EXHIBIT 10.16
PROMISSORY NOTE AND SECURITY AGREEMENT BETWEEN
INTERMEDICS INC. AND THE COMPANY
DATED OCTOBER 20, 1995
22
PROMISSORY NOTE AND SECURITY AGREEMENT
$1,000,000 Palm Coast, Florida October 20, 1995
WHEREAS Intermedics Inc. ("Intermedics") and Cardiac Control Systems,
Inc. ("CCS") are parties to an amended and restated supply contract dated
April 2, 1993 (the "Supply Contract") under which CCS supplies leads to
Intermedics and
WHEREAS Intermedics and CCS are also parties to an amended and restated
license agreement also dated April 2, 1993 (the "License Agreement") and
WHEREAS Intermedics has agreed to loan CCS $1.0 million although
Intermedics is not in the business of making loans and
WHEREAS the purpose of the loan is to assist CCS in its refinancing
efforts and to ensure Intermedics an uninterrupted supply of leads under the
Supply Contract and
WHEREAS CCS will repay the loan by way of certain withholdings which
Intermedics will make from the price of packaged Leads which Intermedics
purchases under the Supply Contract or, under certain circumstances set forth
below, by a reduction of royalty payments under the License Agreement,
NOW THEREFORE FOR VALUE RECEIVED, after date, without grace, in the
manner, on the dates, and in the amounts herein stipulated, CCS (the "Borrower")
promises to pay to the order of Intermedics (the "Holder") the principal sum of
$1 million.
1. The Borrower will pay 24.5% per annum simple interest on the unpaid
and outstanding principal, computed and payable monthly. Principal and accrued
interest will be due and payable as Holder purchases leads.
2. Holder will retain $250 per lead from the price it pays Borrower
under the Supply Contract for the first 4,000 packaged leads ordered after
October 15, 1995, and $90 per packaged lead thereafter until CCS satisfies its
obligations under the promissory note and security agreement. Holder will apply
the amounts so retained first to interest and then to principal.
3. If for any reason Borrower cannot or will not supply leads Holder
under the Supply Contract, then Holder will retain from the royalty payments it
owes under the License Agreement $250 per lead for the first 4,000 leads sold
after such failure or refusal to supply and $90 per lead thereafter until CCS
satisfies its obligations under the promissory note and
-1-
security agreement. Holder will apply the amount so retained first to interest,
then to principal.
4. The attached schedules 1, 2 and 3 illustrate the allocation.
5. The entire unpaid balance of principal and accrued interest, will be due
and payable September 1, 1998. In addition, if a "current competitor of
Intermedics," acquires a greater than 50 percent interest in Borrower, the
entire unpaid balance (principal and accrued interest) will become immediately
due and payable. For purposes of this Promissory Note and Security Agreement,
"current competitor of Intermedics" has the same meaning as set forth in section
4.3 of the License Agreement. Also in addition, if Borrower should fail or
refuse to supply Holder with leads under the Supply Agreement, the entire unpaid
balance (principal and accrued interest) will become immediately due and
payable. If Holder's ability to collect such balance under paragraph 3, above,
appears doubtful, Holder may pursue any other remedy available to it to collect
such balance.
6. Each maker, surety, guarantor, and endorser waives demand, grace,
notice, notice of intent to accelerate, presentment for payment, notice of
acceleration and protest, and agrees and consents that this Promissory Note and
Security Agreement may be renewed and the time of payment extended without
notice and without releasing any of the parties.
7. Borrower will have the right at any time to prepay this Promissory Note
and Security Agreement in whole or in part without penalty.
8. In the event of default in the making of any payment, either of
principal or interest, interest will accrue at the maximum rate permitted by
law.
9. The Borrower hereby agrees to pay all of Holder's expenses incurred
including reasonable attorney's fees, all of which will become a part of the
principal hereof, if this Promissory Note and Security Agreement is placed in
the hands of an attorney for collection or if collected by suit or through any
probate, bankruptcy, or any other legal proceedings.
10. Any deposits or other sums credited by or due from Holder to Borrower,
and any other property of Borrower in the possession of Holder may be applied to
or setoff, without limitation, against the payment of any obligations of
Borrower due and payable under this Promissory Note and Security Agreement.
-2-
11. If, from any circumstance, Holder will receive an amount that would
exceed the highest lawful rate of interest, such amount that would be excessive
interest will be applied to the reduction of the principal amount owing
hereunder or will be refunded but will not be applied to the payment of interest
or deemed interest.
12. Borrower hereby grants to Holder a security interest in the
proceeds of the sale to Holder of packaged leads ordered after October 15, 1995,
to the extent of the amount Holder may retain under paragraph 2 above (whether
such retention is allocated to interest or principal). Borrower further grants
to Holder a security interest in the royalties Holder pays for leads sold after
October 15, 1995, to the extent of the amount Holder may retain under paragraph
3 above (whether such retention is allocated to interest or principal). Such
proceeds and such royalty are hereinafter called the "Collateral".
13. The security interest granted hereunder will secure the payment and
performance of all debts, liabilities and obligations of Borrower to Holder
under this Promissory Note and Security Agreement. Borrower agrees to sign all
documents Holder may reasonably require to perfect the security interest given
under this Agreement.
14. Borrower hereby represents and warrants that Holder will have first
priority in the Collateral pledged as security hereunder. Borrower agrees to
obtain any subordinations or partial subordinations, in a form reasonably
acceptable to Holder, necessary ensure such priority.
15. This Promissory Note and Security Agreement will be governed by and
interpreted under the laws of the State of Florida.
16. No waiver of any right or default by Holder will constitute a
waiver of a subsequent right or default.
17. This Promissory Note and Security Agreement is for the benefit of
Holder and its successors and assigns and may be freely assigned by Holder.
18. The recitals set forth above are hereby incorporated by reference
herein.
Cardiac Control Systems, Inc.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Xxxx X. Xxxxx, President
3
Schedule 1
CARDIAC CONTROL SYSTEMS $1,000,000 LOAN
(Loan Calculations For Illustrative Purposes Only)
Revenue
-----------------------------
Quantity Beginning 300 leads/mth 300 leads/mth Ending
Leads Loan 4000 leads 4000 leads 24.50% Principal Loan
Month Purchased Balance @$250/lead @$90/lead Interest Reduction Balance
----- --------- ------------ ------------- ------------- --------- --------- -----------
1 300 1,000,000.00 75,000.00 20,416.67 54,583.33 945,416.67
2 300 945,416.67 75,000.00 19,302.26 55,697.74 889,718.92
3 300 889,718.92 75,000.00 18,165.09 56,834.91 832,884.02
4 300 832,884.02 75,000.00 17,004.72 57,995.28 774,888.73
5 300 774,888.73 75,000.00 15,820.64 59,179.36 715,709.38
6 300 715,709.38 75,000.00 14,612.40 60,387.60 655,321.78
7 300 655,321.78 75,000.00 13,379.49 61,620.51 593,701.26
8 300 593,701.26 75,000.00 12,121.40 62,878.60 530,822.67
9 300 530,822.67 75,000.00 10,837.63 64,162.37 466,660.30
10 300 466,660.30 75,000.00 9,527.65 65,472.35 401,187.94
11 300 401,187.94 75,000.00 8,190.92 66,809.08 334,378.86
12 300 334,378.86 75,000.00 6,826.90 68,173.10 266,205.77
13 300 266,205.77 75,000.00 5,435.03 69,564.97 196,640.80
14 300 196,640.80 25,000.00 18,000.00 4,014.75 38,985.25 157,655.55
15 300 157,655.55 27,000.00 3,218.80 23,781.20 133,874.35
16 300 133,874.35 27,000.00 2,733.27 24,266.73 109,607.62
17 300 109,607.62 27,000.00 2,237.82 24,762.18 84,845.44
18 300 84,845.44 27,000.00 1,732.26 25,267.74 59,577.70
19 300 59,577.70 27,000.00 1,216.38 25,783.62 33,794.08
20 300 33,794.08 27,000.00 689.96 26,310.04 7,484.04
21 85 7,484.04 7,636.84 152.80 7,484.04 0.00
22
23
24
25
26
27
28
29
30
----- ------------ ---------- ---------- ------------
Totals 6,085 1,000,000.00 187,636.84 187,636.84 1,000,000.00
Schedule 2
CARDIAC CONTROL SYSTEMS $1,000,000 LOAN
(Loan Calculations For Illustrative Purposes Only)
Revenue
-----------------------------
Quantity Beginning 400 leads/mth 400 leads/mth Ending
Leads Loan 4000 leads 4000 leads 24.50% Principal Loan
Month Purchased Balance @$250/lead @$90/lead Interest Reduction Balance
----- --------- ------------ ------------- ------------- --------- --------- -----------
1 400 1,000,000.00 100,000.00 20,416.67 79,583.33 920,416.67
2 400 920,416.67 100,000.00 18,791.84 81,208.16 839,208.51
3 400 839,208.51 100,000.00 17,133.84 82,866.16 756,342.35
4 400 756,342.35 100,000.00 15,441.99 84,558.01 671,784.34
5 400 671,784.34 100,000.00 13,715.60 86,284.40 585,499.93
6 400 585,499.93 100,000.00 11,953.96 88,046.04 497,453.89
7 400 497,453.89 100,000.00 10,156.35 89,843.65 407,610.24
8 400 407,610.24 100,000.00 8,322.04 91,677.96 315,932.28
9 400 315,932.28 100,000.00 6,450.28 93,549.72 222,382.57
10 400 222,382.57 100,000.00 4,540.31 95,459.69 126,922.88
----- ------------ ---------- ------------
Sub Total 4,000 1,000,000.00 126,922.88 873,077.12
11 400 126,922.88 36,000.00 2,591.34 33,408.66 93,514.22
12 400 93,514.22 36,000.00 1,909.25 34,090.75 59,423.47
13 400 59,423.47 36,000.00 1,213.23 34,786.77 24,636.70
14 280 24,636.70 25,139.70 503.00 24,636.70 0.00
15
16
17
18
19
20
----- ---------- ---------- ------------
1,480 133,139.70 6,216.82 126,922.88
21
22
23
24
25
26
27
28
29
30
----- ------------ ---------- ---------- ------------
Totals 5,480 1,000,000.00 133,139.70 133,139.70 1,000,000.00
Schedule 3
CARDIAC CONTROL SYSTEMS $1,000,000 LOAN
(Loan Calculations For Illustrative Purposes Only)
Revenue Variable
-----------------------------
Quantity Beginning # Leads/mth # Leads/mth Ending
Leads Loan 4000 leads 4000 leads 24.50% Principal Loan
Month Purchased Balance @$250/lead @$90/lead Interest Reduction Balance
----- --------- ------------ ------------- ------------- --------- --------- -----------
1 320 1,000,000.00 80,000.00 20,416.67 59,583.33 940,416.67
2 410 940,416.67 102,500.00 19,200.17 83,299.83 857,116.84
3 460 857,116.84 115,000.00 17,499.47 97,500.53 759,616.31
4 300 759,616.31 75,000.00 15,508.83 59,491.17 700,125.14
5 430 700,125.14 107,500.00 14,294.22 93,205.78 606,919.36
6 490 606,919.36 122,500.00 12,391.27 110,108.73 496,810.63
7 380 496,810.63 95,000.00 10,143.22 84,856.78 411,953.85
8 360 411,953.85 90,000.00 8,410.72 81,589.28 330,364.58
9 450 330,364.58 112,500.00 6,744.94 105,755.06 224,609.52
10 400 224,609.52 100,000.00 4,585.78 95,414.22 129,195.30
----- ------------ ---------- ------------
Sub Total 4,000 1,000,000.00 129,195.30 870,804.70
11 490 129,195.30 44,100.00 2,637.74 41,462.26 87,733.03
12 570 87,733.03 51,300.00 1,791.22 49,508.78 38,224.25
13 434 38,224.25 39,004.66 780.41 38,224.25 0.00
14
15
16
17
18
----- ---------- ---------- ------------
Sub Total 1,494 134,404.66 5,209.37 129,195.29
19
20
21
22
23
24
25
26
27
28
29
30
----- ------------ ---------- ---------- ------------
Totals 5,494 1,000,000.00 134,404.66 134,404.66 1,000,000.00
