SECURITY AGREEMENT
THIS SECURITY AGREEMENT (the "Agreement") is made and entered into as of
the twenty-fourth day of March, 1997 by and between CARDIAC CONTROL SYSTEMS,
INC., a Delaware corporation ("Debtor" or "Company") and XXXX X. XXXXXXXXX, an
individual ("Secured Party").
WHEREAS, Debtor is obligated to pay Secured Party the sum of One Hundred
Thousand Dollars ($100,000.00) (the "Obligation") pursuant to a secured
promissory note dated of even date herewith (the "Note"), which Obligation
represents $100,000 advanced to the Debtor by Secured Party.
NOW, THEREFORE, in consideration of the mutual promises made herein between
the parties hereto, and other valuable consideration, the receipt of which is
hereby acknowledged, the parties mutually agree as follows:
1. Recitals. The above recitals are true and correct and are
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incorporated herein by this reference.
2. Grant of Security Interest. To secure the payment of the Note to the
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Secured Party, the Debtor does hereby grant to the Secured Party a security
interest in and to all inventory now owned or hereafter acquired by Debtor,
including without limitation all parts and accessories, and proceeds therefrom
(the "Collateral").
3. Rights Upon Default. Upon the occurrence of an Event of Default, as
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defined in the Note, the Secured Party shall have the rights and remedies of a
secured party under the Florida Uniform Commercial Code and any and all rights
and remedies available to Secured Party under any other applicable laws.
4. Perfection. In order to perfect Secured Party's security interest in
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the Collateral, Debtor shall execute and deliver to Secured Party a UCC-1
Financing Statement which shall be filed with the Florida Secretary of State.
The Debtor shall pay all costs of filing such financing statement.
5. Prior Security Interest. Secured Party acknowledged that the security
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interest of Secured Party is subject to the prior and senior security interest
of Sirrom Capital Corporation.
6. Notice. All notices under this Agreement shall be in writing and
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shall be deemed to have been given (I) in the case of delivery, when delivered
to the address set forth on the signature page to this Agreement, (ii) in the
case of mailing, on the third business day after deposit in the U.S. Mail,
postage prepaid, certified or registered mail and addressed to the other party
at the address set forth on the signature page to this Agreement; and (iii) in
all other cases when the same has been actually received by the other party.
Either party may change its address to which said notices are to be sent by the
giving of notice of such change as set forth herein.
7. Term. This Agreement and the rights and privileges granted hereunder
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to the Secured Party shall continue and remain in full force and effect until
the Obligation has been paid in full to the Secured Party. At such time, this
Agreement, marked "canceled" and the Note, marked "Paid in Full", shall be
returned to Debtor, and the Secured Party shall further execute a termination
statement in regard to any financing statement that is solely related to the
Collateral.
8. Security Agreement. This Agreement has been delivered in the State of
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Florida and shall be construed in accordance and governed by the laws of
Florida.
9. Complete Agreement. This Agreement constitutes the complete agreement
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between the parties in regard to the matters set forth herein and this Agreement
may not be altered, amended or otherwise modified except by a writing signed by
both parties hereto.
IN WITNESS WHEREOF, the Debtor and Secured Party have executed this
Agreement as of the date and year first above written.
"Debtor"
CARDIAC CONTROL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx Xxxxx, President
"Secured Party"
/s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
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SECURED PROMISSORY NOTE
$100,000.00 March 24, 1997
Palm Coast, Florida
FOR VALUE RECEIVED, the undersigned, Cardiac Control Systems, Inc., a
Delaware corporation (the "Maker"), hereby promises to pay to Xxxx X. Xxxxxxxxx,
an individual (the "Payee"), at Payee's principal place of business or such
other place as Payee may from time to time designate in writing, the principal
amount of One Hundred Thousand Dollars and 0/100 ($100,000.00), together with
interest on unpaid principal from time to time outstanding computed from the
date of this Note, at the rate provided herein. The Maker may prepay, at any
time and from time to time, without penalty, all or a portion of said amount.
1. Commencing on the date of this Note, the unpaid principal balance from
time to time outstanding hereunder shall bear interest at the rate of ten
percent (10%) per annum, which interest shall accrue to May 15, 1997 (the
"Maturity Date"), at which time the entire amount of unpaid principal and any
accrued but unpaid interest shall be paid in full.
a. For a term of five (5) years from the Maturity Date, Payee shall
have a right to purchase, in whole or in part and at his option, one (1) share
of restricted common stock of Maker ("Share(s)") at an exercise price of
eighteen cents ($0.18) per Share for every one ($1.00) dollar of interest due
under this Note. Upon receipt by Maker of (i) written notice from Payee of
Payee's exercise of his right to purchase such Shares, delivered to Maker at its
principal place of business, (ii) a representation letter from Payee
satisfactory to Maker containing representations from Payee regarding his
investment intent, acknowledgment that the Shares are restricted and his
accredited investor status, and (iii) clear funds in an amount equal to the
number of Shares to be purchased multiplied by eighteen cents ($0.18), Maker
shall issue the Shares purchased. Payee shall have no other rights to purchase
Shares except as expressly set forth herein, including, without limitation, no
preemptive rights, and no rights to adjustment due to a distribution,
subdivision, reclassification or any other issuance of Shares by Maker or
derivative securities convertible into or exerciseable for Shares. Payee shall
have no right to receive fractional shares. Any amount of interest shall be
rounded down to the nearest whole dollar. Any certificates evidencing Shares
issued pursuant to this Note shall bear a restrictive legend providing
substantially that the Shares may not be transferred by Payee unless registered
under applicable federal and state securities laws or unless an exemption from
such registration is available
2. Notwithstanding the provisions of Section 1 of this Note, from and
after the date of an Event of Default (defined below), the outstanding principal
and accrued and unpaid interest shall together be deemed outstanding principal
and the interest on such principal shall be computed at the rate of three
percent (3%) per month, which interest
shall be payable monthly commencing on the first day of the calendar month
following the date of an Event of Default, and continuing thereafter until the
outstanding principal balance and any accrued and unpaid interest is paid in
full.
3. The entire unpaid amount of this Note, inclusive of principal and
interest, shall become immediately due and payable upon the occurrence of an
Event of Default, as defined below. The term "Event of Default", as used
herein, shall mean the occurrence and continuation of any one or more of the
following events: (a) the failure of Maker to pay in full this Note on the
Maturity Date; (b) the adjudication of Maker as a bankrupt or insolvent, or an
assignment by Maker for the benefit of creditors; (c) the voluntary, or
involuntary, appointment of a receiver, trustee or similar officer for Maker or
for any substantial part of its property or business, and which appointment, if
involuntary, shall have continued for a period of ninety (90) days; (d) the
voluntary, or involuntary, institution of bankruptcy, insolvency,
reorganization, arrangement, dissolution, liquidation or similar proceeding
relating to the Company, and which, if involuntary, shall have continued for as
period of ninety (90) days.
This Note shall be governed by and construed in accordance with the laws of
the State of Florida.
This payment of this Note is secured by a security agreement and UCC-1
financing statement, of even date herewith, on certain personal property of
Maker and being used in the business of Maker.
CARDIAC CONTROL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxx
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Xxxx Xxxxx, President
