EXHIBIT 10.28
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Security Agreement") is made and entered
into on April 30, 1998, by and between OPHTHALMIC IMAGING SYSTEMS, a
California corporation ("Debtor") and PREMIER LASER SYSTEMS, INC., a
California ("Secured Party").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged by each of the parties, the
Debtor and the Secured Party hereby agree as follows:
1. GRANT OF SECURITY.
(a) GRANT OF SECURITY INTEREST. To secure the prompt payment in full
of the Secured Obligations (as defined in Section 2), and to ensure the
observance and performance or all the terms, provisions, agreements and
covenants of the Secured Obligations and this Security Agreement, the
Debtor hereby grants to the Secured Party a security interest (the
"Security Interest") in all of the Debtor's right, title and interest in
and to the following property, whether now owned or hereafter acquired by
the Debtor and whether now existing or hereafter coming into existence (the
"Collateral"):
(i) all parts, goods, raw material, components and inventory
acquired by Debtor through the use of funds advanced by Secured Party on
Debtor's behalf under the Note (described in Section 2);
(ii) all proceeds and products of the foregoing, including, but
not limited to, accounts, accounts receivable, general intangibles, money,
deposit accounts, goods, chattel paper, documents, instruments, insurance
proceeds, and any other tangible or intangible property received upon the
sale or other disposition of any of the foregoing.
(b) CONTINUED SECURITY INTEREST. At the request of the Secured
Party, the Debtor shall take whatever steps are appropriate or necessary to
ensure that the Security Interest shall at all times constitute a valid
lien upon and perfected security interest in the Collateral, enforceable
against the Debtor, securing, in accordance with the terms of this Security
Agreement, the Secured Obligations, and the Collateral shall not at any
time be subject to any liens that are prior to or on a parity with the
Security Interest except for liens that may be held by Imperial Bank to
secure ally "Senior Debt" (as defined in the Note).
(c) FILING; NOTIFICATION; REFILING, ETC.
(i) The Debtor shall, at its sole cost and expense, take all
action which may be requested by the Secured Party in order to defend the
Security Interest, to ensure that the Security Interest will at all times
comply with the provisions of Section 1(b), and to enable the Secured Party to
exercise or enforce its rights hereunder, including, but not limited to,
executing and delivering such financing statements, pledges, designations,
mortgages, hypothecations, notices and assignments, in each case in form and
substance satisfactory to the Secured Party, relating to the creation, validity,
perfection, maintenance or continuation of the Security Interest under the
California Commercial Code, the Uniform Commercial Code, or similar laws of
any jurisdiction in which the Collateral or any part thereof is located,
and of such other states as the Secured Party may from time to time
request. The Debtor shall xxxx its books and records as may be necessary
or appropriate to evidence, protect or perfect in all respects the Security
Interest.
(ii) The Debtor shall, at its sole cost and expense, from time to
time upon the request of the Secured Party, (A) take whatever steps are
necessary or appropriate to perfect the Security Interest with respect to
any portion of the Collateral which cannot be perfected by the filing of
Uniform Commercial Code financing statements, (B) upon the exercise by the
Secured Party of any remedy provided herein, use its diligent best efforts
to obtain all necessary consents to the transfer of any contract, license,
franchise, approval or other agreement, instrument, or document which is
not transferable without such consents, and (c) permit representatives of
the Secured Party, upon reasonable notice, at any time during normal
business hours to inspect the Collateral.
(iii) In the event that any rerecording or refiling (or the
filing of any statement of continuation or assignment of any financing
statement) or any remortgage, repledge or reassignment, or any confirmatory
assignment, or any other action, is required or desirable at any time to
protect and preserve and maintain the Security Interest, the Debtor shall,
at its sale cost and expense, cause the same to be done or taken at such
time and in such manner as may be requested by the Secured Party.
(d) DISPOSAL OF COLLATERAL. So long as any of the Secured
Obligations is outstanding and unsatisfied and unless the Secured Xxxxx
shall have otherwise given its prior consent, the Debtor shall not sell,
assign, transfer, license, lease or otherwise dispose of any Collateral to
anyone other than the Secured Party, except for sales of inventory in the
ordinary course or business.
2. SECURED OBLIGATIONS.
The Security Interest granted hereby shall secure the following
indebtedness, obligations, debts and liabilities of the Debtor, which are
herein collectively called the "Secured Obligations":
(a) PROMISSORY NOTE. The performance of all obligations and the
repayment of all indebtedness evidenced by that certain Promissory Note, of
even date herewith, from Debtor in favor of Secured Party (the "Note") in
the maximum principal amount of $500,000, and all modifications,
renewals, extensions, substitutions, replacements, and/or arrangements
thereof.
(b) FURTHER OBLIGATIONS. Any and all indebtedness, obligations,
debts and liabilities of any kind of the Debtor to the Secured Party,
whether now existing or hereafter arising and whether arising directly or
indirectly between or among the Debtor and the Secured Party or acquired
outright, conditionally or as collateral security from another by the
Secured Party.
(c) COSTS OF ENFORCEMENT AND COLLECTION. Any and all amounts
advances or expended by the Secured Party for the maintenance or
preservation of the Collateral or the exercise by the Secured Party of any
rights or remedies granted herein or otherwise existing at law or in
equity.
3. REPRESENTATIONS AND WARRANTIES.
The Debtor represents and warrants to the Secured Party as follows:
(a) NATURE OF SECURITY INTEREST. This Security Agreement creates a
valid and perfected security interest in the Collateral, prior to that of
any other party (except Imperial Bank) securing the payment or the Secured
Obligations, and all filings and other actions neceesary or desirable to
perfect and protect such Security Interest have been duly taken or will be
duly taken as soon as commercially practicable after the execution of this
Security Agreement;
(b) AUTHORIZATION. No authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory
body is required either (i) for the grant by the Debtor of the Security
Interest granted hereby or for the execution, delivery or performance of
this Security Agreement by the Debtor or (ii) for the perfection or the
exercise by the Secured Party pf its rights and remedies hereunder;
(c) POWER AND CAPACITY. The Debtor has full legal right power,
capacity, and authority to make, enter into, execute and perform its
obligations hereunder, and this Security Agreement constitutes a valid and
binding obligation of the Debtor, enforceable against it in accordance with
its terms.
All representations and warranties of the Debtor made herein shall
survive the execution and delivery of this Security Agreement .
4. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
The Debtor hereby irrevocably appoints the Secured Party as the
Debtor's attorney-in-fact, with full authority in the place and stead of
the Debtor and in the name of the Debtor, the Secured Party or otherwise,
subsequent to the occurrence and during the continuation of an Event of
Default (as defined in Section 7 below) to take any action and to execute
any instrument which the Secured Party may deem necessary, appropriate, or
advisable to accomplish the intent and purposes of this Security Agreement,
including, without limitation:
(a) RECEIPT OF PAYMENT IN RESPECT OF THE COLLATERAL. To ask, demand,
collect, xxx for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;
(b) COLLECTION. To receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a) or
(b) above; and
(c) COLLECTION PROCEEDINGS. To file any claims or take any action or
institute any proceedings which the Secured Party may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of the Secured Party with respect to any of the
Collateral.
5. SECURED PARTY MAY PERFORM.
If the Debtor fails to perform any agreement or covenant contained
herein, the Secured Party may itself perform, or cause performance of, such
agreement or covenant, and the expenses of the Secured Party incurred in
connection therewith shall be payable by the Debtor under Section 8(b).
6. SECURED PARTY'S DUTIES.
The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon
it to exercise any such powers. Except for the safe custody of any
Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
7. REMEDIES.
If the Debtor shall fail to pay or promptly perform any of the Secured
Obligations when due or shall breach any representation, warranty,
covenant, agreement or term under this Security Agreement (collectively, an
"Event of Default"):
(a) COLLATERAL FORECLOSURE. The Secured Party may exercise in
respect of the Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the California Commercial
Code or the Uniform Commercial Code (together, the "Code") (whether or not
the Code applies to the affected Collateral) and also may (i) require the
Debtor to, and the Debtor hereby agrees that it will at its own expense
upon request of the Secured Party, forthwith assemble all or part of the
Collateral as directed by the Secured Party and make it available to the
Secured Party or its agent at a place to be designated by the Secured Party
and (ii) without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any
of the Secured Party's offices or elsewhere, for cash, on credit or for
future delivery, and upon such other terms as the Secured Party may deem
commercially reasonable, and at any such public sale the Secured Party may
bid for and/or purchase all or any part of the Collateral so sold. The
Debtor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) days' notice to the Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification and shall be deemed to meet any
requirement under any applicable law (including both the California and
Uniform Commercial Codes) that reasonable notification be given of the time
and place of such sale or disposition. The Debtor hereby waives and
releases to the fullest extent permitted by applicable law any right of
equity or redemption with respect to the Collateral, whether before or
after sale hereunder, and any right of marshalling the Collateral and any
other security for the Secured Obligations or otherwise. The Secured Party
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned;
(b) APPLICATION OF PROCEEDS. All cash proceeds received by the
Secured Party in respect (i) of any sale or other realization upon all or
any part of the Collateral, or (ii) of any collection upon any policy of
insurance, may, in the discretion of the Secured Party, be held by the
Secured Parry as collateral for the Secured Obligations, and/or then or at
any time thereafter applied (after payment of any amounts payable to the
Secured Party pursuant to Section 8) in whole or in part by the Secured
Party against, all or any part of the Secured Obligations in such order as
the Secured Party shall elect, without resorting to and without regard to
any guaranty, other security, or source of reimbursement which may at the
time be available to it. Any surplus of such cash or cash proceeds held by
the Secured Party and remaining after payment in full of all the Secured
Obligations and expenses of enforcement and collection shall be paid over
to the Debtor or to whomsoever may be lawfully entitled to receive such
surplus;
(c) RETAKING OF COLLATERAL. The Secured Party may at any time and
from time to time, with reasonable notice (in light of the circumstances)
and during regular business hours, with or without judicial process or the
aid or assistance of others, (i) enter upon any premises in which
Collateral may be located and, without resistance or interference by the
Debtor, take physical possession of any items of Collateral and maintain
such possession on the Debtor's premises or move the same or any part
thereof to such other places as the Secured Party shall choose without
being liable to the Debtor on account of any losses, damage or depreciation
that may occur as a result thereof so long as the Secured Party shall act
reasonably and in good faith, (ii) dispose of all or any part of the
Collateral on any premises of the Debtor, (iii) require the Debtor to
assemble and make available to the Secured Party, at the Debtor's expense
all or any part of the Collateral at any reasonable place and time
designated by the Secured Party, or (iv) remove all or any part of the
Collateral from any premises in which any part may be located for the
purpose of effecting the sale or other disposition thereof; and
(d) NATURE OF REMEDIES. All rights and remedies existing under this
Security Agreement are cumulative to, and not exclusive of, any other
rights or remedies available under contract or applicable law.
8. INDEMNITY AND EXPENSES.
(a) INDEMNIFICATION. The Debtor agrees to indemnify the Secured
Party from and against any and all claims, demands, costs, losses and
liabilities, including reasonable attorneys' fees and legal costs, growing
out of, arising in connection with, or resulting from this Security
Agreement (including, without limitation, enforcement of this Security
Agreement) (collectively, "Claims"), except Claims resulting directly from
the Secured Party's gross negligence or willful misconduct. The
indemnification in this subsection (a) shall survive the repayment of all
principal, interest, and fees payable in connection with the Secured
Obligations.
(b) EXPENSES. The Debtor will upon demand pay to the Secured Party
the amount of any and all reasonable expenses, including the reasonable
fees and disbursements of the Secured Party's legal counsel and of any
experts and agents, which the Secured Party may incur in connection with,
arising from, or relating to (i) the administration or enforcement of this
Security Agreement, (ii) the custody, preservation, use or operation of,
or the sale of collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any or the rights of the
Secured Party hereunder, or (iv) the failure by the Debtor to perform or
observe any of the provisions hereof. All expenses incurred by the Scoured
Party shall, until paid in full by the Debtor, constitute a part of the
Secured Obligations.
9. MISCELLANEOUS.
(a) AMENDMENT. No amendment or waiver of any provision of this
Security Agreement nor consent to any departure by the Debtor herefrom
shall in any event be effective unless the same shall be in writing and
signed by the Secured Party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given.
(b) NOTICE. All notices, demands and other communications provided
for hereunder shall be in writing and will be deemed to have been given
when personally delivered, one (2) business day after being sent by
overnight mail or Federal Express, three (3) business days after being sent
by United States mail, postage prepaid, or when receipt is acknowledged, if
telecopied. Notices, demands and communications to the Debtor and the
Secured Party will, unless another address is specified in writing, be sent
to their respective addresses as set forth on the signature page hereof.
(c) CONTINUING SECURITY INTEREST. This Security Agreement shall
create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until payment, performance and satisfaction
in full of the Secured Obligations and the terms and conditions of this
Security Agreement, (ii) be binding upon the Debtor, its successors and
assigns, and (iii) inure to the benefit of the Secured Party and its
successors, transferees and assigns. The Debtor shall not assign or
transfer any of their rights or obligations under this Security Agreement
without the prior written consent of the Secured Party. Upon the payment
in full and complete performance and satisfaction of the Secured
Obligations and the terms and conditions of this Security Agreement, the
Security Interest granted hereby shall terminate and all rights to the
Collateral shall revert to the Debtor. Upon any such termination, the
Secured party will, at the Debtor's expense, execute and deliver to the
Debtor such documents as the Debtor shall reasonably request to evidence
such termination.
(d) GOVERNING LAW. This Security Agreement shall be governed by and
construed in accordance with the laws of the State of California without
giving effect to principles of conflict of laws, except to the extent that
the validity or perfection of the Security Interest hereunder, or remedies
hereunder, in respect of any particular Collateral are governed by the
laws of a jurisdiction other than the State of California.
(e) WAIVERS. The rights and remedies of the Secured Party under this
Security Agreement shall be cumulative and not exclusive of any rights or
remedies which it would otherwise have, now or hereafter existing at law or
inequity or by statute or otherwise and no failure or delay by the Secured
Party in exercising any right shall operate as a waiver of such right, nor
shall any single or partial exercise of any power or right preclude its
other or further exercise or the exercise of any other power or right.
(f) SPECIFIC PERFORMANCE. The Debtor recognizes that the rights of
the Secured Party hereunder are unique and, accordingly, the Secured Party
shall, in addition to such other remedies as may be available to it at law
or in equity have the right to enforce its rights hereunder by actions for
injunctive relief and specific performance to the fullest extent permitted
by law, without the necessity of posting bond or other security. This
Security Agreement is not intended to limit or abridge any rights the
Secured Party which may exist apart from this Security Agreement.
(g) DEFEASANCE. This Security Agreement shall terminate upon the
payment and performance of the Secured Obligations in full; provided that,
if at any time any payment made in respect of the Secured Obligations shall
be recovered or rescinded by or on behalf of the Debtor, or must be
otherwise restored or returned, whether upon the insolvency, bankruptcy or
reorganization or otherwise, the obligations of the Debtor under this
Security Agreement shall continue to be effective or be reinstated, as the
case may be, and shall continue as though such payment had not been made.
(h) SEVERABILITY. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall be so only as to such
jurisdiction and only to the errant of such prohibition or
unenforceability, but all the remaining provisions of this Security
Agreement shall remain valid and enforceable to the fullest extent
permitted by law.
(i) ENTIRE AGREEMENT. This Security Agreement and the Note are
intended by the parties as the final expressions of the Debtor's
obligations to the Secured Party in connection with the Collateral and
supersede all prior understandings or agreements concerning the subject
matter hereof.
(j) COUNTERPARTS. This Security Agreement may be simultaneously
executed in any number of counterparts, each of which shall be deemed an
original but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Debtor and the Secured Party have executed or
caused this Security Agreement to be executed by their duly authorized
representatives as of the date first written above.
DEBTOR: OPHTHALMIC IMAGING SYSTEMS,
a California corporation
By: ________________________________
Its: Chief Executive Officer
Address:
000 Xxxxxxx Xxx, Xxxxx X
Xxxxxxxxxx, XX 00000
SECURED PARTY: PREMIER LASER SYSTEMS, INC.
a California corporation
By: ______________________________
Xxxxxxx Xxxxxx
Chief Executive Officer
Address:
