SECURITY AGREEMENT
------------------
dated June 15, 2000
between
Xxxxxxx X. Xxxxxxx
&
Safe Tech Medical Products, Inc.
Debtors/Obligors
and
ReTrac Medical Inc.
Secured Party
SECURITY AGREEMENT
------------------
AGREEMENT, dated June 15, 2000, between Xxxxxxx Xxxxxxx, and Safe Tech
Medical Products, Inc. both located at 0000 Xxxxxxx Xx. Xxxxxxx Xxxxx 00000
(hereinafter collectively "Debtor/Obligor"), and ReTrac Medical Inc., a Delaware
corporation, having an address at 00 Xxxxx Xxxx Xxxxxx, Xxx Xxxx, XX 00000
("Secured Party").
WITNESSETH:
-----------
WHEREAS, concurrently herewith Secured Party is lending to
Debtor/Obligor the sum of Seventy-Five Thousand Dollars ($75,000.00), as
evidenced by a Promissory Note of even date herewith (the "Note"); and
WHEREAS, in order to induce Secured Party to make said loan and other
Obligations hereinafter described, Debtor/Obligor has agreed to pledge to
Secured Party certain property as security for the loan;
WHEREAS, it is intended by the parties hereto that this Security
Agreement and Obligations hereinafter described supercede and replace the
Security Agreement and related Obligations of May 25, 2000.
NOW THEREFORE, in consideration of Ten Dollars, and other valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. The following terms as used in this Agreement shall
have the meanings set forth below:
"Collateral" shall mean all of the property set forth in Exhibit A
attached hereto and made a part hereof, and all property of the same
class or character acquired by Debtor/Obligor subsequent to the date
hereof, and all proceeds thereof, and all substitutions, replacements
and accessions thereto.
"Obligations" shall mean (1) all principal and interest due or to
become due under the aforesaid Note as set forth in Exhibit B; (2) all
of the obligations set forth in and Exhibit C attached hereto and made
a part hereof; and (3) any other indebtedness or liability of
Debtor/Obligor to Secured Party, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising.
2. CREATION OF THE SECURITY INTEREST. The Security Agreement of date
May 25, 2000 and related Obligations under that agreement are hereby terminated;
and Debtor/Obligor hereby grants to Secured Party a security interest in all of
the right, title and interest of to Secured Party a security interest in all of
the right, title and interest of Debtor/Obligor in and to the Collateral to
secure the full and prompt payment and performance of all of the Obligations.
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3. DEBTOR/OBLIGOR'S OBLIGATIONS TO PAY. Debtor/Obligor shall pay and
perform all of the Obligations of Debtor/Obligor to Secured Party as the same
may become due according to their terms. Debtor/Obligor shall be liable for, and
shall reimburse to Secured Party, all expenses, including reasonable attorneys'
fees, incurred or paid in connection with establishing, perfecting, maintaining,
protecting or enforcing any of Secured Party's rights and remedies hereunder.
4. PROTECTION OF THE COLLATERAL. Debtor/Obligor shall defend the title
to the Collateral against all claims and demands whatsoever. Debtor/Obligor
shall keep the Collateral free and clear of all liens, charges, encumbrances,
taxes and assessments, and shall pay all taxes, assessments and fees relating to
the Collateral. Upon request by Secured Party, Debtor/Obligor shall furnish
further assurances of title, execute any further instruments and do any other
acts necessary to effectuate the purposes and provisions of this Agreement.
Debtor/Obligor shall not sell, exchange, assign, transfer or otherwise dispose
of the Collateral, and shall not encumber, hypothecate, mortgage, create a lien
on or security interest in the Collateral, without the prior written consent of
Secured Party in each instance. The risk of loss of the Collateral at all times
shall be borne by Debtor/Obligor. Debtor/Obligor shall keep the Collateral in
good repair and condition and shall not misuse, abuse or waste the Collateral or
allow the Collateral to deteriorate except for normal wear and tear.
5. FILING AND RECORDING. Debtor/Obligor, at its own cost and expense,
shall execute and deliver to Secured Party any financing statements, and shall
procure for Secured Party any other documents, necessary or appropriate to
protect the security interest granted to Secured Party hereunder against the
rights and interests of third parties, and shall cause the same to be duly
recorded and filed in all places necessary to perfect the security interest of
Secured Party in the Collateral. In the event that any recording or refiling
thereof (or filing of any statements of continuation or assignment of any
financing statement) is required to protect and preserve such security interest,
Debtor/Obligor, at its own cost and expense, shall cause the same to be
re-recorded and/or refiled at the time and in the manner requested by Secured
Party. Debtor/Obligor hereby authorizes Secured Party to file or refile any
financing statements or continuation statements with respect to the security
interest granted pursuant to this Agreement which at any time may be required or
appropriate, although the same may have been executed only by Secured Party, and
to execute such financing statement on behalf of Debtor/Obligor. Debtor/Obligor
hereby irrevocably designates Secured Party, its agents, representatives and
designees, as agent and attorney-in-fact for Debtor/Obligor for the aforesaid
purposes.
6. DEFAULT. The occurrence of any one or more of the following events
(hereinafter referred to as "Events of Default") shall constitute a default
hereunder, whether such occurrence is voluntary or involuntary or comes about or
is effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental authority:
(a) If Debtor shall default in the payment of any principal or interest
due under the Note; or
(b) If Debtor/Obligor shall fail to pay, perform or observe any
covenant, agreement, term or provision of this Agreement, or any other
agreement or arrangement now or
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(c) hereafter entered into between the parties hereto or with respect
to any Obligation of Debtor/Obligor to Secured Party; or
(d) If any representation, warranty or other statement of fact herein
or in any writing, certificate, report or statement at any time
furnished to Secured Party pursuant to or in connection with this
Agreement shall be false or misleading in any material respect; or
(e) If Debtor/Obligor shall: admit in writing its inability to pay its
debts generally as they become due; file a petition for relief under
the bankruptcy laws or a petition to take advantage of any insolvency
act; make an assignment for the benefit of creditors; commence a
proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or the whole or any substantial part of its
property; file a petition or answer seeking reorganization or
arrangement or similar relief under the Federal Bankruptcy Laws or any
other applicable law or statute of the United States or any State; or
if Debtor/Obligor shall be adjudged a bankrupt or insolvent, or a court
of competent jurisdiction shall enter any order, judgment or decree
appointing a receiver, trustee, liquidator or conservator of
Debtor/Obligor or of the whole or any substantial part of the property
of Debtor/Obligor or approves a petition filed against Debtor/Obligor
seeking reorganization or similar relief under the Federal Bankruptcy
Laws or any other applicable law or statute of the United States or any
State; or if, under the provisions of any other law for the relief or
aid of debtors, a court of competent jurisdiction shall assume custody
or control of Debtor/Obligor or the whole or any substantial part of
its property; or if there is commenced against Debtor/Obligor any
proceeding for any of the foregoing relief; or if Debtor/Obligor by any
act indicates its consent to, approval of, or acquiescence in any such
proceeding; or
(f) If any creditor of Debtor/Obligor for any reason whatsoever
hereafter shall accelerate payment in whole or in part of any
outstanding obligation owed to it by Debtor/Obligor under any agreement
or arrangement, or if any judgment against the Debtor/Obligor or any
execution against any of its property for any amount remains unpaid,
unstayed or undismissed for a period in excess often days; or
(g) If all or any part of the Collateral shall be sold, transferred or
assigned, or shall be further encumbered, hypothecated, mortgaged, or
made subject to any other lien or security interest, without the prior
written consent of Secured Party.
7. RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default, the
Obligations shall immediately become due and payable in full without notice or
demand. Secured Party shall have all rights and remedies provided by the Uniform
Commercial Code in effect in the State of New York on the date hereof. In
addition to, or in conjunction with, or substitution for such rights and
remedies, Secured Party may at any time and from and after the occurrence of an
Event of Default hereunder:
(a) with or without notice to Debtor/Obligor, foreclose the security
interest created herein by any available judicial procedure, or take
possession of the Collateral, or any portion thereof, with or without
judicial process, and enter any premises where the Collateral may be
located for the purpose of taking possession of or removing the same,
or rendering the same unusable, or disposing of the Collateral on such
premises, and Debtor/Obligor agrees not to resist or interfere
therewith;
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(b) require Debtor/Obligor to prepare, assemble or collect the
Collateral, at Debtor/Obligor's own expense, and make the same
available to Secured Party at such place as Secured Party may
designate, whether at Debtor/Obligor's premises or elsewhere;
(c) sell, lease or otherwise dispose of all or any part of the
Collateral, whether in its then condition or after further preparation,
in Debtor/Obligor's name or in its own name, or in the name of such
party as Secured Party may designate, either at public or private sale
(at which Secured Party shall have the right to purchase), in lots or
in bulk, for cash or for credit, with or without representations or
warranties, and upon such other terms as Secured Party, in its sole
discretion, may deem advisable; and ten days' written notice of such
public sale date or dates after which private sale may occur, or such
lesser period of time in the case of an emergency, shall constitute
reasonable notice hereunder;
(d) execute and deliver documents of title, certificates of origin, or
other evidence of payment, shipment or storage of any Collateral or
proceeds on behalf of and in the name of Debtor/Obligor;
(e) remedy any default by Debtor/Obligor hereunder, without waiving
such default, and any monies expended in so doing shall be chargeable
with interest to Debtor/Obligor and added to the Obligations secured
hereby; and
(f) apply for an injunction to restrain a breach or threatened breach
of this Agreement by Debtor/Obligor.
If, after an Event of Default, Secured Party shall foreclose
upon the security interest in the Collateral, Debtor/Obligor shall pay to
Secured Party, as compensation for the attorneys' fees of Secured Party, the
greater of $10,000.00 or an amount equal to 20 percent of the then outstanding
Obligations.
8. CUMULATIVE RIGHTS. All rights, remedies and powers granted to
Secured Party herein, or in any instrument or document related hereto, or
provided or implied by law or in equity shall be cumulative and may be exercised
singly or concurrently on any one or more occasions.
9. DEBTOR/OBLIGOR'S REPRESENTATIONS AND WARRANTIES. Debtor/Obligor
hereby represents and warrants to Secured Party that:
(a) Neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will violate any law or regulation, or any
order or decree of any court of governmental authority, or will
conflict with, or result in the breach of, or constitute a default
under, any indenture, mortgage, deed or trust, agreement or other
instrument to which Debtor/Obligor is a party or by which
Debtor/Obligor may be bound, or result in the creation or imposition of
any lien, claim or encumbrance upon any property of Debtor/Obligor.
4
(b) Debtor/Obligor has the power to execute, deliver and perform the
provisions of this Agreement and all instruments and documents
delivered or to be delivered. pursuant hereto, and has taken or caused
to be taken all necessary or appropriate actions to authorize the
execution, delivery and performance of this Agreement and all such
instruments and documents.
(c) Debtor/Obligor is the legal and equitable owner of the Collateral,
free and clear of all security interests, liens, claims and
encumbrances of every kind and nature.
(d) No default exists, and no event which with notice or the passage of
time, or both, would constitute a default under the Collateral by any
party thereto, and there are no offsets, claims or defenses against the
obligations evidenced by the Collateral, except as may be expressly set
forth in Exhibit A annexed hereto.
10. NOTICES. All notices, requests, demands or other communications
provided for herein shall be in writing and shall be deemed to have been
properly given if sent by registered or certified mail, return receipt
requested, addressed to the parties at their respective addresses hereinabove
set forth, or at such other addresses as the parties may designate in writing.
11. MODIFICATION AND WAIVER. No modification or waiver of any provision
of this Agreement, and no consent by Secured Party to any breach thereof by
Debtor/Obligor, shall be effective unless such modification or waiver shall be
in writing and signed by Secured Party, and the same shall then be effective
only for the period and on the conditions and for the specific instances and
purposes specified in such writing. No course of dealing between Debtor/Obligor
and Secured Party in exercising any rights or remedies hereunder shall operate
as a waiver or preclude the exercise of any other rights or remedies hereunder.
12. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
13. MISCELLANEOUS. This Agreement shall be construed in accordance with
and shall be governed by the laws of the State of New York, and enforced under
personal and exclusive jurisdiction of State of New York, County of Rockland.
5
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first above written.
IN THE PRESENCE OF:
Safe Tech Medical Products, Inc., by
ATTEST:
/S/ Xxxxxxx X. Xxxxxxx
------------------------------
/s/ Xxxxxxx X. Xxxxxxx, President
--------------------
Secretary
/S/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
RETRAC MEDICAL INC.
ATTEST:
By /S/ Xxxxxx Xxxxx
---------------------------
/s/ Xxxxxx Xxxxx, President/CEO
--------------------
Secretary
STATE OF NEW YORK )
) ss.
COUNTY OF ROCKLAND )
On the 15th day of June, 2000, before me personally came Xxxxxxx X.
Xxxxxxx, to me known to be the individual described in and who executed the
foregoing Security Agreement, and acknowledged that he executed said Security
/s/
------------------------------------
Notary Public
6
STATE OF NEW YORK )
) ss.
COUNTY OF ROCKLAND )
On the 15th day of June, 2000, before me personally came Xxxxxxx X.
Xxxxxxx, to me known, who being duly sworn, did depose and say that he resides
at 0000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000; that he is the President of Safe
Tech Medical Products, Inc., the corporation described in and which executed the
foregoing Security Agreement; and that he signed his name thereto by the order
of the board of directors of the said corporation.
STATE OF NEW YORK )
) ss.
COUNTY OF ROCKLAND )
On the 15th day of June, 2000, before me personally came Xxxxxx Xxxxx,
to me known, who being duly sworn, did depose and say that he resides at 0 Xxxxx
Xxxxx, Xxxxxxxxxx, XX 00000; that he is the President of ReTrac Medical Inc.,
the corporation described in and which executed the foregoing Security
Agreement; and that he signed his name thereto by the order of the board of
directors of the said corporation.
/s/
------------------------------------
Notary Public
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EXHIBIT
A COLLATERAL
US Patent Nos.:
5,401,245 (Mar. 28, 1995),
5,527,306 (Jun 18, 1996),
5,785,693 (Jul. 28, 1998),
5,533,983 (Jul. 9, 1996)
all applications/registration of foreign patents including
Canada,
China,
Japan,
Mexico,
Belgium,
Denmark,
France,
Germany,
Italy,
The Netherlands,
Switzerland,
United Kingdom,
8
EXHIBIT B
PROMISSORY NOTE
Attached hereto.
9
PROMISSORY NOTE
---------------
dated June 15, 2000
from
Xxxxxxx X. Xxxxxxx
&
Safe Tech Medical Products, Inc.
Maker
to
ReTrac Medical Inc.
Payee
10
PROMISSORY NOTE
---------------
STATE OF NEW YORK )
) ss.
COUNTY OF ROCKLAND )
$75,000.00 June 15, 2000
FOR VALUE RECEIVED, Xxxxxxx X. Xxxxxxx and Safe Tech Medical Products,
Inc. both having an address at 0000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000,
(collectively "Maker"), hereby covenants and promises to pay to ReTrac Medical
Inc., a corporation, having an address at 00 Xxxxx Xxxx Xxxxxx, Xxx Xxxx, XX
00000 ("Payee"), or order, at Payee's address first above written or at such
other address as Payee may designate in writing, Seventy-Five Thousand Dollars
($75,000.00), lawful money of the United States of America, together with
interest thereon computed from the date hereof at the rate of 18 percent per
annum, which principal and interest shall be payable on demand.
MAKER COVENANTS AND AGREES WITH PAYEE AS FOLLOWS:
1. Maker will pay the indebtedness evidenced by this Note as provided
herein.
2. This Note is secured by a security agreement of even date herewith
(the "Security Agreement"), which Security Agreement is a lien upon the property
which is more particularly described in the Security Agreement. All of the
covenants, conditions and agreements contained in the Security Agreement
expressly are incorporated by reference herein and hereby are made a part
hereof. In the event of any conflict between the terms of this Note and the
terms of the Security Agreement, the terms of the Security Agreement shall be
paramount and shall govern.
3. In the event any payment due hereunder shall not be paid on the date
when due, such payment shall bear interest at the lesser of twenty percent per
annum or the highest lawful rate permitted under applicable law, from the date
when such payment was due until paid. This paragraph shall not be deemed to
extend or otherwise modify or amend the date when such payments are due
hereunder. The obligations of Maker under this Note are subject to the
limitation that payments of interest shall not be required to the extent that
the charging of or the receipt of any such payment by the holder of this Note
would be contrary to the provisions of law applicable to the holder of this Note
limiting the maximum rate of interest which may be charged or collected by the
holder of this Note.
4. The holder of this Note may declare the entire unpaid amount of
principal and interest under this Note to be immediately due and payable if
Maker defaults in the due and punctual payment of any installment of principal
or interest hereunder.
5. Maker, and all guarantors, endorsers and sureties of this Note,
hereby waive presentment for payment, demand, protest, notice of protest, notice
of nonpayment, and notice of dishonor of this Note. Maker and all guarantors,
endorsers and sureties consent that Payee at any time may extend the time of
payment of all or any part of the indebtedness secured hereby, or may grant any
other indulgences.
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6. Any notice or demand required or permitted to be made or given
hereunder shall be deemed sufficiently made and given if given by personal
service or by the mailing of such notice or demand by certified or registered
mail, return receipt requested, addressed, if to Maker, at Maker's address first
above written, or if to Payee, at Payee's address first above written. Either
party may change its address by like notice to the other party.
7. This Note may not be changed or terminated orally, but only by an
agreement in writing signed by the party against whom enforcement of any change,
modification, termination, waiver, or discharge is sought. This Note shall be
construed in accordance with the laws of the State of New York; and enforced
under personal and exclusive jurisdiction of State of New York, County of
Rockland.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
above written.
IN THE PRESENCE OF:
/S/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
Safe Tech Medical Products, Inc., by:
/S/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
/s/
-------------------
Secretary
12
STATE OF NEW YORK )
) ss.
COUNTY OF ROCKLAND )
On the 15th day of June, 2000, before me personally came Xxxxxxx X.
Xxxxxxx, to me known to be the individual described in and who executed the
foregoing Promissory Note, and acknowledged that he executed said Promissory
Note.
/s/
------------------------------------
Notary Public
STATE OF NEW YORK )
) ss.
COUNTY OF ROCKLAND )
On the 15th day of June, 2000, before me personally came Xxxxxxx X.
Xxxxxxx, to me known, who being duly sworn, did depose and say that he resides
at 0000 Xxxxxxx Xxxxx, Xxxxxxx, Xxxxx 00000; that he is the President of Safe
Tech Medical Products, Inc., the corporation described in and which executed the
foregoing Promissory Note; and that he signed his name thereto by the order of
the board of directors of the said corporation.
/s/
------------------------------------
Notary Public
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EXHIBIT C
OBLIGATIONS
The parties hereto have executed a "License Agreement" (attached hereto) for the
worldwide exclusive licensing agreement involving the fight to manufacture, sell
and distribute products evidenced by the patents identified in Exhibit B.
14
