EXHIBIT 99.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Agreement") is made and entered into as of
March 29, 2001 by and between INOVISE MEDICAL, INC., an Oregon corporation
("Debtor") and CARDIAC SCIENCE, INC., a Delaware corporation ("Secured Party").
R E C I T A L S
A. Secured Party has loaned Debtor one million thirty thousand dollars
($1,030,000) (the "Loan"). The parties signed a Secured Promissory Note dated
March 29, 2001 (the "Note") securing the Loan and providing the terms and
conditions for repayment of the Loan to the Secured Party by the Debtor.
B. In order to secure the payment of the Note, the Secured Party
requires that Debtor grant to Secured Party a security interest in the
Collateral as provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals, the
following mutual agreements and promises, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Security Interest.
(a) Creation of Security Interest. Debtor hereby grants to
Secured Party a security interest in all of Debtor's right, title and interest
in and to the Collateral, as defined in Subsection 1(b) below, in order to
secure the payment and performance of the obligations of Debtor to Secured Party
described in Subsection 1(c) below.
(b) Collateral. As used herein, the term "Collateral" shall
mean (i) all of the property and assets of Debtor, tangible and intangible,
including but not limited to all cash, receivables, software, personal property,
intellectual property, real property and leases, wherever located, (ii) all
replacements of the property and assets referenced in clause (i), the ownership
of which is acquired by Debtor hereafter, and (iii) all the proceeds or products
of the foregoing; provided however that, Collateral shall not include any
royalty payments to the Debtor in connection with the Agreement dated December
16, 1997 between the Debtor and Xxxxx Xxxxx, Inc. The Secured Party shall have a
first lien priority interest in all Collateral.
(c) Obligations Secured. The security interest granted to
Secured Party by Debtor pursuant to this Section 1 shall secure payment and
performance of Debtor's obligations under (i) the Note, and (ii) any amendment,
modification, renewal or extension of the Note (the "Secured Obligations").
2. Representations and Warranties of Debtor. Debtor hereby represents
and warrants to Secured Party that:
(a) The Company is a corporation duly organized and validly
existing under the
laws of the State of Oregon and has all requisite corporate power and authority
to carry on its business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its business,
financial condition or properties.
(b) All corporate action on the part of Company necessary for
the execution and delivery of this Agreement has been duly authorized by the
Company's Board of Directors. This Agreement constitutes valid and legally
binding obligations of Debtor, enforceable in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy laws, laws affecting
creditors' rights and court decisions limiting the availability of specific
performance and other equitable remedies. The Company has full corporate power
and corporate authority to execute and deliver this Agreement and to carry out
the transactions contemplated hereby.
(c) Except for the security interest created hereunder, Debtor
is the owner of the Collateral free from any lien, security interest or
encumbrance.
3. Covenants of Debtor. Until payment of all obligations due under the
Note, Debtor agrees that, unless the Secured Party shall have otherwise
consented in writing:
(a) Debtor shall execute and take such action as may
reasonably be requested from time to time by Secured Party, including the
execution and delivery of financing statements and certificates of title, and
the filing of financing statements, as may be necessary to perfect and maintain
the security interest granted to Secured Party hereby.
(b) Debtor shall not misuse, abuse, waste or allow to
deteriorate the Collateral, except for ordinary wear and tear. Secured Party may
examine and inspect the Collateral, wherever located, during normal business
hours and upon at least 48 hours' prior notice to Debtor. Debtor will insure the
Collateral against all risks to which the Collateral is exposed in the ordinary
course, and shall cause Secured Party to be named as loss payees thereunder to
the extent of its interest therein.
(c) Debtor shall keep appropriate records and, upon written
request of the Secured Party, will give Secured Party any information it may
reasonably require with respect to the condition and status of the Collateral.
(d) Debtor shall notify Secured Party within ten (10) days of
any change in (A) the Company's corporate name, (B) the Company's business or
legal structure, or (C) the Company's place of business or chief executive
office if the Debtor has more than one place of business, or (D) the location of
Collateral.
4. Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default":
(a) Failure to Pay the Note. Debtor has failed to pay the
amount due under the Note when payable, if not otherwise converted pursuant to
the terms thereof, or any "Event of Default" as defined in the Note has
occurred.
(b) Misrepresentation. Any warranty or representation of
Debtor to Secured Party in this Agreement proves to have been false or
misleading in any material respect when made.
(c) Breach of Covenants. Debtor shall fail or neglect to
perform, keep or observe any covenant or obligation of Debtor contained in this
Agreement.
(d) Insolvency, Etc. Debtor shall suffer the appointment of a
receiver, trustee, custodian or similar fiduciary for all or substantially all
of its assets, or shall make an assignment for the benefit of creditors, or any
petition for an order for relief shall be filed by or against Debtor under any
applicable bankruptcy law and such proceeding is not controverted within thirty
(30) days, or is not dismissed within sixty (60) days, after commencement of
such proceeding.
5. Secured Party's Rights and Remedies.
(a) Upon the occurrence of an Event of Default as hereinabove
set forth, Secured Party may exercise all rights or remedies that the Secured
Party may have as a secured party under the Uniform Commercial Code as adopted
in each state in which any Collateral is located.
(b) Upon the occurrence of any Event of Default, Secured Party
may sell, lease or otherwise dispose of all or any part of the Collateral upon
any terms which are commercially reasonable. Secured Party shall give fifteen
(15) days' prior written notice to Debtor of the time and place of any public
sale of the Collateral, or of the time after which a private sale or other
disposition of the Collateral is to be made.
(c) All proceeds from the sale or other disposition of the
Collateral, and all other amounts received by Secured Party pursuant to the
terms of this Agreement, unless otherwise expressly required by law or
regulation, shall be applied as follows:
(1) First, to the payment of all expenses reasonably
incurred by Secured Party in connection with any sale or disposition of the
Collateral, including, but not limited to, the expenses of taking, advertising,
processing, preparing and storing the Collateral to be sold, and all court costs
and all reasonable legal fees of Secured Party in connection therewith;
(2) Second, to the payment of all obligations of
Debtor to Secured Party arising under the Note which have come due and are
unpaid; and
(3) Third, the balance, if any, to Debtor.
(d) No delay or omission by Secured Party in exercising any
right or remedy hereunder or with respect to any obligation of Debtor to Secured
Party secured hereunder shall operate as a waiver thereof or of any other right
or remedy available to Secured Party, and no single or partial exercise thereof
shall preclude any other or further exercise thereof or the exercise of any
other right or remedy. Secured Party, in its sole discretion, on at least three
(3) days' prior written notice to Debtor, may (but shall have no obligation to)
remedy any Event of Default by Debtor hereunder or with respect to any
obligation of Debtor to the Secured Party or any other person, firm, corporation
or other entity in any reasonable manner without waiving the Event of Default
remedied and without waiving any other prior or subsequent Event of Default by
Debtor, and shall be reimbursed for its necessary and reasonable out-of-pocket
expenses in so remedying any of such Event of Default. All rights and remedies
of Secured Party hereunder are cumulative.
6. Miscellaneous.
(a) Successors and Assigns. This Agreement is not assignable
by either party, except that the Secured Party may assign this Agreement to any
person or entity to which the Secured Party is permitted to and does assign and
transfer the Note. Subject to the foregoing, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, expressed or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
(b) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California without regard to its
conflicts of laws principles.
(c) Titles and Subtitles. The titles and subtitles used in
this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting this Agreement.
(d) Notices. All notices, requests, demands or other
communications hereunder shall be in writing and shall be deemed to have been
duly given, if delivered in person or mailed, certified, return-receipt
requested, postage prepaid:
If to Debtor,
addressed to: Inovise Medical, Inc.
0000 Xxxxxxxxxx Xxxxxxx, Xxxxx X
Xxxxxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxx
and, if to the
Secured Party
addressed to: Cardiac Science, Inc.
00000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Any party hereto may from time to time, by ten (10) days' advance
written notice to the other parties, designate a different address, which shall
be substituted for the one specified above for such party. If any notice or
other document is sent by certified or registered mail, return receipt
requested, postage prepaid, properly addressed as aforementioned, the same shall
be deemed served or delivered seventy-two (72) hours after mailing thereof. If
any notice is sent via facsimile to a party, it will be deemed to have been
delivered on the date the fax thereof is actually received, provided the
original thereof is sent by mail in the manner set forth above, within
twenty-four (24) hours after the fax is sent.
(e) Amendments, Waivers and Consents. Any term of this
Agreement to the contrary notwithstanding, changes in or additions to this
Agreement may be made, and compliance with any covenant or provision or breach
of any representation or warranty herein or therein set forth may be omitted or
waived, if the Debtor shall obtain consent thereto in writing from the Secured
Party. Any waiver or consent may be given subject to satisfaction of conditions
stated therein
and any waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
(f) Counterparts. This Agreement may be executed in one or
more counterparts, and any number of counterparts signed in the aggregate by
Debtor and the Secured Party shall constitute a single original instrument.
(g) Entire Agreement. This Agreement, the Note, and the Bridge
Financing Agreement between the parties of even date herewith constitute the
entire understanding between the parties with respect to the subject matter
hereof, superseding all negotiations, prior discussions and preliminary
agreements with respect thereto.
(h) Waiver. No waiver of any term, provision or condition of
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or be construed as a further or continuing waiver of any
such term, provision or condition or as a waiver of any other term, provision or
condition of this Agreement.
(i) Further Assurances. Each party hereto agrees to execute
and deliver such other documents and instruments as the other party may
reasonably request to better evidence or effectuate the rights and obligations
of the parties hereto and the transactions contemplated hereunder, provided that
no party shall, as a result thereof, be required to assume any further
obligation or relinquish any of its rights hereunder.
(j) Severability. The invalidity or unenforceability of any
provision hereto shall in no way affect the validity or enforceability of any
other provision.
(k) Number and Gender. Whenever the singular or plural number
is used herein, and when the context so requires, the same shall include the
plural or singular, as the case may be; and, the masculine, feminine and neuter
gender shall each include the other.
IN WITNESS WHEREOF, the parties have executed this Security Agreement
as of the date first above written.
"Debtor"
INOVISE MEDICAL, INC.
an Oregon corporation
By:
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Its:
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"Secured Party"
CARDIAC SCIENCE, INC.
a Delaware corporation
By:
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Its:
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