Document:

Exhibit 10.7

    GUARANTOR
SECURITY AGREEMENT

     

    THIS
SECURITY AGREEMENT (this “Security Agreement”)
is made as of April 15, 2009, by and between MDWERKS GLOBAL HOLDINGS, INC., a
Florida corporation (“Debtor”), and VICIS
CAPITAL MASTER FUND, a sub-trust of Vicis Capital Series Master Trust, a unit
trust organized and existing under the laws of the Cayman Islands (the “Lender”).

     

    
      RECITALS

    

     

    A.          Guarantor
is either a direct or an indirect wholly-owned subsidiary of MDwerks, Inc., a
Delaware corporation (“MDwerks”).

     

    B.           Pursuant
to a Loan and Securities Purchase Agreement of even date herewith by and between
Lender, MDwerks, and Xeni Financial Services, Corp. (together with MDwerks, the
“Borrowers”), a
Florida corporation (as amended or modified from time to time, the “Loan Agreement”), the
Borrowers borrowed up to $3,200,000 from Lender (the “Loan”) evidenced by
the issuance of a Senior Secured Promissory Note in the form attached thereto
(the “Note”).

    

    C.          Guarantor
executed and delivered a guaranty to Lender as provided in the Loan Agreement
(the “Guaranty”).

     

    D.          It
is a condition precedent to the Loan that Debtor execute and deliver to Lender a
security agreement in the form hereof to secure it obligations, covenants and
agreements contained in the Guaranty. This is the Guarantor Security Agreement
referred to in the Loan Agreement.

     

    AGREEMENTS

     

    In
consideration of the Recitals and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Debtor hereby agrees
with Lender as follows:

     

    ARTICLE
I

    DEFINITIONS

     

    Capitalized
terms used herein but not defined herein shall have the respective meanings
given to them in the Loan Agreement. Terms not otherwise defined herein and
defined in the UCC shall have, unless the context otherwise requires, the
meanings set forth in the UCC as in effect on the date hereof (except that the
term “document” shall only have the meaning set forth in the UCC for purposes of
clause (d) of the definition of Collateral). When used in this Security
Agreement, the following terms shall have the following meanings:

     

    Accounts. “Accounts”
shall mean all accounts, including without limitation all rights to payment for
goods sold or services rendered that are not evidenced by instruments or chattel
paper, whether or not earned by performance, and any associated rights
thereto.

     

    Collateral.
“Collateral” shall mean all personal properties and assets of Debtor, wherever
located, whether tangible or intangible, and whether now owned or hereafter
acquired or arising, including without limitation:

     

    (a)           all
Inventory and documents relating to Inventory;

     

    (b)           all
Accounts and documents relating to Accounts;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)           all
equipment, fixtures and other goods, including without limitation machinery,
furniture and trade fixtures;

     

    (d)           all
general intangibles (including without limitation payment intangibles, software,
customer lists, sales records and other business records, contract rights,
causes of action, and licenses, permits, franchises, patents, copyrights,
trademarks, and goodwill of the business in which the trademark is used, trade
names, or rights to any of the foregoing), promissory notes, contract rights,
chattel paper, documents, letter-of-credit rights and instruments;

     

    (e)           (i)
all deposit accounts and (ii) all cash and cash equivalents deposited with or
delivered to Lender from time to time and pledged as additional security for the
Obligations;

     

    (f)           all
investment property;

     

    (g)           all
commercial tort claims; and

     

    (h)           all
additions and accessions to, all spare and repair parts, special tools,
equipment and replacements for, and all supporting obligations, proceeds and
products of, any and all of the foregoing assets described in Sections (a)
through (g), inclusive, above.

     

    Event of Default.
“Event of Default” shall have the meaning specified in the Loan
Agreement.

     

    Inventory.
“Inventory” shall mean all inventory, including without limitation all goods
held for sale, lease or demonstration or to be furnished under contracts of
service, goods leased to others, trade-ins and repossessions, raw materials,
work in process and materials used or consumed in Debtor’s business, including,
without limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by Debtor, and shall include such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by Debtor.

      

    Obligations.
“Obligations” shall mean all debts, liabilities, obligations, covenants and
agreements of Debtor arising from or contained in the Guaranty.

     

    Person. “Person”
shall mean and include an individual, partnership, corporation, trust,
unincorporated association and any unit, department or agency of
government.

     

    Security Agreement.
“Security Agreement” shall mean this Guarantor Security Agreement, together with
the schedules attached hereto, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms
hereof.

     

    Security Interest.
“Security Interest” shall mean the security interest of Lender in the Collateral
granted by Debtor pursuant to this Security Agreement.

     

    UCC. “UCC” shall mean
the Uniform Commercial Code as adopted in the State of New York and in effect
from time to time.

     

    ARTICLE
II

    THE
SECURITY INTEREST; REPRESENTATIONS AND WARRANTIES

     

    2.1          The Security
Interest. To secure the full and complete payment and performance when
due (whether at stated maturity, by acceleration, or otherwise) of each of the
Obligations, Debtor hereby grants to Lender a security interest in all of
Debtor’s right, title and interest in and to the Collateral.

     

    
      
         

      

      
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    2.2         Representations and
Warranties. Debtor hereby represents and warrants to Lender
that:

     

    (a)           The
records of Debtor with respect to the Collateral are presently located only at
the address(es) listed on Schedule 1 attached
to this Security Agreement.

     

    (b)           The
Collateral is presently located only at the location(s) listed on Schedule 1
attached to this Security Agreement.

     

    (c)           The
chief executive office and chief place(s) of business of Debtor are presently
located at the address(es) listed on Schedule 1 to this
Security Agreement.

     

    (d)           Debtor
is a Florida corporation and its exact legal name is set forth in the definition
of “Debtor” in the introductory paragraph of this Security Agreement. The
organization identification number of Debtor is listed on Schedule 1 to this
Security Agreement.

     

    (e)           All
of Debtor’s present patents and trademarks, if any, including those that have
been registered with, or for which an application for registration has been
filed in, the United States Patent and Trademark Office are listed on Schedule 2 attached
to this Security Agreement. All of Debtor’s present copyrights registered with,
or for which an application for registration has been filed in, the United
States Copyright Office or any similar office or agency of any state or any
other country are listed on Schedule
2  attached to this Security Agreement.

     

    (f)           Debtor
has good title to, or valid leasehold interest in, all of the Collateral, and
there are no Liens on any of the Collateral except Permitted Liens.

     

    2.3         Authorization to File
Financing Statements. Debtor hereby irrevocably authorizes
Lender at any time and from time to time to file in any UCC jurisdiction any
initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of Debtor or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC or such other jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency of filing office
acceptance of any financing statement or amendment, including whether Debtor is
an organization, the type of organization and any state or federal organization
identification number issued to Debtor. Debtor agrees to furnish any such
information to Lender promptly upon written request.

     

    ARTICLE
III 

    AGREEMENTS
OF DEBTOR

     

    From and
after the date of this Security Agreement, and until all of the Obligations are
paid in full, Debtor shall:

     

    3.1         Sale of
Collateral.  Not sell, lease, transfer or otherwise dispose of
Collateral or any interest therein, except as provided for in the Loan Agreement
and for sales of Inventory in the ordinary course of business.

     

    3.2         Maintenance of Security
Interest.  

     

    (a)           At
the expense of Debtor, defend the Security Interest against any and all claims
of any Person adverse to Lender (but only to the extent the claim of such Person
is subordinate or junior to the Security Interest of Lender) and take such
action and execute such financing statements and other documents as Lender may
from time to time reasonably request in writing to maintain the perfected status
of the Security Interest. Debtor shall not further encumber or grant a security
interest in any of the Collateral except as provided for in the Loan
Agreement.

     

    
      
         

      

      
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    (b)           Debtor
further agrees to take any other commercially reasonable action reasonably
requested in writing by Lender if necessary to ensure the attachment, perfection
and priority of, and the ability of Lender to enforce its security interest in
any and all of the Collateral including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC, to the extent, if any, that Debtor’s signature
thereon is required therefor, (ii) complying with any provision of any
statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Lender to enforce, its security interest in such
Collateral, (iii) taking all actions required by any earlier versions of the UCC
(to the extent applicable) or by other law, as applicable in any relevant UCC
jurisdiction, or by other law as applicable in any foreign jurisdiction, (iv)
obtaining waivers from landlords where any material portion of the tangible
Collateral is located in form and substance reasonably satisfactory to Lender,
and (v) executing such documents and cooperating with the Lender and any
third-party to allow Lender to obtain control of any Collateral consisting of
deposit accounts or investment property.

     

    3.3         Locations. Give
Lender at least thirty (30) days prior written notice of Debtor’s intention to
relocate any of the Collateral (other than Inventory in transit) or any of the
records relating to the Collateral from the locations listed on Schedule 1 attached
to this Security Agreement, in which event Schedule 1 shall be
deemed amended to include the new location. Any additional filings or refilings
requested in writing by Lender as a result of any such relocation in order to
maintain the Security Interest in such Collateral shall be at Debtor’s
expense.

     

    3.4         Insurance. Maintain
insurance (including, without limitation, commercial general liability and
property insurance) with respect to the Collateral consisting of tangible
personal property in such amounts, against such risks, in such form and with
responsible and reputable insurance companies or associations as is required by
any governmental authority having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in
similar businesses similarly situated. If requested in writing by Lender, and if
the existing third-party loss payee agrees to relinquish its position as loss
payee, Debtor will obtain lender’s loss payable endorsements on applicable
insurance policies in favor of Lender and will provide to Lender certificates of
such insurance or copies thereof. If such request is made, and if the existing
third-party loss payee agrees to relinquish its position as loss payee, Debtor
shall use commercially reasonable efforts to cause each insurer to agree, by
endorsement on the policy or policies or certificates of insurance issued by it
or by independent instrument furnished to Lender, that such insurer will give
thirty (30) days written notice to Lender before such policy will be altered or
canceled. No settlement of any insurance claim shall be made without Lender’s
prior consent, which consent will not be unreasonably withheld, conditioned or
delayed. In the event of any insured loss, Debtor shall promptly notify Lender
thereof in writing, and, after an Event of Default shall have occurred and be
continuing, Debtor hereby authorizes and directs any insurer concerned to make
payment of such loss directly to Lender as its interest may appear. Lender is
authorized, in the name and on behalf of Debtor, to make proof of loss and to
adjust, compromise and collect, in such manner and amounts as it reasonably
shall determine, all claims under all policies; and Debtor agrees to sign, on
written demand of Lender, all receipts, vouchers, releases and other instruments
which may be necessary in aid of this authorization. After an Event of Default
shall have occurred and be continuing, the proceeds of any insurance from loss,
theft, or damage to the Collateral shall be held in a segregated account
established by Lender and disbursed and applied at the discretion of Lender,
either in reduction of the Obligations or applied toward the repair, restoration
or replacement of the Collateral.

     

    
      
         

      

      
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    3.5         Name; Legal Status.
(a) Without providing at least 30 days prior written notice to Lender, Debtor
will not change its name, its place of business or, if more than one, chief
executive office, or its mailing address or organizational identification number
if it has one, (b) if Debtor does not have an organizational identification
number and later obtains one, Debtor shall forthwith notify Lender of such
organizational identification number, and (c) Debtor will not change its type of
organization or jurisdiction of organization.

     

    ARTICLE
IV 

    RIGHTS
AND REMEDIES

     

    4.1         Right to Cure. In
case of failure by Debtor after receipt of written notice from Lender to procure
or maintain insurance, or to pay any fees, assessments, charges or taxes
(subject to Debtor’s right to contest in good faith, such assessments, charges
or taxes) arising with respect to the Collateral, Lender shall have the right,
but shall not be obligated, to effect such insurance or pay such fees,
assessments, charges or taxes, as the case may be, and, in that event, the cost
thereof shall be payable by Debtor to Lender immediately upon demand, together
with interest at an annual rate of 8% from the date of disbursement by Lender to
the date of payment by Debtor. If Lender effects any insurance on behalf of
Debtor, Debtor thereafter may cancel such insurance so effected after providing
Lender with evidence that Debtor or another secured party having cure rights
similar to those set forth in this Section 4.1 has obtained insurance as
required by this Security Agreement..

     

    4.2         Rights of Parties.
Upon the occurrence and during the continuance of an Event of Default, in
addition to all the rights and remedies provided in the Transaction Documents or
in Article 9 of the UCC and any other applicable law, Lender may (but is
under no obligation so to do):

     

    (a)           require
Debtor to assemble the Collateral at a place designated by Lender, which is
reasonably convenient to the parties; and

     

    (b)           take
possession of all Collateral and of Debtor’s records pertaining to all
Collateral that are necessary to properly administer and control the Collateral
or the handling and collection of Collateral, and sell, lease or otherwise
dispose of the Collateral in a commercially reasonable manner in whole or in
part, at public or private sale, on or off the premises of Debtor;
and

     

    (c)           collect
any and all money due or to become due and enforce in Debtor’s name all rights
with respect to the Collateral; and

     

    (d)           settle,
adjust or compromise any dispute with respect to any Account; and

     

    (e)            receive
and open mail addressed to Debtor; and

     

    (f)            on
behalf of Debtor, endorse checks, notes, drafts, money orders, instruments or
other evidences of payment.

     

    4.3         Power of Attorney.
Upon the occurrence and during the continuance of an Event of Default, Debtor
does hereby constitute and appoint Lender as Debtor’s true and lawful attorney
with full power of substitution for Debtor in Debtor’s name, place and stead for
the purposes of performing any obligation of Debtor under this Security
Agreement and taking any action and executing any instrument which Lender may
deem necessary to perform any obligation of Debtor under this Security
Agreement, which appointment is irrevocable and coupled with an interest, and
shall not terminate until the Obligations are paid in full.

     

    
      
         

      

      
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    4.4         Right to Collect
Accounts. Upon the occurrence and during the continuance of an Event of
Default, and without limiting Debtor’s obligations under the Transaction
Documents: (a) Debtor authorizes Lender to notify any and all debtors on the
Accounts to make payment directly to Lender (or to such place as Lender may
direct); (b) Debtor agrees, on written notice from Lender, to deliver to Lender
promptly after receipt thereof, in the form in which received (together with all
necessary endorsements), all payments received by Debtor on account of any
Account; and (c) Lender may, at its option, apply all such payments against the
Obligations or remit all or part of such payments to Debtor.

     

    4.5         Reasonable Notice.
Written notice, when required by law, sent in accordance with the provisions of
Section 12.6 of the Loan Agreement and given at least ten (10) business days
(counting the day of sending) before the date of a proposed disposition of the
Collateral shall be reasonable notice.

     

    4.6         Limitation on Duties
Regarding Collateral.  The sole duty of Lender with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as Lender deals with similar property for its own account.
Neither Lender nor any of its directors, officers, employees or agents, shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of Debtor or otherwise.

     

    4.7         Lock Box; Collateral
Account. This Section 4.7 shall be effective only upon the occurrence and
during the continuance of an Event of Default. If Lender so requests in writing,
Debtor will direct each of its debtors on the Accounts to make payments due
under the relevant Account or chattel paper directly to a special lock box to be
under the control of Lender. Debtor hereby authorizes and directs Lender to
deposit into a special collateral account to be established and maintained by
Lender all checks, drafts and cash payments received in said lock box. All
deposits in said collateral account shall constitute proceeds of Collateral and
shall not constitute payment of any Obligation until so applied. At its option,
Lender may, at any time, apply finally collected funds on deposit in said
collateral account to the payment of the Obligations, in the order of
application set forth in Section 4.8, or permit Debtor to withdraw all or any
part of the balance on deposit in said collateral account. If a collateral
account is so established, Debtor agrees that it will promptly deliver to
Lender, for deposit into said collateral account, all payments on Accounts and
chattel paper received by it. All such payments shall be delivered to Lender in
the form received (except for Debtor’s endorsement where necessary). Until so
deposited, all payments on Accounts and chattel paper received by Debtor shall
be held in trust by Debtor for and as the property of Lender and shall not be
commingled with any funds or property of Debtor.

     

    4.8         Application of
Proceeds. Lender shall apply the proceeds resulting from any sale or
disposition of the Collateral in the following order:

     

    (a)           to
the reasonable costs of any sale or other disposition;

     

    (b)           to
the reasonable expenses incurred by Lender in connection with any sale or other
disposition, including attorneys’ fees;

     

    (c)           to
the payment of the Obligations then due and owing in any order selected by
Lender in a commercially reasonable manner; and

     

    (d)           to
Debtor.

     

    
      
         

      

      
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    4.9         Other Remedies. No
remedy herein conferred upon Lender is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Security Agreement and the
Transaction Documents now or hereafter existing at law or in equity or by
statute or otherwise. No failure or delay on the part of Lender in exercising
any right or remedy hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude other or further
exercise thereof or the exercise of any other right or remedy.

     

    ARTICLE
V

    MISCELLANEOUS

    

    5.1         Expenses and Attorneys’
Fees. Debtor shall pay all reasonable fees and expenses incurred by
Lender, including the reasonable fees of counsel, in connection with the
preparation, administration and amendment of this Security Agreement and the
protection, administration and enforcement of the rights of Lender under this
Security Agreement or with respect to the Collateral, including without
limitation the protection and enforcement of such rights in any
bankruptcy.

     

    5.2         Setoff. Debtor agrees
that, upon the occurrence and during the continuance of an Event of Default,
Lender shall have all rights of setoff and bankers’ lien provided by applicable
law.

     

    5.3         Assignability;
Successors. Debtor’s rights and liabilities under this Security Agreement
are not assignable or delegable, in whole or in part, without the prior written
consent of Lender. The provisions of this Security Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the
parties.

     

    5.4         Survival. All
agreements, representations and warranties made in this Security Agreement or in
any document delivered pursuant to this Security Agreement shall survive the
execution and delivery of this Security Agreement, and the delivery of any such
document.

     

    5.5         Governing Law. This
Security Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York applicable to contracts made
and wholly performed within such state.

     

    5.6         Execution; Headings.
This Security Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof. The article and section headings in this Security
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.

     

    5.7         Notices. All notices,
requests and demands to or upon Lender or Debtor (to be delivered care of
Borrowers) shall be delivered in the manner set forth in Section 12.6 of the
Loan Agreement.

     

    5.8         Amendment. No
amendment of this Security Agreement shall be effective unless in writing and
signed by Debtor and Lender.

     

    5.9         Severability. Any
provision of this Security Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Security Agreement in such jurisdiction or affecting the
validity or enforceability of any provision in any other
jurisdiction.

     

    
      
         

      

      
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    5.10       
WAIVER OF RIGHT TO
JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF ANY CONTROVERSY THAT MAY ARISE UNDER THIS SECURITY
AGREEMENT.

     

    5.11       
Submission to
Jurisdiction.

     

    (a)           EACH
OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED
THE STATE AND COUNTY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT. EACH OF THE PARTIES TO THIS
SECURITY AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

     

    (b)           EACH
OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS
BY NOTICE IN THE MANNER SPECIFIED IN SECTION 12.6 OF THE LOAN AGREEMENT AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION SUCH
PARTY MAY NOW OR HEREAFTER HAVE TO SERVICE OF PROCESS IN SUCH MANNER. DEBTOR
AGREES THAT SERVICE OF PROCESS MAY BE DELIVERED CARE OF BORROWERS.

     

    [Signature page
follows]

     

    
      
         

      

      
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    IN
WITNESS WHEREOF, this Guarantor Security Agreement has been executed as of the
day and year first above written.

     

    
      
        
          	 
      	
                  MDWERKS GLOBAL HOLDINGS,
      INC. 

                
	 	 
	 
      	
                  By:  

                	
                    /s/
      David M. Barnes

                
	 
      	 
      	
                  Name:  

                	
                  David
      M. Barnes

                
	 
      	 
      	
                  Title:  

                	
                  Chief
      Executive Officer

                

        

      

    

    

    
      
        	 
      	
                VICIS
      CAPITAL MASTER FUND

              
	 
      	 
      
	 
      	
                By:  Vicis
      Capital, LLC

              
	 
      	 
      
	 
      	
                By:  

              	
                  /s/
      Chris Phillips

              
	 
      	 
      	
                Name:  

              	
                Chris
      Phillips

              
	 
      	 
      	
                Title:  

              	
                Managing
      Director

              

      

    

    

    [Signature page to Guarantor Security
Agreement - MGHI]

    
      
         

      

      
        - 9
-Exhibit 10.8

    GUARANTOR
SECURITY AGREEMENT

     

    THIS
SECURITY AGREEMENT (this “Security Agreement”)
is made as of April 15, 2009, by and between XENI MEDICAL SYSTEMS, INC., a
Delaware corporation (“Debtor”), and VICIS
CAPITAL MASTER FUND, a sub-trust of Vicis Capital Series Master Trust, a unit
trust organized and existing under the laws of the Cayman Islands (the “Lender”).

     

    
      RECITALS

    

     

    A.          Guarantor
is either a direct or an indirect wholly-owned subsidiary of MDwerks, Inc., a
Delaware corporation (“MDwerks”).

     

    B.           Pursuant
to a Loan and Securities Purchase Agreement of even date herewith by and between
Lender, MDwerks, and Xeni Financial Services, Corp. (together with MDwerks, the
“Borrowers”), a
Florida corporation (as amended or modified from time to time, the “Loan Agreement”), the
Borrowers borrowed up to $3,200,000 from Lender (the “Loan”) evidenced by
the issuance of a Senior Secured Promissory Note in the form attached thereto
(the “Note”).

    

    C.          Guarantor
executed and delivered a guaranty to Lender as provided in the Loan Agreement
(the “Guaranty”).

     

    D.          It
is a condition precedent to the Loan that Debtor execute and deliver to Lender a
security agreement in the form hereof to secure it obligations, covenants and
agreements contained in the Guaranty. This is the Guarantor Security Agreement
referred to in the Loan Agreement.

     

    AGREEMENTS

     

    In
consideration of the Recitals and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Debtor hereby agrees
with Lender as follows:

     

    ARTICLE
I

    DEFINITIONS

     

    Capitalized
terms used herein but not defined herein shall have the respective meanings
given to them in the Loan Agreement. Terms not otherwise defined herein and
defined in the UCC shall have, unless the context otherwise requires, the
meanings set forth in the UCC as in effect on the date hereof (except that the
term “document” shall only have the meaning set forth in the UCC for purposes of
clause (d) of the definition of Collateral). When used in this Security
Agreement, the following terms shall have the following meanings:

     

    Accounts. “Accounts”
shall mean all accounts, including without limitation all rights to payment for
goods sold or services rendered that are not evidenced by instruments or chattel
paper, whether or not earned by performance, and any associated rights
thereto.

     

    Collateral.
“Collateral” shall mean all personal properties and assets of Debtor, wherever
located, whether tangible or intangible, and whether now owned or hereafter
acquired or arising, including without limitation:

     

    (a)           all
Inventory and documents relating to Inventory;

     

    (b)           all
Accounts and documents relating to Accounts;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c)           all
equipment, fixtures and other goods, including without limitation machinery,
furniture and trade fixtures;

     

    (d)           all
general intangibles (including without limitation payment intangibles, software,
customer lists, sales records and other business records, contract rights,
causes of action, and licenses, permits, franchises, patents, copyrights,
trademarks, and goodwill of the business in which the trademark is used, trade
names, or rights to any of the foregoing), promissory notes, contract rights,
chattel paper, documents, letter-of-credit rights and instruments;

     

    (e)           (i)
all deposit accounts and (ii) all cash and cash equivalents deposited with or
delivered to Lender from time to time and pledged as additional security for the
Obligations;

     

    (f)           all
investment property;

     

    (g)           all
commercial tort claims; and

     

    (h)           all
additions and accessions to, all spare and repair parts, special tools,
equipment and replacements for, and all supporting obligations, proceeds and
products of, any and all of the foregoing assets described in Sections (a)
through (g), inclusive, above.

     

    Event of Default.
“Event of Default” shall have the meaning specified in the Loan
Agreement.

     

    Inventory.
“Inventory” shall mean all inventory, including without limitation all goods
held for sale, lease or demonstration or to be furnished under contracts of
service, goods leased to others, trade-ins and repossessions, raw materials,
work in process and materials used or consumed in Debtor’s business, including,
without limitation, goods in transit, wheresoever located, whether now owned or
hereafter acquired by Debtor, and shall include such property the sale or other
disposition of which has given rise to Accounts and which has been returned to
or repossessed or stopped in transit by Debtor.

      

    Obligations.
“Obligations” shall mean all debts, liabilities, obligations, covenants and
agreements of Debtor arising from or contained in the Guaranty.

     

    Person. “Person”
shall mean and include an individual, partnership, corporation, trust,
unincorporated association and any unit, department or agency of
government.

     

    Security Agreement.
“Security Agreement” shall mean this Guarantor Security Agreement, together with
the schedules attached hereto, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms
hereof.

     

    Security Interest.
“Security Interest” shall mean the security interest of Lender in the Collateral
granted by Debtor pursuant to this Security Agreement.

     

    UCC. “UCC” shall mean
the Uniform Commercial Code as adopted in the State of New York and in effect
from time to time.

     

    ARTICLE
II

    THE
SECURITY INTEREST; REPRESENTATIONS AND WARRANTIES

     

    2.1          The Security
Interest. To secure the full and complete payment and performance when
due (whether at stated maturity, by acceleration, or otherwise) of each of the
Obligations, Debtor hereby grants to Lender a security interest in all of
Debtor’s right, title and interest in and to the Collateral.

     

    
      
         

      

      
        - 2
-

        
          

        

      

      
         

      

    

    2.2         Representations and
Warranties. Debtor hereby represents and warrants to Lender
that:

     

    (a)           The
records of Debtor with respect to the Collateral are presently located only at
the address(es) listed on Schedule 1 attached
to this Security Agreement.

     

    (b)           The
Collateral is presently located only at the location(s) listed on Schedule 1
attached to this Security Agreement.

     

    (c)           The
chief executive office and chief place(s) of business of Debtor are presently
located at the address(es) listed on Schedule 1 to this
Security Agreement.

     

    (d)           Debtor
is a Delaware corporation and its exact legal name is set forth in the
definition of “Debtor” in the introductory paragraph of this Security Agreement.
The organization identification number of Debtor is listed on Schedule 1 to this
Security Agreement.

     

    (e)           All
of Debtor’s present patents and trademarks, if any, including those that have
been registered with, or for which an application for registration has been
filed in, the United States Patent and Trademark Office are listed on Schedule 2 attached
to this Security Agreement. All of Debtor’s present copyrights registered with,
or for which an application for registration has been filed in, the United
States Copyright Office or any similar office or agency of any state or any
other country are listed on Schedule
2  attached to this Security Agreement.

     

    (f)           Debtor
has good title to, or valid leasehold interest in, all of the Collateral, and
there are no Liens on any of the Collateral except Permitted Liens.

     

    2.3         Authorization to File
Financing Statements. Debtor hereby irrevocably authorizes
Lender at any time and from time to time to file in any UCC jurisdiction any
initial financing statements and amendments thereto that (a) indicate the
Collateral (i) as all assets of Debtor or words of similar effect, regardless of
whether any particular asset comprised in the Collateral falls within the scope
of Article 9 of the UCC or such other jurisdiction, or (ii) as being of an equal
or lesser scope or with greater detail, and (b) contain any other information
required by part 5 of Article 9 of the UCC for the sufficiency of filing office
acceptance of any financing statement or amendment, including whether Debtor is
an organization, the type of organization and any state or federal organization
identification number issued to Debtor. Debtor agrees to furnish any such
information to Lender promptly upon written request.

     

    ARTICLE
III 

    AGREEMENTS
OF DEBTOR

     

    From and
after the date of this Security Agreement, and until all of the Obligations are
paid in full, Debtor shall:

     

    3.1         Sale of
Collateral.  Not sell, lease, transfer or otherwise dispose of
Collateral or any interest therein, except as provided for in the Loan Agreement
and for sales of Inventory in the ordinary course of business.

     

    3.2          Maintenance of Security
Interest.  

     

    (a)           At
the expense of Debtor, defend the Security Interest against any and all claims
of any Person adverse to Lender (but only to the extent the claim of such Person
is subordinate or junior to the Security Interest of Lender) and take such
action and execute such financing statements and other documents as Lender may
from time to time reasonably request in writing to maintain the perfected status
of the Security Interest. Debtor shall not further encumber or grant a security
interest in any of the Collateral except as provided for in the Loan
Agreement.

     

    
      
         

      

      
        - 3
-

        
          

        

      

      
         

      

    

    (b)           Debtor
further agrees to take any other commercially reasonable action reasonably
requested in writing by Lender if necessary to ensure the attachment, perfection
and priority of, and the ability of Lender to enforce its security interest in
any and all of the Collateral including, without limitation, (i) executing,
delivering and, where appropriate, filing financing statements and amendments
relating thereto under the UCC, to the extent, if any, that Debtor’s signature
thereon is required therefor, (ii) complying with any provision of any
statute, regulation or treaty of the United States as to any Collateral if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Lender to enforce, its security interest in such
Collateral, (iii) taking all actions required by any earlier versions of the UCC
(to the extent applicable) or by other law, as applicable in any relevant UCC
jurisdiction, or by other law as applicable in any foreign jurisdiction, (iv)
obtaining waivers from landlords where any material portion of the tangible
Collateral is located in form and substance reasonably satisfactory to Lender,
and (v) executing such documents and cooperating with the Lender and any
third-party to allow Lender to obtain control of any Collateral consisting of
deposit accounts or investment property.

     

    3.3         Locations. Give
Lender at least thirty (30) days prior written notice of Debtor’s intention to
relocate any of the Collateral (other than Inventory in transit) or any of the
records relating to the Collateral from the locations listed on Schedule 1 attached
to this Security Agreement, in which event Schedule 1 shall be
deemed amended to include the new location. Any additional filings or refilings
requested in writing by Lender as a result of any such relocation in order to
maintain the Security Interest in such Collateral shall be at Debtor’s
expense.

     

    3.4         Insurance. Maintain
insurance (including, without limitation, commercial general liability and
property insurance) with respect to the Collateral consisting of tangible
personal property in such amounts, against such risks, in such form and with
responsible and reputable insurance companies or associations as is required by
any governmental authority having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in
similar businesses similarly situated. If requested in writing by Lender, and if
the existing third-party loss payee agrees to relinquish its position as loss
payee, Debtor will obtain lender’s loss payable endorsements on applicable
insurance policies in favor of Lender and will provide to Lender certificates of
such insurance or copies thereof. If such request is made, and if the existing
third-party loss payee agrees to relinquish its position as loss payee, Debtor
shall use commercially reasonable efforts to cause each insurer to agree, by
endorsement on the policy or policies or certificates of insurance issued by it
or by independent instrument furnished to Lender, that such insurer will give
thirty (30) days written notice to Lender before such policy will be altered or
canceled. No settlement of any insurance claim shall be made without Lender’s
prior consent, which consent will not be unreasonably withheld, conditioned or
delayed. In the event of any insured loss, Debtor shall promptly notify Lender
thereof in writing, and, after an Event of Default shall have occurred and be
continuing, Debtor hereby authorizes and directs any insurer concerned to make
payment of such loss directly to Lender as its interest may appear. Lender is
authorized, in the name and on behalf of Debtor, to make proof of loss and to
adjust, compromise and collect, in such manner and amounts as it reasonably
shall determine, all claims under all policies; and Debtor agrees to sign, on
written demand of Lender, all receipts, vouchers, releases and other instruments
which may be necessary in aid of this authorization. After an Event of Default
shall have occurred and be continuing, the proceeds of any insurance from loss,
theft, or damage to the Collateral shall be held in a segregated account
established by Lender and disbursed and applied at the discretion of Lender,
either in reduction of the Obligations or applied toward the repair, restoration
or replacement of the Collateral.

     

    
      
         

      

      
        - 4
-

        
          

        

      

      
         

      

    

    3.5         Name; Legal Status.
(a) Without providing at least 30 days prior written notice to Lender, Debtor
will not change its name, its place of business or, if more than one, chief
executive office, or its mailing address or organizational identification number
if it has one, (b) if Debtor does not have an organizational identification
number and later obtains one, Debtor shall forthwith notify Lender of such
organizational identification number, and (c) Debtor will not change its type of
organization or jurisdiction of organization.

     

    ARTICLE
IV 

    RIGHTS
AND REMEDIES

     

    4.1         Right to Cure. In
case of failure by Debtor after receipt of written notice from Lender to procure
or maintain insurance, or to pay any fees, assessments, charges or taxes
(subject to Debtor’s right to contest in good faith, such assessments, charges
or taxes) arising with respect to the Collateral, Lender shall have the right,
but shall not be obligated, to effect such insurance or pay such fees,
assessments, charges or taxes, as the case may be, and, in that event, the cost
thereof shall be payable by Debtor to Lender immediately upon demand, together
with interest at an annual rate of 8% from the date of disbursement by Lender to
the date of payment by Debtor. If Lender effects any insurance on behalf of
Debtor, Debtor thereafter may cancel such insurance so effected after providing
Lender with evidence that Debtor or another secured party having cure rights
similar to those set forth in this Section 4.1 has obtained insurance as
required by this Security Agreement..

     

    4.2         Rights of Parties.
Upon the occurrence and during the continuance of an Event of Default, in
addition to all the rights and remedies provided in the Transaction Documents or
in Article 9 of the UCC and any other applicable law, Lender may (but is
under no obligation so to do):

     

    (a)           require
Debtor to assemble the Collateral at a place designated by Lender, which is
reasonably convenient to the parties; and

     

    (b)           take
possession of all Collateral and of Debtor’s records pertaining to all
Collateral that are necessary to properly administer and control the Collateral
or the handling and collection of Collateral, and sell, lease or otherwise
dispose of the Collateral in a commercially reasonable manner in whole or in
part, at public or private sale, on or off the premises of Debtor;
and

     

    (c)           collect
any and all money due or to become due and enforce in Debtor’s name all rights
with respect to the Collateral; and

     

    (d)           settle,
adjust or compromise any dispute with respect to any Account; and

     

    (e)            receive
and open mail addressed to Debtor; and

     

    (f)            on
behalf of Debtor, endorse checks, notes, drafts, money orders, instruments or
other evidences of payment.

     

    4.3           Power of Attorney.
Upon the occurrence and during the continuance of an Event of Default, Debtor
does hereby constitute and appoint Lender as Debtor’s true and lawful attorney
with full power of substitution for Debtor in Debtor’s name, place and stead for
the purposes of performing any obligation of Debtor under this Security
Agreement and taking any action and executing any instrument which Lender may
deem necessary to perform any obligation of Debtor under this Security
Agreement, which appointment is irrevocable and coupled with an interest, and
shall not terminate until the Obligations are paid in full.

     

    
      
         

      

      
        - 5
-

        
          

        

      

      
         

      

    

    4.4         Right to Collect
Accounts. Upon the occurrence and during the continuance of an Event of
Default, and without limiting Debtor’s obligations under the Transaction
Documents: (a) Debtor authorizes Lender to notify any and all debtors on the
Accounts to make payment directly to Lender (or to such place as Lender may
direct); (b) Debtor agrees, on written notice from Lender, to deliver to Lender
promptly after receipt thereof, in the form in which received (together with all
necessary endorsements), all payments received by Debtor on account of any
Account; and (c) Lender may, at its option, apply all such payments against the
Obligations or remit all or part of such payments to Debtor.

     

    4.5         Reasonable Notice.
Written notice, when required by law, sent in accordance with the provisions of
Section 12.6 of the Loan Agreement and given at least ten (10) business days
(counting the day of sending) before the date of a proposed disposition of the
Collateral shall be reasonable notice.

     

    4.6         Limitation on Duties
Regarding Collateral.  The sole duty of Lender with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the UCC or otherwise, shall be to deal with
it in the same manner as Lender deals with similar property for its own account.
Neither Lender nor any of its directors, officers, employees or agents, shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of Debtor or otherwise.

     

    4.7         Lock Box; Collateral
Account. This Section 4.7 shall be effective only upon the occurrence and
during the continuance of an Event of Default. If Lender so requests in writing,
Debtor will direct each of its debtors on the Accounts to make payments due
under the relevant Account or chattel paper directly to a special lock box to be
under the control of Lender. Debtor hereby authorizes and directs Lender to
deposit into a special collateral account to be established and maintained by
Lender all checks, drafts and cash payments received in said lock box. All
deposits in said collateral account shall constitute proceeds of Collateral and
shall not constitute payment of any Obligation until so applied. At its option,
Lender may, at any time, apply finally collected funds on deposit in said
collateral account to the payment of the Obligations, in the order of
application set forth in Section 4.8, or permit Debtor to withdraw all or any
part of the balance on deposit in said collateral account. If a collateral
account is so established, Debtor agrees that it will promptly deliver to
Lender, for deposit into said collateral account, all payments on Accounts and
chattel paper received by it. All such payments shall be delivered to Lender in
the form received (except for Debtor’s endorsement where necessary). Until so
deposited, all payments on Accounts and chattel paper received by Debtor shall
be held in trust by Debtor for and as the property of Lender and shall not be
commingled with any funds or property of Debtor.

     

    4.8         Application of
Proceeds. Lender shall apply the proceeds resulting from any sale or
disposition of the Collateral in the following order:

     

    (a)           to
the reasonable costs of any sale or other disposition;

     

    (b)           to
the reasonable expenses incurred by Lender in connection with any sale or other
disposition, including attorneys’ fees;

     

    (c)           to
the payment of the Obligations then due and owing in any order selected by
Lender in a commercially reasonable manner; and

     

    (d)           to
Debtor.

     

    
      
         

      

      
        - 6
-

        
          

        

      

      
         

      

    

    4.9         Other Remedies. No
remedy herein conferred upon Lender is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Security Agreement and the
Transaction Documents now or hereafter existing at law or in equity or by
statute or otherwise. No failure or delay on the part of Lender in exercising
any right or remedy hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right hereunder preclude other or further
exercise thereof or the exercise of any other right or remedy.

     

    ARTICLE
V

    MISCELLANEOUS

    

    5.1         Expenses and Attorneys’
Fees. Debtor shall pay all reasonable fees and expenses incurred by
Lender, including the reasonable fees of counsel, in connection with the
preparation, administration and amendment of this Security Agreement and the
protection, administration and enforcement of the rights of Lender under this
Security Agreement or with respect to the Collateral, including without
limitation the protection and enforcement of such rights in any
bankruptcy.

     

    5.2         Setoff. Debtor agrees
that, upon the occurrence and during the continuance of an Event of Default,
Lender shall have all rights of setoff and bankers’ lien provided by applicable
law.

     

    5.3         Assignability;
Successors. Debtor’s rights and liabilities under this Security Agreement
are not assignable or delegable, in whole or in part, without the prior written
consent of Lender. The provisions of this Security Agreement shall inure to the
benefit of and be binding upon the successors and assigns of the
parties.

     

    5.4         Survival. All
agreements, representations and warranties made in this Security Agreement or in
any document delivered pursuant to this Security Agreement shall survive the
execution and delivery of this Security Agreement, and the delivery of any such
document.

     

    5.5         Governing Law. This
Security Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York applicable to contracts made
and wholly performed within such state.

     

    5.6         Execution; Headings.
This Security Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof. The article and section headings in this Security
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.

     

    5.7          Notices. All notices,
requests and demands to or upon Lender or Debtor (to be delivered care of
Borrowers) shall be delivered in the manner set forth in Section 12.6 of the
Loan Agreement.

     

    5.8         Amendment. No
amendment of this Security Agreement shall be effective unless in writing and
signed by Debtor and Lender.

     

    5.9         Severability. Any
provision of this Security Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions of this Security Agreement in such jurisdiction or affecting the
validity or enforceability of any provision in any other
jurisdiction.

     

    
      
         

      

      
        - 7
-

        
          

        

      

      
         

      

    

    5.10        WAIVER OF RIGHT TO JURY
TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF ANY CONTROVERSY THAT MAY ARISE UNDER THIS SECURITY
AGREEMENT.

     

    5.11         Submission to
Jurisdiction.

     

    (a)           EACH
OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY IRREVOCABLY AND UNCONDITIONALLY
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED
THE STATE AND COUNTY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS SECURITY AGREEMENT. EACH OF THE PARTIES TO THIS
SECURITY AGREEMENT IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE
VENUE OF ANY SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS AND ANY CLAIM THAT ANY
SUCH PROCEEDING BROUGHT IN ANY SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

     

    (b)           EACH
OF THE PARTIES TO THIS SECURITY AGREEMENT HEREBY CONSENTS TO SERVICE OF PROCESS
BY NOTICE IN THE MANNER SPECIFIED IN SECTION 12.6 OF THE LOAN AGREEMENT AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION SUCH
PARTY MAY NOW OR HEREAFTER HAVE TO SERVICE OF PROCESS IN SUCH MANNER. DEBTOR
AGREES THAT SERVICE OF PROCESS MAY BE DELIVERED CARE OF BORROWERS.

     

    [Signature page
follows]

     

    
      
         

      

      
        - 8
-

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, this Guarantor Security Agreement has been executed as of the
day and year first above written.

     

    
      
        
          	 
      	
                  XENI
      MEDICAL SYSTEMS, INC.

                
	 	 
	 
      	
                  By:  

                	
                    /s/
      David M. Barnes

                
	 
      	 
      	
                  Name:  

                	
                  David
      M. Barnes

                
	 
      	 
      	
                  Title:  

                	
                  Chief
      Executive Officer

                

        

      

    

    

    
      
        	 
      	
                VICIS
      CAPITAL MASTER FUND

              
	 
      	 
      
	 
      	
                By:  Vicis
      Capital, LLC

              
	 
      	 
      
	 
      	
                By:  

              	
                  /s/
      Chris Phillips

              
	 
      	 
      	
                Name:  

              	
                Chris
      Phillips

              
	 
      	 
      	
                Title:  

              	
                Managing
      Director

              

      

    

    

    [Signature page to Guarantor Security
Agreement - XMSI]

    
      
         

      

      
        - 9
-

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