SECURED CREDIT AGREEMENT
(ACCOUNTS RECEIVABLE AND INVENTORY)
Date: JUNE 25, 1996
NBD BANK ("Lender") and Professional Dental Technologies, Inc., d/b/a
Pro-Dentec, d/b/a Prism, d/b/a Rota Point and Professional Dental Hygienists,
Inc., d/b/a Professional Dental Technologies and Services (collectively the
"Borrower") agree to the following:
1. LINE OF CREDIT. Lender, in its sole discretion, will lend to
Borrower, on the terms described in this Agreement, up to the principal sum of:
(a) up to 75% of the net amount of "eligible" Receivables (as determined in
accordance with Paragraph 8 below); and (b) up to 25% of the lesser of the
cost or market value, or whatever other reasonable valuation is set by Lender,
of "eligible" Inventory (as determined in accordance with Paragraph 8 below).
The maximum principal amount to be advanced to Borrower under this line of
credit will not exceed $3,000,000.00 at any one time outstanding, of which the
maximum principal amount to be advanced against the security of eligible
Inventory will not exceed $ 400,000,00.
Lender shall not be obligated to lend or relend to Borrower at any
time under this line of credit; each borrowing or reborrowing which is made
under this line of credit will be made at the option of, and in the sole
discretion, of Lender. Without in any way limiting the generality of the
foregoing, Lender may, at any time and from time to time, in its sole
discretion, change or reduce the percentage advance rates against eligible
Receivables and eligible Inventory set forth in the immediately preceding
paragraph.
2. RATE OF INTEREST. The rate of interest to be charged on all advances,
whether under this Agreement, any supplement, or otherwise ("Interest Rate"),
will be 1.50 percentage points per annum higher than the prime per annum rate
of interest adjusted on a daily basis, based on such rates as announced,
published or determined by Lender (the "Prime Rate") and after maturity of the
obligations (whether upon demand for payment, default under this Agreement,
expiration of term, termination, acceleration or otherwise), the Interest Rate
will be 3.50 percentage points per annum higher than the Prime Rate. However, in
no event shall the Interest Rate be more than the highest rate permitted by law.
For purposes hereof, the "Prime Rate" is that rate of interest which the Lender
shall from time to time announce to be the Lender's Prime Rate. The Prime Rate
is set by the Lender based upon various factors, including its costs and desired
(THIS AGREEMENT CONTAINS BOTH A GRANT OF A SECURITY INTEREST IN RECEIVABLES AND
INVENTORY AND A PROMISE TO MAKE PAYMENT OF FUNDS BORROWED.)
return, general economic conditions and other factors and is used as a reference
point for pricing some loans. Lender may make loans at, above or below the Prime
Rate. Any change in the Prime Rate shall immediately effect a change in the rate
of interest payable hereunder. Such interest will be payable to Lender at the
close of each month, and Lender may charge the amount of such interest to
Borrower's account at that time. Interest charged on all advances shall be
calculated on the basis of a year of 360 days for the actual number of days
elapsed in a month, using the net debit balance owing to Lender at the close of
each day of each respective month. After allowing 3 business days for collection
of checks and other instruments (and subject to final collection), Lender will
credit to Borrower's account the net amount of cash received by Lender.
3. GRANT OF SECURITY: RECEIVABLES AND INVENTORY.
(a) As security for all advances from Lender, and for all other
obligations as more particularly described below in Paragraph 5,
chargeable to Borrower's account, Borrower hereby grants Lender a first
lien and security interest in: (1) all Receivables now or hereafter owned
by Borrower; and (2) all Inventory now or hereafter owned by Borrower and
wherever located.
(b) The term "Receivables" means all obligations of any kind at any
time owing to Borrower, and whether now existing or arising in the
future. Receivables include the following classifications of collateral
under the Uniform Commercial Code: accounts, accounts receivable,
contract rights, causes of action (including, without limitation, causes
of action and recoveries under U.S.C. Sections 542-550 and 553), general
intangibles (including all state and federal tax refunds, pension
refunds, together with the goodwill of the business connected with the
use of, and symbolized by, any of the foregoing, all trade secrets,
patent, trademark and copyright royalties or like payments, proceeds of
condemnation, awards, proceeds of judgments and proceeds of fire and
other property insurance, such as business interruption insurance, and
all certificates of public convenience and necessity, and all proceeds of
insurance applicable to the Receivables or returned goods), chattel
paper, documents, instruments, deposits, and all proceeds of the
foregoing, as well as all security which Borrower has for any of these
Receivables, and all of Borrower's rights to any goods or other property
sold or leased which may be represented by such Receivables.
(c) The term "Inventory" includes all goods intended for sale or
lease by Borrower, or to be furnished by Borrower under contracts of sale
or service, all raw materials, goods in process, finished goods,
materials and supplies of every nature used or useable in connection with
the manufacture, packing, shipping, advertising, selling, leasing or
furnishing of such goods, all documents evidencing or representing the
same, wherever located, and all proceeds of such collateral, including
insurance proceeds. Lender's security interest in Inventory will
continue through all stages of manufacture and will, without further act,
attach to raw materials, to goods in process, to the finished goods, to
the Receivables or other proceeds resulting from the sale or other
disposition of Inventory, to all such Inventory as may be returned to
Borrower by its customers, and all proceeds of insurance arising from
loss or damage to any Inventory.
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(d) The Inventory and Receivables shall be security for all of
Borrower's obligations to Lender, including, but not limited to,
borrowings under this Agreement and for all other obligations chargeable
to Borrower's account under this Agreement and other agreements Borrower
has or may have with Lender. Lender may also have other collateral for
the Borrower's obligations. Until all such obligations have been fully
paid or satisfied, Lender's security interest will continue in full force
and effect.
4. GRANT OF SECURITY: BUSINESS RECORDS. In addition to Lender's other
security, Borrower hereby grants Lender a lease and first lien and security
interest in all of Borrower's books of accounts, ledgers, computer software,
computer printouts and other computerized records and cabinets in which there
are reflected or maintained the Receivables in which Lender has a security
interest, or which relate to any other security Lender may hold from Borrower
and all supporting evidence and documents relating to such security in the form
of written applications, credit information, account cards, payment records,
correspondence, delivery and installation certificates, invoice copies, delivery
receipts, notes and other evidences of indebtedness, insurance certificates and
the like. For convenience, these documents are called "Business Records." Lender
and its representatives shall, at all reasonable times during business hours, be
entitled to free and undisputed access to such Business Records, and to make
copies and extracts from such Business Records. All future Business Records
which Borrower may acquire or develop concerning Receivables and other security
for the advances shall also and without further act be subject to the provisions
of this Agreement, and Lender shall have a lease and first lien and security
interest in them.
5. PAYMENT AND OBLIGATIONS. ALL OF BORROWER'S OBLIGATIONS TO LENDER,
WHETHER ARISING UNDER THIS AGREEMENT, ANY TERM NOTE OR OTHERWISE, SHALL BE
PAYABLE UPON DEMAND. Borrower's obligations to Lender include the principal on
all loans and advances, whether under this Agreement, any Term Note(s) or
otherwise, including advances under the line of credit in excess of the limits
set forth in Paragraph 1 above, the interest accrued and unpaid, all liabilities
acquired by purchase by Lender, by assignment or participation, and all other
obligations, however arising, whenever arising, however evidenced, and whether
absolute or contingent, due or to become due, including, without limitation, all
obligations of Borrower arising under any guaranty agreements. Furthermore, all
reasonable costs and expenses incurred by Lender or its agents in connection
with this Agreement, including the preparation and review of this Agreement and
all related agreements and documents, a collateral monitoring fee, of $1,500.00
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per quarter payable in arrears, each January 1st , April 1st , July 1st and
October 1st, and all other obligations to Lender, shall be part of Borrower's
obligations and secured by the Receivables and Inventory and other collateral
security granted to Lender. Such costs and expenses include reasonable
attorneys' fees and court costs incurred by Lender in obtaining legal advice
regarding this Agreement or in enforcing payment of Borrower's obligations or to
obtain payment of any of the Receivables or to perfect, renew or extend Lender's
security interest or to defend any action or proceeding related to this
Agreement or any Receivables, Inventory or other collateral, including any costs
and expenses of any proceeding in which Lender is involved with Borrower or any
customer of Borrower's, such as the costs and fees of lifting the automatic stay
or participating in any bankruptcy proceeding, the costs of preserving and
liquidating the Receivables and Inventory or other collateral security and the
amount of all unpaid taxes, fees, assessments and similar charges owing by
Borrower to any governmental authority, but only with respect to the
Receivables, Inventory or other collateral and not otherwise, and which Lender
is required to pay or deposit for Borrower's account.
6. WARRANTIES AND COVENANTS RE: RECEIVABLES. Borrower warrants to Lender
that all existing or future Receivables at the time of their assignment to
Lender, will be valid, genuine and existing obligations created by sale and
actual delivery by Borrower of goods or other property or through Borrower
performing services or furnishing other sufficient consideration to its account
debtors and other obligors, in the regular course of Borrower's business. These
account debtors and other obligors are hereafter referred to as the "Customer."
Borrower's Receivables will be free of all security interests, liens and
encumbrances, except in Lender's favor, and shall be unconditionally owing to
Borrower without any defense, offset or counterclaim. All of the shipping and
delivery receipts and other documents to be given to Lender by Borrower with
respect to the Receivables will be genuine. If any of these Receivables arise
out of contracts with the United States or any of its departments, agencies or
instrumentalities, Borrower shall advise Lender of this fact. Borrower shall
execute any and all documents required by law in order to assign such
Receivables and the proceeds thereof to Lender and give proper notice of the
assignment in accordance with the requirements of the Federal Assignment of
Claims Act, as amended, or any similar law now in force or passed in the future.
If there are any disputes with Borrower's Customers, Borrower will notify Lender
promptly and settle with them at no expense or detriment to Lender.
7. WARRANTIES AND COVENANTS RE: INVENTORY.
(a) Borrower jointly and severally warrants that all Inventory is
and shall be kept by Borrower at the following locations:
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633 ▇▇▇▇▇▇▇▇, 2410 ▇▇▇▇▇▇▇▇, 1210 Batesville and ▇▇▇ ▇. ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
and shall not (without prior written approval of Lender) be removed from such
location(s) except for purposes of sale in the ordinary course of business.
(b) All Inventory of Borrower will be free of all security
interests, liens and encumbrances, or consignment arrangements or
agreements, except those in favor of Lender and those consented to in
writing by Lender.
(c) Borrower shall perform any and all steps reasonably requested
by Lender to protect, preserve and further perfect Lender's security
interest in the Inventory. Such steps shall include leasing warehouses
to Lender or its designee, transferring Inventory to such warehouses or
to public warehouses, placing and maintaining signs, appointing
custodians, and executing and filing financing or continuation
statements in form and substance satisfactory to Lender. If any
Inventory is in the possession or control of any of Borrower's agents or
processors, Borrower shall notify them of Lender's security interest,
and upon Lender's request, instruct them to hold all such Inventory for
Lender's account and subject to Lender's instructions.
(d) Lender may, in its discretion, at any time, pursuant to the
power of attorney granted in this Agreement, notify Borrower's agents,
processors or any warehousemen who have possession of any Inventory, of
Lender's security interest, and that all such Inventory must be held for
Lender's account and subject to its instructions.
8. ELIGIBLE RECEIVABLES AND INVENTORY.
(a) The determination of whether Receivables or Inventory are
"eligible" is one that will be made entirely by Lender, but in no event
shall Receivables that are more than 90 days old (based on the billing
date) or 30 days old (based on the billing date) for COD Receivables, be
eligible.
(b) If any of the following things happen, then Lender may, in
addition to its other rights, reclassify all of the Receivables of a
Customer as ineligible without in any way affecting Lender's security in
such Receivables: (i) if any warranty is breached as to any Receivable
or as to the goods and services which gave rise to any Receivable; (ii)
if 50% or more of the total Receivables from a Customer are either more
than 90 days old (based on the billing date) or more than 30 days old
(based on billing date) for COD Receivables; (iii) if the Customer
disputes liability on any Receivable; (iv) if the Customer makes a claim
with respect to liability; (v) if the Customer files, or has filed
against it, a petition for bankruptcy, reorganization or any other type
of relief under any insolvency laws; (vi) if the Customer makes an
assignment for the benefit of creditors, or seeks a composition with
creditors; (vii) if the Customer becomes insolvent, or fails, suspends,
or goes out of business.
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(c) Eligible Inventory includes only those portions of the
Inventory listed on schedules provided to Lender by Borrower which
Lender may from time to time classify as eligible.
9. RECORDS AND REPORTS.
(a) Borrower shall maintain adequate stock records of its
Inventory, including perpetual inventories. Borrower shall also make a
physical listing of all Inventory, wherever located, at least every
twelve months, and whenever requested by Lender, and a copy of each such
physical listing shall be supplied to Lender.
(b) Upon Lender's request, Borrower shall furnish schedules
describing all Receivables created or acquired by Borrower, and
confirming Lender's security interests therein; however, Lender's rights
will not be impaired if Borrower fails to do so.
(c) All items making up proof of delivery of goods and services
rendered by Borrower to Customers, and copies of all invoices to
Borrower's Customers will be held in trust for Lender's benefit, and
Borrower shall promptly furnish the originals or copies of the same at
any time Lender requires them.
(d) In addition, at Lender's request, Borrower will periodically
furnish written reports detailing its Inventory and containing such
information on Inventory as Lender may reasonably specify. Lender shall
further have the right, at all times, to have access to and to inspect
Borrower's Inventory.
(e) Lender may also inspect, audit and make abstracts from
Borrower's Business Records and any other records, files and books of
account, and Borrower shall furnish upon Lender's request, at reasonable
intervals, statements showing Borrower's financial condition and the
results of its operations.
(f) Borrower shall also promptly provide Lender with copies of
all of Borrower's future audited, reviewed or compiled financial
statements, and statements or reports Borrower is required to file with
shareholders or any governmental agencies, such as the Securities and
Exchange Commission, and any other documents or information Lender may
reasonably request.
10. INSURANCE. Borrower shall insure the Inventory for Lender's benefit
against loss or damage by fire, theft, burglary, pilferage, loss in transit and
such other hazards as Lender may specify, in amounts and under policies and by
insurers reasonably acceptable to Lender, and all premiums shall be paid by
Borrower when due and the policies or certified copies of such policies
delivered to Lender. If Borrower fails to do so, Lender may procure such
insurance and charge the cost to Borrower's account. No cancellation of such
insurance or material change in the terms of any policy shall be made without
the insurance carrier giving Lender at least 30 days' prior written notice. In
the event of any casualty to the Inventory which is covered by insurance,
Borrower authorizes Lender to settle any claim or proceed to suit and judgment
for all insurance proceeds arising out of the casualty to the Inventory, and
upon receipt of payment of such proceeds Lender, at its option, may apply all
payments to the obligations in any order Lender determines or to the restoration
or replacement of the Inventory.
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11. VERIFICATION AND COLLECTION OF RECEIVABLES. Lender may verify any
Receivable at any time in any reasonable manner, including written or telephone
requests for verification of Receivables from Customers, and Borrower shall help
Lender do so. Lender at any time may notify Borrower's Customers that Lender has
a security interest in the Receivables, and collect them directly in Lender's
own name. Unless and until Lender so notifies such Customers, Borrower will
collect the Receivables as a trustee for Lender under an express trust for
Lender's benefit. All full or partial payments of any Receivables made directly
to Borrower or that otherwise come into Borrower's possession shall also be
received by Borrower in trust, and unless Borrower is instructed otherwise,
Borrower shall deliver all payments to Lender in their original form. Similarly,
any goods which are returned to Borrower by its Customers or which Borrower
otherwise recovers shall also be received in trust for Lender. Borrower shall
advise Lender promptly of any such returned goods, and unless Lender instructs
Borrower to deliver them to Lender, Borrower shall sell them for Lender, and the
Receivables so created shall be part of Lender's security. After Lender has
notified any Customer, Lender shall have the right, without Borrower's
participation, approval or notice, to settle any disputes between such Customer
and Borrower directly with the Customer for any amounts and upon such terms as
Lender considers advisable. Further, upon request of Lender at any time,
Borrower agrees to notify such Customers and indicate on all ▇▇▇▇▇▇▇▇ that the
Receivables are payable to Lender.
12. SALES OF INVENTORY. If Borrower sells Inventory for cash, all full
and partial payments shall immediately be delivered to Lender in their original
form, and if Borrower sells Inventory on credit, Borrower shall confirm the
assignment to Lender of the resulting Receivables and Lender's security interest
therein pursuant to this Agreement.
13. APPOINTMENT OF AGENT. After the occurrence of any of the events of
default set forth in Paragraph 14 and upon the declaration by Lender of such
default, to protect Lender's interest in the Receivables, Inventory and other
collateral, Borrower appoints Lender as Borrower' s attorney-in-fact, or any
person or entity that Lender from time to time appoints to act in this capacity.
Such appointment shall be effective immediately upon declaration of default by
Lender. As Borrower's attorney-in-fact, Lender shall have the power to endorse
Borrower's name on checks, notes, acceptances, drafts, or other forms of payment
or security that may come into Lender's possession. Such attorney may also sign
Borrower's name on any invoices or bills of lading relating to any Receivables
or Inventory or on any tax refund checks or drafts, or on drafts against the
Customers, on schedules and confirmations of assignments of Receivables or
Inventory, on notices of assignments, financing statements under the Uniform
Commercial Code and other public records, on verifications of accounts and on
notices to Customers. Lender may also notify the post office authorities to
change the address for delivery of Borrower's mail to an address designated by
Lender. Lender may receive, open and dispose of all mail addressed to Borrower.
Lender may send requests for verifications of accounts to Customers, and do all
other things necessary to carry out this Agreement. Borrower ratifies and
confirms all acts of the attorney. Neither the attorney-in-fact, if a separate
person or entity is designated, nor Lender will be liable for any act or
omission, or any error in judgment or mistake of fact or law. These powers
granted to Lender and the attorney are coupled with an interest, and cannot be
revoked by Borrower so long as Borrower is indebted to Lender or Lender has a
security interest in any Receivable or other collateral.
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14. DEFAULTS. If any of the following things happen, Borrower shall be
in default of this Agreement and Lender shall have the remedies provided below
in Paragraph 15:
(a) if, after demand, Borrower fails to make any payment required
of it under this Agreement, or any other note or agreement with Lender,
or, if no demand has been made, if Borrower fails to make any payment
required of it under this Agreement, or any other note or agreement with
Lender when and as due;
(b) if Borrower defaults under this Agreement or any other
agreement or note with Lender, other than a default under Paragraph
14(a) above;
(c) if Borrower or any Guarantor of the amounts due under this
Agreement ("Guarantor") becomes insolvent or generally unable to meet
its debts as they become due, or fails, suspends, or goes out of
business;
(d) if Borrower's Tangible Net Worth (as defined below) is ever
less than $ 2,000,000.00. For the purposes of this provision, Tangible
Net Worth means total assets less intangible assets, prepaids,
investments in affiliates, advances to officers, employees, and
affiliates, and total liabilities all as determined by the Lender.
Intangible assets include goodwill, patents, copyrights, mailing lists,
catalogs, trademarks, bond discounts and underwriting expenses,
organization expenses, and all other intangibles;
(e) if Borrower or any Guarantor suffers a material loss of any
of its property or assets that is not covered by insurance satisfactory
to Lender;
(f) if a trustee, receiver or custodian is appointed over all or
substantially all of Borrower's or any Guarantor's property;
(g) if any proceeding in bankruptcy, insolvency or reorganization
is instituted by or against Borrower or any Guarantor;
(h) if Borrower or any Guarantor makes an assignment for the
benefit of creditors or a composition with any of its creditors;
(i) if the Borrower makes additional net investments in, or
advances to, its nonconsolidated joint ventures exceeding $400,000 in
the aggregate during a period commencing with the execution of this
agreement and ending on the Borrower's current fiscal year, and
thereafter if the Borrower makes any additional net investment in, or
advance to, its nonconsolidated joint ventures without the Lender's
prior consent;
(j) if the Borrower guaranties or otherwise becomes or remains
secondarily liable on the undertaking of another, including any
affiliate of Borrower but excluding endorsement of drafts for deposit
and collection in the ordinary course of business; or
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(k) if the Borrower or any Guarantor defaults under the terms of
any agreement or instrument relating to any debt for borrowed money,
other than a default under Paragraphs 14 (a) or 14 (b), such that the
creditor declares the debt due before its maturity.
NOTWITHSTANDING THE FOREGOING, LENDER'S RIGHT TO DEMAND PAYMENT SHALL NOT BE
CONDITIONED UPON A DEFAULT UNDER THIS AGREEMENT OR ANY OTHER AGREEMENT.
15. RIGHTS AND REMEDIES.
(a) Lender shall have the following rights and remedies in the
event of the occurrence of any of the defaults described in Paragraph 14
above: all of the rights and remedies of a secured party under the
Uniform Commercial Code, including the right to sell and deliver any and
all of the Receivables and Inventory Lender may hold at public or
private sale, for cash, for credit or otherwise, and upon such prices
and terms as Lender deems advisable. Borrower acknowledges that, unless
the circumstances dictate that shorter notice is reasonable, at least 15
days' prior notice of any such sale or other disposition of the
Receivables or Inventory shall be reasonable notice, and that such
notice may be given to Borrower at its address specified below, or at
such other address as it provides to Lender in writing from time to
time. Such notice may be written, by telegram, telex or other medium of
communication, or may be personally delivered by Lender. If the sale of
the Receivables or Inventory is public, Lender may purchase at the sale
and shall have all rights of a good faith purchaser for value. Lender
shall also have the right to collect the Receivables by direct action
against Borrower's Customers making such settlements or compromises with
them as it deems advisable. Lender may also take physical possession of
any Inventory at any time or times, and maintain such possession on
Borrower's premises. Lender may also remove such Inventory or any part
thereof to such other places as it may wish. If Lender exercises its
right to take possession of Inventory, Borrower shall, on Lender's
request, assemble it and make it available to Lender at a place
reasonably convenient to Lender. In addition to all of the rights and
remedies set forth in this Agreement, Lender will have the right
forthwith or at any time thereafter to remove from Borrower's premises
all Business Records and Lender may keep and retain the Business Records
in its possession until all present and future indebtedness and
obligations of whatever nature owing by Borrower to Lender shall have
been fully paid and discharged. The removal of such Business Records
shall not prevent Borrower from being afforded access to them, during
regular business hours, at the place or places to which they have been
moved by Lender, for the purpose of examining and auditing them and
making written excerpts from such Business Records.
(b) The proceeds of the sale or collection of the Receivables and
Inventory shall, at Lender's option, first be applied to all costs and
expenses of sale or collection, including reasonable attorneys' fees,
and secondly to the payment, in whatever order Lender elects, of all
obligations chargeable to Borrower.
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(c) Subject to the provisions of applicable law, Lender shall
return any surplus to Borrower, and Borrower shall remain liable to
Lender for any deficiency.
(d) All sums at any time standing to Borrower's credit on
Lender's books, and all of Borrower's property at any time in Lender's
possession, custody or control or upon which Lender has a lien or
security interest may be held by Lender as security for all obligations
due Lender from Borrower, and may be offset against such obligations.
(e) In any bankruptcy proceeding, including one for
reorganization, Borrower agrees that Lender shall have a right of first
refusal to provide financing in such proceeding on such basis as to
priority and security as Lender elects. Borrower acknowledges, however,
that this Agreement and all supplements thereto are financial
accommodations for its benefit, and that Lender has no obligation to
finance Borrower or any trustee in any such bankruptcy proceeding.
16. NO MARSHALLING. Borrower, on its own behalf and on behalf of its
successors and assigns hereby expressly waives all rights, if any, to require a
marshalling of assets by Lender or to require that Lender first resort to some
or any portion of any collateral securing Borrower's obligations before
foreclosing upon, selling or otherwise realizing on any other portion thereof
17. TERM AND TERMINATION. Unless there is a sooner demand for payment,
this Agreement shall have an initial term of three years from the date set forth
above. This Agreement shall be automatically renewed for successive periods of
one year unless terminated as provided below. Even if this Agreement is
automatically renewed, the obligations due Lender under this Agreement will
still be payable on demand. Lender may terminate this Agreement at any time, and
Borrower may so terminate it only on the anniversary of the Agreement in any
year upon sixty (60) days prior written notice to Lender. However, if Borrower
chooses to terminate the Agreement and to pay Lender a prepayment premium in
addition to the then principal, accrued interest and any other obligations due
Lender, Borrower may terminate this Agreement at any time. The Borrower shall be
obligated to pay a prepayment premium if Borrower makes a prepayment of all or
substantially all (more than 50%) of the principal then outstanding, accrued
interest and other obligations due Lender by Borrower at any time other than the
annual anniversary of this Agreement. The prepayment premium previously referred
to shall be equal to 2% of the maximum dollar amount of the line of credit if
prepayment is made within one year from the date of this Agreement, and 1% of
such amount if prepayment is made thereafter.
18. EARLY TERMINATION. If Borrower defaults in any manner as provided
in Paragraph 14 above, then, anything contained in this Agreement or any
supplement notwithstanding, Lender shall have the right to terminate this
Agreement at any time without notice, and if Lender stops making advances to
Borrower, such act under these circumstances shall be treated as one of
termination. On such termination date, all outstanding obligations due under
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this Agreement or any supplement or other agreement between Lender and Borrower,
or any affiliate of Lender's, shall immediately become due and payable without
further notice, act or demand on Lender's part. All of Lender's rights under
this Agreement shall continue notwithstanding termination, and Lender's security
interest in all Receivables, Inventory and other collateral, then or thereafter
existing, shall also remain in full force. Borrower shall further be required to
furnish Lender with all reports, schedules and confirmatory assignments of all
Receivables, and to turn over all payments on the Receivables and other
proceeds, as if this Agreement had not terminated, until Borrower has satisfied
all of its obligations to Lender.
19. ENVIRONMENTAL LIABILITIES. The Borrower agrees that Lender shall not
assume any liability or obligation for loss, damage, fines, penalties, claims or
duty to clean-up or dispose of wastes or materials on or relating to the
collateral or other property of the Borrower regardless of any inspections made
by the Lender prior to the consummation of this transaction or as a result of
any conveyance of title to the Lender by foreclosure, deed in lieu of
foreclosure, or otherwise. The Borrower agrees to remain fully liable and shall
indemnify and hold harmless Lender from any costs, expenses, clean-up costs,
waste disposal costs, litigation costs, fines, penalties, including without
limitation those costs, expenses, penalties and fines within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act, and other
federal or state laws and regulations, now or in the future in effect, and all
other related liabilities. Any claim Lender may have against the Borrower
pursuant to this paragraph shall be part of the obligations.
20. REINSTATEMENT OF OBLIGATIONS AND SECURITY. To the extent that
Borrower makes a payment to Lender or Lender receives any payment(s) or proceeds
of Receivables or other collateral for Borrower' s benefit, which payment(s) or
proceeds or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable doctrine, then, to the extent of such payment(s) or
proceeds received, the Borrower's obligations or part thereof intended to be
satisfied thereby shall be reinstated and continue in full force and effect, and
all collateral security therefor shall remain in full force and effect (or be
reinstated), as if such payment(s) or proceeds had not been received by Lender,
and an appropriate adjustment to Borrower's loan balance may be recorded, until
payment shall have been made to Lender, which payment shall be due on demand.
21. CHIEF EXECUTIVE OFFICE; TRADENAMES. Borrower further warrants and
covenants that:
(a) its chief executive office and principal place of business is
located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
(b) its Business Records are kept at the following location(s):
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
- 11 -
(c) its corporate name is exactly as set forth on the signature page
of this Agreement and Borrower has not changed its corporate name since
the date of its incorporation, nor has it or does it use any tradenames
or tradestyles except Professional Dental Technologies and Services,
Pro-Dentec, Prism and Rota Point; and
(d) Borrower shall provide Lender with 15 days prior written notice
of any change with respect to any of the foregoing.
22. LEGAL RATE ADJUSTMENT. This Agreement, all supplements thereto and
all other notes, security agreements and mortgages between the Borrower and
Lender pertaining to the obligations of the Borrower are expressly limited so
that in no event whatsoever shall the amount of interest paid or agreed to be
paid to Lender exceed the highest rate of interest permissible under applicable
law. If, from any circumstances, fulfillment of any provision of this Agreement
or such other notes and agreements at the time performance of such provisions
shall be due, shall involve exceeding the interest limitation validly prescribed
by law which a court of competent jurisdiction may deem applicable, then the
obligation to be fulfilled shall be reduced to an amount computed at the highest
rate of interest permissible under applicable law, and if, for any reason
whatsoever, Lender shall ever receive as interest an amount which would be
deemed unlawful under applicable law, such interest shall be automatically
applied to the payment of the principal of such obligation (whether or not then
due and payable), and not to the payment of interest, or shall be refunded to
the Borrower, if such principal has been paid in full.
23. SET-OFF. In addition to any rights and remedies of Lender provided by law,
Lender shall have the right, without prior written notice to the Borrower, any
such notice being expressly waived by Borrower to the extent permitted by
applicable law, upon the occurrence of any event of default and so long as such
event of default is continuing, to set off and apply against any obligations,
whether matured or unmatured, of the Borrower to Lender, any amount owing by
Lender to Borrower, at or at any time after the happening of any of the above
mentioned events, and such right of set-off may be exercised by Lender against
Borrower or against any assignee for the benefit of creditors, receiver, or
execution, judgment or attachment creditor of Borrower, or against anyone else
claiming through or against the Borrower of such assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by Lender prior to the making, filing or issuance or service upon
Lender of, or of notice of, assignment for the benefit of creditors, appointment
or application for the appointment of a receiver, or issuance of execution,
subpoena or order or warrant. Lender agrees promptly to notify the Borrower
after any set-off and application made by Lender, provided that the failure to
give such notice shall not affect the validity of such set-off and application.
24. GENERAL PROVISIONS.
(a) Lender's failure to exercise any right or remedy or option
under this Agreement, or any delay by Lender in exercising any of them,
will not operate as a waiver. Borrower understands that the only way
Lender may waive its rights is in writing signed by an authorized agent
of Lender.
- 12 -
(b) All of Lender's rights and remedies under this Agreement are
cumulative and not exclusive one of the other.
(c) If any provision of this Agreement is unenforceable for any
reason, it shall not affect the enforceability of the other provisions
of this Agreement.
(d) Borrower also understands that this Agreement cannot be
changed or terminated orally, and that it is for the benefit of Lender
and its successors and assigns and is binding upon Borrower and its
permitted successors and assigns.
(e) Borrower shall not delegate its duties or assign its rights
and obligations under this Agreement without the prior written consent
of Lender.
(f) In addition to this Agreement, Borrower may execute with
Lender one or more riders, supplements or other agreements which shall
form a part of this Agreement. If there is an express conflict between
the terms of this Agreement and those contained in any rider, supplement
or other agreement, the terms of this Agreement shall control unless
such other rider, supplement or other agreement specifically provides
otherwise.
(g) This Agreement, together with any written supplements, riders
or other agreements, is the entire agreement between the parties
relating to the subject matter of this Agreement, and supersedes all
prior agreements, commitments and understandings between the parties.
(h) Except and only to the extent that the perfection of Lender's
security interests may be governed by the laws of another jurisdiction,
this Agreement is to be governed by the internal laws of the State of
Michigan, including the Uniform Commercial Code as adopted in Michigan.
Unless otherwise defined, the terms used in this Agreement shall have
the meaning given them in the Uniform Commercial Code.
(i) Neither this agreement nor any uncertainty or ambiguity
herein shall be construed or resolved against the Lender or Borrower,
whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed
and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intentions of all parties
hereto.
(j) Except where the context otherwise requires, each term stated
in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter.
(k) Any reference to a rider, supplement or other document or
agreement shall include any amendments, modifications, renewals,
restatements, extensions, supplements, or substitutions thereof which
may hereafter be executed in accordance with the terms hereof.
- 13 -
(l) All exhibits referenced in this Agreement shall be deemed to
be incorporated into this Agreement as if entirely set forth herein.
(m) This Agreement may be executed in one or more counterparts.
25. JOINT AND SEVERAL LIABILITY.
(a) The obligations and liabilities of Borrower under, and all
representations, warranties and covenants of Borrower in this Agreement
and the other documents relating to obligations of Borrower to Lender
shall be joint and several in all respects whatsoever. The term
"Borrower" shall apply to each Borrower individually and collectively
and each Borrower shall be jointly and severally liable.
(b) Lender may deal with either Borrower as if it were the sole
obligor, without inpairing in any way the liability of the other
Borrower. Without limiting the generality of that right, Lender may in
particular release, impair, or fail to perfect an interest in any
collateral of either Borrower, waive defaults by either Borrower, or
extend, compromise or release the liability of either Borrower, without
the consent of the other Borrower.
(c) Each Borrower represents that it has carefully considered the
alternatives to and the legal consequence of incurring joint and several
liability for the obligations to Lender and has determined that by such
arrangement it is able to obtain financing on terms more favorable than
otherwise, and that under a joint and several loan facility, it will
realize substantial interest savings over alternative financing
arrangements. Borrower also represents and warrants that the businesses
of each are integrally related, and that the success of each Borrower is
a direct business benefit to the other.
(d) Lender may bring a separate action or actions on the
obligations of Borrower against either Borrower, whether or not the
other is or is not joined therein. Each Borrower agrees that any release
which may be given to the other or any Guarantor of the obligations of
Borrower shall not release the other Borrower from its obligations. Each
Borrower waives any right to assert against Lender any defense (legal or
equitable), set off, counterclaim, or claims which such Borrower
individually nay now or any time hereafter have against the other
Borrower or any other party liable to Lender in any manner whatsoever.
(e) Any and all present and future debt and other obligations of
either Borrower to the other Borrower are hereby subordinated to the
full payment and performance of the obligations of Borrower to Lender;
provided, however, such debt and other obligations may be incurred and
repaid, subject to the terms of this Agreement, so long as no default
has occurred.
- 14 -
(f) Each Borrower is presently informed as to the financial
condition of the other Borrower, and of all other circumstances which a
diligent inquiry would reveal and which bear upon the risk of nonpayment
of the obligations of Borrower to Lender. Each Borrower hereby covenants
that it will continue to keep itself informed as to the financial
condition of the other Borrower, the status of the other Borrower, and
of all circumstances which bear upon the risk of nonpayment. Absent a
written request from Borrower to Lender for information, each Borrower
hereby waives any and all rights it may have to require Lender to
disclose to such Borrower any information which Lender may now or
hereafter acquire concerning the condition or circumstances of the other
Borrower.
(g) Each Borrower waives all rights to notices of default,
existence, creation, or incurring of new or additional indebtedness, and
all other notices of formalities to which such Borrower may, as a joint
and several Borrower hereunder, be entitled.
26. NOTICE. Borrower agrees to give prompt notice to Lender of the
occurrence of (i) any event of default and (ii) any other development, financial
or otherwise, which would affect the Borrower's or the Guarantor's business,
properties or affairs in a materially adverse manner.
27. ACKNOWLEDGMENT OF BORROWER. THIS AGREEMENT HAS BEEN FREELY AND
VOLUNTARILY ENTERED INTO WITH THE LENDER BY THE BORROWER, WITHOUT ANY DURESS OR
COERCION, AND AFTER THE BORROWER HAS EITHER CONSULTED WITH COUNSEL OR HAS BEEN
GIVEN AN OPPORTUNITY TO DO SO, AND THE BORROWER ACKNOWLEDGES THAT IT HAS
CAREFULLY AND COMPLETELY READ ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT.
- 15 -
28. WAIVER OF JURY TRIAL. BORROWER AND LENDER ACKNOWLEDGE THAT THE RIGHT
TO A TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT MAY BE WAIVED.
BOTH BORROWER AND LENDER EACH KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND WITHOUT
COERCION, WAIVE ALL RIGHTS TO TRIAL BY JURY OF ALL DISPUTES BETWEEN THEM.
NEITHER LENDER NOR BORROWER SHALL BE DEEMED TO HAVE GIVEN UP THIS WAIVER OF JURY
TRIAL UNLESS THE PARTY CLAIMING THAT THIS WAIVER HAS BEEN RELINQUISHED HAS A
WRITTEN INSTRUMENT SIGNED BY THE OTHER PARTY STATING THAT THIS WAIVER HAS BEEN
GIVEN UP.
PROFESSIONAL DENTAL HYGIENISTS, INC., d/b/a
Professional Dental Technologies and Services
---------------------------------------------
(Name of Borrower)
an Arkansas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Its: VICE PRESIDENT
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
(Address of Borrower)
PROFESSIONAL DENTAL TECHNOLOGIES, INC., d/b/a
Pro-Dentec, d/b/a Prism, d/b/a Rota Pint
---------------------------------------------
(Name of Borrower)
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
-----------------------------------------
Its: Chief Operating Officer
▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------------
(Address of Borrower)
NBD BANK
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Its: Vice-President
-------------------------------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
- 16 -
EQUIPMENT AND FIXTURES SECURITY AGREEMENT
-----------------------------------------
Date: June 25, 1996
NBD BANK ("Lender") and Professional Dental Technologies, Inc.,
d/b/a Pro- Dentec, d/b/a Prism, d/b/a Rota Point and Professional Dental
Hygienists, Inc., d/b/a Professional Dental Technologies and Services
(collectively the "Borrower") agree to the following:
1. SUPPLEMENT TO SECURED CREDIT AGREEMENT. This Agreement is a
supplement to a Secured Credit Agreement (Accounts Receivable and Inventory) of
even date herewith (the "Secured Credit Agreement") between Lender and Borrower.
This Agreement (the "Equipment Agreement") shall secure all of Borrower's
obligations under the Secured Credit Agreement and under the "Term Note(s)", and
the other obligations described in Paragraph 5 below, and shall remain in effect
for so long as such obligations remain unsatisfied.
2. GRANT OF SECURITY. In addition to any other security granted to
Lender, Borrower grants to Lender a lien and security interest in all equipment
and fixtures (the "Equipment") owned by Borrower, now or in the future, or in
which Borrower has or, in the future may have, rights of any kind, together with
any and all proceeds of the Equipment to secure all obligations of Borrower to
Lender, including the obligations described in Paragraph 5 below.
3. DEFINITION OF EQUIPMENT. The term "Equipment" shall include all
equipment, fixtures, chattels, machinery, furniture and like personal property
owned by Borrower, now or in the future, bought for or used by Borrower in
Borrower's business, or in which Borrower obtains rights of any kind, including
rights under any lease, whether a true lease or a lease intended as security,
and wherever such collateral is located, including all such collateral located,
affixed or to be affixed to premises commonly known as:
633 ▇▇▇▇▇▇▇▇, 2410 ▇▇▇▇▇▇▇▇, 1210 Batesville and ▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇
The Equipment also includes, but is not limited to, all
accessories, machinery parts and appurtenances attached, kept, used or intended
for use in connection with any equipment and fixtures and all apparatus, tools,
supplies, materials, blue prints and plans.
4. GOOD TITLE AND PRIOR SECURITY INTERESTS. Borrower warrants that it
is the lawful owner of all of the Equipment and has complete authority to grant
a security interest in this collateral. The Equipment is free of all other
liens, security interests, encumbrances and adverse claims (collectively "Other
Liens") except as set forth on Exhibit A attached hereto and made a part hereof.
If there are any Other Liens which Lender has not agreed may be continued,
Borrower shall pay and discharge the same immediately. If Borrower fails to do
so, Lender may, at its option, pay or discharge such Other Liens, in whole or in
part, and Borrower shall immediately reimburse Lender for all such sums so paid
by Lender. Any such payments made by Lender to discharge any such Other Liens,
not reimbursed by Borrower, shall form part of the Obligations as defined in
this Equipment Agreement and the Secured Credit Agreement and shall be secured
by all security granted by Borrower to Lender under this and any other
agreement.
5. PAYMENT AND OBLIGATIONS. All of Borrower's obligations to Lender
shall be payable as provided in the Secured Credit Agreement or as provided in
the Term Note(s), if any, given by Borrower to Lender simultaneously with the
execution and delivery of this Agreement to Lender or hereafter (together with
all amendments, restatements, modifications, renewals, extensions or
substitutions of any of them, collectively "Term Note(s)"). Borrower's
obligations (the "Obligations") to Lender include the principal on all loans and
advances under this Agreement, the Secured Credit Agreement, the Term Note(s),
if any, or under any other agreement, the interest accrued and unpaid, under any
such agreements or Term Note(s), all liabilities acquired by purchase by Lender,
by assignment or participation, and all other obligations, however arising,
whenever arising, howsoever evidenced and whether absolute or contingent, due or
to become due. Furthermore, all reasonable costs and expenses incurred by Lender
or its agents in connection with this Agreement, the Secured Credit Agreement,
the Term Note(s), if any, and all other obligations to Lender shall be part of
Borrower's Obligations and secured by the Equipment. Such costs and expenses
include reasonable attorneys' fees and court costs incurred by Lender in
obtaining legal advice regarding this Equipment Agreement or any loans,
including the preparation and review of this Equipment Agreement and all related
agreements and documents, or in enforcing payment of Borrower's Obligations or
to obtain possession of the Equipment or to perfect, renew or extend Lender's
security interest or to demand any action or proceeding related to this
Equipment Agreement or any other agreement or the Term Note(s) between Lender
and Borrower, including any costs and expenses of any proceeding in which Lender
is involved with Borrower, such as the costs and fees of lifting the automatic
stay, the costs of preserving and liquidating the Equipment, and the amounts of
all unpaid taxes and similar charges owing by Borrower to any governmental
authority only with respect to the Equipment or other collateral, and not
otherwise, and which Lender is required to pay or deposit for Borrower's
account.
6. RATE OF INTEREST. The interest to be charged on all Obligations
under this Equipment Agreement and the Secured Credit Agreement shall be based
on the terms and conditions set forth in the Secured Credit Agreement.
7. INSURANCE. Borrower shall insure the Equipment for Lender's benefit
against loss or damage by fire, theft, burglary, pilferage, loss in transit and
such other hazards as Lender may specify, in amounts and under policies and by
insurers reasonably acceptable to Lender, and all premiums shall be paid by
Borrower and the policies or certified copies of such policies delivered to
Lender. If Borrower fails to do so, Lender may procure such insurance and the
amounts so expended by Lender shall become part of the Obligations under this
Equipment Agreement and the Secured Credit Agreement. No cancellation of such
insurance or material change in the terms of any policy shall be made without
the insurance carrier giving Lender at least 30 days prior written notice.
- 2 -
8. SETTLEMENT OF INSURANCE CLAIMS. In the event of any casualty to the
Equipment which is covered by insurance, Borrower authorizes Lender to settle
any claim or proceed to suit and judgment for all insurance proceeds arising out
of the casualty to the Equipment, and upon receipt of payment of such proceeds,
Lender, at its option, may apply all payments to the obligations in any order
Lender determines or to the restoration or replacement of the Equipment.
Notwithstanding the foregoing if Borrower is not in default under
this agreement or any of the loan documents, nor do circumstances exist that
with the passage of time, the giving of notice, or both would constitute such a
default, Lender shall allow the Borrower to use the insurance proceeds to repair
and restore the Equipment.
9. DEFAULTS. If any of the following things happen, Lender shall have
the remedies provided below in paragraph 10:
(a) if, after demand, Borrower fails to make any payment
required of Borrower under this Equipment Agreement, the Secured Credit
Agreement, the Term Note(s), or any other agreement with Lender, or, if
no demand has been made, if Borrower fails to make any payment required
of Borrower under this Equipment Agreement, the Secured Credit
Agreement, the Term Note(s) or any other agreement with Lender when and
as due;
(b) if Borrower otherwise breaches any term or provision of
this Equipment Agreement, the Secured Credit Agreement, the Term
Note(s), or any other agreement with Lender, other than a default under
Paragraph 9(a) above;
(c) if Borrower or any Guarantor of the amounts due under this
Agreement ("Guarantor") becomes insolvent or generally unable to meet
its debts as they become due, or fails, suspends, or goes out of
business;
(d) if Borrower's Tangible Net Worth (as defined below) is
ever less than $ 2,000,000.00. For the purposes of this provision,
Tangible Net Worth means total assets less intangible assets, prepaids,
investments in affiliates, advances to officers, employees, and
affiliates, and total liabilities all as determined by the Lender.
Intangible assets include goodwill, patents, copyrights, mailing lists,
catalogs, trademarks, bond discounts and underwriting expenses,
organization expenses, and all other intangibles.
(e) if Borrower or any Guarantor suffers a material loss of
any of its property or assets that is not covered by insurance
satisfactory to Lender;
(f) if a trustee, receiver or custodian is appointed over all
or substantially all of Borrower's or any Guarantor's property;
- 3 -
(g) if any proceeding in bankruptcy, insolvency or
reorganization is instituted by or against Borrower or any Guarantor;
(h) if Borrower or any Guarantor makes an assignment for the
benefit of creditors or a composition with any of its creditors;
(i) if the Borrower makes additional net investments in, or
advances to, its nonconsolidated joint ventures exceeding $400,000 in
the aggregate during a period commencing with the execution of this
agreement and ending on the Borrower's current fiscal year, and
thereafter if the Borrower makes any additional net investment in, or
advance to, its nonconsolidated joint ventures without the Lender's
prior consent;
(j) if the Borrower guaranties or otherwise becomes or remains
secondarily liable on the undertaking of another, including any
affiliate of Borrower but excluding endorsement of drafts for deposit
and collection in the ordinary course of business; or
(k) if the Borrower or any Guarantor defaults under the terms
of any agreement or instrument relating to any debt for borrowed money,
other than a default under Paragraphs 9 (a) or 9 (b), such that the
creditor declares the debt due before its maturity.
10. RIGHTS AND REMEDIES. If Borrower defaults under this Equipment
Agreement, Lender may take physical possession of the Equipment or any part of
such collateral at any time or times, and maintain such possession on Borrower's
premises. Lender may also remove such Equipment or any part of it to such other
place(s) as it may wish. If Lender exercises its right to take possession of the
Equipment, Borrower shall, on Lender's demand, assemble it and make it available
to Lender, at a place reasonably convenient to Lender. After Borrower has
defaulted on the Obligations, Borrower will, if it is a tenant of the premises
where the Equipment is located, at Lender's option, assign to Lender its rights
under its Lease. Borrower shall also, if a tenant of the premises where the
Equipment is located, permit Lender to occupy such premises rent free for at
least 90 days so that Lender may sell or otherwise dispose of the Equipment and
other security it has for the Obligations without incurring the expense of
removing such Equipment and other collateral from such premises. In addition,
with respect to all Equipment as well as all other collateral, Lender shall have
all of the rights and remedies set forth in the Secured Credit Agreement, and
all of the rights and remedies available to Lender as a secured party under the
Uniform Commercial Code or other law.
11. FAILURE TO REPAIR. If Borrower fails to repair the Equipment or
keep the Equipment in good repair and operating condition, Lender may, at its
option, repair or replace any Equipment, and Borrower shall immediate1y
reimburse Lender for all costs it has incurred in doing so. If Borrower fails to
reimburse Lender for all sums expended by Lender in this regard, such expenses
shall form part of the Obligations under this Equipment Agreement and the
Secured Credit Agreement, and the Term Note(s), if any, and shall be secured by
all of the collateral granted to Lender under this Equipment Agreement and the
Secured Credit Agreement.
- 4 -
12. ANTI-SALE AND LIEN PROVISION. Without Lender's prior written
consent, Borrower shall not sell, assign, lease, mortgage, encumber, suffer or
grant any security interest or lien in or dispose of the Equipment with an
aggregate value exceeding $20,000.00, or any part of it or interests in it, nor
shall Borrower attempt to do so.
13. REMOVAL OF COLLATERAL. Without Lender's prior written consent,
Borrower shall not remove or attempt to remove or suffer anyone else to remove
or permit them to remove any of the Equipment with an aggregate value exceeding
$20,000.00, from the place(s) where it is now located.
14. PAYMENT OF TAXES. Borrower shall also make payment of all taxes,
impositions, judgments and other claims, which could or would create a right of
seizure or levy upon the Equipment or create a security interest in or lien on
the Equipment.
15. MOTOR VEHICLE COLLATERAL. If any part of the Equipment consists of
motor vehicles or certificated vehicles, as defined by the law governing this
Equipment Agreement or such vehicles, then the amount allocated to such motor
vehicles or certificated vehicles shall be $ 0.
16. ANTI-WAIVER AND SEVERABILITY. Lender's failure to exercise any
right, remedy or option under this Equipment Agreement, or any delay by Lender
in exercising any of them, will not operate as a waiver. Borrower understands
that the only way Lender may waive its rights is in writing signed by an
authorized agent of Lender. All of Lender's rights and remedies under this
Equipment Agreement are cumulative and not exclusive of each other. If any
provision of this Equipment Agreement is unenforceable for any reason, it shall
not affect the enforceability of the other provisions of this Equipment
Agreement.
17. MISCELLANEOUS. Borrower also understands that this Equipment
Agreement cannot be changed or terminated orally, and that it is for the benefit
of Lender, its successors and assigns and is binding upon Borrower and its
permitted successors and assigns. In addition to this Equipment Agreement,
Borrower has executed with Lender the Secured Credit Agreement and one or more
Riders or Supplements which shall form a part of that Agreement. If there is an
express conflict between the terms of this Equipment Agreement and the terms of
the Secured Credit Agreement, the terms of the Secured Credit Agreement shall
control. If there is an express conflict between the terms of this Equipment
Agreement and those contained in any Rider or Supplement to it, the terms of
this Equipment Agreement shall control unless the Rider or Supplement
specifically provides otherwise. This Equipment Agreement, together with the
Secured Credit Agreement, written supplements or riders executed by Lender and
Borrower, and the Term Note(s), if any, is the entire agreement between the
parties relating to the subject matter, and supersedes all prior agreements,
commitments and understandings of the parties. This Equipment Agreement may be
executed in one or more counterparts, each of which shall be deemed one and the
same original instruments. Except and only to the extent that the perfection of
Lender's security interests may be governed by the laws of another jurisdiction,
this Equipment Agreement is to be governed by the internal laws of the State of
Michigan, including the Uniform Commercial Code as adopted in Michigan. Unless
otherwise defined, the terms used in this Equipment Agreement shall have the
meaning given them in the Uniform Commercial Code.
- 5 -
18. WAIVER OF JURY TRIAL. BORROWER AND LENDER ACKNOWLEDGE THAT THE
RIGHT TO A TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT MAY BE
WAIVED. BOTH BORROWER AND LENDER EACH KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND
WITHOUT COERCION, WAIVE ALL RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES BETWEEN
THEM. NEITHER LENDER NOR BORROWER SHALL BE DEEMED TO HAVE GIVEN UP THIS WAIVER
OF JURY TRIAL UNLESS THE PARTY CLAIMING THAT THIS WAIVER HAS BEEN RELINQUISHED
HAS A WRITTEN INSTRUMENT SIGNED BY THE OTHER PARTY STATING THAT THIS WAIVER HAS
BEEN GIVEN UP.
PROFESSIONAL DENTAL HYGIENISTS, INC., d/b/a
Professional Dental Technologies and Services
---------------------------------------------
(Name of Borrower)
an Arkansas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
----------------------------------------
Its: Vice President
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(Address of Borrower)
PROFESSIONAL DENTAL TECHNOLOGIES, INC., d/b/a
Pro-Dentec, d/b/a Prism, d/b/a Rota Point
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(Name of Borrower)
a Nevada corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
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Its: Chief Operating Officer
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(Address of Borrower)
NBD BANK
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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Its: Vice President
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EXHIBIT A
PERMITTED LIEN LIST
SECRETARY OF STATE OF ARKANSAS
FILE NUMBER RECORDING DATE SECURED PARTY
----------- -------------- -------------
755450 May 29, 1991 Pitney ▇▇▇▇▇ Credit Corp.
768395 September 13, 1991 The Citizens Bank
768396 September 13, 1991 The Citizens Bank
882236 January 7, 1994 ▇▇▇▇▇ Financial Corporation
884210 January 24, 1994 Miles Financial Services, Inc.
896102 April 5, 1994 Citizens Bank of Batesville
▇▇▇▇▇▇▇ February 29, 1996 CIT Group/Equipment Financing
1004325 February 29, 1996 CIT Group/Equipment Financing
1006426 March 12, 1996 CIT Group/Equipment Financing
1006427 March 12, 1996 CIT Group/Equipment Financing
1008581 March 22, 1996 CIT Group/Equipment Financing
1008582 March 22, 1996 CIT Group/Equipment Financing
INDEPENDENCE COUNTY, ARKANSAS
FILE NUMBER RECORDING DATE SECURED PARTY
----------- -------------- -------------
48506 September 16, 1991 The Citizens Bank
48507 September 16, 1991 The Citizens Bank
49340 February 20, 1992 AGFA Financial Services
786855 February 21, 1992 AGFA Financial Services
53364 January 10, 1994 ▇▇▇▇▇ Financial Corporation
53475 January 28, 1994 Miles Financial Services, Inc.
53891 April 1, 1994 Citizens Bank of Batesville
58170 February 29, 1996 CIT Group/Equipment Financing
58172 February 29, 1996 CIT Group/Equipment Financing
58244 March 12, 1996 CIT Group/Equipment Financing
58245 March 12 ,1996 CIT Group/Equipment Financing
58294 March 22, 1996 CIT Group/Equipment Financing
58295 March 22, 1996 CIT Group/Equipment Financing
INTELLECTUAL PROPERTY AGREEMENT
This Agreement is entered into on JUNE 25, 1996 between Professional Dental
Technologies, Inc., a Nevada corporation ("Borrower"), and NBD Bank, a Michigan
banking corporation ("Lender").
Borrower has executed and delivered a Secured Credit Agreement dated JUNE 25,
1996. To induce Lender to provide credit evidenced by the Secured Credit
Agreement, Borrower has agreed to the followings terms and conditions regarding
all of its present and future trademarks, patents and related rights, including
but not limited to the trademarks and patents listed in the attached Schedule A
(collectively the "Intellectual Property").
THEREFORE, the parties agree as follows:
1. Borrower agrees that so long as any debt to Lender of any kind,
whenever and however such debt may arise ("Liabilities") is outstanding, the
Borrower shall not create or permit to exist any lien on Intellectual Property
other than future liens in favor of the Lender as contemplated by this
agreement.
2. So long as any Liabilities remain outstanding, Borrower further
agrees that it will not convey or transfer any interest in the Intellectual
Property or enter into any agreement (such as a license agreement) regarding the
Intellectual Property without the Lender's prior written consent with the
exception of a potential license for fluoride toothpaste to be granted to ▇▇▇▇▇▇
▇▇▇▇▇▇▇.
3. So long as any Liabilities remain outstanding, Lender shall have a
license to use the Intellectual Property to the extent deemed necessary by the
Lender to enforce any of its rights in any collateral pledged to the Lender by
the Borrower.
4. If at any time Lender in good ▇▇▇▇▇ ▇▇▇▇▇ itself undersecured, upon
demand, Borrower shall execute collateral assignments of the Intellectual
Property in form and substance acceptable to Lender on or within ten (10) days
of such demand and such additional documents as Lender deems necessary to
perfect its interest in such assets. In the event the Borrower does not execute
such assignments and documents within such ten (10) day period, the line of
credit provided under the Secured Credit Agreement shall cease and no additional
borrowings shall be permitted. At the expiration of such ten (10) day period,
provided no event of default has occurred, or any circumstances exist that with
the passage of time or the giving of notice, or both, would constitute a
default, Borrower shall have a period of ninety (90) days to obtain alternate
financing. At the expiration of such ninety (90) day period, all Liabilities
shall be due immediately without notice.
5. WAIVER OF JURY TRIAL. BORROWER AND LENDER ACKNOWLEDGE THAT THE RIGHT
TO A TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT MAY BE WAIVED.
BOTH BORROWER AND LENDER EACH KNOWINGLY, VOLUNTARILY, IRREVOCABLY AND WITHOUT
COERCION, WAIVE ALL RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES BETWEEN THEM.
NEITHER LENDER OR BORROWER SHALL BE DEEMED TO HAVE GIVEN UP THIS WAIVER OF JURY
TRIAL UNLESS THE PARTY CLAIMING THAT THIS WAIVER HAS BEEN RELINQUISHED HAS A
WRITTEN INSTRUMENT SIGNED BY THE OTHER PARTY STATING THAT THIS WAIVER HAS BEEN
GIVEN UP.
PROFESSIONAL DENTAL
TECHNOLOGIES, INC. NBD BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------- --------------------------
Its: Chief Operating Officer Its: Vice President
-------------------------- ---------------------------
SCHEDULE A
Patent No. Registration
Country Filing Date
5,078,158 USA 1-7-92
5,109,563 USA 5-5-92
5,205,302 USA 4-27-93
5,342,284 ▇▇▇ ▇-▇▇-▇▇
5,052,419 USA 10-1-91
5,276,935 ▇▇▇ ▇-▇▇-▇▇
5,373,599 USA 12-20-94
5,072,482 USA 12-17-91
5,148,568 ▇▇▇ ▇-▇▇-▇▇
4,884,849 USA 12-5-89
4,827,552 USA 5-9-89
350,440 USA 9-13-94
5,112,226 USA 5-12-92
4,869,277 USA 9-26-89
5,234,009 ▇▇▇ ▇-▇▇-▇▇
SCHEDULE A
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TRADEMARK REG. NO.
PRO-DENTEC 1,953,949
PRO-DENTX 1,953,996
▇▇▇▇-▇▇▇▇ 1,431,860
▇▇▇▇▇▇ 1,804,289
PRO-CAM 1,798,603
MOBIUS 1,849,050
PROFESSIONAL RELATIONSHIP PROGRAM 1,849,625
PDT SENSOR 1,933,388
STM 1,935,285
SOFT TISSUE MANAGEMENT 1,890,856
BEYOND STM 1,900,160