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EXHIBIT 4(8)
Security
Agreement
This
Security Agreement (“Security Agreement”) originally
made May 1, 2002 between Integral Vision, Inc., 38700 Grand River
Avenue, Farmington Hills, MI 48335 (“Debtor”) and The
Klonoff Company, Inc., a California corporation of 11811 SE 255
th Street, Kent, WA 98031, as the Representative of the
Class 2 Purchasers under the Second Amended Note and Warrant
Purchase Agreement between the Debtor and the Purchasers thereunder
(“Secured Party”) is hereby amended and restated March
__, 2008. The Debtor and The Klonoff Company, Inc. hereby
acknowledge that references to the Second Amended Note and Warrant
Purchase Agreement or Purchase Agreement in this Security Agreement
shall mean all subsequent amended and modified versions of the
Second Amended Note and Warrant Purchase Agreement, including
without limitation the Fifth Amended and Restated Note and Warrant
Purchase Agreement which should be effective shortly after or
currently with this amended Security Agreement being duly executed
by the Debtor and The Klonoff Company, Inc. Both the Debtor and The
Klonoff Company, Inc. have new addresses which are shown in Section
14.d below.
Whereas,
the Debtor wishes to grant security interests in favor of the
Secured Party as provided in this Security Agreement;
For
valuable consideration acknowledged as received by the parties,
they agree as follows:
1. Definitions.
a. Article 9 of the UCC . Terms
used in the definition of Collateral below, and as those terms and
any other terms are used in this Security Agreement, whether
capitalized or not, shall have the respective meanings given such
terms in Article 9 of the Uniform Commercial Code
(“UCC”) (or absent definition in Article 9 of the UCC,
as defined in any other article of the UCC) as enacted in the State
of Michigan as of the date of this Security Agreement, and as
amended thereafter.
b. Collateral. The term,
“Collateral”, shall mean: all of the following assets,
and rights of Debtor, wherever located, whether now owned or
hereafter acquired or arising: Accounts; Letter of Credit;
Letter-of-credit Rights; Inventory, including Work in Progress;
Supporting obligations; and all Cash Proceeds and products of the
foregoing.
c. Obligations. This Security
Agreement secures all the following (all of which are referred to
as “Obligations”):
i.
Debtor’s obligations to the Secured Party under (i) the
promissory Note granted under the Note and Warrant Purchase
Agreements (“Promissory Note”) and (ii) this Security
Agreement;
ii.
all of Debtor’s other present and future amounts owed to
Secured Party, including without limitation, obligations as a
guarantor or surety, and all interest on any
Obligations;
iii.
the repayment of (a) any amounts that Secured Party may advance or
spend for the maintenance or preservation of the Collateral and (b)
any other expenses that Secured Party may make under the provisions
of the Security Agreement or the for the benefit of
Debtor;
iv.
all costs incurred by Secured Party to obtain, preserve, and
enforce this Security Agreement, collect the Obligations, and
maintain and preserve the Collateral, and including, without
limitation, taxes, assessments, insurance premiums, repairs,
attorneys fees and legal costs and expenses, rent, storage costs,
and expenses of sale;
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v.
all amounts owed under any modifications, renewals or extensions of
any of the foregoing obligations;
vi.
any of the foregoing that arises after the filing of a petition by
or against Debtor under the Bankruptcy Code, even if the
obligations do not accrue because of the automatic stay under
Bankruptcy Code §362 or otherwise.
2. Grant of Security Interest.
Debtor grants a security interest in the Collateral to Secured
Party to secure the payment or performance of the
Obligations.
3. Perfection of Security
Interests.
a. Filing of financing statement.
Debtor irrevocably authorizes Secured Party at any time to file in
any jurisdiction any financing statements, and amendments thereto,
(the “Financing Statement”) that indicate (i) the
Collateral covered by this Agreement, regardless of whether any
particular asset in the Collateral falls within the scope of
Article 9 of the UCC of the place of filing It is agreed that a new
Financing Statement will be filed in the State of Michigan as soon
as possible after this amended Security Agreement is duly executed
by the Debtor and The Klonoff Company, Inc.
b. Letter-of-credit rights . If the Debtor
is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Debtor, the Debtor shall promptly
notify the Secured Party thereof and, at the request and option of
the Secured Party, the Debtor shall, in an agreement in form and
substance satisfactory to Secured Party in the form attached as
Exhibit 3.b. (“Credit Agreement”), arrange for the
issuer and any confirmer of such letter of credit to consent to an
assignment to the Secured Party of the proceeds of any drawing
under the letter of credit, with the Secured Party agreeing that
the proceeds of any drawing under the letter of credit are to be
applied as provided in any Credit Agreement.
c. Other Actions as to any and all
Collateral . The Debtor shall take any other action
reasonably requested by Secured Party to insure the attachment,
perfection and first priority of, and the ability of the Secured
Party to enforce, the Secured Party’s security interest in
any and all of the Collateral, including without limitation, (a)
executing, delivering and, where appropriate, filing financing
statements and any amendments, to the extent the Debtor’s
signature is required, (b) causing the Secured Party’s name
to be noted as a secured party on any certificate of title for a
titled Collateral if such notation is a condition of attachment,
perfection or priority of, or ability of the Secured Party to
enforce the Secured Party’s security interest in such
Collateral, (c) complying with any provision of any statute,
regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition of attachment,
perfection or priority of, or ability of the Secured Party to
enforce the Secured Party’s security interest in such
Collateral, (d) obtaining governmental and other third party
consents and approvals, including without limitation, any consent
of any licensor, lessor or other person obligation on the
Collateral, (e) obtaining waivers from mortgagees and landlords in
form and substance satisfactory to Secured Party and (f) taking all
actions required by any earlier versions of the UCC or by other
law, as applicable in any relevant UCC jurisdiction, or by other
law as applicable to any foreign jurisdiction.
4. Relation to Intellectual Property
Assignment . Along with this Security Agreement, the Debtor
has previously executed and delivered to the Secured Party the
Collateral Assignment of Proprietary Rights and Security Agreement
dated March 29, 2001 (“Collateral Assignment”). It is
also expected that said Collateral Assignment will be amended
concurrently with this Security Agreement being amended (and that
such amended Collateral Assignment will be delivered to the Secured
Party as soon as possible after it is duly executed). Such
Collateral Assignment, including amendments thereto, shall be
governed by the terms of such Collateral Assignment and not by the
terms of this Agreement.
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5. Post-Closing Covenants and Rights
Concerning the Collateral.
a. Inspection . The parties to this
Security Agreement may inspect any Collateral in the other
party’s possession, at any time upon reasonable
notice.
b. Personal Property . The
Collateral shall remain personal property at all times.
c. Secured Party’s Collection
Rights . Secured Party shall have the right at any time to
enforce Debtor’s rights against Debtor’s account
debtors and obligors.
6. Obligations Concerning Maintenance of
Collateral .
a. Risk of Loss . Debtor has the
risk of loss of the Collateral.
b. Insurance .
i.
Insurance Policies . Debtor shall maintain insurance with
respect to its properties, business, and the Collateral, with
financially sound and reputable insurers, against such casualties
and contingencies as are in accordance with general practices of
businesses engaged in similar activities of Debtor in similar
geographic areas, and shall be in such amounts, contain such terms,
in such forms and for such periods as may be reasonably
satisfactory to Secured Party. Without limiting the forgoing,
Debtor shall (i) maintain casualty or physical hazard insurance on
“all risk” basis for all its physical property, (ii)
maintain workers compensation or similar insurance required by law,
and (iii) maintain liability insurance against claims of bodily
injury, death, property damage, business interruption insurance,
and product liability insurance. The Debtor shall furnish the
Secured Party with such certificates of insurance and policies
evidencing compliance with these provisions upon Secured
Party’s request.
c. Secured Party’s Obligations and
Duties . Secured Party has no duty to collect any income
accruing on the Collateral or preserve any rights relating to the
Collateral. Notwithstanding anything to the contrary herein, the
Debtor shall remain liable under each contract or agreement
comprised in the Collateral to be observed or performed by the
Debtor thereunder. The Secured Party shall not have any obligation
or liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by Secured Party of
any payment relating to any of the Collateral. The Secured Party
shall not be obligated in any manner to perform any of the
obligations of the Debtor under or pursuant to any such contract or
agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Secured Party in respect of the Collateral
or as to the sufficiency of any performance by any party under any
such contract or agreement, to present or file any claim, to take
any action to enforce any performance or to collect the payment of
any amounts which may have been assigned to Secured Party or to
which Secured Party may be entitled at time. The Secured
Party’s sole duty with respect to the custody, safe-keeping
and physical preservation of the Collateral in its possession,
under §9-207 of the UCC or otherwise, shall be to deal with
such Collateral in the same manner as the Secured Party deals with
similar property for its own account.
7. Debtor’s Representations and
Warranties . Debt
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