EXHIBIT 10.4
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Coast Business Credit(R)
00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
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[Space above this line for Recorder's use only]
INTERCREDITOR AND SUBORDINATION AGREEMENT
NOTICE: THIS INTERCREDITOR AND SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY
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INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN
OF SOME OTHER OR LATER SECURITY INSTRUMENT.
This Intercreditor and Subordination Agreement (this "Agreement"),
dated as of June 13, 1997, is entered into by and between Sirrom Capital
Corporation ("Sirrom") and Coast Business Credit(R), a division of Southern
Pacific Thrift & Loan Association ("Coast"), to determine the parties'
respective rights, remedies and interests with respect to Cardiac Control
Systems, Inc., a Delaware corporation ("Borrower"). This Agreement is made with
respect to the following facts:
X. Xxxxxxxx is the owner of certain improved real property
located at Three Commerce Boulevard, Palm Coast, Flagler County,
Florida, and more particularly described in Exhibit A attached hereto
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(the "Property").
X. Xxxxxx is a creditor of Xxxxxxxx, as evidenced by that
certain Secured Promissory Note dated March 31, 1995, in the original
principal amount of $1,500,000 (the "Subordinated Instrument"), and
such indebtedness is secured by the lien of that certain Mortgage,
Assignment of Rents and Leases and Security Agreement dated as of
March 31, 1995, executed by Xxxxxxxx, as mortgagor, for the benefit of
Sirrom, as beneficiary, recorded on April 18, 1995, as Instrument No.
95004828 of the Official Records of Flagler County, Florida, which
constitutes a first priority lien on the Property (the "Sirrom
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Mortgage") and a security interest in some or all of the personal
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property of Borrower.
C. Coast is proposing to extend various secured financial
accommodations to Borrower for the purpose of, among others, providing
working capital; and Coast proposes to secure such financial
accommodations with a perfected lien on substantially all of
Borrower's tangible and intangible assets, including, without
limitation, a perfected lien on the Property (the "Coast Mortgage").
However, Coast is unwilling to provide such financial accommodations
unless Sirrom subordinates its claims in the manner set forth below.
Xxxxxx hereby acknowledges and affirms that Coast's financial
accommodations to Borrower constitute valuable consideration to
Sirrom.
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged by the parties hereto, and to induce Coast to extend such
financial accommodations to Borrower as it may determine, and to better secure
Coast with respect to the foregoing, the parties hereby agree as follows:
1. Subordination and Standby.
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a. Indebtedness. Except as set forth in Sections 2 and 3 of this
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Agreement, unless and until all Senior Indebtedness (as herein defined) has been
fully paid and satisfied in cash, Sirrom shall not accept or receive, by setoff
or in any other manner, from Borrower the whole or any part of any sums which
may now or hereafter be owing to Sirrom by Borrower, or any of its predecessors,
successors or assigns, including, without limitation, a receiver, trustee or
debtor in possession (the term "Borrower" shall hereinafter include any such
predecessors, successors or assigns) under or in connection with the
Subordinated Indebtedness (as herein defined);
b. Liens and Security Interests. Except as set forth in Section 2
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of this Agreement, any and all of Sirrom's liens and security interests against
any assets of Borrower and any other assets securing the Subordinated
Indebtedness, whether now existing or hereafter granted or arising, shall in
each case be subordinate to the rights, liens and interests held by Coast with
respect to the Senior Indebtedness. Accordingly, except as set forth in Section
2 of this Agreement, unless and until all of the Senior Indebtedness has been
fully paid and satisfied in cash:
(1) During the continuance of a Payment Blockage (as defined
below), Sirrom shall not commence, prosecute or participate in any other
action, whether private, judicial, equitable, administrative or otherwise,
including, without limitation, any bankruptcy case against Borrower or any
of its assets, provided that, as more fully set forth in Section 8 hereof,
Sirrom may file a proof of claim in a bankruptcy or insolvency proceeding
involving Borrower, which proof of claim shall indicate Sirrom's
subordination hereunder;
(2) During the continuance of a Payment Blockage, Sirrom shall
have no right either to possess any such assets, enforce any security
interests in, foreclose, levy or execute upon, or collect or attach any
such assets, whether by private or judicial action or otherwise; and
(3) the right, title, interest and claims of Sirrom in and to
the proceeds of any policy of insurance covering or relating to any assets
of Borrower (including, without limitation, the Property) or any awards or
other compensation paid in connection with any permanent or temporary
taking in eminent domain of all or any part of or interest in the Property,
are irrevocably subject and subordinate to the right, title, interest and
claims of Coast in and to such proceeds and awards. Subject to the terms of
Sections 2 and 3 hereof, Xxxxxx shall promptly remit to Coast all such
proceeds and awards that may be received by Sirrom so long as any part of
the Senior Indebtedness remains outstanding.
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c. "Senior Indebtedness". The term "Senior Indebtedness" shall
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mean, collectively all indebtedness and other obligations of Borrower now or
hereafter existing under that certain Loan and Security Agreement of even date
herewith between Borrower and Coast and the Schedule thereto (the "Loan and
Security Agreement"), any promissory notes and all other documents, instruments
and agreements executed by Borrower with or in favor of Coast in connection
therewith, as they may be amended, supplemented, extended, renewed, modified or
restated from time to time, up to a maximum principal amount of $3,500,000 plus
interest, fees, expenses, indemnities or otherwise (in each case whether
incurred or accruing after the initiation of any bankruptcy case, whether or not
allowed).
d. "Subordinated Indebtedness". The term "Subordinated
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Indebtedness" shall mean, collectively, all indebtedness and other obligations
of Borrower to Sirrom under the Subordinated Instrument and any other document,
instrument or agreement, whether the sums represent principal, interest,
dividends, costs, attorneys' fees, charges, or other obligations due or not due,
whether incurred directly or indirectly and whether absolute or contingent.
2. Limited Subordination of Lien on Property. Notwithstanding
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anything to the contrary herein, the lien of the Coast Mortgage on the Property
shall be senior to the lien of the Sirrom Mortgage on the Property only to the
extent of $500,000, plus Coast's costs and expenses of collection and
enforcement (including reasonable attorneys' fees) of the Coast Mortgage.
3. Permitted Payments. Subject to the conditions set forth herein,
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Borrower may pay to Sirrom, and Sirrom may accept or receive and shall not be
required to hold in trust, regularly scheduled payments of principal and
interest on the Subordinated Instrument ("Permitted Payments"); provided, that
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no payment on any of the Subordinated Indebtedness may be made during any
Payment Blockage instituted pursuant to Section 4 of this Agreement. Xxxxxx
agrees that prepayments of the Subordinated Indebtedness or payments resulting
from either the breach of any covenant or warranty contained in the Subordinated
Instrument or the acceleration of any amounts due thereunder shall not be
Permitted Payments for the purpose of this Agreement.
4. Payment Blockages.
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a. Payment Blockage Notices. Upon the occurrence and at any time
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during the continuation of any Default (as herein defined) under the Loan and
Security Agreement, Coast may deliver written notice thereof to Sirrom in the
manner set forth herein (each a "Payment Blockage Notice"), specifying the
Default or Defaults upon which Coast has elected to prohibit payments from
Borrower to Sirrom ("Payment Blockage"). A Payment Blockage shall be in effect
for the purposes hereof for a period of 120 days from the date of delivery or
deemed delivery of any Payment Blockage Notice unless, prior to the expiration
of such 120 day period, the Defaults are cured, if curable, or waived in writing
or the benefits of such Payment Blockage are waived in writing by Coast.
b. "Defaults". For the purposes of this Agreement, "Default"
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shall mean any Event of Default under and as defined in the Loan and Security
Agreement, any default under the Coast Mortgage, any promissory note or any
other document, instrument or agreement evidencing all or any part of the Senior
Indebtedness, or any other failure to pay any portion of the principal of,
premium, if any, or interest on any Senior Indebtedness as and when due and
payable (as a result of maturity, acceleration or otherwise).
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5. Modifications of Indebtedness.
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a. Senior Indebtedness. Coast shall have the right, without
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notice to Sirrom, to amend, supplement or modify the Senior Indebtedness, in any
manner whatsoever, including, without limitation, any extensions or shortening
of time of payments (even if such shortening causes any Senior Indebtedness to
be due on demand or otherwise), any revision of any amortization schedule with
respect thereto, and Sirrom consents and agrees to any such amendment,
supplement or modification.
b. Subordinated Indebtedness. Sirrom understands and agrees that
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neither the Subordinated Instrument nor any other document, instrument or
agreement evidencing all or any part of the Subordinated Indebtedness may be
modified or amended without Coast's prior written consent.
6. Subordinated Indebtedness Owed Only to Sirrom. Sirrom warrants
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and represents that it is the holder of the Subordinated Indebtedness and has
the authority to enter into this Agreement without the consent of any third
party including any financial institution, government agency, Sirrom
Investments, Inc. or otherwise.
Sirrom covenants and agrees that the entire Subordinated Indebtedness
shall continue to be owing only to it.
Sirrom further warrants and represents that the only indebtedness
owing by Borrower to it is the Subordinated Indebtedness; that to the best of
its knowledge as of the date hereof, there is no default or breach with respect
to any of such indebtedness; and, specifically, that nothing herein contained
constitutes a default or breach with respect to any of such indebtedness.
7. Payments Received by Sirrom. Except as provided in Section 2 or 3
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hereof, if any payment, distribution or any collateral proceeds thereof is
received by Xxxxxx from Borrower, or from any enforcement of Sirrom's security
interest or liens, with respect to the Subordinated Indebtedness prior to the
satisfaction in full of all the Senior Indebtedness in cash, Sirrom shall
receive and hold the same in trust as trustee for the benefit of Coast and shall
forthwith deliver such assets to Coast in precisely the form received (except
for the endorsement or assignment by Sirrom where necessary), for application on
any of the Senior Indebtedness, due or not due. In the event of the failure of
Sirrom to make any such endorsement or assignment to Coast, Coast and any of its
officers or agents are hereby irrevocably authorized to make such endorsement or
assignment.
8. Claims in Bankruptcy. In the event of any bankruptcy, assignment
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for the benefit of creditors or similar proceedings against Borrower, Sirrom
shall file all claims it may have against Xxxxxxxx, and shall direct the debtor
in possession or trustee in bankruptcy, as appropriate, to pay over to Coast all
amounts due to Sirrom on account of the Subordinated Indebtedness until the
Senior Indebtedness has been paid in full in cash. If Xxxxxx fails to file such
claims as requested by Coast, Coast may file such claims on Xxxxxx's own behalf.
9. Postpetition Financing; Liens. In the event of any bankruptcy
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case against Borrower or any of the assets of Xxxxxxxx, Sirrom hereby expressly
consents to the granting by Borrower to Coast of senior liens and priorities in
connection with any post-petition financing of Borrower by Coast; provided that
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any senior lien with respect to the Property shall be limited as herein provided
and the aggregate obligations of Borrower pre petition and post petition to
Coast shall not exceed the Senior Indebtedness.
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10. Sale of Assets. In the event of a sale of some or all of the
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assets of Xxxxxxxx, Xxxxxx agrees to release its security interest in such
assets (other than the Property), or any of them, upon the request of Coast;
provided that such assets are sold in a commercially reasonable manner with the
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net proceeds being applied to the Senior Indebtedness, whether or not Sirrom
will receive any proceeds from such sale.
11. Instrument Legends. The faces of the Subordinated Instrument and
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any other instrument evidencing the Subordinated Indebtedness or any portion
thereof will be forthwith inscribed with a legend conspicuously indicating that
payment thereon is subordinated to the claims of Coast pursuant to the terms of
this Agreement, and copies thereof will forthwith be delivered to Coast. Any
instrument evidencing any of the Subordinated Indebtedness or any portion
thereof which is hereafter executed will, on the date thereof, be inscribed with
the aforesaid legend, and copies thereof will be delivered to Coast on the date
of its execution or within 20 business days thereafter.
12. Additional Remedies. If Sirrom violates any of the terms of this
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Agreement, in addition to any remedies in law, equity or otherwise, Coast may
restrain such violation in any court of law and may interpose this Agreement as
a defense in any action by Xxxxxx.
13. Sirrom's Waivers. All of the Senior Indebtedness shall be deemed
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to have been made or incurred in reliance upon this Agreement. Xxxxxx expressly
waives all notice of the acceptance by Coast of the subordination and other
provisions of this Agreement and agrees that Coast has made no warranties or
representations with respect to the legality, validity, enforceability,
collectability or perfection of the Senior Indebtedness or any liens or security
interests held in connection therewith.
Sirrom agrees that Coast shall be entitled to manage and supervise its
loans in accordance with applicable law and its usual practices, modified from
time to time as it deems appropriate under the circumstances, without regard to
the existence of any rights that Sirrom may now or hereafter have in or to any
assets. Coast shall have no liability to Sirrom as a result of any and all
lawful actions which Coast takes or omits to take (including, without
limitation, actions with respect to the creation, perfection or continuation of
its liens or security interest, actions with respect to the occurrence of a
Default, actions with respect to the foreclosure upon, sale, release or failure
to realize upon, any of its collateral, and actions with respect to the
collection of any claim for all or any part of the Senior Indebtedness from any
account debtor or any other party), regardless of whether any such actions or
omissions may affect Coast's rights to deficiency or Xxxxxx's rights of
subrogation or reimbursement.
Coast may, from time to time, enter into agreements and settlements
with Borrower as it may determine, including, without limitation, any
substitution of collateral, any release of any lien or security interest and any
release of Borrower. Sirrom waives any and all rights it may have to require
Coast to marshal assets.
14. Waivers. No waiver shall be deemed to be made by Coast or Sirrom
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of any of their respective rights hereunder unless it is in writing signed by
the waiving party. Each such waiver shall be a waiver only with respect to the
specific instance involved and shall in no way impair the rights of the waiving
party or the obligations of the other party to the waiving party in any other
respect at any other time.
15. Information Concerning Financial Condition. Sirrom hereby
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assumes responsibility for keeping itself informed of the financial condition of
Borrower and of all other
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circumstances bearing upon the risk of nonpayment of the Senior Indebtedness,
and agrees that Coast shall have no duty to advise it of information known to
Coast regarding such condition or any such circumstances. In the event Coast, in
its sole discretion, undertakes, at any time or from time to time, to provide
any such information to Sirrom, Coast shall be under no obligation (i) to
provide any such information to Sirrom on any subsequent occasion, (ii) to
undertake any investigation not a part of its regular business routine, or (iii)
to disclose any information which, pursuant to its commercial finance practices,
Coast wishes to maintain confidential.
16. Third Party Beneficiaries. This Agreement is solely for the
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benefit of Coast, Sirrom and their respective successors and assigns, and
neither Borrower nor any other persons or entities are intended to be third
party beneficiaries hereunder or to have any right, benefit, priority or
interest under, or because of the existence of, or to have any right to enforce,
this Agreement. Coast and Sirrom shall have the right to modify or terminate
this Agreement at any time without notice to or approval of Borrower or any
other person or persons.
Notwithstanding any of the foregoing, if any third party satisfies the
Senior Indebtedness owing to Coast, Coast may assign its rights and remedies
hereunder to such third party, and such third party shall assume Coast's
position for all purposes of this Agreement. If a determination is made in
favor of any third party, including, without limitation, a trustee in
bankruptcy, that Coast's liens or security interests are invalid, avoidable or
unperfected, the subordination set forth in Section 1 hereinabove shall be
deemed null and void, but only to the extent of such invalidity, avoidability
and imperfection.
17. Notices. For the purposes of this Agreement, written notices
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shall be sent by U.S. first class mail, postage prepaid; or by U.S. certified
mail, return receipt requested, postage prepaid; or by personal delivery; or by
facsimile confirmed by the recipient; and addressed to the notified party at its
address set forth below its signature line, or such other address specified by
the party with like notice. Notices shall be deemed received three (3) business
days after deposit in the U.S. mail, if sent by first class mail; upon the date
set forth in the return receipt, if by certified mail; on the day of
confirmation of delivery by the recipient, if by facsimile; or on the day of
transmittal by personal delivery.
18. Costs and Attorneys' Fees. If there is any claim or controversy
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litigated in any lawsuit between any of the parties hereto in connection with
this Agreement, the prevailing parties in the lawsuit shall be entitled to
recover from the other parties their reasonable costs and attorneys' fees.
19. Consent to Jurisdiction; Additional Waivers. Sirrom and Coast
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each consents to the jurisdiction of any state or federal court located within
Los Angeles County, California. Sirrom waives personal service of any and all
process upon it, and consents that all service of process be made in the manner
set forth in Section 17 of this Agreement. Sirrom and Coast each waives, to the
fullest extent each may effectively do so, any defense or objection based upon
forum non conveniens and any defense or objection to venue of any action
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instituted within Los Angeles County, California. EACH OF THE PARTIES HERETO
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY
MATTER ARISING FROM OR RELATED TO THIS AGREEMENT.
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20. Governing Law. This Agreement has been delivered and accepted at
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and shall be deemed to have been made in the State of California, and shall be
interpreted, and the rights and liabilities of the parties hereto determined, in
accordance with the internal laws (as opposed to conflicts of laws provisions)
of the State of California.
21. Successors and Assigns. This Agreement shall be binding upon and
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shall inure to the benefit of the parties' respective successors and assigns,
subject to the provisions hereof.
22. Integrated Agreement. This Agreement sets forth the entire
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understanding of the parties with respect to the within matters and may not be
modified or amended except upon a writing signed by all parties.
23. Authority. Each of the signatories hereto certifies that such
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party has all necessary authority to execute this Agreement.
24. Counterparts. This Agreement may be executed in one or more
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counterparts, each one 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.
"Sirrom"
SIRROM CAPITAL CORPORATION
By:
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Title:
Address for notices:
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000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
"Coast"
COAST BUSINESS CREDIT
By: /s/ Xxxxxx X. Xxxxxx
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Title: Vice President
Address for notices:
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00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Manager
Fax: (000) 000-0000
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24. Counterparts. This Agreement may be executed in one or more
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counterparts, each one 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.
"Sirrom"
SIRROM CAPITAL CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
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Title: VP
Address for notices:
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000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
"Coast"
COAST BUSINESS CREDIT
By:
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Title:
Address for notices:
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00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn.: Manager
Fax: (000) 000-0000
All of the foregoing is consented and agreed to as of
the date set forth above:
"Borrower"
CARDIAC CONTROL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
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Title: President and CEO
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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
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State of California
County of Los Angeles
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On June 11, 1997 before me, Xxxxxxxxx X. Xxxxxx personally
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Date Name, Title of Officer - i.e.
"Xxxx Xxx, Notary Public"
appeared Xxxxxx X. Xxxxxx
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Name(s) of Signer(s)
[_] personally known to me OR [_] proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that his/her/their signature(s) on
the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal. [SEAL OF NOTARY PUBLIC APPEARS HERE]
Signature
/s/ Xxxxxxxxx X. Xxxxxx
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(ATTENTION NOTARY: Although the information requested below is OPTIONAL, it
could prevent fraudulent attachment of this certificate to another document.)
CAPACITY CLAIMED [_] INDIVIDUAL
BY SIGNER:
[_] CORPORATE OFFICER:
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Title(s)
[_] PARTNERS: [_] Limited
[_] General
[_] ATTORNEY-IN-FACT
[_] TRUSTEE(S)
[_] GUARDIAN/CONSERVATOR
[_] OTHER:
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SIGNER IS REPRESENTING:
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Name of Person(s), Entity(ies)
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THIS CERTIFICATE MUST BE ATTACHED TO THE DOCUMENT DESCRIBED BELOW:
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Title of the Document: Intercredit & Subordination Agreement
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Date of Document: 6/11/97 Signer(s) Other Than Name Above:
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Number of Pages: 8 plus 1 all purpose acknowledgment
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CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
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STATE OF TENNESSEE )
) ss.
COUNTY OF DAVIDSON )
On June 11 , 1997, before me, Xxxxxx Xxxxxx
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(Name and Title of Officer)
personally appeared Xxxx Xxxxxxxx
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[X] personally known to me
-or-
[_] proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxx Xxxxxx My Commission expires SEPT. 23, 2000
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Signature of Notary
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OPTIONAL
Though the data below is not required by law, it may prove valuable to persons
relying on the document and could prevent fraudulent reattachment of this form.
CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT
[_] Individual
[_] Corporate Officer
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Title or Type of Document
[_] Partner(s) [_] Limited
[_] General -------------------------------------
[_] Attorney-In-Fact Number of Pages
[_] Trustee(s)
[_] Guardian/Conservator
[_] Other:
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Date of Document
Signer is representing:
Name of Person(s) or Entity(ies)
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Signer(s) Other Than Named Above
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