**Exhibit 10.29.2**

 

**SECURITY AGREEMENT**

 

SECURITY AGREEMENT, dated as ofJanuary 27, 2005, among Refocus Group, Inc., a Delaware corporation (“***Debtor***”), Refocus Ocular, Inc., aDelaware corporation (the “***Guarantor***”),and Medcare Investment Fund III, Ltd., a Texas limited partnership(hereinafter, the “***Secured Party***”).  Debtor and Guarantor are referred tocollectively herein as the “***Grantors.***”

 

WHEREAS, Debtor is the Maker of that certain SecuredBridge Note in the principal amount of $500,000, dated as of the date hereof(the “***Note***”), payable to SecuredParty;

 

WHEREAS, the Guarantor is a wholly owned subsidiary ofDebtor and, pursuant to a Guaranty dated as of the date hereof (the “***Guaranty***”), will guaranty theobligations of Debtor under the Note;

 

WHEREAS, the execution of this Agreement is acondition to the delivery of the Note; and

 

WHEREAS, the Guarantor will derive substantial benefitfrom the execution and delivery of this Agreement.

 

NOW, THEREFORE, in consideration of the promisescontained herein and for other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto agree asfollows:

 

**Section 1. Definitions.** The term “***State***,” as used herein, meansthe State of Delaware. All terms defined in the Uniform Commercial Code of theState and used herein shall have the same definitions herein as specifiedherein.  The term “***Obligations***”as used herein means all of the indebtedness, obligations, and liabilities ofthe Grantors to the Secured Party, individually or collectively, whether director indirect, joint or several, absolute or contingent, due or to become due,now existing or hereafter arising under or in respect of the Note, theGuaranty, any and all future indebtedness of the Grantors to the Secured Party,any other instruments or agreements executed and delivered pursuant thereto orin connection therewith or this Agreement, and the term “Event of Default,” asused herein, means the failure of a Grantor to pay or perform any of itsObligations as and when due to be paid or performed.

 

**Section 2. Grant of Security Interest.**  The Grantors hereby grant to the SecuredParty, to secure the payment and performance in full of all of the Obligations,a security interest in and so pledge and assign to the Secured Party, thefollowing properties, assets, and rights of the Grantors, wherever located,whether now owned or hereafter acquired or arising, and all proceeds andproducts thereof (all of the same being hereinafter called the “***Collateral***”):

 

(a)           eachPatent referred to in Schedule I attached hereto, all inventions andimprovements described and claimed therein, all reissues, divisions,continuations, renewals, modifications, substitutions, extensions andcontinuations-in-part thereof, all improvements, modifications, or enhancementsthereto, and all trade secrets and know-how pertaining to any of

 

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the foregoing, allincome, royalties, damages, claims and payments now or hereafter due and/orpayable under and with respect thereto, including, without limitation, damagesand payments for past and future infringements thereof, all rights to sue forpast, present and future infringements thereof, and all rights corresponding toany of the foregoing in the United States, its territories and possessions (collectively,the “***Patents***”);

 

(b)           eachapplication for a Patent (“***Patent Application***”)referred to in Schedule I, together with any reissues, continuations,divisions, modifications, substitutions, extensions and contintuations-in-partthereof, all income royalties, damages, claims and payments now or hereafterdue and/or payable under and with respect thereto, including, withoutlimitation, damages and payments for past and future infringements thereof, allrights to sue for past, present and future infringements thereof, and allrights corresponding to any of the foregoing in the United States, itsterritories and possessions;

 

(c)           eachtrademark and service mark application or registration and each common law mark(“***Trademarks***”) referred to in ScheduleII, and any renewals thereof, together with the goodwill of the business towhich the Trademarks pertain, and all income, royalties, damages, claims andpayments now or hereafter due and/or payable under and with respect thereto,including, without limitation, damages and payments for past and futureinfringements thereof, all rights to sue for past, present and futureinfringements thereof, and all rights corresponding to any of the foregoing inthe United States, its territories and possessions; and

 

(d)           allproducts and proceeds of the foregoing, including, without limitation, anyclaim by a Grantor against third parties for past, present or futureinfringement of any Patent, Patent Application or Trademark.

 

**Section 3. Authorization to File Financing Statements.**  The Grantors hereby irrevocably authorize theSecured Party at any time and from time to time to file in any UniformCommercial Code jurisdiction any initial financing statements and amendmentsthereto that contain any information required by Part 5 of Article 9 of theUniform Commercial Code of the State for the sufficiency or filing officeacceptance of any financing statement or amendment, including whether the Debtoris an organization, the type of organization and any organization identificationnumber issued to the Grantors.  The Grantorsagree to furnish any such information to the Secured Party promptly uponrequest.

 

**Section 4. Actions as to Any and All Collateral.**  The Grantors agree to take any actionreasonably requested by the Secured Party to insure the attachment, perfectionand first priority of, and the ability of the Secured Party to enforce, theSecured Party’s security interest in any and all of the Collateral including,without limitation, (a) executing, delivering and, where appropriate, filingfinancing statements and amendments relating thereto under the UniformCommercial Code, to the extent, if any, that a Grantor’s signature thereon isrequired therefore, (b) complying with any provision of any statute, regulationor treaty of the United States as to any Collateral if compliance with suchprovision is a condition to attachment, perfection, or priority of, or abilityof the Secured Party to enforce, the Secured Party’s security interest in suchCollateral, (c) obtaining governmental and other third-party consents andapprovals, and (d) taking all actions required by any earlier versions of theUniform Commercial Code or by other

 

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law, as applicable in anyrelevant Uniform Commercial Code jurisdiction, or by other law as applicable inany foreign jurisdiction.

 

**Section 5. Representations and Warranties Concerning Grantors’ Legal Status. **The Grantors havepreviously delivered to the Secured Party a certificate signed by the Grantorsand entitled “Perfection Certificate” (the “***PerfectionCertificate***”).  EachGrantor represents and warrants to the Secured Party as follows:  (a) the Grantor’s exact legal name is thatindicated on the Perfection Certificate and on the signature page hereof, (b)the Grantors are an organization of the type and organized in the jurisdictionset forth in the Perfection Certificate, (c) the Perfection Certificateaccurately sets forth the Grantor’s organizational identification number oraccurately states that the Grantor has none, (d) the Perfection Certificateaccurately sets forth the Grantor’s place of business or, if more than one, itschief executive office as well as the Grantor’s mailing address if different,and (e) all other information set forth on the Perfection Certificatepertaining to the Grantor is accurate and complete.

 

**Section 6. Covenants Concerning Company’s Legal Status. **Each Grantor covenants withthe Secured Party as follows:  (a)without providing at least 30 days prior written notice to the Secured Party,the Grantor will not change its name, its place of business or, if more thanone, chief executive office, or its mailing address or organizational identificationnumber if it has one, (b) if the Grantor does not have an organizationalidentification number and later obtains one, the Grantor shall forthwith notifythe Secured Party of such organizational identification number, and (c) theGrantor will not change its type of organization, jurisdiction or organization,or other legal structure.

 

**Section 7. Representations and Warranties Concerning Collateral, Etc.  **The Grantors furtherrepresent and warrant to the Secured Party as follows:  (a) the Guarantor is the owner of theCollateral, free from any adverse lien, security interest, or otherencumbrance, except for the security interest created by this Agreement; (b)all of the Collateral is valid and subsisting and in full force and effect; (c)as of the date hereof, except for the Patents, Patent Applications andTrademarks on the Schedules attached hereto, no Grantor owns any patent,trademark and service mark rights in the United States that pertain to, or areutilized in, Debtor’s PresVIEW Scleral Implant, the PresVIEW Incision System,or Debtor’s scleral spacing procedure for the treatment of presbyopia, ocularhypertension and primary open angle glaucoma in the human eye; and (d) allother information set forth on the Perfection Certificate pertaining to theCollateral is accurate and complete.

 

**Section 8. Covenants Concerning Collateral, Etc. **The Grantors further covenant with the Secured Partyas follows:  (a) except for the securityinterest herein granted, the Guarantor shall be the owner of the Collateralfree from any lien, security interest, or other encumbrance, and the Grantorsshall use all commercially reasonable efforts to defend the same against allclaims and demands of all persons at any time claiming the same or anyinterests therein adverse to the Secured Party, (b) the Grantors shall notpledge, mortgage, or create, or suffer to exist a security interest in theCollateral in favor of any person other than the Secured Party, (c) the Grantorswill keep the Collateral in good order and repair and will not use the same inviolation of law or any policy of insurance thereon, (d) the Grantors will paypromptly when due all taxes, assessments, governmental charges, and levies uponthe Collateral or incurred in connection with the use or operation of suchCollateral or incurred in connection with this Agreement, (e) the 

 

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Grantors will not licenseany of the Collateral or grant any other right or permission to use any of theCollateral, (f) the Grantors will not grant any covenant not to sue or immunityfrom suit on any of the Collateral; (g) the Grantors will not sell or otherwisedispose, or offer to sell or otherwise dispose, of the Collateral or anyinterest therein; (h) the Grantors will promptly notify the Secured Party ofthe existence of any new Patents, Patent Applications or Trademarks in theUnited States not identified on Schedules I or II hereto so that theSecured Party may further perfect its security interest therein by, inter alia,recording its security interest therein with the United States Patent andTrademark Office or with any state; and (i) at their expense, the Grantors willperform all acts and execute all documents necessary to maintain the existenceof the Collateral as valid and subsisting, including, without limitation, (x) theprosecution of each Patent Application to issuance unless all claims thereinhave been finally rejected by the Patent Office and, after consultation withthe Secured Party, the Grantors determine in their reasonable business judgmentthat further prosecution is unlikely to secure allowance of any finallyrejected claim, (y) the payment of all maintenance fees on each Patent, and (z)the filing of any renewal affidavits and applications for each registeredTrademark, subject to cessation of use, as determined by the Grantors in theirreasonable business judgment.

 

**Section 9. Collateral Protection Expenses.**  In its discretion, the Secured Party maydischarge taxes and other encumbrances at any time levied or placed on any ofthe Collateral and pay any necessary filing fees.  The Grantors agree to reimburse the SecuredParty on demand for any and all expenditures so made.  The Secured Party shall have no obligation tothe Grantors to make any such expenditures, nor shall the making thereofrelieve the Grantors of any default.

 

**Section10.  Power of Attorney.**

 

**10.1        Appointmentand Powers of the Secured Party.**  Each Grantor hereof irrevocably constitutesand appoints the Secured Party and any officer or agent thereof, with fullpower of substitution, as its true and lawful attorneys-in-fact with fullirrevocable power and authority in the place and stead of such Grantor or inthe Secured Party’s own name, for the purpose of carrying out the terms of thisAgreement, to take any and all appropriate action and to execute any and alldocuments and instruments that may be necessary or desirable to accomplish thepurposes of this Agreement and, without limiting the generality of theforegoing, hereby gives said attorneys the power and right, on behalf of suchGrantor, without notice to or assent by such Grantor, to do the following:

 

(a)           uponthe occurrence and during the continuance of an Event of Default, generally tosell, transfer, pledge, make any agreement with respect to, or otherwise dealwith any of the Collateral in such manner as is consistent with the UniformCommercial Code of the State and as fully and completely as though the SecuredParty were the absolute owner thereof for all purposes, and to do at Grantor’sexpense, at any time, or from time to time, all acts and things which theSecured Party deems necessary to protect, preserve, or realize upon theCollateral and the Secured Party’s security interest therein, in order toeffect the intent of this Agreement, all as fully and effectively as theGrantor might do, including, without limitation, (i) the filing and prosecutingof registration and transfer applications with the appropriate federal or localagencies or authorities with respect to patentable inventions and processes,and (ii) the execution, delivery, and recording, in connection with any sale orother disposition of any Collateral, of the

 

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endorsements,assignments, or other instruments of conveyance or transfer with respect tosuch collateral; and

 

(b)           to theextent that the Grantor’s authorization given in Section 3 is notsufficient, to file such financing statements with respect thereto, with orwithout the Grantor’s signature, or a photocopy of this Agreement insubstitution for a financing statement, as the Secured Party may deemappropriate and to execute in the Grantor’s name such financing statements andamendments thereto and continuation statements which may require the Grantor’ssignature.

 

**10.2        Ratificationby Company.**  To theextent permitted by law, the Grantor hereby ratifies all that said attorneysshall lawfully do or cause to be done by virtue hereof.  This power of attorney is a power coupledwith an interest and shall be irrevocable.

 

**10.3.       NoDuty on Secured Party.** The powers conferred on the Secured Party hereunder are solely toprotect its interests in the Collateral and shall not impose any duty upon itto exercise any such powers.  The SecuredParty shall be accountable only for the amounts that it actually receives as aresult of the exercise of such powers, and neither it nor any of its officers,directors, employees or agents shall be responsible to the Grantor for any actor failure to act, except for the Secured Party’s own gross negligence orwillful misconduct.

 

**Section 11. Remedies.**  If anEvent of Default shall have occurred and be continuing, the Secured Party may,without notice to or demand upon the Grantors, declare this Agreement to be indefault, and the Secured Party shall thereafter have in any jurisdiction inwhich enforcement hereof is sought, in addition to all other rights andremedies, the rights and remedies of a secured party under the UniformCommercial Code of the State or of any jurisdiction in which Collateral islocated, including, without limitation, the right to take possession of theCollateral.  The Secured Party shall giveto the Grantors at least five Business Days prior written notice of the timeand place of any public sale of Collateral or of the time after which anyprivate sale or any other intended disposition is to be made.  The Grantors hereby acknowledge that fiveBusiness Days prior written notice of such sale or sales shall be reasonablenotice.  In addition, the Grantors waiveany and all rights that they may have to a judicial hearing in advance of theenforcement of any of the Secured Party’s rights hereunder, including, withoutlimitation, its right following an Event of Default to take immediatepossession of the Collateral and to exercise its rights with respect thereto.

 

**Section 12. Standards for Exercising Remedies.**  To the extent that applicable law imposesduties on the Secured Party to exercise remedies in a commercially reasonablemanner, the Grantors acknowledge and agree that it is not commerciallyunreasonable for the Secured Party (a) to fail to incur expenses reasonablydeemed significant by the Secured Party to prepare Collateral for dispositionor otherwise to complete work in process into finished products fordisposition, (b) to advertise dispositions of Collateral through publicationsor media of general circulation, whether or not the Collateral is of aspecialized name, (c) to contact other persons, whether or not in the samebusiness as the Grantors, for expressions of interest in acquiring all or anyportion of the Collateral, or (d) to the extent deemed appropriate by theSecured Party, to obtain the services of other brokers, investment bankers,consultants, and other professionals to assist the Secured Party in thecollection for disposition of any of the Collateral.  The Grantors 

 

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acknowledge that thepurpose of this Section 12 is to provide nonexhaustive indications of whatactions or omissions by the Secured Party shall not be deemed commerciallyunreasonable solely on account of not being indicated in this Section 12 shallbe construed to grant any rights to the Grantors or to impose any duties on theSecured Party that would not have been granted or imposed by this Agreement orby applicable law in the absence of this Section 12.

 

**Section 13. No Waiver by Secured Party, Etc.**  The Secured Party shall not be deemed to havewaived any of its rights upon or under the Obligations or the Collateral unlesssuch waiver shall be in writing and signed by the Secured Party.  No delay or omission on the part of theSecured Party in exercising any right shall operate as a waiver of such rightor any other right.  A waiver on any oneoccasion shall not be construed as a bar to or waiver of any right on anyfuture occasion.  All rights and remediesof the Secured Party with respect to the Obligations or the Collateral, whetherevidenced hereby or by any other instrument or papers, shall be cumulative andmay be exercised singularly, alternative, successively, or concurrently at suchtime or at such times as the Secured Party deems expedient.

 

**Section 14. Suretyship Waivers by Grantors.**  The Grantors waive demand, notice, protect,notice of acceptance of this Agreement, notice of loans made, credit extended,Collateral received or delivered or other action taken in reliance hereon, andall other demands and notices of any description.  With respect to both the Obligations and theCollateral, the Grantors assent to any extension or postponement of the time ofpayment or any other indulgence, to any substitution, exchange, or release ofor failure to perfect any security interest in any Collateral, to the additionor release of any party or person primarily or secondarily liable, to theacceptance of partial payment thereon and the settling, compromising, oradjusting of any thereof, all in such manner and at such time or times as theSecured Party may deem advisable.  TheSecured Party shall have no duty as to the collection or protection of the Collateralor any income thereon, nor as to the preservation of rights against priorparties.  The Grantors further waive anyand all other surety defenses.

 

**Section 15. Marshalling.** The Secured Party shall not be required to marshal any present or futurecollateral security (including but not limited to this Agreement and theCollateral) for, or other assurances of payment of, the Obligations or any ofthem or to resort to such collateral security or other assurances of payment inany particular order, and all of its rights hereunder and in respect of suchcollateral security and other assurances of payment shall be cumulative and inaddition to all other rights however existing or arising.  To the extent that it lawfully may, theGrantors hereby agree that they will not invoke any law relating to themarshalling of collateral which might cause delay in or impede the enforcementof the Secured Party’s rights under this Agreement or under any otherinstrument creating or evidencing any of the Obligations or under which any ofthe Obligations is secured or payment thereof is otherwise assured, and, to theextent that it lawfully may, the Grantors hereby irrevocable waive the benefitsof all such laws.

 

**Section 16. Proceeds of Dispositions, Expenses.**  The Grantors shall pay to the Secured Partyon demand any and all expenses, including reasonable attorneys’ fees anddisbursements, incurred or paid by the Secured Party in protecting, preserving,or enforcing the Secured Party’s rights under or in respect of any of theObligations or any of the Collateral. After deducting all of said expenses, the residue of any proceeds ofcollection or sale of the Obligations or Collateral

 

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shall, to the extentactually received in cash, be applied to the payment of the Obligations in suchorder or preference as the Secured Party may determine, proper allowance andprovision being made for any Obligations not then due.  Upon the final payment and satisfaction infull of all of the Obligations and after making any payments required by §§9-608(a)(1)(C)or 9-615(a)(3) of the Uniform Commercial Code of the State, any excess shall bereturned to the Grantors, and the Grantors shall remain liable for anydeficiency in the payment of the Obligations.

 

**Section 17. Overdue Amounts.  **Untilpaid, all amounts due and payable by the Grantors hereunder shall be a debtsecured by the Collateral and shall bear, whether before or after judgment,interest at the rate of interest.

 

**Section 18. Governing Law; Consent to Jurisdiction.  **THIS AGREEMENT IS INTENDED TO TAKE EFFECT AS A SEALEDINSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWSOF THE STATE.

 

**Section 19. Miscellaneous.** The headings of each section of this Agreement are for convenience onlyand shall define or limit the provisions thereof.  This Agreement and all rights and obligationshereunder shall be binding upon the Grantors and their respective successorsand assigns, and shall inure to the benefit of the Secured Party and itssuccessors and assigns.  If any term ofthis Agreement shall be held to be invalid, illegal, or unenforceable, thevalidity of all other terms hereof shall in no way be affected thereby, andthis Agreement shall be construed and be enforceable as if such invalid,illegal, or unenforceable term had not been included herein.  The Grantors acknowledge receipt of a copy ofthis Agreement.

 

**[*Signature page follows*]**

 

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**[*Signature page to Security Agreement*]**

 

IN WITNESS WHEREOF, intending to be legally bound, theGrantors have caused this Agreement to be duly executed as of the date firstabove written.

 
|                                | REFOCUS GROUP, INC.  |             |   |
|-------------------------------------|----------------------|------------------|--------|
|                                |                 |             |   |
|                                |                 |             |   |
|                                | By:                  |             |   |   |
|                                | Name:                | Terence A. Walts |   |
|                                | Title:               | President        |   |
|                                |                 |             |   |
|                                |                 |             |   |
|                                | REFOCUS OCULAR, INC. |             |   |
|                                |                 |             |   |
|                                |                 |             |   |
|                                | By:                  |             |   |   |
|                                | Name:                | Terence A. Walts |   |
|                                | Title:               | President        |   |
|                                |                 |             |   |
| Accepted:                           |                 |             |   |
|                                |                 |             |   |
| MEDCARE INVESTMENT  FUND, III, LTD. |                 |             |   |
|                                |                 |             |   |
|                                |                 |             |   |
| By:                                 |                 |             |   |   |   |
| Name:                               |                 |             |   |   |   |
| Title:                              |                 |             |   |   |   |
|                                     |                      |                  |        |  |  |  |  |  |  |  |  |  |

 

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