PROMISSORY NOTE AND SECURITY INTEREST
$20,000 _________ ____, 2001
Salt Lake City, Utah
FOR VALUE RECEIVED, the undersigned, TOTAL DENTAL ADMINISTRATORS, INC., a Utah
Corporation, ("TDA"), hereby unconditionally promises to pay to SAFEGUARD HEALTH
ENTERPRISES, INC., a Delaware corporation ("SafeGuard"), or its designee,
successors and assigns, at its offices at 00 Xxxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx
00000, or at such other place as the holder of this promissory note (the "Note")
may from time to time designate in writing, the principal amount of Twenty
Thousand Dollars ($20,000), without interest.
1. Payments. All sums due hereunder shall be paid in lawful money of the
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United States, without any deduction whatsoever, including but not limited to
any deduction for any set-off or counterclaim over a twelve (12) month period,
in quarterly installments of Five Thousand Dollars ($5,000) (the "Payments")
commencing ninety (90) days following the date of this Note and each ninetieth
(90th) day thereafter until paid in full (the "Due Dates"). All payments due
hereunder shall be made to SafeGuard by check delivered to the address set forth
below or such other address as SafeGuard may designate from time to time by
written notice, or by wire transfer of immediately available funds to such bank
account as SafeGuard may designate.
2. Delinquent Payment. If any Payment is not paid within ten (10) days
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after any Due Date, TDA shall pay to SafeGuard, in addition to the Payment and
without any requirement of notice or demand by SafeGuard, a late payment charge
equal to one percent (1%) per month of the amount of the Payment or the maximum
amount permitted under applicable law from such Due Date until TDA pays the
Payment. TDA expressly acknowledges and agrees that the foregoing late payment
charge provision is reasonable under the circumstances existing on the date of
this Note, that it would be extremely difficult and impractical to fix
SafeGuard's actual damages arising out of any late payment and that the
foregoing late payment charge shall be presumed to be the actual amount of such
damages incurred by SafeGuard. No provision in this Note (including without
limitation the provisions for a late payment charge and for interest on any
amounts remaining unpaid after any Due Date) shall be construed as in any way
excusing TDA from its obligation to make any Payment under this Note promptly
when due.
3. Security Interest. As security for the payment of principal under this
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Note, TDA hereby grants to SafeGuard a security interest in and to all of the
shares of stock of SafeGuard Health Plans, Inc., a Utah corporation, obtained by
TDA from SafeGuard pursuant to that certain Stock Purchase Agreement between
SafeGuard and TDA dated as of the date of this Note, and all of the assets
purchased by TDA from SafeGuard pursuant to the Asset Purchase Agreement by and
between TDA and SafeGuard Health Plans, Inc., an Arizona corporation, dated as
of the date of this Note (collectively the "Collateral"). The security interest
xxxxxx created shall attach immediately upon execution of this Note and
concurrently herewith, TDA shall execute any financing statements requested by
SafeGuard to perfect the security interest created hereby. In addition, TDA
shall pay from its own funds, as they become due, all taxes and assessments
levied or assessed against the Collateral, or any part of the Collateral, prior
to the final termination of this Note. Upon any event of default hereunder,
SafeGuard shall be entitled to all the rights and remedies of a secured creditor
with respect to such Collateral.
4. Presentment, Notice of Dishonor and Protest. TDA consents to renewals,
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replacements and extensions of time for any payment hereof, before, at or after
maturity and waives, to the fullest extent permitted by applicable law,
diligence, grace, presentment, exhibition, protest, demand, dishonor, exemption
rights, nonpayment and notice, of every kind with respect to this Note or any
payment hereunder. No delay or omission on the part of SafeGuard in exercising
any power, right, privilege or remedy under this Note shall operate as a waiver
of such power, right, privilege or remedy or of any other power, right,
privilege or remedy hereunder. It is agreed that the granting to TDA or any
other party of an extension or renewal or extensions of the time for the payment
or renewal of any sum or sums due hereunder or under any other instrument or for
the performance of any covenant or stipulation thereof or the taking of security
shall not in any way release or effect the liability of TDA on this Note.
5. Assignment. SafeGuard shall have the right to sell, assign or otherwise
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transfer this Note, either in part or in its entirety, without TDA's consent.
This Note may not be assigned by TDA without the prior written consent of
SafeGuard or SafeGuard's successors, representatives or assigns.
6. Successors and Assigns. This Note and all of the covenants, promises and
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agreements contained in it, shall be binding on and inure to the benefit of the
respective legal representatives, successors and assigns of SafeGuard and TDA.
7. Modification. This Note may not be changed, modified, or terminated
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except by an agreement in writing signed by the parties or their successors and
assigns.
8. Severability. If any provision of this Note, or the application of it to
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any party or circumstance, is held to be invalid, illegal or unenforceable, the
remainder of this Note, and the application of such provision to other parties
or circumstances, shall not be affected thereby, the provisions of this Note
being severable in any such instance.
9. Attorneys' and Other Fees. TDA hereby agrees to pay all costs and
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expenses, including without limitation attorneys' fees and disbursements
incurred by SafeGuard, or adjudged by a court, in connection with the collection
or enforcement of this Note or any portion of this Note, whether or not a suit
is filed. This provision is separate and severable and shall survive any merger
of this Note into any judgment.
10. Notices. Notice to either party provided for in this Note shall be
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given by mailing such notice by certified mail, return receipt requested, to the
addresses stated below or such other address as either party may hereafter
specify in writing:
To TDA: To SafeGuard:
Total Dental Administrators, Inc. SafeGuard Health Enterprises, Inc.
000 Xxxx Xxxxxx Xxxxxxxx Xxxx, #0X 00 Xxxxxxxxxx
Xxxx Xxxx Xxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Attn: Ms. Xxxx Xxx Xxxxxxxx, Attn: Xxxxxx X. Xxxxxxxx
President and Chief Executive Officer Senior Vice President and General
Fax: (000) 000-0000 Counsel
Fax: (000) 000-0000
11. Governing Law. This Note shall be interpreted and construed in
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accordance with, and governed by, the internal laws and not the laws pertaining
to conflicts or choice of law of the State of California. The exclusive forum
for the determination of any action relating to the validity and enforceability
hereof shall be either an appropriate court of said State or a court of the
United States which includes said State within its territorial jurisdiction.
Executed at Salt Lake City, Utah, as of the 20th day of February, 2001.
TOTAL DENTAL ADMINISTRATORS, INC.,
a Utah corporation
By: /s/ Xxxx Xxx Xxxxxxxx
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Name: Xxxx Xxx Xxxxxxxx
Title: President and Chief Executive Officer
