refractive
Keratectomy Pending
10813.40.1a Intrastromal Photo-Refractive
Keratectomy Pending
10813.40.2 Intrastromal Photo-Refractive
Keratectomy Pending
10813.47.1 Method for Corneal Laser Surgery CIP Pending
10813.40.1a Method for Corneal Laser Surgery CIP Pending
10813.48a Time-Sharing Laser Pending
</Table>
PATENT ASSIGNMENT
WHEREAS, ESCALON MEDICAL CORP. (the "GRANTOR") is the owner of
the entire right, title and interest in and to the United States patents, patent
applications listed on Schedule "A" attached hereto and made a part hereof, the
inventions described therein and all rights associated therewith (collectively,
the "PATENT COLLATERAL"), which are registered in the United States Patent and
Trademark Office or which are the subject of pending applications in the United
States Patent and Trademark Office; and
WHEREAS, PNC BANK, NATIONAL ASSOCIATION, having a place of
business at 1600 Market Street, Philadelphia, Pennsylvania 19103, identified as
the "BANK" under that certain Rider to Security Agreement - Patents of even date
herewith (the "GRANTEE") is desirous of acquiring said Patent Collateral;
WHEREAS, the Grantee has a security interest in the assets of
the Grantor adequate to carry on the business of the Grantor; and
WHEREAS, the Rider provides that this Assignment shall become
effective upon the occurrence of an Event of Default as defined in the Security
Agreement dated as of November 16, 2001 by and between the Grantor and the
Grantee.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, the Grantor, its successors and assigns does hereby
transfer, assign and set over unto Grantee, its successors, transferees and
assigns, all of its present and future right, title and interest in and to the
Patent Collateral and all proceeds thereof and all rights and proceeds
associated therewith.
IN WITNESS WHEREOF, the undersigned has caused this Patent
Assignment to be executed by its duly authorized officer on this 16th day of
November, 2001.
WITNESS / ATTEST: ESCALON MEDICAL CORP.
/s/ By: /s/
- -------------------------------------- -------------------- --------
(SEAL)
Print Name: H.M. Rimmer Print Name: Richard J. DePiano
-------------------------- ----------------------
Title: Chairman and Chief
Executive Officer
---------------------------
RIDER TO SECURITY AGREEMENT-
COPYRIGHTS
THIS RIDER TO SECURITY AGREEMENT ("RIDER") is executed as of this 16th
day of November, 2001, by and between ESCALON MEDICAL CORP. (the "GRANTOR") with
an address at 351 E. Conestoga Road, Wayne, Pennsylvania 19087 and PNC BANK,
NATIONAL ASSOCIATION (the "BANK"), with an address at 1600 Market Street,
Philadelphia, Pennsylvania 19103. This Rider is incorporated into and made part
of that certain Security Agreement ("SECURITY AGREEMENT") between the Grantor
and the Bank dated November 16, 2001, and also into certain other financing
documents, guarantees and security agreements executed by and between the
Grantor and the Bank (all such documents including this Rider being collectively
referred to as "LOAN DOCUMENTS"). All capitalized terms not otherwise defined in
this Rider shall have the same meanings ascribed to such terms in the other Loan
Documents.
The Grantor owns the works and has registered (or has filed
applications for the registration of) the copyrights therefor listed on Schedule
"A" attached hereto and made part hereof (all such copyright rights and any
renewals or extensions thereof hereinafter referred to as the "COPYRIGHTS").
The Grantor desires to acquire the Copyrights and the registration
thereof, together with all the goodwill of Assignor associated therewith and
represented thereby, as security for the Grantor's Obligations referred to and
described in the Loan Documents, and the Grantor desires to have its security
interest in such Copyrights confirmed by a document identifying same and in such
form that it may be recorded in the Library of Congress, Copyright Office.
NOW, THEREFORE, with the foregoing background deemed incorporated by
reference and made a part hereof, the parties hereto, intending to be legally
bound hereby, covenant and agree as follows:
1. GRANT OF SECURITY INTEREST. In consideration of and pursuant to the
terms of the Loan Documents, and for other good, valuable and sufficient
consideration, the receipt and sufficiency of which is hereby acknowledged, and
to secure the Grantor's present and future Obligations, the Grantor grants and
assigns to the Bank a lien and security interest in all of the Grantor's present
and future right, title and interest in and to the Copyrights, together with all
the goodwill of the Grantor associated with and represented by the Copyrights,
and the registration thereof and the right (but not the obligation) to sue for
past, present and future infringements, and the proceeds thereof, including,
without limitation, license royalties and proceeds of infringement suits.
2. REPRESENTATIONS AND WARRANTIES. The Grantor represents, warrants and
covenants that: (a) the Copyrights are subsisting and have not been adjudged
invalid or unenforceable; (b) each of the Copyrights is valid and enforceable;
(c) the Grantor is the sole and exclusive owner of the entire and unencumbered
right, title and interest in and to each of the Copyrights, and each of the
Copyrights is free and clear of any liens, charges and encumbrances, including,
without limitation, pledges, assignments, licenses and covenants by the Grantor
not to sue third persons; (d) the Grantor has the unqualified right to enter
into this Rider and perform its terms; (e) the
Grantor has used, and will continue to use for the duration of this Rider,
proper statutory notice in connection with its use of the Copyrights; and (f)
the Grantor has used, and will continue to use for the duration of this Rider,
consistent standards of quality in products leased or sold under the Copyrights.
3. VERIFICATION OF QUALITY CONTROL. The Grantor hereby grants to the
Bank and its employees and agents the right to visit the Grantor's locations
which lease, sell, or store products under any of the Copyrights and to inspect
the products and quality control records relating thereto at reasonable times
during regular business hours to ensure the Grantor's continued compliance with
Section 2(f).
4. COVENANTS. The Grantor further covenants that until all of the
Obligations have been satisfied in full: (a) the Grantor shall maintain the
Copyrights in full force and effect; (b) the Grantor will not enter into any
agreement which is inconsistent with the Grantor's obligations under this Rider;
and (c) if the Grantor acquires rights to any new Copyrights, whether or not
registered, the provisions of this Rider shall automatically apply thereto and
the Grantor shall promptly register any new Copyright in the United States
Copyright Office, and shall give the Bank prompt written notice thereof along
with an amended Schedule A.
5. EXCLUSIVE USE OF COPYRIGHTS. So long as this Rider is in effect and
so long as the Grantor has not received notice from the Bank that an Event of
Default has occurred under the Loan Documents and that the Bank has elected to
exercise its rights to assignment hereunder, the Grantor shall continue to have
the exclusive right to use the Copyrights, including the licensing thereof, and
the Bank shall have no right to use the Copyrights or issue any exclusive or
non-exclusive license with respect thereto, or assign, pledge or otherwise
transfer title in the Copyrights to anyone else.
6. REMEDIES UPON DEFAULT. (a) Anything herein contained to the contrary
notwithstanding, if and while the Grantor shall be in default hereunder or an
Event of Default exists under the Loan Documents, the Grantor hereby covenants
and agrees that the Bank as the holder of a security interest under the Uniform
Commercial Code, may take such action permitted under the Loan Documents or
permitted by law, in its exclusive discretion, to foreclose upon the Copyrights
covered hereby. Without limiting the generality of the foregoing, the Bank may
immediately, without notice or demand, each of which the Grantor hereby waives,
collect directly any payments due the Grantor in respect of the Copyrights, or
sell at a public or private sale or otherwise realize upon all or from time to
time, any of the Copyrights. No notice of any public or private sale shall be
required, provided that, if any notice is required by applicable law, then
twenty (20) days written notice to the Grantor of any such sale or other
disposition of any of the Copyrights shall be reasonable notice. At any such
sale or disposition, the Bank may, to the extent permitted by law, purchase the
whole or any part of the Copyrights sold, free from any right of redemption on
the part of the Grantor, which right the Grantor hereby waives and releases.
After deducting from the proceeds of such sale or other disposition of the
Collateral all costs and expenses incurred by the Bank in enforcing its rights
hereunder (including, without limitation, brokers' fees, auctioneers' fees and
attorneys' fees actually incurred), the Bank shall apply the remainder of the
proceeds to the payment of the Obligations in such order and manner as the Bank
in its sole discretion may determine. Any remainder of the proceeds after
payment in
full of the Obligations shall be paid over to the Grantor. If any deficiency
shall arise, the Grantor shall remain liable to the Bank therefor.
(b) For such purposes, and in the event of the Grantor's
default hereunder or Event of Default under the Loan Documents and while such
Event of Default exists, the Grantor hereby authorizes and empowers the Bank to
make, constitute and appoint any officer or agent of the Bank as the Bank may
select, in its exclusive discretion, as the Grantor's true and lawful
attorney-in-fact, with the power to endorse the Grantor's name on all
applications, documents, papers and instruments necessary for the Bank to use
the Copyrights or to grant or issue any exclusive or non-exclusive license under
the Copyrights to anyone else, or necessary for the Bank to assign, pledge,
convey or otherwise transfer title in or dispose of the Copyrights to anyone
else. The Grantor hereby ratifies all that such attorney shall lawfully do or
cause to be done by virtue hereof, except for the gross negligence or willful
misconduct of such attorney. This power of attorney shall be irrevocable for the
life of this Rider and the Loan Documents, and until all the Obligations (as
defined in the Security Agreement) are satisfied in full.
(c) The Grantor expressly acknowledges that this Rider shall
be recorded with the Library of Congress, Copyright Office in Washington, D.C.
Contemporaneously herewith, the Grantor shall also execute and deliver to the
Bank such documents as the Bank shall reasonably request to permanently assign
all rights in the Copyrights to the Bank, which documents shall be held by the
Bank until the occurrence of an Event of Default hereunder or under the Loan
Documents. After such occurrence, the Bank may, at its sole option, record such
escrowed documents with the Copyright Office.
7. SUBJECT TO SECURITY AGREEMENT. This Rider shall be subject to the
terms, provisions, and conditions set forth in the Security Agreement and may
not be modified without the written consent of the party against whom
enforcement is being sought.
8. INCONSISTENT WITH SECURITY AGREEMENT. All rights and remedies herein
granted to the Bank shall be in addition to any rights and remedies granted to
the Bank under the Loan Documents. In the event of an inconsistency between this
Rider and the Security Agreement, the language of the Security Agreement shall
control. The terms and conditions of the Security Agreement are hereby
incorporated herein by reference.
9. RE-ASSIGNMENT OF AND/OR TERMINATION OF ANY INTEREST IN COPYRIGHTS.
Upon payment and performance of all Obligations under the Loan Documents and
full satisfaction of all of the Grantor's liabilities and obligations to the
Bank, the Bank shall execute and deliver to the Grantor all documents necessary
to re-vest all rights in and to the Copyrights in the Grantor and/or terminate
any interest of the Bank therein.
10. FEES AND EXPENSES. Any and all reasonable fees, costs and expenses,
of whatever kind or nature, including the reasonable attorneys' fees and legal
expenses incurred by the Bank in connection with the preparation of this Rider
and all other documents relating hereto and the consummation of this
transaction, the filing or recording of any documents (including all taxes in
connection therewith) in public offices, the payment or discharge of any taxes,
reasonable counsel fees, maintenance fees, encumbrances or costs otherwise
incurred in protecting, maintaining, preserving the Copyrights, or in defending
or prosecuting any actions or
proceedings arising out of or related to the Copyrights, in each case in
accordance with the terms of this Rider, shall be borne and paid by the Grantor
on demand by the Bank and until so paid shall be added to the principal amount
of the Obligations to the Bank and shall bear interest at the contract rate
therefor.
11. PROSECUTION OF COPYRIGHT APPLICATIONS. (a) Subject to the terms of
the Security Agreement, the Grantor shall have the duty to prosecute diligently
any copyright application with respect to the Copyrights pending as of the date
of this Rider or thereafter, until the Obligations shall have been satisfied in
full, to preserve and maintain all rights in the Copyrights, and upon reasonable
request of the Bank, the Grantor shall make federal application on registrable
but unregistered copyrights belonging to the Grantor. Any reasonable expenses
incurred in connection with such applications shall be borne by the Grantor. The
Grantor shall not abandon any Copyright without the written consent of the Bank.
(b) The Grantor shall have the right to bring suit in its own
name to enforce the Copyrights, in which event the Bank may, if the Grantor
deems it necessary or after an Event of Default under the Loan Documents, be
joined as a nominal party to such suit if the Bank shall have been satisfied
that it is not thereby incurring any risk of liability because of such joinder.
The Grantor shall promptly, upon demand, reimburse and indemnify the Bank for
all damages, reasonable costs and reasonable expenses, including attorneys'
fees, incurred by the Bank in the fulfillment of the provisions of this
paragraph.
12. ADDITIONAL REMEDIES. Upon the occurrence of an Event of Default
under the Loan Documents, the Bank may, at its sole discretion, complete any
obligation of the Grantor hereunder, in the Grantor's name or in the Bank's
name, but at the Grantor's expense and the Grantor hereby agrees to reimburse
the Bank in full for all reasonable expenses, including reasonable attorneys
fees, incurred by the Bank protecting, defending and maintaining the Copyrights.
13. GOVERNING LAW. THIS RIDER WILL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS LOCATED, EXCLUDING ITS CONFLICT
OF LAWS RULES, EXCEPT THAT THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA
SHALL GOVERN TO THE EXTENT APPLICABLE.
14. COUNTERPARTS. This Rider may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile transmission
shall be effective as delivery of a manually executed counterpart. Any party so
executing this Agreement by facsimile transmission shall promptly deliver a
manually executed counterpart, provided that any failure to do so shall not
affect the validity of the counterpart executed by facsimile transmission.
WITNESS the due execution hereof as a document under seal, as of the date first
written above.
WITNESS / ATTEST: ESCALON MEDICAL CORP.
/s/ By: /s/
- ---------------------------------- -------------------- -------
(SEAL)
Print Name: H.M. Rimmer Print Name: Richard J. DePiano
---------------------- ---------------------
Title: SVP Finance Title: Chairman & CEO
--------------------------- ---------------------------
(Include title only if an officer
of entity signing to the right)
PNC BANK, NATIONAL ASSOCIATION
By: /s/
---------------------------------
Print Name: Frank P. Devine
-------------------------
Title: Assistant Vice President
-----------------------------
SCHEDULE A - COPYRIGHTS
<Table>
<Caption>
Name of Copyright Registered (Y/N) Registration or Film No.
- ----------------- ---------------- ------------------------
None
</Table>
COPYRIGHT ASSIGNMENT
WHEREAS, ESCALON MEDICAL CORP. (the "GRANTOR") is the owner of the
entire right, title and interest in and to the United States copyrights listed
on Schedule A attached hereto and made part hereof (collectively as the
"Copyrights") which are registered in the United States Library of Congress,
Copyright Office or which are the subject of pending applications in the United
States Library of Congress, Copyright Office; and
WHEREAS, PNC BANK, NATIONAL ASSOCIATION, having a place of business at
1600 Market Street, Philadelphia, Pennsylvania 19103, identified as the "BANK"
under that certain Rider to Security Agreement - Copyrights of even date
herewith (the "Grantee") is desirous of acquiring said Copyrights;
WHEREAS, the Grantee has a security interest in the assets of the
Grantor adequate to carry on the business of the Grantor; and
WHEREAS, the Rider provides that this Assignment shall become effective
upon the occurrence of an Event of Default as defined in the Security Agreement
dated as of November 16, 2001, by and between the Grantor and the Grantee.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the Grantor, for itself and its successors and assigns does hereby
transfer, assign and set over unto Grantee, its successors, transferees and
assigns, all of its present and future right, title and interest in and to the
Copyrights and all proceeds thereof and all goodwill associated therewith.
IN WITNESS WHEREOF, the undersigned has caused this Copyright
Assignment to be executed by its duly authorized officer on this 16th day of
November, 2001.
WITNESS / ATTEST: ESCALON MEDICAL CORP.
/s/ By: /s/
- --------------------------------- ------------------- --------
(SEAL)
Print Name: H.M. Rimmer Print Name: Richard J. DePiano
--------------------- ---------------------
Title: SVP Finance Title: CEO
-------------------------- --------------------------
(Include title only if an officer
of entity signing to the right)