SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") is
made this ___ day of ___________, 1997 by SUNRISE TECHNOLOGIES
INTERNATIONAL, INC., a Delaware corporation ("Company"), in favor
of PENNSYLVANIA MERCHANT GROUP LTD as agent (the "Agent") for the
investors (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a U.S. Note and Warrant Purchase
Agreement dated of even date herewith (as amended from time to
time, the "U.S. Agreement") by and among Company and each of the
persons and entities listed on the Schedule of Investors attached
hereto as Exhibit A (each such person of entity is referred to
herein as a "U.S. Investor" and collectively, the "U.S.
Investors"), and an Offshore Note and Warrant Purchase Agreement
dated of even date herewith (as amended from time to time, the
"Offshore Agreement") by and among Company and each of the
persons and entities listed on the Schedule of Investors attached
thereto as Exhibit A (each such person or entity is referred to
herein as an "Offshore Investor" and collectively the "Offshore
Investors"), Company has authorized the issue and sale of up to
$[ ] face amount of its Convertible Notes (the "Notes") and
Warrants to purchase up to [ ] of its Common Shares, $0.001
par value (the "Warrants"); and
WHEREAS, subject to the terms and conditions of the
U.S. Agreement and the Offshore Agreement (collectively, the
"Agreements"), Company has agreed to sell to the U.S. Investors
and the Offshore Investors (collectively, the "Investors") and
each of the Investors, severally and not jointly, has agreed to
purchase from Company the number of Notes and Warrants
(collectively, the "Securities") set forth opposite each
Investor's name on Exhibit A to the Agreements at the price set
forth on such Exhibit A; and
WHEREAS, it is a condition to the Investors'
obligations to purchase the Securities pursuant to the Agreements
that Company shall have executed and delivered this Security
Agreement in favor of the Agent on behalf of the Investors.
NOW, THEREFORE, in consideration of the foregoing
premises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and intending
to be legally bound, Company hereby agrees that the Agent, on
behalf of the Investors, shall have the rights, remedies and
benefits hereinafter set forth.
1. As security for the payment of the Notes, Company
hereby grants to the Agent, on behalf of the Investors, a
security interest in the ophthalmic patents or applications for
patents owned by Company or in which Company has an interest
listed on Schedule A attached hereto, or any related books or
records, accessions or substitutions thereof or thereto, and any
part thereof (collectively, the "Collateral").
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2. Anything herein to the contrary notwithstanding,
(a) Company shall remain liable under any contracts and
agreements related to or included in the Collateral to perform
all of its duties and obligations thereunder to the same extent
as if this Security Agreement had not been executed, (b) the
exercise by the Agent of any of the Agent's rights hereunder
shall not release Company from any of its duties or obligations
under any contracts and agreements related to or included in the
Collateral, and (c) neither the Agent nor any Investors shall
have any obligation or liability under any contracts and
agreements related to or included in the Collateral by reason of
this Security Agreement, nor shall the Agent or any Investors be
obligated to perform any of the obligations or duties of Company
thereunder or to take any action to collect or enforce any claim
for payment assigned hereunder.
3. Company represents and covenants that:
a. Its chief executive office and the office
where its records are kept concerning the Collateral is located
at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
b. It will promptly notify and provide the agent
with a complete description of the opening of any new places of
business, the closing of any existing places of business, the
conduct of business under any names or through any entities other
than those set forth above and the relocation of any of the
records concerning the Collateral. Company will furnish to the
Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports
in connection with the Collateral as the Agent may reasonably
request, all in reasonable detail.
c. It has good title to the Collateral, free and
clear of any liens and encumbrances, excepting the security
interest granted hereby.
d. This Security Agreement creates a valid and
enforceable security interest in the Collateral securing the
payment of the Notes, and upon the filing of the necessary
financing statements, such security interest will be a perfected
security interest.
e. Except for any filings required with the
United States Patent and Trademark Office, 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 Company of the security interest granted hereby
or for the execution, delivery or performance of this Security
Agreement by Company, or (ii) except the filing of financing
statements, for the perfection of or the exercise by the Agent,
on behalf of the Investors, of rights and remedies hereunder.
4. At any time and from time to time, upon the
reasonable request of the Agent, Company shall, at its own
expense:
a. Defend the Collateral against the claims and
demand of all persons and entities.
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b. Give, execute, deliver and filing in the
proper governmental offices, any instrument, paper or document,
including but not limited to one or more financing statements
under the Uniform Commercial Code, satisfactory to the Agent, or
take any action, which the Agent may deem necessary or desirable,
in order to create, preserve, perfect, extend, modify, terminate
or otherwise affect the security interest granted pursuant
hereto, or to enable the Agent to exercise or enforce any of the
Agent's rights hereunder.
c. Pay, or reimburse the Agent and the Investors
in the amount of, all expenses (including reasonable fee and
expenses of attorneys, experts and agents) reasonably incurred by
such persons in connection with the exercise, defense or
assertion of any rights or interests of the Agent and the
Investors hereunder, or the enforcement of any provisions hereof.
5. Company shall not, without the prior written
consent of the Investors, (i) transfer, sell or assign any of the
Collateral except on customary terms in the ordinary course of
business; (ii) allow or permit any other security interest or
lien to attach thereto, other than any other security interests
or liens permitted under the Agreements; (iii) file, or authorize
or permit to be filed, in any jurisdiction any financing
statement relating to any of the Collateral unless the Agent, on
behalf of the Investors, is named as sole secured party; (iv)
permit any of the Collateral to be levied upon under any legal
process; or (v) permit anything to be done that may materially
impair the value of any of the Collateral or the security
intended to be afforded hereby.
6. Company hereby authorizes the Agent to file one or
more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral without
the signature of Company where permitted by law. A carbon,
photographic, or other reproduction of this Security Agreement or
any part thereof shall be sufficient as a financing statement
where permitted by law. Company shall furnish to the Agent from
time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection
with the Collateral as the Agent may request, all in reasonable
detail.
7. Upon default by Company in the performance of any
covenant or agreement herein or in the Agreement or any other
agreement or document covering the Notes, or in the discharge,
payment or performance of the Notes, or if any representation or
warranty herein should prove untrue in any material respect, the
Agent, on behalf of the Investors, shall have with respect to the
Collateral all of the rights and remedies of a secured party
under the Uniform Commercial Code or any other applicable law and
all rights provided herein or in any other applicable security,
loan or other agreement, all of which rights and remedies shall,
to the full extent permitted by law, be cumulative. The Agent
may require Company at its expense to assemble the Collateral or
any part thereof and make it available to the Agent, on behalf of
the Investors, at a place to be designated by the Agent, which is
reasonably convenient to the Agent and Company. The Agent, on
behalf of the Investors, may sell the Collateral or any part
thereof in one or more parcels at public or private sale, at any
of the Agent's offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other
terms as the Agent may deem commercially reasonable. Any notice
of sale, disposition or other intended action by the Agent, sent
to Company at the address specified above, or such other address of
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Company as may from time to time be shown on the Agent's
records, at least thirty (30) days prior to such action, shall
constitute reasonable notice to Company.
8. The powers conferred on the Agent hereunder are
solely to protect the Agent's interest in the Collateral and
shall not impose any duty upon the Agent to exercise any such
powers. Except for the safe custody of any Collateral in the
Agent's possession and the accounting for monies actually
received by the Agent hereunder, the Agent shall have no duty as
to any Collateral or as to the taking of any necessary steps to
preserve any right of or against other parties pertaining to any
Collateral. Company shall indemnify the Agent and each Investor
from and against any and all claims, losses and liabilities
growing out of or resulting from this Security Agreement
(including, without limitation, enforcement of this Security
Agreement) or the Agent's or any Investor's interest in the
Collateral, except claims, losses or liabilities resulting from
the Agent's or such Investor's respective gross negligence of
wilful misconduct.
9. No provisions hereof shall be modified except by a
writing signed by the Agent and Company expressly referring to
the provision hereof so modified.
10. This Security Agreement shall be binding upon and
shall inure to the benefit of the assigns or successors of
Company and the Agent.
11. No delay, failure to enforce, or single or partial
exercise on the part of the Agent in connection with any of the
Agent's rights hereunder shall constitute an estoppel or waiver
thereof, or preclude other or further exercise or enforcement
thereof and no waiver of any default hereunder shall be a waiver
of any subsequent default.
12. This Security Agreement shall be governed as to
its validity, interpretation and effect in accordance with the
laws of the Commonwealth of Pennsylvania, except as required by
mandatory provisions of law and except if 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 Pennsylvania. Unless
the context otherwise requires, all terms used herein which are
defined in the Uniform Commercial Code as enacted in Pennsylvania
shall have the meanings therein stated.
IN WITNESS WHEREOF, this Security Agreement has been
executed in Fremont, California on the day and year first above
written.
SUNRISE TECHNOLOGIES
INTERNATIONAL, INC.
By: _________________________
Name: ▇▇▇▇▇ ▇. Light
Title: Chief Executive
Officer
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