SECURITY AGREEMENT
Exhibit
10.2
THIS AGREEMENT is made and entered into
November ___, 2008, at Sunnyvale, California, by and between C ACQUISITION
CORP., a Delaware corporation ("Secured Party") and CORE SYSTEMS INCORPORATED, a
California corporation ("Debtor").
Recitals:
A. Debtor
has executed a Promissory Note (the "Note") in favor of Secured Party in the
principal amount of $1,500,000 incident to the purchase of the business assets
of Secured Party.
B. Debtor
desires to secure the performance of all obligations to Secured Party under the
Note by granting to Secured Party a security interest in the collateral
described in this Agreement.
NOW, THEREFORE, the parties agree as
follows:
1. Grant of Security Interest;
Priority. Debtor hereby grants to Secured Party a security
interest in the property described in paragraph 2 to secure Debtor's obligations
under the Note and under this Agreement. Secured Party acknowledges
and agrees that the security interest granted hereunder shall be subordinate to
any security interest in the collateral granted by Debtor to secure indebtedness
to an institutional lender for business purposes, and Secured Party agrees to
execute any document or agreement reasonably necessary to give effect to such
subordination, provided,
however, that such agreement (a) shall permit the payment of principal
and interest on the Note in accordance with its terms for so long as such
institutional lender has not declared Debtor to be in default of its obligations
to such institutional lender and (b) shall not require Secured Party to refrain
from exercising its rights to foreclose on the collateral for a period of more
than six months after any default under this Agreement.
2. Collateral. The
property ("collateral") which is subject to the security interest created hereby
consists of a present and continuing interest in all of the Debtor’s property
and asset of every kind and description, whether now owned or hereafter
acquired, including without limitation the following:
(a) All accounts receivable,
deposit accounts, general intangibles, or other rights to payment of Debtor;
and
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(b) All furniture, fixtures, leasehold
improvements, intellectual property, business equipment, supplies, inventory and
other tangible and intangible assets of Debtor now or at any time prior to the
termination of this Security Agreement owned or acquired by Debtor, together
with all improvements, replacements, accessions, and additions to
them.
3. Secured
Obligations. This Security Agreement secures payment of all
existing and future indebtedness and liability of Debtor to Secured Party under
the Note, and the performance of all obligations of Debtor to Secured Party
under this Security Agreement.
4. Covenants. Debtor
covenants and agrees:
(a) To perform and pay when
due all obligations to Secured Party under the Note and this Security
Agreement.
(b) To pay all expenses,
including attorneys fees, incurred by Secured Party in the perfection,
preservation, enforcement, and exercise of its rights under this Security
Agreement.
(c) Except as permitted in
Section 1 of this Agreement, not to sell, permit liens on, lease, transfer, or
otherwise dispose or encumber the collateral except, before the occurrence of a
default, for cash proceeds of accounts collected in the ordinary course of
business.
(d) To perform all acts
necessary to maintain, preserve, and protect the collateral.
(e) To execute and deliver
to Secured Party all financing statements and other documents that Secured Party
requests, in order to maintain a perfected security interest in the
collateral.
(f) To carry at all times
insurance coverage with respect to the collateral which is reasonably acceptable
to Secured Party.
(g) To
maintain Debtor’s corporate existence as a California corporation.
(h) Not
to change Debtor’s legal name unless Secured Party shall have received not less
than 30 days prior written notice from Debtor of such proposed change in its
corporate name, which notice shall accurately set forth the new
name.
(i) Not
to change Debtor’s chief executive office, or open up any new
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locations
at which collateral may be held, unless Secured Party shall have received not
less than 30 days prior written notice from Debtor of such proposed change,
which notice shall accurately set forth the address of its new chief executive
office or location.
5. Default. Debtor
will be in default under this Agreement if:
(a) Debtor fails to pay any
amount due under the Note or under the Asset Purchase Agreement dated November
14, 2008, by and among Debtor, Secured Party and Implant Sciences Corporation,
or any other event of default described in the Note occurs.
(b) Debtor breaches any of
the covenants, representations, or provisions of this Security
Agreement.
(c) There is a seizure or
attachment of, or a levy on, any of the collateral.
(d) Debtor ceases
operations, is dissolved, or becomes insolvent.
6. Remedies. When
an event of default occurs Secured Party may:
(a) Declare the unpaid
balance of principal and interest under the Note immediately due and payable,
without demand, presentment, protest or notice to Debtor, all of which Debtor
expressly waives.
(b) Exercise all rights and
remedies available to a secured creditor after default, including but not
limited to the rights and remedies of secured creditors under the California
Uniform Commercial Code.
7. Termination. This
Security Agreement will terminate and the security interest hereby created shall
be extinguished upon payment in full of all principal and interest due under the
Note, and the performance of all obligations to Secured Party under this
Security Agreement.
8. Attorneys
Fees. Debtor will pay all costs and expenses, including
reasonable attorneys fees, incurred by Secured Party in the collection of all
sums due under the Note, and the enforcement of obligations under this Security
Agreement.
9. Non-Waiver. No
waiver by Secured Party of any breach or default will be a waiver of any breach
or default occurring later. A waiver will be valid only if it is in
writing and signed by Secured Party.
10. Assignment. This
Security Agreement will bind and benefit the successors
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and
assignees of the parties, but Debtor may not assign its rights or obligations
under this Security Agreement without Secured Party's prior written
consent.
11. Governing
Law. This Agreement will be governed by the laws of the State
of California.
12. Entire
Agreement. This Security Agreement is the entire agreement,
and supersedes any prior agreements or understandings, between Secured Party and
Debtor relating to the collateral. Any modification of this Security
Agreement must be in writing and signed by all parties.
13. Notice. Notices
under this Security Agreement are considered to be served two days after they
are deposited in the United States mail, with prepaid, first class postage,
addressed as follows:
Secured
Party: C
Acquisition Corp.
c/o Implant Sciences
Corporation
000
Xxxxxxx Xxxx
Xxxxxxxxx,
Xxxxxxxxxxxxx 00000
Attention:
President
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Debtor:
|
Core
Systems Incorporated
|
|
|
0000
Xxxxx Xxxx
|
|
|
Xxxxxxxxx,
Xxxxxxxxxx 00000
|
IN WITNESS WHEREOF, the parties to this
Agreement have executed it on the day and year first above written.
SECURED
PARTY:
C
ACQUISITION CORP., a Delaware corporation
By:
______________________________________
DEBTOR:
CORE
SYSTEMS INCORPORATED,
a
California corporation
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