1
Exhibit 10.8
SECURITY AGREEMENT
SECURITY AGREEMENT made as of August 4, 1995 by and between XXXXXX AND
XXXXXX, D.M.D., P.C., a Massachusetts professional corporation with a mailing
address at 0 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Debtor"), and
FIRST NEW ENGLAND DENTAL CENTERS, INC. a Delaware corporation with its office at
0 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("Secured Party").
WITNESSETH:
Debtor, for valuable consideration, hereby grants to and creates in
Secured Party a security interest in the Collateral, as hereinafter defined, now
owned and hereafter acquired by Debtor, and all proceeds thereof whether cash or
non-cash, to secure the Obligations of Debtor to Secured Party, as hereinafter
defined.
If Debtor shall well and truly perform the Obligations as hereinafter
defined, and shall pay in full when due the principal of and interest on any
Advances made to the Debtor by the Secured Party under that certain Revolving
Credit Agreement by and between Debtor and Secured Party of even date herewith
in accordance with the terms and conditions thereof, which Revolving Credit
Agreement is attached hereto and incorporated herein by reference as though
fully set forth (the "Revolving Credit Agreement"), or any renewal or extension
thereof, then this Agreement shall terminate; otherwise this Agreement shall
remain in full force and effect.
Debtor hereby represents, warrants, covenants and agrees to and with
Secured Party as follows:
1. SECURITY INTEREST. Debtor grants to Secured Party a security interest
("Security Interest") in: (1) all accounts and general intangibles (as such
terms are defined in the Uniform Commercial Code in effect in Massachusetts from
time to time [the "Uniform Commercial Code"]) in which Debtor now has or
hereafter acquires any right, and the proceeds therefrom whether cash or
non-cash, including any equipment or inventory purchased with cash proceeds; and
(2) all equipment and fixtures of Debtor, whether now owned or hereafter
acquired for use in Debtor's practice of dentistry, and all substitutions
therefor, accessions thereto and proceeds thereof, including any personal
property or fixtures purchased with cash proceeds (collectively, the
"Collateral"). The Security Interest shall secure the payment and performance of
Debtor's obligations under the Revolving Credit Agreement and all other
obligations of Debtor to Secured Party, including its obligation to pay or
reimburse Secured Party
2
for expenses of collection as provided herein (the "Obligations").
2. TITLE TO COLLATERAL. Except for the Security Interest created hereunder,
Debtor is (or, as to Collateral to be acquired after the date hereof, will be)
the owner of the Collateral free from any lien, security interest, claim, or
encumbrance and Debtor will defend the Collateral against all claims and demands
of all persons at any time claiming the same or any interest therein. During the
term of this Agreement, Debtor shall not grant any security interest in the
Collateral without the prior express written consent of Secured Party.
Notwithstanding anything in this paragraph 2 to the contrary, Debtor may grant a
purchase money security interest in connection with the purchase of any
equipment specified in a budget for Debtor's practice approved by Secured Party
under paragraph 1.3 of the Revolving Credit Agreement.
3. FINANCING STATEMENTS AND OTHER ACTIONS. Debtor agrees to do all acts as
may be reasonably necessary to perfect or protect the Security Interest or to
otherwise carry out the provisions of this Agreement, including but not limited
to the execution of financing statements, amendments and similar instruments and
the procurement of waivers and disclaimers of interest in the Collateral by
others. Secured Party may file as a financing statement a carbon, photographic
or other reproduction of this Agreement or a financing statement.
4. DEBTOR'S PLACE(S) OF BUSINESS. Debtor represents that Debtor's place(s)
of business is located at the address(es) set forth in Exhibit A and the records
concerning Debtor's accounts are located at the address(es) set forth in Exhibit
B. Debtor covenants to notify Secured Party of any change in the information
contained in this Paragraph 4.
5. LOCATION OF COLLATERAL. Debtor warrants and covenants that all of the
Collateral shall be located at Debtor's place of business specified in this
Agreement.
6. MAINTENANCE OF COLLATERAL. Debtor shall preserve the Collateral for the
benefit of Secured Party. Without limiting the generality of the foregoing,
Debtor shall preserve all beneficial contract rights and take all commercially
reasonable steps to collect all accounts promptly. Debtor shall not encumber,
sell or otherwise dispose of any item of the Collateral. Debtor shall have and
maintain insurance at all times with respect to the Collateral against all risks
of physical loss or damage to the Collateral in accordance with paragraph 5 of
the Agreement.
7. MAINTENANCE OF RECORDS. Debtor covenants to keep accurate and complete
books of record and account, in which proper entries shall be made of all its
dealings in accordance
- 2 -
3
with sound accounting practices. Secured Party shall have the right to audit and
make copies of any records or other writings which relate to the Collateral.
8. TAXES AND ASSESSMENTS. Debtor will pay when due all tax assessments and
all taxes imposed upon the Secured Party by reason of this Security Interest, or
the Obligations hereby secured, as well as any specific tax now or hereafter
created by law upon said Obligations or such Security Interest while the Secured
Party is holder hereof. If such taxes or other assessments remain unpaid after
the date fixed for payment of same, without penalty or interest, or if any lien
be claimed which, in the opinion of the Secured Party, or its counsel, would
create a valid obligation having priority over this Security Interest, Secured
Party may pay such tax, assessments and claims and the amount paid shall be
added to the Obligations, but there shall be no obligation on the part of
Secured Party to make any such payment.
9. POWERS OF SECURED PARTY. Until discharge of the Obligations, in the
event of Default by Debtor, Secured Party is authorized and shall be entitled to
do, either in its own name or in the name of Debtor, all reasonable things with
reference to the Collateral that the Debtor might reasonably have done to
protect the Collateral and the proceeds thereof, were it not for the creation of
the Security Interest granted herein, including, but not limited to, the
following rights:
A. To collect, xxx for and receive payment of the proceeds of the
Collateral;
B. To endorse, in the name of Debtor, any instruments payable to
Debtor which shall be received or collected in partial or full
payment of the Collateral;
C. To settle, adjust and compromise all present and future claims
arising out of any of the Collateral; and
D. To notify account debtors on the Collateral to make payment
directly to Secured Party.
The Secured Party shall give the Debtor ten (10) days advance written
notice, during which time the Debtor may take curative action, before the
Secured Party exercises any of the powers referred to in this Paragraph.
10. COLLATERAL HEREAFTER ACQUIRED. The warranties, representations,
covenants and agreements made by Debtor with respect to Collateral now owned by
Debtor shall be presumed to be made by Debtor with respect to all Collateral
hereafter acquired and owned by Debtor as of the time Debtor first acquires
rights in such Collateral.
- 3 -
4
11. EVENTS OF DEFAULT. Until the Obligations are paid in full, the
occurrence of any one or more of the following shall be an event of default
hereunder ("Events of Default"):
A. Debtor fails to pay or perform any of the Obligations when due;
or
B. Debtor fails to perform its covenants under this Agreement,
subject to any grace period included herein, and in the absence
of such grace period, if Debtor's failure to perform continues
for thirty (30) days after the date of notice of default; or
C. the occurrence of any event which permits the Secured Party to
terminate the Agreement, or any event which constitutes a default
under the Revolving Credit Agreement or any other obligation of
Debtor to Secured Party.
12. RIGHTS UPON DEFAULT. Upon the occurrence of an Event of Default,
Secured Party may (a) upon notice to Debtor declare the Obligations to be
immediately due and payable without presentment, demand, or protest of any kind,
all of which are hereby expressly waived, and (b) exercise the rights and
remedies accorded a secured party by the Uniform Commercial Code.
No course of dealing or delay in accelerating the Obligations or in taking
or failing to take any other action with respect to any Event of Default shall
affect Secured Party's right to take such action at a later time. No waiver as
to any one default shall affect Secured Party's rights upon any other default.
13. EXPENSES. Any payment made or expense incurred by Secured Party
(including reasonable attorneys' fees and disbursements) in connection with the
exercise of any right on default shall be added to the indebtedness of Debtor to
Secured Party, shall be payable upon demand and shall be secured by the Security
Interest.
14. NOTICES. Any notice under this Agreement shall be in writing and shall
be deemed delivered if mailed, postage prepaid to a party at the principal place
of business specified in this Agreement or such other address as may be
specified by notice given after the date hereof.
15. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
and shall bind the heirs, executors, administrators, legal representatives,
successors and assigns of the parties.
16. GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the Commonwealth of Massachusetts.
- 4 -
5
This Agreement shall have the effect of an instrument under seal.
XXXXXX AND XXXXXX, D.M.D., P.C.
By: /s/Xxxxxx Xxxxxx
------------------------------------
President
6
EXHIBIT A
---------
Place(s) of Business
7
EXHIBIT B
---------
Location of Records
