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EXHIBIT 4.8
SECURITY AGREEMENT
Date: October 17, 1996
A. PARTIES
1. Debtor: AMERICAN DENTAL TECHNOLOGIES, INC.
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Check one: [ ] individual [ ] partnership [ X ] corporation [ ] other
2. Address: 00000 Xxxxxxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxxxxxxx, Xxxxxxxx 00000
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Address shown is [ ] place of business [ X ] chief executive office (if more than
one place of business) [ ] residence
3. Secured Party: THE INTERNATIONAL BANK
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4. Address: P. X. Xxxxxx 0000, Xxxxxx Xxxxxxx, Xxxxx 00000
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(Information concerning this security interest may be obtained at the
office of the Secured Party shown above).
B. AGREEMENT
Subject to the applicable terms of this Security Agreement, Debtor grants
to Secured Party a security interest in the collateral to secure the
payment of the obligations. A carbon, photographic, or other
reproduction of this Security Agreement may be filed as a financing
statement.
C. OBLIGATIONS
1. The following are the obligations secured by this Agreement:
a. All past, present, and future advances, of whatever, type, by Secured
Party to Debtor, and extensions and renewals thereof.
b. All existing and future liabilities of whatever type, of Debtor to
Secured Party, and including (but not limited to) liability for
overdrafts and as indorser and surety.
c. All costs incurred by Secured Party to obtain, preserve, and enforce
this security interest, collect the obligation, and maintain and
preserve the collateral, including (but not limited to) taxes,
assessments, insurance premiums, repairs, reasonable attorney's fees
and legal expenses, feed, rent, storage costs, and expenses of sale.
d. Interest on the above amounts, as agreed between Secured Party and
Debtor, or if no such agreement, at the maximum rate permitted by law.
2. List notes included in the obligations as of the date of this Agreement
(show date and amount):
a. Revolving Credit Promissory Note of even date herewith in the
principal face amount of $2,500,000.00 executed by Texas AirSonics,
Inc. and American Dental Technologies, Inc. payable to the order of
Secured Party.
D. COLLATERAL
1. The security interest is granted in the following collateral:
All of Debtor's present and future and now or hereafter acquired
accounts receivable and inventory; and all proceeds of the foregoing.
2. Classify goods under one or more of the following Uniform Commercial
Code categories:
[ ] Consumer goods [ ] Equipment (farm use) [ X ] Inventory
[ ] Equipment (business use) [ ] Farm products
E. AGREEMENTS OF DEBTOR
1. Debtor will: take adequate care of the collateral; insure the collateral
for such hazards and in such amounts as Secured Party directs, policies
to be satisfactory to Secured Party; pay all costs necessary to obtain,
preserve, and enforce this security interest, collect the obligation,
and preserve the collateral, including (but not limited to) taxes,
assessments, insurance premiums, repairs, reasonable attorneys' fees and
legal expenses, feed, rent, storage costs, and expenses of sale; furnish
Secured Party with any information on the collateral requested by
Secured Party; allow Secured Party to inspect the collateral, and
inspect and copy all records relating to the collateral and the
obligation; sign any papers furnished by Secured Party which are
necessary to obtain and maintain this security interest; assist Secured
Party in complying with the Federal Assignment of Claims Act, where
necessary to enable Secured Party to become an assignee under such Act;
take necessary steps to preserve the liability of account debtors,
obligors, and secondary
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parties whose obligations are part of the collateral; transfer
possession of all instruments, documents, and chattel paper which are
part of the collateral to Secured Party immediately, or as to those
hereafter acquired, immediately following acquisition; perfect a
security interest (using a method satisfactory to Secured Party) in
goods covered by chattel paper which is part of the collateral; notify
Secured Party of any change occurring in or to the collateral, or in any
fact or circumstance warranted or represented by Debtor in this
agreement or furnished to Secured Party, or if any event of default
occurs.
2. Debtor will not (without Secured Party's consent): remove the collateral
from the locations specified herein; allow the collateral to become an
accession to other goods; sell, lease, otherwise transfer, manufacture,
process, assemble, or furnish under contracts of service, the collateral,
except goods identified herein as inventory; allow the collateral to
be affixed to real estate, except goods identified herein as fixtures.
3. Debtor warrants: no financing statement has been filed with respect to
the collateral, other than relating to this security interest; Debtor is
absolute owner of the collateral, and it is not encumbered other
than by this security interest (and the same will be true of collateral
acquired hereafter when acquired); none of the collateral is affixed to
real estate or an accession to other goods, nor will collateral acquired
hereafter be affixed to real estate or an accession to other goods when
acquired, unless Debtor has furnished Secured Party the consents or
disclaimers necessary to make this security interest valid against persons
holding interests in the real estate or other goods: all account debtors
and obligors, whose obligations are part of the collateral, are to the
extent permitted by law prevented from asserting against Secured Party any
claims or defenses they have against sellers, or can be so prevented by
Secured Party taking action provided by law for such purposes.
F. RIGHTS OF SECURED PARTY
Secured Party may, in its discretion, after default: terminate, on notice
to Debtor, Debtor's authority to sell, lease, otherwise transfer,
manufacture, process or assemble, or furnish under contracts of service,
inventory collateral, or any other collateral as to which such permission has
been given; require Debtor to give possession or control of the collateral to
Secured Party; indorse as Debtor's agent any instruments or chattel paper in
the collateral; notify account debtors and obligors on instruments to make
payment direct to Secured Party; contact account debtors directly to verify
information furnished by Debtor; take control of proceeds and use cash
proceeds to reduce any part of the obligation; take any action Debtor is
required to take or otherwise necessary to obtain, preserve, and enforce this
security interest, and maintain and preserve the collateral, without notice
to Debtor, and add costs of same to the obligation (but Secured Party is
under no duty to take any such action); release collateral in its possession
to Debtor, temporarily or otherwise; take control of funds generated by the
collateral, such as dividends, interest, and proceeds or refunds from
insurance, and use same to reduce any part of the obligation; vote any stock
which is part of the collateral, and exercise all other rights which an owner
of such stock may exercise; waive any of its rights hereunder without such
waiver prohibiting the later exercise of the same or similar rights; revoke
any permission or waiver previously granted to Debtor.
G. MISCELLANEOUS
The rights and privileges of Secured Party shall inure to its successors
and assigns. All representations, warranties, and agreements of Debtor are
joint and several if Debtor is more than one and shall bind Debtor's personal
representatives, heirs, successors, and assigns. Definitions in the Uniform
Commercial Code apply to words and phrases in this agreement; if Code
definitions conflict, Article 9 definitions apply. Debtor waives
presentment, demand, notice of dishonor, protest, and extension of time
without notice as to any instruments and chattel paper in the collateral.
Notice mailed to Debtor's address in Item A2, or to Debtor's most recent
changed address on file with Secured Party, at least five (5) days prior to
the related action (or, if the Uniform Commercial Code specifies a longer
period, such longer period prior to the related action), shall be deemed
reasonable.
H. DEFAULT
1. Any of the following is an event of default: failure of Debtor to pay
any note in the obligation in accordance with its terms, or any other
liability in the obligation on demand, or to perform any act or duty
required by this agreement; falsity of any warranty or representation in
this agreement when made; substantial change in any fact warranted or
represented in this agreement; involvement of Debtor in bankruptcy or
insolvency proceedings, death, dissolution, or other termination of
Debtor's existence; merger or consolidation of Debtor with another;
substantial loss, theft, destruction, sale, reduction in value,
encumbrance of, damage to, or change in the collateral; modification of
any contract, the rights to which are part of the collateral; levy on,
seizure, or attachment of the collateral; judgment against Debtor; filing
any financing statement with regard to the collateral, other than relating
to this security interest; Secured Party's belief that the prospect of
payment of any part of the obligation, or the performance of any part of
this agreement, is impaired.
2. When an event of default occurs, the entire obligation becomes immediately
due and payable at Secured Party's option without notice to Debtor, and
Secured Party may proceed to enforce payment of same and exercise any and
all of the rights and remedies available to a secured party under the
Uniform Commercial Code as well as all other rights and remedies. When
Debtor is in default, Debtor, upon demand by Secured Party, shall assemble
the collateral and make it available to Secured Party at a place
reasonably convenient to both parties. Debtor is entitled to any surplus
and shall be liable to Secured Party for any deficiency.
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I. FIRST AND PRIOR LIEN
This security interest grants to Secured Party, a first and prior lien to
secure the payment of the notes and obligations listed herein, and extensions
and renewals thereof. If Secured Party disposes of the collateral following
default, the proceeds of such disposition available to satisfy the
indebtedness shall be applied first to the notes herein, and renewals and
extension thereof, in the order of execution, and there after to all
remaining indebtedness and obligations secured hereby, in the order in which
such remaining indebtedness and obligations were executed or contracted. For
the purpose of this paragraph, an extended or renewed note will be considered
executed on the date of the original note.
DEBTOR:
AMERICAN DENTAL TECHNOLOGIES, INC.
By: Xxxxxxxx X. Xxxxxxx, President
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Xxxxxxxx X. Xxxxxxx, President
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Typed Name and Title
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