EXHIBIT 10.14
SECURITY AGREEMENT
THIS AGREEMENT, entered into as of April 1, 1997, between GMS DENTAL GROUP,
INC., a Delaware corporation (the "Company"), and XXXXXXX X. XXXXX
("Purchaser").
W I T N E S S E T H:
WHEREAS, Purchaser has purchased from the Company 750,000 shares of the
Company's Common Stock (the "Shares"); and
WHEREAS, the Company has loaned to Purchaser the amount of $150,000.00
which Purchaser has used to pay the purchase price of the Shares; and
WHEREAS, Purchaser has executed and delivered to the Company a
full-recourse Promissory Note evidencing such loan (the "Note") and has agreed
to pledge all of the Shares to the Company as security for the payment of the
Note:
NOW, THEREFORE, it is agreed as follows:
1. Purchaser hereby delivers to the Company one or more certificates
representing the Shares, together with two Assignments Separate From Certificate
endorsed in blank by the Purchaser. Purchaser hereby pledges and grants a
security interest in the Shares, including any shares into which the Shares may
be converted and all proceeds of the Shares, as security for the timely payment
of all of Purchaser's obligations under the Note and for Purchaser's performance
of all of its obligations under this Agreement. In the event of a default in
payment of the Note, Purchaser hereby appoints the Company as his true and
lawful attorney to take such action as may be necessary or appropriate to cause
the Shares to be transferred into the name of the Company or any assignee of the
Company and to take any other action on behalf of Purchaser permitted hereunder
or under applicable law.
2. The Company agrees to hold the Shares as security for the timely
payment of all of Purchaser's obligations under the Note and for Purchaser's
performance of all of its obligations under this Agreement, as provided herein.
At no time shall the Company dispose of or encumber the Shares, except as
otherwise provided in this Agreement.
3. At all times while the Company is holding the Shares as security under
this Agreement, the Company shall:
(a) Collect any dividends that may be declared on the Shares and
credit such dividends against any accrued interest or unpaid principal under the
Note, as part payment;
(b) Collect and hold any shares that may be issued upon conversion of
the Shares; and
(c) Collect and hold any other securities or other property that
may be distributed with respect to the Shares.
Such shares and other securities or property shall be subject to the security
interest granted in Section 1 of this Agreement and shall be held by the Company
under this Agreement.
4. While the Shares are pledged to the Company, as security under
this Agreement, Purchaser shall have the right to vote the Shares at all
meetings of the Company's stockholders; provided that Purchaser is not in
default in the performance of any material term of this Agreement or in any
payment due under the Note. In the event of such a default, the Company shall
have the right to the extent permitted by law to vote and to give consents,
recertifications and waivers and take any other action with respect to the
Shares with the same force and effect as if the Company were the absolute and
sole owner of the Shares.
5. Upon payment of all or part of the outstanding principal balance
of the Note and any interest and other charges due under the Note, the Company
shall release from pledge and redeliver to Purchaser the certificate(s)
representing the Shares for which payment has been received and the Assignment
Separate From Certificate forms.
6. Following ten (10) days prior written notice of Purchaser's
failure to perform any material term of this Agreement or failure to make any
payment when due under the Note, and Purchaser has not cured such failure within
the 10-day period, the Company shall have all of the rights and remedies of a
creditor and secured party at law and in equity, including (without limitation)
through a public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future deliver. The Company is authorized
at any such sale, if it deems it advisable to do so, to restrict the prospective
bidders or purchasers of any of the Shares to persons who will represent and
agree that they are purchasing for their own account for investment, and not
with a view to the distribution or sale of any of the Shares, to restrict the
prospective bidders or purchasers and the use any purchaser may make of the
Shares and impose any other restriction or condition that the Company deems
necessary or advisable under the federal and state securities laws. Upon any
such sale the Company shall have the right to deliver, assign and transfer to
Purchaser thereof the Shares so sold. Each purchaser at any such sale shall hold
the Shares so sold absolute, free from any claim or right of any kind. In case
of any sale of any or all of the Shares on credit or for future delivery, the
Shares so sold may be retained by the Company until the selling price is paid by
Purchaser thereof, but the Company shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Shares to sold and, in case
of any such failure, such Shares may again be sold under the terms of this
section. Purchaser hereby agrees that any disposition of any or all of the
Shares by way of a private placement or other method which is in the opinion of
the Company is required or advisable under Federal and state securities laws is
commercially reasonable. At any public sale, the Company may (if it is the
highest bidder) purchase all or any part of the Shares at such price as the
Company deems proper. Out of the proceeds of any sale, the Company may retain an
amount sufficient to pay all amounts then due under the Note, together with the
expenses of the sale an reasonable attorneys' fees. The Company shall pay
the balance of such proceeds, if any, to Purchaser. Purchaser shall be liable
for any deficiency that remains after the Company has exercised its rights under
this Agreement.
7. This Agreement shall be governed by and construed in accordance
with the laws of the State of California. This Agreement shall inure to the
benefit of, and be binding upon, the Company and its successors and assigns and
be binding upon Purchaser and Purchaser's legal representative, heirs, legatees,
distributees, assigns and transferees by operation of law. This Agreement
contains the entire security agreement between the Company and Purchaser.
Purchaser will execute any additional agreements, assignments or documents or
take any other actions reasonably required by the Company to preserve and
perfect the security interest in the Shares granted to the Company herein and
otherwise to effectuate this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer, and Purchaser has
personally executed this Agreement.
GMS DENTAL GROUP, INC.
By _____________________________
Xxxxx X. Xxxxxx
Chairman of the Board
PURCHASER
________________________________
Xxxxxxx X. Xxxxx
