Document:

Prepared by MERRILL CORPORATION

Exhibit 4.2

 

U.S. Small Business

Administration

U.S. Small Business Administration

NOTE

 

 

 

	

  SBA Loan #

  	

  PLP-490-270-4001

  
	

  SBA Loan Name 

  	

  AMERICAN MEDICAL TECHNOLOGIES, INC.

  
	

  Date

  	

  October 3, 2001

  
	

  Loan Amount

  	

  $750,000.00

  
	

  Interest Rate

  	

  2.0% above the Prime Rate, variable monthly

  
	

  Borrower

  	

  AMERICAN MEDICAL TECHNOLOGIES, INC.

  
	

  Operating

  Company

  	

   

  
	

  Lender

  	

  VALUEBANK TEXAS

  

 

	

  1.

  	

  PROMISE TO

  PAY:

  
	

   

  	

   

  	

   

  
	

   

  	

  In return

  for the Loan, Borrower promises to pay to the order of Lender the amount of

  
	

   

  	

  SEVEN

  HUNDRED FIFTY THOUSAND AND NO/ 100 ––––––––––––––––––––––––––––––––––––

  Dollars,

  
	

   

  	

  interest on

  the unpaid principal balance, and all other amounts required by this Note.

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  2.

  	

  DEFINITIONS:

  
	

   

  	

   

  	

   

  
	

   

  	

  "Collateral"

  means any property taken as security for payment of this Note or any

  guarantee of this Note.

  
	

   

  	

  "Guarantor"

  means each person or entity that signs a guarantee of payment of this Note.

  
	

   

  	

  "Loan"

  means the loan evidenced by this Note.

  
	

   

  	

  "Loan

  Documents" means the documents related to this loan signed by Borrower,

  any Guarantor, or anyone who pledges 

    collateral.

  
	

   

  	

  "SBA"

  means the Small Business Administration, an Agency of the United States of

  America.

  

 

	

  3.

  	

  PAYMENT

  TERMS:

  
	

   

  	

   

  
	

   

  	

  Borrower

  must make all payments at the place Lender designates. The payment terms for

  this Note are:

  
	

   

  	

   

  
	

   

  	

  The interest

  rate on this Note will fluctuate. The initial interest rate is 8.5% per year.

  This initial rate is the Prime Rate on the date SBA received the loan

  application, plus 2.0%. The initial interest rate must remain in effect until

  the first change period begins.

  
	

   

  	

   

  
	

   

  	

  Borrower

  must pay interest on the disbursed principal balance every month, plus a

  principal payment of $750,000.00 in the month of October, 2002; interest

  payments must be made on the tenth calendar day in the months they are due;

  principal payments must be made on the same day as the date of this Note in

  the months they are due.

  
	

   

  	

   

  
	

   

  	

  Lender will

  apply each installment payment first to pay interest accrued to the day

  Lender receives the payment, then to bring principal current, then to pay any

  late fees, and will apply any remaining balance to reduce principal.

  
	

   

  	

   

  
	

   

  	

  The interest

  rate will be adjusted monthly (the "change period").

  
	

   

  	

   

  
	

   

  	

  The

  "Prime Rate" is the prime rate in effect on the first business day

  of the month in which an interest rate change occurs, as published in the

  Wall Street Journal on the next business day.

  
	

   

  	

   

  
	

   

  	

  The adjusted

  interest rate will be 2.0% above the Prime Rate. Lender will adjust the

  interest rate on the first calendar day of each change period. The change in

  interest rate is effective on that day whether or not Lender gives Borrower

  notice of the change. The initial interest rate must remain in effect until

  the first change period begins.

  
	

   

  	

   

  
	

   

  	

  Lender must

  adjust the payment amount at least annually as needed to amortize principal

  over the remaining term of the note.

  
	

   

  	

   

  
	

   

  	

  If SBA

  purchases the guaranteed portion of the unpaid principal balance, the

  interest rate becomes fixed at the rate in effect at the time of the earliest

  uncured payment default. If there is no uncured payment default, the rate

  becomes fixed at the rate in effect at the time of purchase.

  
	

   

  	

   

  
	

   

  	

  All

  remaining principal and accrued interest is due and payable 1 year from the

  date of this Note.

  
	

   

  	

   

  
	

   

  	

  Late Charge:

  If a payment on this Note is more than 10 days late, Lender may charge

  Borrower a late fee of up to 5% of the unpaid portion of the regularly

  scheduled payment.

  
	

   

  	

   

  
	

   

  	

  Interest may

  be computed on a per annum basis of a year of three hundred sixty days.

  

 

	

   

  	

   

  
	

  4.

  	

  RIGHT TO

  PREPAY:

  
	

   

  	

   

  
	

   

  	

  Borrower may

  prepay this Note. Borrower may prepay 20 percent or less of the unpaid

  principal balance at any time without notice. If Borrower prepays more than

  20 percent and the Loan has been sold on the secondary market,

  
	

   

  	

  Borrower

  must:

  
	

   

  	

   

  
	

   

  	

  A.

  	

  Give Lender

  written notice;

  
	

   

  	

  B.

  	

  Pay all

  accrued interest; and

  
	

   

  	

  C.

  	

  If the

  prepayment is received less than 21 days from the date Lender receives the

  notice, pay an amount equal to 21 days' interest from the date lender

  receives the notice, less any interest accrued during the 21 days and paid

  under subparagraph B.

  
	

   

  	

   

  	

   

  
	

   

  	

  If Borrower

  does not prepay within 60 days from the date Lender receives the notice,

  Borrower must give Lender a new notice.

  
	

   

  	

   

  
	

   

  	

   

  
	

  5.

  	

  DEFAULT:

  
	

   

  	

   

  
	

   

  	

  Borrower is

  in default under this Note if Borrower does not make a payment when due under

  this Note, or if Borrower or Operating Company:

  
	

   

  	

   

  
	

   

  	

  A.

  	

  Fails to do

  anything required by this Note and other Loan Documents;

  
	

   

  	

  B.

  	

  Defaults on

  any other loan with Lender;

  
	

   

  	

  C.

  	

  Does not

  preserve, or account to Lender's satisfaction for, any of the Collateral or

  its proceeds;

  
	

   

  	

  D.

  	

  Does not

  disclose, or anyone acting on their behalf does not disclose, any material

  fact to Lender or SBA;

  
	

   

  	

  E.

  	

  Makes, or

  anyone acting on their behalf makes, a materially false or misleading representation

  to Lender or SBA;

  
	

   

  	

  F.

  	

  Defaults on

  any loan or agreement with another creditor, if Lender believes the default

  may materially affect Borrower's ability to pay this Note;

  
	

   

  	

  G.

  	

  Fails to pay

  any taxes when due;

  
	

   

  	

  H.

  	

  Becomes the

  subject of a proceeding under any bankruptcy or insolvency law;

  
	

   

  	

  I.

  	

  Has a

  receiver or liquidator appointed for any part of their business or property;

  
	

   

  	

  J.

  	

  Makes an

  assignment for the benefit of creditors;

  
	

   

  	

  K.

  	

  Has any

  adverse change in financial condition or business operation that Lender

  believes may materially affect Borrower's ability to pay this Note;

  
	

   

  	

  L.

  	

  Reorganizes,

  merges, consolidates, or otherwise changes ownership or business structure

  without Lender's prior written consent; or

  
	

   

  	

  M.

  	

  Becomes the

  subject of a civil or criminal action that Lender believes may materially

  affect Borrower's ability to pay this Note.

  
	

   

  	

   

  
	

   

  	

   

  
	

  6.

  	

  LENDER'S

  RIGHTS IF THERE IS A DEFAULT:

  
	

   

  	

   

  
	

   

  	

  Without

  notice or demand and without giving up any of its rights, Lender may:

  
	

   

  	

   

  
	

   

  	

  A.

  	

  Require

  immediate payment of all amounts owing under this Note;

  
	

   

  	

  B. 

  	

  Collect all

  amounts owing from any Borrower or Guarantor;

  
	

   

  	

  C.

  	

  File suit

  and obtain judgment;

  
	

   

  	

  D.

  	

  Take

  possession of any Collateral; or

  
	

   

  	

  E. 

  	

  Sell, lease,

  or otherwise dispose of, any Collateral at public or private sale, with or

  without advertisement.

  

 

 

	

  7.

  	

  LENDER'S

  GENERAL POWERS:

  
	

   

  	

   

  
	

   

  	

  Without

  notice and without Borrower's consent, Lender may:

  
	

   

  	

   

  
	

   

  	

  A.

  	

  Bid on or

  buy the Collateral at its sale or the sale of another lienholder, at any

  price it chooses;

  
	

   

  	

  B.

  	

  Incur

  expenses to collect amounts due under this Note, enforce the terms of this

  Note or any other Loan Document, and preserve or dispose of the Collateral.

  Among other things, the expenses may include payments for property taxes,

  prior liens, insurance, appraisals, environmental remediation costs, and

  reasonable attorney's fees and costs. If Lender incurs such expenses, it may

  demand immediate repayment from Borrower or add the expenses to the principal

  balance;

  
	

   

  	

  C.

  	

  Release

  anyone obligated to pay this Note;

  
	

   

  	

  D.

  	

  Compromise,

  release, renew, extend or substitute any of the Collateral; and

  
	

   

  	

  E.

  	

  Take any

  action necessary to protect the Collateral or collect amounts owing on this

  Note.

  
	

   

  	

   

  
	

   

  	

   

  
	

  8.

  	

  WHEN FEDERAL

  LAW APPLIES:

  
	

   

  	

   

  
	

   

  	

  When SBA is

  the holder, this Note will be interpreted and enforced under federal law,

  including SBA regulations. Lender or SBA may use state or local procedures

  for filing papers, recording documents, giving notice, foreclosing liens, and

  other purposes. By using such procedures, SBA does not waive any federal

  immunity from state or local control, penalty, tax, or liability. As to this

  Note, Borrower may not claim or assert against SBA any local or state law 

  to deny any obligation, defeat any claim of SBA, or preempt

  federal law.

  
	

   

  	

   

  
	

   

  	

   

  
	

  9.

  	

  SUCCESSORS

  AND ASSIGNS:

  
	

   

  	

   

  
	

   

  	

  Under this

  Note, Borrower and Operating Company include the successors of each, and

  Lender includes its successors and assigns.

  
	

   

  	

   

  
	

   

  	

   

  
	

  10.

  	

  GENERAL

  PROVISIONS:

  
	

   

  	

   

  
	

   

  	

  A.

  	

  All

  individuals and entities signing this Note are jointly and severally liable.

  
	

   

  	

  B.

  	

  Borrower

  waives all suretyship defenses.

  
	

   

  	

  C.

  	

  Borrower

  must sign all documents necessary at any time to comply with the Loan

  Documents and to enable Lender to acquire, perfect, or maintain Lender's

  liens on Collateral.

  
	

   

  	

  D.

  	

  Lender may

  exercise any of its rights separately or together, as many times and in any

  order it chooses. Lender may delay or forgo enforcing any of its rights

  without giving up any of them.

  
	

   

  	

  E.

  	

  Borrower may

  not use an oral statement of Lender or SBA to contradict or alter the written

  terms of this Note.

  
	

   

  	

  F.

  	

  If any part

  of this Note is unenforceable, all other parts remain in effect.

  
	

   

  	

  G.

  	

  To the

  extent allowed by law, Borrower waives all demands and notices in connection

  with this Note, including presentment, demand, protest, and notice of

  dishonor. Borrower also waives any defenses based upon any claim that Lender

  did not obtain any guarantee; did not obtain, perfect, or maintain a lien

  upon Collateral; impaired Collateral; or did not obtain the fair market value

  of Collateral at a sale.

  

 

 

	

  11.

  	

  STATE–SPECIFIC

  PROVISIONS:

  
	

   

  	

   

  
	

   

  	

  As set forth

  in Loan Agreement of even date.

  

 

 

	

  12.

  	

  BORROWER'S

  NAME(S) AND SIGNATURE(S):

  
	

   

  	

   

  
	

   

  	

  By signing

  below, each individual or entity becomes obligated under this Note as Borrower.

  

 

 

	

   

  	

  AMERICAN

  MEDICAL TECHNOLOGIES, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Benjamin

  J. Gallant

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

       BENJAMIN J. GALLANT

  
	

   

  	

   

  	

       Chairman–& CEOPrepared by MERRILL CORPORATION

Exhibit 4.3

 

SBA Loan No.

PLP-490–270-4001

 

DEED

OF TRUST, SECURITY AGREEMENT

AND

ASSIGNMENT OF RENTS

 

	

  STATE OF TEXAS

  	

  §

  	

   

  
	

   

  	

  §

  	

  KNOW ALL MEN BY THESE

  PRESENTS:

  
	

  COUNTY OF NUECES

  	

  §

  	

   

  

 

That AMERICAN MEDICAL TECHNOLOGIES, INC., a Delaware corporation, f/k/a

AMERICAN DENTAL TECHNOLOGIES, INC., by merger with TEXAS AIRSONICS, INC., whose

mailing address is 5555 Bear Lane, Corpus Christi, Texas 78405, hereinafter

called "Mortgagor" (whether one or more) for the purpose of securing

the indebtedness hereinafter described, and in consideration of the sum of TEN

DOLLARS ($10.00) to Mortgagor in hand paid by the Trustee hereinafter named,

the receipt of which is hereby acknowledged, and for the further consideration

of the uses, purposes and trusts hereinafter set forth, has granted, sold and

conveyed, and by these presents does grant, sell and convey unto SCOTT

HEITKAMP, Trustee, whose mailing address is P. 0. Box 4956, Corpus Christi,

Texas 78469, and his or its substitutes or successors, all of the following

described property, to–wit:

 

(a)           That land located in Nueces County,

Texas, more particularly described as follows:

 

Lot One (1), Block Two (2), INDUSTRIAL TECHNOLOGY PARK

UNIT 1,

City of Corpus Christi, Nueces County, Texas,

according to map or plat 

thereof recorded in Volume 46, Pages 105–107 of

the Map Records of Nueces 

County, Texas.

 

(b)           All fixtures and improvements now or

hereafter situated on said land, and all the water rights and other rights,

hereditaments and appurtenances in anywise appertaining or belonging thereto.

 

(c)           All proceeds now or hereafter arising

from the foregoing listed properties and types of properties.

 

All of the above types and items of properties are herein referred to

as the "property".

 

                This conveyance is

subject to all lawful restrictive covenants and easements, if any, of record in

the office of the County Clerk of the County in which said land is located and

presently in force and affecting said land. There is also excepted herefrom all

oil, gas and other minerals, if any, heretofore conveyed to others or reserved

by Mortgagor's predecessors in title as shown by the records of said Clerk.

 

                TO HAVE AND TO

HOLD the above described property, together with the rights, privileges and

appurtenances thereto belonging unto the said Trustee, and to the said

Trustee's substitutes or successors forever. And Mortgagor does hereby bind

itself and its successors to warrant and forever defend the property unto the

said Trustee, and the Trustee's substitutes or successors and assigns forever, against

the claim, or claims, of all persons claiming or to claim the same or any part

thereof.

 

                This conveyance,

however, is made in TRUST to secure payment of the following:

 

(a)           That certain promissory note of even

date herewith executed by AMERICAN MEDICAL TECHNOLOGIES, INC., payable to the

order of VALUEBANK

TEXAS (herein called "Beneficiary"), whose mailing address

is P. 0. Box 4956, Corpus Christi, Texas 78469, described as follows, to–wit:

 

In the original principal sum of SEVEN HUNDRED FIFTY

THOUSAND AND N0/100 DOLLARS ($750,000.00) maturing 1 year from date.

 

 

(b)           Any sums which may hereafter be

advanced by Beneficiary under the terms hereof together with interest thereon

and attorney's fees as hereinafter provided;

 

(c)           Any and all renewals and extensions

of the foregoing, regardless of the number of or length of time of such

renewals and extensions, and regardless of whether or not Mortgagor joins in or

executes an agreement relating to such renewals and extensions.

 

                Should Mortgagor

do and perform all of the covenants and agreements herein contained, and make

prompt payment of said indebtedness as the same shall become due and payable,

then this conveyance shall become null and void and of no further force and

effect, and shall be released at the expense of Mortgagor, by the holder

thereof, herein called "Beneficiary" (whether one or more).

 

                Mortgagor

covenants and agrees as follows:

 

                That Mortgagor is

lawfully seized of said property, and has the right to convey the same; that

said property is free from all liens and encumbrances except as may herein be

specifically set forth.

 

                To protect the

title and possession of said property and to pay when due all taxes and

assessments now existing or hereafter levied or assessed upon said property, or

the interest therein created by this Deed of Trust, and to preserve and

maintain the lien hereby created prior to all other liens except as may herein

be specifically provided, and to not place or allow the creation or placement

of any other liens on said property without the prior written approval of

Beneficiary.

 

                To keep the

improvements on said land, and any goods covered hereby, in good repair and

condition, and not to permit or commit any waste thereof; to keep all buildings

occupied so as not to impair the insurance carried thereon.

 

                To insure and keep

insured all improvements now or hereafter created upon said land, and the goods

covered hereby, against loss or damage by fire and windstorm, and any other

hazard or hazards (including but not limited to flood insurance if in a special

flood hazard area designated by HUD) as may be reasonably required from time to

time by Beneficiary during the term of the indebtedness hereby secured, to the

extent of the amount of the indebtedness hereby secured, or to the extent

necessary to prevent Mortgagor from being a co–insurer under the

insurance policies, whichever is the greater, in such form and with such

insurance company or companies as may be approved by Beneficiary, and to

deliver to Beneficiary the policies of such insurance having attached to said

policies such mortgage indemnity clause as Beneficiary shall direct; to deliver

renewals of such policies to Beneficiary at least ten (10) days before any such

insurance policies shall expire; any proceeds which Beneficiary may receive

under any such policy, or policies, may be applied by Beneficiary at his own

option, to reduce the indebtedness hereby secured, whether then matured or to

mature in the future, and in such manner as Beneficiary may elect, or Beneficiary

may permit Mortgagor to use said proceeds to repair or replace all improvements

damaged or destroyed and covered by said policy.

 

                To comply with all

terms and conditions of any loan agreement made in connection with the

indebtedness secured hereby.

 

                If requested by

Beneficiary to provide within 30 days of a request being made, an appraisal by

an MAI appraiser or other appraiser approved by Beneficiary, and Mortgagor

agrees that if Mortgagor does not timely comply with a request made for an

appraisal that Beneficiary may obtain such appraisal at Mortgagor's expense.

 

                To provide

Beneficiary on at least an annual basis, with each Mortgagor's and each Maker's

financial statements including a current balance sheet, current income

statement and current statement of sources and uses of cash.

 

                Within 15 days of

demand made by Beneficiary, to make an initial deposit in a reasonable amount

determined by Beneficiary and then monthly payments to a fund for taxes and

insurance premiums on the property. Monthly payments will be made on the

payment date specified in the note, and each payment will be 1/12 of the amount

that Beneficiary estimates will be required annually for payment of taxes and

insurance premiums. The fund will accrue no interest, and Beneficiary will hold

it without bond in escrow and use it to pay the taxes and insurance premiums.

If Mortgagor has complied with the requirements of this paragraph, Beneficiary

must pay the taxes before delinquency. Mortgagor agrees to make additional

deposits on demand if the fund is ever insufficient for its purpose. If an

excess accumulates in the fund, Beneficiary may either credit it to future

monthly deposits until the excess is exhausted or refund it to Mortgagor.

Before Mortgagor makes the final payment on the note, Beneficiary will credit

to that payment the whole amount then in the fund or, at Beneficiary's option,

refund it after the note is paid. If this Deed of Trust is foreclosed, any

balance in the fund over that needed to pay taxes, including taxes accruing but

not yet payable, and to pay insurance premiums will be first applied to the

balance, if any, of indebtedness secured hereby and the remainder, if any,

refunded to Mortgagor. Deposits to the fund described in this paragraph are in

addition to the monthly payments provided for in the note.

 

                To the extent not

prohibited by law, Mortgagor will pay, or reimburse Beneficiary for, all costs

and expenses, of every character, incurred or expended from time to time

(including, but not limited to, the fees and expenses of counsel for

Beneficiary) in connection with the negotiation, preparation, execution,

filing, recording, refiling and re–recording of this Deed of Trust and

all related financing statements and the making, servicing and collection of

the debt secured hereby; any and all stamp, mortgage and recording taxes; the

costs of any title insurance or lien insurance purchased by Beneficiary in

connection herewith; all costs of negotiation, preparation, execution and

delivery of any and all amendments, modifications, supplements, consents,

waivers or other documents or writings relating to the transactions

contemplated by this Deed of Trust; and all costs (including attorneys' fees)

of reviewing title opinions and security opinions relating to the debt secured

hereby.

 

                With respect to

any substances defined as or included in the definition of "hazardous

substances," "hazardous wastes," "hazardous materials"

or "toxic substances" under any applicable federal, state or local

laws, ordinances or regulations (including, without limitation, friable

asbestos and asbestos deemed hazardous by federal or state regulations) (such

substances collectively referred to hereinafter as "Hazardous

Materials" and such laws, ordinances and regulations together with all

rules, orders and permits pursuant thereto collectively referred to hereinafter

as "Hazardous Materials Laws"), Mortgagor:

 

(a)           represents that (except as to

Hazardous Materials violations that have been remedied as required by

governmental authorities having jurisdiction of the matter) neither Mortgagor

nor any affiliate, employee, or agent of Mortgagor nor, to the best of

Mortgagor's knowledge, any of Mortgagor's predecessors in title (i) has ever

stored, buried, installed, transported, treated or disposed of any Hazardous

Materials at, to or from the property in violation of any applicable Hazardous

Materials Laws, (ii) has ever caused or was legally responsible for the

release, discharge, emission, leak, spill or dumping of any Hazardous Materials

at or from the property except for those releases allowed under applicable

Hazardous Materials Laws, or (iii) has ever received notification from any

federal, state or other governmental authority of the presence or potential or

actual release of any Hazardous Materials at or from the property;

 

(b)           covenants to (i) comply with all

applicable Hazardous Materials Laws with respect to the manufacture, storage,

transmission, presence, discharge and removal of Hazardous Materials at or from

the property, (ii) pay promptly when due the costs of any required removal of

any Hazardous Materials from the property and to keep the property free of any

lien imposed pursuant to any Hazardous Materials Laws, (iii) not locate nor

allow location of any underground storage tanks on the property, and (iv)

notify Beneficiary promptly in writing of the commencement of any legal or

regulatory proceedings relating to Hazardous Materials affecting the property;

and

 

(c)           agrees to indemnify and to hold

harmless Beneficiary, its officers, employees, agents, successors and assigns

(the "Indemnitees") from and against, and to reimburse the

Indemnitees with respect to, any and all claims, demands, causes of action,

loss, damage, liabilities, costs, and expenses (including attorneys' fees and

court costs) of any and every kind or character, known or unknown, fixed or

contingent, asserted against or incurred by the Indemnitees at any time or from

time to time, whether as beneficiary under the Deed of Trust, as mortgagee in

possession, or as successor–in–interest to Mortgagor by foreclosure

deed or deed in lieu of foreclosure, by reason of or arising out of any

violation of any Hazardous Materials Laws (including, without limitation, all

claims, demands, loss, damage, liabilities, costs and expenses in connection

with the presence on the property or release from or to the property of

Hazardous Materials disposed of or otherwise released), regardless of whether

the act, omission, event, or circumstance constituted a violation of applicable

law at the time of existence or occurrence. Mortgagor's obligations hereunder

shall arise upon the discovery of the presence of any Hazardous Materials,

whether or not any federal agency or any state or local environmental agency

has taken or threatened any action in connection with the presence of any

Hazardous Materials. The foregoing indemnity shall survive the repayment of the

indebtedness secured hereby and the release of the lien of the Deed of Trust

and shall survive the transfer of any or all right, title and interest in and

to the property by Mortgagor to any other party.

 

In the event Mortgagor fails, after reasonable notice, to pay any

amounts described in clause (b)(ii) immediately above, Beneficiary may, but

shall not be obligated to, cause the Hazardous Materials to be removed from the

property and the cost of such removal shall be added to the indebtedness

secured hereby (regardless of whether such addition increases the outstanding

balance of the indebtedness secured hereby to an amount in excess of the face

amount of any notes described herein). Beneficiary shall have the right at

reasonable times and reasonable intervals, following reasonable advance notice

to Mortgagor, to conduct an environmental audit of the property and Mortgagor

shall cooperate in the conduct of such environmental audit. Mortgagor shall pay

the cost of environmental audits of the property conducted for the benefit or

at the request of Beneficiary.

 

                That in the event

Mortgagor shall fail to keep the improvements on the land hereby conveyed or

the goods covered hereby in good repair and condition, or to pay promptly when

due all taxes and assessments, as aforesaid, or to preserve the lien status as

herein warranted on said property, or to keep the buildings, improvements and

goods insured, as aforesaid, or to deliver the policy, or policies, of

insurance or the renewal thereof to Beneficiary, as aforesaid, or to promptly,

fully and timely observe or perform any covenant or obligation of Mortgagor

contained herein, then Beneficiary may, at its option, but without being

required to do so, make such repairs, pay such taxes and assessments, purchase

any tax title thereon, remove any other liens, and prosecute or defend any

suits in relation to the preservation of the lien status herein warranted on

said property, or insure and keep insured the improvements thereon in an amount

not to exceed that above stipulated, or perform such other covenants and

obligations.

 

                Mortgagor will

reimburse Beneficiary for all amounts expended by Beneficiary to satisfy any

obligation of Mortgagor under this Deed of Trust or to protect the Property. In

addition, whether or not a default shall have occurred, Mortgagor will pay, or

reimburse Beneficiary for, all costs and expenses, of every character incurred

or expended from time to time in connection with the evaluation, monitoring,

administration and protection of the Property, the exercise by Beneficiary of

any of its rights and remedies hereunder or at law (including, but not limited

to all appraisal fees, consulting fees, brokerage fees and commissions,

insurance premiums, Uniform Commercial Code search fees, fees incident to title

searches and reports, investigation costs, escrow fees, attorneys' fees, legal

expenses, fees of auditors and accountants, court costs, fees of governmental

authorities, auctioneer fees and expenses, and all fees and expenses incurred

in connection with the marshalling, guarding, management, operation, removal,

maintenance, cleanup, storage, auction and liquidation of the Property). Any amounts

to be paid or reimbursed by Mortgagor to Beneficiary shall be a demand

obligation owing by Mortgagor to Beneficiary and, to the extent not prohibited

by law, shall bear interest from the date of expenditure by Beneficiary until

paid at the same rate provided for past–due principal and interest in the

principal obligation (the "Past Due Rate"). The principal obligation

shall be (1) the note secured hereby; (2) if more than one note is secured

hereby, the note with the largest face amount; and (3) if no note is secured

hereby, the obligation with the largest face amount.

 

                That in the event

of default in the payment of any installment, principal or interest, of any

note or other indebtedness hereby secured, in accordance with the terms

thereof, or of a breach under the terms of any loan agreement made in

connection with indebtedness secured hereby, or of a breach of any of the

covenants herein contained to be performed by Mortgagor, then and in any of

such events Beneficiary may elect, Mortgagor hereby expressly waiving

presentment and demand for payment, to declare the entire principal

indebtedness hereby secured with all interest accrued thereon and all other

sums hereby secured immediately due and payable, and in the event of default in

the payment of said indebtedness when due or declared due, it shall thereupon,

or at any time thereafter, be the duty of the Trustee, or the Trustee's

successor or substitute as hereinafter provided, at the request of Beneficiary

(which request is hereby conclusively presumed), to enforce this trust; and

after advertising the time, place and terms of the sale of the above–described

and conveyed property then subject to the lien hereof which is to be sold as

directed by the Beneficiary, and mailing and filing notices as required by

Section 51.002, Texas Property Code, as then amended (successor to Article

3810, Texas Revised Civil Statutes), and otherwise complying with that statute,

the Trustee may sell the above–described property then subject to the

lien hereof, or such portions thereof as directed by Beneficiary, at public

auction in accordance with such notices on the first Tuesday in any month between the hours of ten o'clock

A.M. and four o'clock P.M., to the highest bidder for cash, selling all of the

property as an entirety or in such parcels as the Trustee acting may elect, and

make due conveyance to the Purchaser or Purchasers, with general warranty

binding Mortgagor, and Mortgagor's successors, heirs and assigns; and out of

the money arising from such sale, the Trustee acting shall pay first all the

expenses of advertising the sale and making the conveyance, including a

reasonable commission not to exceed five percent (5%) to the Trustee, which

commission shall be due and owing in addition to the attorney's fees provided

for in said note, and then to Beneficiary the full amount of principal,

interest, attorney's fees and other charges due and unpaid on said note and all

other indebtedness secured hereby, rendering the balance (except for any

amounts required by law to be paid before payment to Mortgagor) of the sales

price, if any, to Mortgagor, and Mortgagor's successors, heirs or assigns; and

the recitals in the conveyance to the Purchaser or Purchasers shall be full and

conclusive evidence of the truth of the matters therein stated, and all

prerequisites to said sale shall be presumed to have been performed, and such

sale and conveyance shall be conclusive against Mortgagor and Mortgagor's

successors, heirs and assigns. Mortgagor will remain liable for any deficiency

remaining after a sale or other disposition hereunder.

 

                It is agreed that

in the event a foreclosure hereunder should be commenced by the Trustee, or the

Trustee's substitute or successor, Beneficiary may at any time before the sale

of said property direct the said Trustee to abandon the sale, and may then

institute suit for the collection of said note, and for the foreclosure of this

Deed of Trust lien; it is further agreed that if Beneficiary should institute a

suit for the collection thereof, and for a foreclosure of this Deed of Trust

lien, that he may at any time before the entry of a final judgment in said suit

dismiss the same, and require the Trustee, or the Trustee's substitute or

successor, to sell the property in accordance with the provisions of this Deed

of Trust. Sale of a part or parcel of the property covered hereby shall not

exhaust the power of sale, and sales may be made from time to time until all

property covered hereby is sold, or until all indebtedness secured hereby is

paid in full.

 

                Beneficiary, if it

is the highest bidder, shall have the right to purchase at any sale of the

property and to have the amount for which such property is sold credited on the

debt then owing.

 

                Beneficiary in any

event is hereby authorized to appoint a substitute trustee, or a successor

trustee, to act instead of the Trustee named herein without other formality

than the designation in writing of a substitute or successor trustee; and the

authority hereby conferred shall extend to the appointment of other successor

or substitute trustees successively until the indebtedness hereby secured has

been paid in full, or until said property is sold hereunder, and each

substitute and successor trustee shall succeed to all of the rights and powers

of the original trustee named herein.

 

                In the event any

sale is made of the property, or any portion thereof, under the terms of this

Deed of Trust, Mortgagor, its successors, heirs and assigns, shall forthwith

upon the making of such sale surrender and deliver possession of the property

so sold to the Purchaser at such sale, and in the event of their failure to do

so they shall thereupon from and after the making of such sale be and continue

as tenants at will of such Purchaser, and in the event of their failure to surrender

possession of said property upon demand, the Purchaser, and the Purchaser's

successors, heirs and assigns, shall be entitled to institute and maintain an

action for forcible detainer of said property in the Justice of the Peace Court

in the Justice Precinct in which such property, or any part thereof, is

situated.

 

                It is agreed that

the lien hereby created shall take precedence over and be a prior lien to any

other lien of any character (except for any lien herein specifically stated to

which this Deed of Trust is subject to), whether vendor's, materialmen's or

mechanic's lien hereafter created on the property, and in the event the

proceeds of the indebtedness secured hereby as set forth herein are used to pay

off and satisfy any liens heretofore existing on said property, then

Beneficiary is, and shall be, subrogated to all of the rights, liens and

remedies of the holders of the indebtedness so paid.

 

                It is further

agreed that if Mortgagor, its successors, heirs or assigns, while the owner of

the hereinabove described property, should commit an act of bankruptcy, or

authorize the filing of a voluntary petition in bankruptcy, or should an act of

bankruptcy be committed and involuntary proceedings instituted or threatened,

or should the property be taken over by a receiver for Mortgagor, its heirs,

successors or assigns, all indebtedness secured hereby shall, at the option of

Beneficiary, immediately become due and payable, and the acting Trustee may

then proceed to sell the property under the provisions of this Deed of Trust.

 

                It is agreed that

an extension, or extensions, may be made of the time of payment of all, or any

part, of the indebtedness secured hereby, and that any part of the property may

be released from this lien without altering or affecting the priority of the

lien created by this Deed of Trust in favor of any junior encumbrancer,

mortgagee or purchaser, or any person acquiring an interest in the property

hereby conveyed, or any part thereof, it being the intention of the parties

hereto to preserve this lien on the land herein described and all improvements

thereon, and that may be hereafter constructed thereon, first and superior to

any liens that may hereafter be placed thereon, or that may be fixed, given or

imposed by law thereon after the execution of this instrument notwithstanding

any such extension of the time of payment, or the release of a portion of said

property from this lien.

 

                In the event any

portion of the indebtedness hereinabove described cannot be lawfully secured by

the lien herein granted, it is agreed that the first payments made on said

indebtedness shall be applied to the discharge of that portion of said

indebtedness.

 

                Beneficiary shall

be entitled to receive any and all sums which may become payable to Mortgagor for

the condemnation of the hereinabove described property, or any part thereof,

for public or quasi–public use, or by virtue of private sale in lieu

thereof, and any sums which may be awarded or become payable to Mortgagor for

damages caused by public works or construction on or near the said property.

All such sums are hereby assigned to Beneficiary, who may, after deducting

therefrom all expenses actually incurred, including attorney's fees, release

same to Mortgagor or apply the same to the reduction of the indebtedness hereby

secured, whether then matured or to mature in the future, or on any money

obligation hereunder, as and in such manner as Beneficiary may elect.

Beneficiary shall not be, in any event or circumstances, liable or responsible

for failure to collect, or exercise diligence in the collection of, any such

sums.

 

                Nothing herein or

in said note shall ever entitle Beneficiary, upon the arising of any

contingency whatsoever, to receive or collect interest in excess of the highest

rate allowed by the laws of the State of Texas on the principal indebtedness

hereby secured or on any money obligation hereunder and in no event shall

Mortgagor be obligated to pay interest thereon in excess of such rate. To the

extent permitted by applicable law, determination of the legal maximum amount

of interest shall at all time be made by amortizing, prorating, allocating and

spreading in equal parts during the period of the full stated term of the Note,

all interest at any time contracted for, charged or received with respect to

the Note and the indebtedness, so that the actual rate of interest with respect

to the note and indebtedness is uniform throughout the stated term of the Note.

 

                The term

"Mortgagor" as used in this instrument will be construed as singular

or plural to correspond with the number of persons executing this instrument as

Mortgagor. If more than one person executes this instrument as Mortgagor, his,

her, their, or its duties and liabilities under this instrument will be joint

and several, and the grants of liens and security interests herein made shall

cover each such person's joint interest as well as his several interest in the

property mortgaged hereunder. It is intended that the lien on each particular

person's interest executing this instrument as Mortgagor shall cover the entire

indebtedness described herein as being secured hereby; and it is not intended

that the interest of such a particular person in the property covered hereby

shall secure only that particular person's liability on the indebtedness; nor

is it intended that any such particular person may have that particular

person's interest in the property released from the liens hereof unless and

until the entire indebtedness secured hereby has been satisfied. The terms

"Beneficiary" and "Mortgagor" as used in this instrument

include the heirs, executors or administrators, successors, representatives,

receivers, trustees, and assigns of those parties. This instrument is binding

upon the Mortgagor, the Mortgagor's successors, heirs and assigns (subject to

the prohibition of assignment of the property as set forth herein), and will

inure to the benefit of the Trustee and the Trustee's successors and

substitutes and Beneficiary and Beneficiary's successors and assigns.

 

                Mortgagor assigns

to Beneficiary, as collateral, all present and future rent and other income and

receipts from the property and all present and future accounts evidencing or

arising from said rents, income and receipts. Leases are not assigned.

Mortgagor warrants the validity and enforceability of the assignment. Mortgagor

may as Beneficiary's licensee collect rent and other income and receipts as

long as Mortgagor is not in default under the indebtedness secured hereby or

this deed of trust. Mortgagor will apply all rent and other income and receipts

to payment of the indebtedness secured hereby and performance of this deed of

trust, but if the rent and other income and receipts exceed the amount due

under the indebtedness secured hereby and deed of trust, Mortgagor may retain

the excess. If Mortgagor defaults in payment of the indebtedness secured hereby

or performance of this deed of trust, Beneficiary may terminate Mortgagor's

license to collect and then as Mortgagor's agent may rent the property, if it

is vacant and collect all rent and other income and receipts. Beneficiary

neither has nor assumes any obligations as lessor or landlord with respect to

any occupant of the property. Beneficiary shall apply all rent and other income

and receipts collected under this paragraph first to expenses incurred in

exercising Beneficiary's rights and remedies and then to Mortgagor's

obligations under the indebtedness secured hereby and this deed of trust in the

order determined by Beneficiary. Beneficiary is not required to act under this

paragraph, and acting under this paragraph does not waive any of Beneficiary's

other rights or remedies. If Mortgagor becomes a voluntary or involuntary

bankrupt, Beneficiary's filing a proof of claim in bankruptcy will be

tantamount to the appointment of a receiver under Texas law.

 

                Mortgagor waives

the benefit of all laws now in existence or that hereafter may be enacted

providing for (i) any appraisement before sale of any portion of the property,

commonly known as Appraisement Laws, and (ii) the benefit of all laws that may

be hereinafter enacted in any manner extending the time for the enforcement of

the collection of the indebtedness or creating or extending a period of

redemption from any sale made with respect to the indebtedness, commonly known

as Stay Laws and Redemption Laws, to the extent Mortgagor may lawfully waive

such laws.

 

                Acceptance by

Beneficiary of any payment in an amount less than the amount then due shall be

deemed as acceptance on account only and the failure to pay the entire amount

then due shall be and continue to be a default by Mortgagor; and at any time

thereafter, and until the entire amount then due has been paid, Beneficiary

shall be entitled to exercise all rights and remedies conferred it in this

instrument or at law upon the occurrence of a default.

 

                Beneficiary shall

have the additional right, upon the commencement of any action to enforce the

lien or security interest herein given, to have appointed by a court of

competent jurisdiction, a receiver to take possession of the property and to

collect all rents, issues, income, and profits arising from or pertaining to

the property. This provision is a right created by this deed of trust and is

cumulative of and is not to affect in any manner the right of Beneficiary to the

appointment of a receiver under any applicable law or statute.

 

                In the event

Mortgagor conveys or contracts to convey the property covered hereby, or any

interest in the property covered hereby, including a leasehold interest, to a

party or parties not appearing in this instrument without the written consent

thereto of Beneficiary, then Beneficiary, at its election exercised any time

after such event and without notice to Mortgagor, may declare the entire

indebtedness secured hereby at once due and payable.

 

                Mortgagor shall

not be entitled to release of the liens hereof on any portion of the property

covered hereby (commonly known as "partial releases") upon payment of

a portion of the indebtedness secured hereby; and the Mortgagor shall be

entitled to release of any property covered hereby only upon satisfaction in

full of the entire indebtedness secured hereby.

 

                THIS INSTRUMENT IS

INTENDED AS A FINANCING STATEMENT as that term is used in the Texas Uniform

Commercial Code covering the properties hereinabove described to the full

extent same may be subject to the Texas Uniform Commercial Code. THIS

INSTRUMENT (STATEMENT) IS TO BE FILED IN THE REAL ESTATE RECORDS AND COVERS

FIXTURES. An originally signed copy of this instrument, or a photographic or other

reproduction of an originally signed copy of this instrument, may be filed as a

financing statement under the Uniform Commercial Code in Texas and other

jurisdictions which permit such.

 

"The Loan secured by this lien was made under a United

States Small Business Administration (SBA) nationwide program which uses tax

dollars to assist small business owners. If the United States is seeking to

enforce this document, then under SBA regulations:

 

(a)           When SBA

is the holder of the Note, this document and all documents evidencing or

securing this Loan will be construed in accordance with federal law.

 

(b)           Lender or

SBA may use local or state procedures for purposes such as filing papers,

recording documents, giving notice, foreclosing liens, and other purposes. By

using these procedures, SBA does not waive any federal immunity from local or

state control, penalty, tax or liability. No Borrower or Guarantor may claim or

assert against SBA any local or state law to deny any obligation of Borrower,

or defeat any claim of SBA with respect to this Loan.

 

Any clause in this document requiring arbitration is not

enforceable when SBA is the holder of the Note secured by this

instrument."

 

DATED the  3 

day of  October,  A.D., 2001.

 

	

   

  	

  AMERICAN MEDICAL TECHNOLOGIES, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By

  	

    /s/  Benjamin J. Gallant

  
	

   

  	

   

  	

       BENJAMIN

  J. GALLANT

  
	

   

  	

   

  	

       Chairman–&

  CEO

  

 

 

	

  STATE OF TEXAS

  	

  §

  
	

   

  	

  §

  
	

  COUNTY OF NUECES

  	

  §

  

 

 

                This instrument was acknowledged

before me on the 3rd day of October, 2001, by BENJAMIN J.

GALLANT, the Chairman & CEO of AMERICAN MEDICAL TECHNOLOGIES, INC., a

Delaware corporation, on behalf of said Corporation.

 

	

   

  	

  /s/ Amy K. Green 

  
	

  

  	

  Notary Public, State of Texas

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