SECURITY AGREEMENT
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SECURITY AGREEMENT, dated as of May 17, 1999, between Premier Laser
Systems, Inc., a California corporation ("PREMIER"), and the secured parties
signatory hereto and their respective endorsees, transferees and assigns
(collectively, the "SECURED PARTY").
W I T N E S S E T H:
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WHEREAS, pursuant to a Secured Convertible Debenture Purchase
Agreement, dated the date hereof among Premier and the Secured Party (the
"Purchase Agreement"), Premier has agreed to issue to the Secured Party and the
Secured Party has agreed to purchase from Premier an aggregate principal amount
of $4,000,000 of Premier's 6% Secured Convertible Debentures (the "Debentures"),
which are convertible into shares of Premier's Class A Common Stock, no par
value (the "Common Stock"). In connection therewith, Premier shall issue to the
Secured Party a Common Stock purchase warrants of even date herewith to purchase
an aggregate of 60,000 shares of Common Stock (the "Warrants"); and
WHEREAS, in order to induce the Secured Party to purchase the
Debentures, Premier has agreed to execute and deliver to the Secured Party this
Agreement for the benefit of the Secured Party and to grant to it a first
priority security interest in certain property of Premier to secure the prompt
payment, performance and discharge in full of all of Premier's obligations under
the Debentures and the exercise and discharge in full of all of Premier's
obligations under the Warrants.
NOW, THEREFORE, in consideration of the agreements herein contained and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto hereby agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth in this Section 1. Terms used but not
otherwise defined in this Agreement that are defined in Article 9 of the UCC
(such as "GENERAL INTANGIBLES" and "PROCEEDS") shall have the respective
meanings given such terms in Article 9 of the UCC.
(a) "CLASS B WARRANTS" means the Company's Class B Warrants,
entitling the holders thereof to purchase an aggregate of 7,592,460 shares of
Common Stock.
(b) "COLLATERAL" means the collateral in which the Secured
Party is granted a security interest by this Agreement and which shall include
the following, whether presently owned or existing or hereafter acquired or
coming into existence, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products and accounts
thereof, including, without limitation, all proceeds from the sale or transfer
of the Collateral and of insurance covering the same and of any tort claims in
connection therewith:
(i) All Goods of the Company, including, without
limitations, all machinery, equipment, computers,
motor vehicles, trucks, appliances, furniture,
special and general tools, fixtures, test and quality
control devices and other equipment of every kind and
nature and wherever situated, together with all
documents of title and documents representing the
same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all
substitutes for any of the foregoing and all other
items used and useful in connection with the
Company's businesses and all improvements thereto
(collectively, the "EQUIPMENT"); and
(ii) All Inventory of the Company; and
(iii) All of the Company's contract rights and
general intangibles, including, without limitation,
all partnership interests, stock or other securities,
licenses, distribution and other agreements, computer
software development rights, leases, franchises,
customer lists, quality control procedures, grants
and rights, goodwill, trademarks, service marks,
trade styles, trade names, patents, patent
applications, copyrights, deposit accounts, and
income tax refunds (collectively, the "GENERAL
INTANGIBLES"); and
(iv) All Receivables of the Company including all
insurance proceeds, and rights to refunds or
indemnification whatsoever owing, together with all
instruments, all documents of title representing any
of the foregoing, all rights in any merchandising,
goods, equipment, motor vehicles and trucks which any
of the same may represent, and all right, title,
security and guaranties with respect to each
Receivable, including any right of stoppage in
transit; and
(v) All of the Company's documents, instruments and
chattel paper, files, records, books of account,
business papers, computer programs and the products
and proceeds of all of the foregoing Collateral set
forth in clauses (i)-(iv) above.
(c) "COMPANY" shall mean, collectively, Premier and all of the
subsidiaries of Premier, other than Ophthalmic Imaging Systems, Inc.
(d) "OBLIGATIONS" means all of the Company's obligations under
this Agreement, the Debentures and the Warrants, in each case, whether now or
hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
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increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from the Secured Party as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented, converted, extended or modified from time to time.
(e) "QUALIFIED FACILITY" means a credit facility or factoring
arrangement with a nationally or regionally recognized institutional lender
without conditions or restrictions (including with respect to borrowing base
requirements) as to availability of funds to the Company, whereby such lender
has required the Company to grant to it a first priority security interest in
the Collateral, loans under which facility shall not be subject to repayment for
at least 364 calendar days.
(f) "QUALIFIED INCOME SOURCE" means(i) licensing or royalty
arrangements whereby the Company has received prepaid licensing or royalty fees,
(ii) deposits or prepaid distribution arrangements received by the Company,
(iii) non-refundable net proceeds from the exercise of Class B Warrants, (iv)
non-refundable cash proceeds net, of applicable taxes and other expenses, from
the settlement of or judgment from the litigation specified in Schedule 1(f)
hereto, and (V) a Qualified Facility.
(g) "TWO THIRDS-IN-INTEREST" means one or more of the secured
party signatories hereto holding in excess of 66.66% of the aggregate principal
amount of the Debentures outstanding, determined on a cumulative basis.
(h) "UCC" means the Uniform Commercial Code, as currently in
effect in the State of California.
2. GRANT OF SECURITY INTEREST. As an inducement for the Secured Party
to purchase the Debentures and to secure the complete and timely payment,
performance and discharge in full, as the case may be, of all of the
Obligations, the Company hereby, unconditionally and irrevocably, pledges,
grants and hypothecates to the Secured Party, a continuing security interest in,
a first lien upon and a right of set-off against all of the Company's right,
title and interest of whatsoever kind and nature in and to the Collateral (the
"SECURITY INTEREST").
3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
COMPANY. The Company represents and warrants to, and covenants and agrees with,
the Secured Party as follows:
(a) The Company has the requisite corporate power and
authority to enter into this Agreement and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by the Company
of this Agreement and the filings contemplated therein have been duly authorized
by all necessary action on the part of the Company and no further action is
required by the Company.
(b) The Company represents and warrants that it has no place
of business or offices where its respective books of account and records are
kept (other than temporarily at the offices of its attorneys or accountants) or
places where Collateral is stored or located, except as set forth on SCHEDULE A
attached hereto;
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(c) Except as specified in SCHEDULE 3(c), the Company is the
sole owner of the Collateral (except for non-exclusive licenses granted by the
Company in the ordinary course of business), free and clear of any liens,
security interests, encumbrances, rights or claims, and is fully authorized to
grant the Security Interest in and to pledge the Collateral. There is not on
file in any governmental or regulatory authority, agency or recording office an
effective financing statement, security agreement, license or transfer or any
notice of any of the foregoing (other than those that have been filed in favor
of the Secured Party pursuant to this Agreement) covering or affecting any of
the Collateral. So long as this Agreement shall be in effect and other than
pursuant to Section 11 hereof, the Company shall not execute and shall not
knowingly permit to be on file in any such office or agency any such financing
statement or other document or instrument (except to the extent filed or
recorded in favor of the Secured Party pursuant to the terms of this Agreement).
(d) Except as specified in SCHEDULE 3(d), no written claim has
been received that any Collateral or the Company's use of any Collateral
violates the rights of any third party. There has been no adverse decision to
the Company's claim of ownership rights in or exclusive rights to use the
Collateral in any jurisdiction or to the Company's right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of the Company, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.
(e) The Company shall at all times maintain its books of
account and records relating to the Collateral at its principal place of
business at the locations set forth on SCHEDULE A attached hereto and may not
relocate such books of account and records or tangible Collateral unless it
delivers to the Secured Party at least 30 days prior to such relocation (i)
written notice of such relocation and the new location thereof (which must be
within the United States) and (ii) evidence that appropriate financing
statements and other necessary documents have been filed and recorded and other
steps have been taken to perfect the Security Interest to create in favor of the
Secured Party valid, perfected and continuing first priority liens in the
Collateral.
(f) This Agreement creates in favor of the Secured Party a
valid security interest in the Collateral securing the payment and performance
of the Obligations and, upon making the filings described in the immediately
following sentence, a perfected first priority security interest in such
Collateral. Except for the filing of financing statements on Form UCC-1 under
the UCC with the jurisdictions indicated on SCHEDULE B, attached hereto, no
authorization or approval of or filing with or notice to any governmental
authority or regulatory body located in the United States of America is required
either (i) for the grant by the Company of, or the effectiveness of, the
Security Interest granted hereby or for the execution, delivery and performance
of this Agreement by the Company or (ii) for the perfection of or exercise by
the Secured Party of its rights and remedies hereunder.
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(g) On the date of execution of this Agreement, the Company
will deliver to the Secured Party one or more executed UCC financing statements
on UCC-1 under the UCC with respect to the Security Interest for filing with the
jurisdictions indicated on SCHEDULE B, attached hereto and in such other
jurisdictions as may be requested by the Secured Party.
(h) The execution, delivery and performance of this Agreement
does not conflict with or cause a breach or default, or an event that with or
without the passage of time or notice, shall constitute a breach or default,
under any agreement to which the Company is a party or by which the Company is
bound. No consent (including, without limitation, from stock holders or
creditors of the Company) is required for the Company to enter into and perform
its obligations hereunder.
(i) The Company shall at all times maintain the liens and
Security Interest provided for hereunder as valid and perfected first priority
(subject to subordination pursuant to Section 11 hereof) liens and security
interests in the Collateral in favor of the Secured Party until this Agreement
and the Security Interest hereunder shall be terminated pursuant to Section 11.
The Company hereby agrees to defend the same against any and all persons. The
Company shall safeguard and protect all Collateral for the account of the
Secured Party. At the request of the Secured Party, the Company will sign and
deliver to the Secured Party at any time or from time to time one or more
financing statements pursuant to the UCC (or any other applicable statute) in
form reasonably satisfactory to the Secured Party and will pay the cost of
filing the same in all public offices wherever filing is, or is deemed by the
Secured Party to be, necessary or desirable to effect the rights and obligations
provided for herein. Without limiting the generality of the foregoing, the
Company shall pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the Company shall obtain and
furnish to the Secured Party from time to time, upon demand, such releases
and/or subordinations of claims and liens which may be required to maintain the
priority of the Security Interest hereunder.
(j) The Company will not transfer, pledge, hypothecate,
encumber, license (except for non-exclusive licenses granted by the Company in
the ordinary course of business), sell (except Inventory in the ordinary course)
or otherwise dispose of any of the Collateral without the prior written consent
of the Secured Party.
(k) The Company shall keep and preserve its Equipment,
Inventory and other tangible Collateral in good condition, repair and order and
shall not operate or locate any such Collateral (or cause to be operated or
located) in any area excluded from insurance coverage.
(l) The Company shall, within ten (10) days of obtaining
knowledge thereof, advise the Secured Party promptly, in sufficient detail, of
any substantial change in the Collateral, and of the occurrence of any event
which would have a material adverse effect on the value of the Collateral or on
the Secured Party's security interest therein.
(m) The Company shall promptly execute and deliver to the
Secured Party such further deeds, mortgages, assignments, security agreements,
financing statements or other instruments, documents, certificates and
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assurances and take such further action as the Secured Party may from time to
time request and may in its sole discretion deem necessary to perfect, protect
or enforce its security interest in the Collateral including, without
limitation, the execution and delivery of a separate security agreement with
respect to the Company's intellectual property ("INTELLECTUAL PROPERTY SECURITY
AGREEMENT") in which the Secured Party has been granted a security interest
hereunder, substantially in a form acceptable to the Secured Party, which
Intellectual Property Security Agreement, other than as stated therein, shall be
subject to all of the terms and conditions hereof.
(n) The Company shall permit the Secured Party and its
representatives and agents to inspect the Collateral at any time, and to make
copies of records pertaining to the Collateral as may be requested by the
Secured Party from time to time.
(o) The Company will take all steps reasonably necessary to
diligently pursue and seek to preserve, enforce and collect any rights, claims,
causes of action and accounts receivable in respect of the Collateral.
(p) The Company shall promptly notify the Secured Party in
sufficient detail upon becoming aware of any attachment, garnishment, execution
or other legal process levied against any Collateral and of any other
information received by the Company that may materially affect the value of the
Collateral, the Security Interest or the rights and remedies of the Secured
Party hereunder.
(q) All information heretofore, herein or hereafter supplied
to the Secured Party by or on behalf of the Company with respect to the
Collateral is accurate and complete in all material respects as of the date
furnished.
(r) SCHEDULE A, attached hereto contains a list of all of the
subsidiaries of Premier.
4. DEFAULTS. The following events shall be "EVENTS OF DEFAULT":
(a) The occurrence of an Event of Default (as defined in the
Debentures) under the Debentures;
(b) Any representation or warranty of the Company in this
Agreement or in the Intellectual Property Security Agreement shall prove to have
been incorrect in any material respect when made;
(c) The failure by the Company to observe or perform any of
its obligations hereunder or in the Intellectual Property Security Agreement for
ten (10) days after receipt by the Company of notice of such failure from the
Secured Party; and
(d) Any breach or default under the Warrants.
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5. DUTY TO HOLD IN TRUST. Upon the occurrence of any Event of Default
and at any time thereafter, the Company shall, upon receipt by it of any
revenue, income or other sums subject to the Security Interest, whether payable
pursuant to the Debentures or otherwise, or of any check, draft, note, trade
acceptance or other instrument evidencing an obligation to pay any such sum,
hold the same in trust for the Secured Party and shall forthwith endorse and
transfer any such sums or instruments, or both, to the Secured Party for
application to the satisfaction of the Obligations.
6. RIGHTS AND REMEDIES UPON DEFAULT. Upon occurrence of any Event of
Default and at any time thereafter, the Secured Party shall have the right to
exercise all of the remedies conferred hereunder and under the Debentures and
the Warrants, and the Secured Party shall have all the rights and remedies of a
secured party under the UCC and/or any other applicable law (including the
Uniform Commercial Code of any jurisdiction in which any Collateral is then
located). Without limitation, the Secured Party shall have the following rights
and powers:
(a) The Secured Party shall have the right to take possession
of the Collateral and, for that purpose, enter, with the aid and assistance of
any person, any premises where the Collateral, or any part thereof, is or may be
placed and remove the same, and the Company shall assemble the Collateral and
make it available to the Secured Party at places which the Secured Party shall
reasonably select, whether at the Company's premises or elsewhere, and make
available to the Secured Party, without rent, all of the Company's respective
premises and facilities for the purpose of the Secured Party taking possession
of, removing or putting the Collateral in saleable or disposable form.
(b) The Secured Party shall have the right to operate the
business of the Company using the Collateral and shall have the right to assign,
sell, lease or otherwise dispose of and deliver all or any part of the
Collateral, at public or private sale or otherwise, either with or without
special conditions or stipulations, for cash or on credit or for future
delivery, in such parcel or parcels and at such time or times and at such place
or places, and upon such terms and conditions as the Secured Party may deem
commercially reasonable, all without (except as shall be required by applicable
statute and cannot be waived) advertisement or demand upon or notice to the
Company or right of redemption of the Company, which are hereby expressly
waived. Upon each such sale, lease, assignment or other transfer of Collateral,
the Secured Party may, unless prohibited by applicable law which cannot be
waived, purchase all or any part of the Collateral being sold, free from and
discharged of all trusts, claims, right of redemption and equities of the
Company, which are hereby waived and released.
7. APPLICATIONS OF PROCEEDS. The proceeds of any such sale, lease or
other disposition of the Collateral hereunder shall be applied first, to the
expenses of retaking, holding, storing, processing and preparing for sale,
selling, and the like (including, without limitation, any taxes, fees and other
costs incurred in connection therewith) of the Collateral, to the reasonable
attorneys' fees and expenses incurred by the Secured Party in enforcing its
rights hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations, and to the payment of
any other amounts required by applicable law, after which the Secured Party
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shall pay to the Company any surplus proceeds. If, upon the sale, license or
other disposition of the Collateral, the proceeds thereof are insufficient to
pay all amounts to which the Secured Party is legally entitled, secured parties
signatory hereto will be entitled to their pro rata portion of such proceeds
(determined by reference to the aggregate principal amount of Debentures
outstanding, determined on a cumulative basis), and the Company will be liable
for the deficiency, together with interest thereon, at the rate of 17% per annum
(the "Default Rate"), and the reasonable fees of any attorneys employed by the
Secured Party to collect such deficiency. To the extent permitted by applicable
law, the Company waives all claims, damages and demands against the Secured
Party arising out of the repossession, removal, retention or sale of the
Collateral, unless due to the gross negligence or willful misconduct of the
Secured Party.
8. COSTS AND EXPENSES. The Company agrees to pay all out-of-pocket
fees, costs and expenses incurred in connection with any filing required
hereunder, including without limitation, any financing statements, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Secured Party. The
Company shall also pay all other claims and charges which in the reasonable
opinion of the Secured Party might prejudice, imperil or otherwise affect the
Collateral or the Security Interest therein. The Company will also, upon demand,
pay to the Secured Party the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and
agents, which the Secured Party may incur in connection with (i) the enforcement
of this Agreement, (ii) the custody or preservation of, or the sale of,
collection from, or other realization upon, any of the Collateral, or (iii) the
exercise or enforcement of any of the rights of the Secured Party under the
Debentures. Until so paid, any fees payable hereunder shall be added to the
principal amount of the Debentures and shall bear interest at the Default Rate.
9. RESPONSIBILITY FOR COLLATERAL. The Company assumes all liabilities
and responsibility in connection with all Collateral, and the obligations of the
Company hereunder or under the Debentures and the Warrants shall in no way be
affected or diminished by reason of the loss, destruction, damage or theft of
any of the Collateral or its unavailability for any reason.
10. SECURITY INTEREST ABSOLUTE. All rights of the Secured Party and all
Obligations of the Company hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement,
the Debentures, the Warrants or any agreement entered into in connection with
the foregoing, or any portion hereof or thereof; (b) any change in the time,
manner or place of payment or performance of, or in any other term of, all or
any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Debentures, the Warrants or any other agreement entered
into in connection with the foregoing; (c) any exchange, release or
nonperfection of any of the Collateral, or any release or amendment or waiver of
or consent to departure from any other collateral for, or any guaranty, or any
other security, for all or any of the Obligations; (d) any action by the Secured
Party to obtain, adjust, settle and cancel in its sole discretion any insurance
claims or matters made or arising in connection with the Collateral; or (e) any
other circumstance which might otherwise constitute any legal or equitable
defense available to the Company, or a discharge of all or any part of the
Security Interest granted hereby. Until the Obligations shall have been paid and
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performed in full, the rights of the Secured Party shall continue even if the
Obligations are barred for any reason, including, without limitation, the
running of the statute of limitations or bankruptcy. The Company expressly
waives presentment, protest, notice of protest, demand, notice of nonpayment and
demand for performance. In the event that at any time any transfer of any
Collateral or any payment received by the Secured Party hereunder shall be
deemed by final order of a court of competent jurisdiction to have been a
voidable preference or fraudulent conveyance under the bankruptcy or insolvency
laws of the United States, or shall be deemed to be otherwise due to any party
other than the Secured Party, then, in any such event, the Company's obligations
hereunder shall survive cancellation of this Agreement, and shall not be
discharged or satisfied by any prior payment thereof and/or cancellation of this
Agreement, but shall remain a valid and binding obligation enforceable in
accordance with the terms and provisions hereof. The Company waives all right to
require the Secured Party to proceed against any other person or to apply any
Collateral which the Secured Party may hold at any time, or to marshal assets,
or to pursue any other remedy. The Company waives any defense arising by reason
of the application of the statute of limitations to any obligation secured
hereby.
11. TERM OF AGREEMENT AND SUBORDINATION OF SECURITY INTEREST. (a) This
Agreement and the Security Interest shall terminate on the earlier of (A)
subject to the provisions of the immediately following sentence, the date of the
receipt by the Secured Party of evidence satisfactory to it that the Company has
received a minimum of $4,000,000 in bona fide funds from a Qualified Income
Source which shall not be subject to repayment prior to the later to occur of
(i) the 364th calendar day following the obtainment of such funds and (ii) the
270th day following the date that an Underlying Shares Registration Statement
(as defined in the Debentures) is first declared effective by the Securities and
Exchange Commission, and (B) the date on which all payments under the Debentures
have been made in full and all other Obligations have been paid or discharged.
Notwithstanding the foregoing and anything to the contrary contained herein, in
no event shall this Agreement or the Security Interest terminate prior to the
date that an Underlying Shares Registration Statement is first declared
effective by the Securities and Exchange Commission.
(b) If the Company shall have entered into a Qualified
Facility for in excess of $500,000, then the Security Interest shall, subject to
terms mutually acceptable to the Company and the Secured Party, become
subordinate to any security interest granted to such lender pursuant to such
Qualified Facility.
(c) Upon any termination or subordination of the Security
Interest pursuant to this Section 11, the Secured Party, at the request and at
the expense of the Company, will join in executing an appropriate amendment or
termination statement (as the case may be) with respect to any financing
statement executed and filed pursuant to this Agreement.
12. POWER OF ATTORNEY; FURTHER ASSURANCES. (a) The Company authorizes
the Secured Party, and does hereby make, constitute and appoint it, and its
respective officers, agents, successors or assigns with full power of
substitution, as the Company's true and lawful attorney-in-fact, with power, in
its own name or in the name of the Company, to, after the occurrence and during
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the continuance of an Event of Default, (i) endorse any notes, checks, drafts,
money orders, or other instruments of payment (including payments payable under
or in respect of any policy of insurance) in respect of the Collateral that may
come into possession of the Secured Party; (ii) to sign and endorse any UCC
financing statement or any invoice, freight or express xxxx, xxxx of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to the Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened
against the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and xxx for monies due in respect of the Collateral; and (v) generally, to do,
at the option of the Secured Party, and at the Company's expense, at any time,
or from time to time, all acts and things which the Secured Party deems
necessary to protect, preserve and realize upon the Collateral and the Security
Interest granted therein in order to effect the intent of this Agreement, the
Debentures and the Warrants all as fully and effectually as the Company might or
could do; and the Company 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 shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be outstanding, subject to
termination under Section 11.
(b) On a continuing basis, the Company will make, execute,
acknowledge, deliver, file and record, as the case may be, in the proper filing
and recording places in any jurisdiction, including, without limitation, the
jurisdictions indicated on SCHEDULE B, attached hereto, all such instruments,
and take all such action as may reasonably be deemed necessary or advisable, or
as reasonably requested by the Secured Party, to perfect the Security Interest
granted hereunder and otherwise to carry out the intent and purposes of this
Agreement, or for assuring and confirming to the Secured Party the grant or
perfection of a security interest in all the Collateral.
(c) The Company hereby irrevocably appoints the Secured Party
as the Company's attorney-in-fact, with full authority in the place and stead of
the Company and in the name of the Company, from time to time in the Secured
Party's discretion, to take any action and to execute any instrument which the
Secured Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including the filing, in its sole discretion, of one or more
financing or continuation statements and amendments thereto, relative to any of
the Collateral without the signature of the Company where permitted by law.
13. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing, with copies to all the other parties hereto, and
shall be deemed to have been duly given when (i) if delivered by hand, upon
receipt, (ii) if sent by facsimile, upon receipt of proof of sending thereof,
(iii) if sent by nationally recognized overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified mail, return receipt requested, postage prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:
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If to the Company: Premier Laser Systems, Inc.
0 Xxxxxx
Xxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Chief Financial Officer
With copies to: Xxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxxxxx, 00xx xxxxx
Xxxxx Xxxx, XX 00000-0000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxxxxx, Esq.
If to the Secured Party, to the address set forth below such Secured
Party's name on the signatures pages hereto.
14. OTHER SECURITY. To the extent that the Obligations are now or
hereafter secured by property other than the Collateral or by the guarantee,
endorsement or property of any other person, firm, corporation or other entity,
then the Secured Party shall have the right, in its sole discretion, to pursue,
relinquish, subordinate, modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Party's rights and
remedies hereunder.
15. ACTIONS BY THE SECURED PARTY. Any action required or permitted
hereunder to be taken by or on behalf of the secured parties signatory hereto
shall, for such action to be valid, require the approval of the Two
Thirds-in-Interest prior to the taking of such action. If the consent, approval
or disapproval of the secured parties signatory hereto is required or permitted
pursuant to this Agreement, such consent, approval or disapproval shall only be
valid if given by the Two Thirds-in-Interest.
16. MISCELLANEOUS.
(a) No course of dealing between the Company and the Secured
Party, nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Party, any right, power or privilege hereunder or under the
Debentures shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or thereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.
(b) All of the rights and remedies of the Secured Party with
respect to the Collateral, whether established hereby or by the Debentures or by
any other agreements, instruments or documents or by law shall be cumulative and
may be exercised singly or concurrently.
(c) This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and is intended to supersede
all prior negotiations, understandings and agreements with respect thereto.
Except as specifically set forth in this Agreement, no provision of this
Agreement may be modified or amended except by a written agreement specifically
referring to this Agreement and signed by the parties hereto.
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(d) In the event that any provision of this Agreement is held
to be invalid, prohibited or unenforceable in any jurisdiction for any reason,
unless such provision is narrowed by judicial construction, this Agreement
shall, as to such jurisdiction, be construed as if such invalid, prohibited or
unenforceable provision had been more narrowly drawn so as not to be invalid,
prohibited or unenforceable. If, notwithstanding the foregoing, any provision of
this Agreement is held to be invalid, prohibited or unenforceable in any
jurisdiction, such provision, as to such jurisdiction, shall be ineffective to
the extent of such invalidity, prohibition or unenforceability without
invalidating the remaining portion of such provision or the other provisions of
this Agreement and without affecting the validity or enforceability of such
provision or the other provisions of this Agreement in any other jurisdiction.
(e) No waiver of any breach or default or any right under this
Agreement shall be considered valid unless in writing and signed by the party
giving such waiver, and no such waiver shall be deemed a waiver of any
subsequent breach or default or right, whether of the same or similar nature or
otherwise.
(f) This Agreement shall be binding upon and inure to the
benefit of each party hereto and its successors and assigns.
(g) Each party shall take such further action and execute and
deliver such further documents as may be necessary or appropriate in order to
carry out the provisions and purposes of this Agreement.
(h) This Agreement shall be construed in accordance with the
laws of the State of New York, except to the extent the validity, perfection or
enforcement of a security interest hereunder in respect of any particular
Collateral which are governed by a jurisdiction other than the State of New York
in which case such law shall govern. Each of the parties hereto irrevocably
submit to the exclusive jurisdiction of any New York State or United States
Federal court sitting in Manhattan county over any action or proceeding arising
out of or relating to this Agreement, and the parties hereto hereby irrevocably
agree that all claims in respect of such action or proceeding may be heard and
determined in such New York State or Federal court. The parties hereto agree
that a final judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereto further waive any objection to venue
in the State of New York and any objection to an action or proceeding in the
State of New York on the basis of forum non convenient.
(i) EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING
OF ANY DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR
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EACH PARTY TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY
RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL
CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVED ITS RIGHTS TO A
JURY TRIAL FOLLOWING SUCH CONSULTATION. THIS WAIVER IS IRREVOCABLE, MEANING
THAT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS AND SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE
EVENT OF A LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.
(j) This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.
* * * * * * * * * * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed on the day and year first above written.
PREMIER LASER SYSTEMS, INC.
By: /S/ XXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: CEO
SECURED PARTIES:
STRONG RIVER INVESTMENTS, INC.
By: /s/ XXXXXXX X.XXXXXXXXX
-------------------------------------
Xxxxxxx X. Xxxxxxxxx
Attornye-in-Fact
Strong River Investments, Inc.
c/x Xxxxxxx Capital Corp.
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Avi Vigder
HERKIMER LLC
By: /s/ L. FAMINGTON /S/ XXXXXX XXXXXXX
-------------------------------------
Name: CTC Corporation Ltd.
Title: Director
Address for Notice:
x/x Xxxxx Xxxxxxxx (Xxxxxx) Limited
Commercial Centre
P.O. Box 31106 SMB
Grand Cayman
Xxxxxx Xxxxxxx
-00-
Xxxxxxx Xxxx Indies
Facsimile No.: (000) 000-0000
with a copy to: Southridge Capital Management LLC
Executive Pavillon
00 Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
-15-
SCHEDULE A TO SECURITY AGREEMENT
Places where books of account, records and Collateral is located
----------------------------------------------------------------
1. 3 Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000
(Executive Offices)
Subsidiaries
------------
1. EyeSys - Premier Inc., a Delaware corporation.
100% owned
2. CRS U.S.A., Inc., a California mutual benefit nonprofit corporation
(Premier Laser Systems, Inc. is the sole member.)
3. Xxxx.Xxxx, LLC, a California limited liability company
(51% owned by Premier Laser Systems, Inc., now in the process of being
shut down).
4. Ophthalmic Imaging Systems, a California corporation (51% owned by
Premier Laser Systems, Inc.)
-16-
SCHEDULE B TO SECURITY AGREEMENT
Jurisdictions where UCC-1 filings required
------------------------------------------
1. California Secretary of State
-17-
SCHEDULE 1(f) TO SECURITY AGREEMENT
Premier Laser Systems vs. Infrared Fiber Systems, Inc, Coherent, Inc., et al, as
described in Item 3 to Annual Report on Form 10-K of Premier Laser Systems for
the fiscal year ended March 31, 1998
-18-
SCHEDULE 3(c) TO SECURITY AGREEMENT
Ownership of Collateral
-----------------------
1. Under Agreement dated January 9, 1998 with Corneal Contouring Development,
LLC ("CCD"), PLS may be obligated to return technology relating to a corneal
reprofiling device, if certain conditions are not met. This device is not
presently marketed by PLS. CCD has a security interest in the assets pertaining
to this product.
2. Under Agreement dated August 28, 1998 with Wound Healing of Oklahoma, Inc.
PLS may be obligated to return technology relating to a device for lowering the
intraocular pressure of the eye, if certain conditions are not met. This device
is not presently marketed by PLS.
3. Under a Technology Transfer and Software License Agreement dated October 16,
1998 among Premier Laser Systems, Inc., Xxxxxx and Associates, Inc. and Xxxxx
Xxxxxx, PLS may be required to return technology relating to mapping of the eye.
This device is not presently marketed by PLS.
4. Security interest in favor of Marine National Bank, covering computer
equipment and molds.
5. Joint ownership of patent for laser tip, with Xxxxxxx Xxxxxxx.
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SCHEDULE 3(d) TO SECURITY AGREEMENT
CURRENT MATTERS
1. BRITESMILE, INC., A UTAH CORPORATION, PLAINTIFF, V. INTERDENT, INC., A
CALIFORNIA CORPORATION, PREMIER LASER SYSTEMS, INC. A CALIFORNIA CORPORATION.
This is a patent infringement case filed 09/22/97 regarding a laser method for
bleaching teeth.
2. Opposition against Premier Laser Systems application in the Patent and
Trademark Office to registration of the trademark "Aurora," and objection to the
further use of that name by Premier Laser Systems in connection with the sale of
its products.
OLD MATTERS WHICH MAY NO LONGER BE IN DISPUTE
3. Xx. Xxxxxxxxx: Letter alleging that he is an inventor of certain
(unspecified) technology of Premier Laser.
4. Dr. Xxxxxxxx Bath: Letter alleging that Premier infringes a patent.
5. Opticon: Letter alleging that Premier infringes a patent.
6. Xx. Xxxxxxxxxx: Letter alleging that Premier infringes copyright.
7. Dr. Berlin: Letter to his lawyer (not to Premier) alleging that Premier
infringes a patent.
-20-
