EXHIBIT 10.1
CREDIT AGREEMENT
$15,000,000.00 REVOLVING CREDIT LOAN
AMONG
APPLE ORTHODONTIX, INC.
AS THE COMPANY,
THE SUBSIDIARIES OF THE COMPANY
LISTED AS GUARANTORS HEREIN
AND
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
AS THE AGENT
AND
THE BANKS NAMED HEREIN
DATED AS OF JULY 28, 1997
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION.............1
SECTION 1.01 Definitions...............................................1
SECTION 1.02 Types of Advances........................................14
SECTION 1.03 Accounting Terms.........................................14
SECTION 1.04 Schedules................................................14
ARTICLE II THE LOANS.................................................14
SECTION 2.01 The Loans.................................................14
SECTION 2.02 The Notes.................................................15
SECTION 2.03 Notice of Advance.........................................15
SECTION 2.04 Disbursement of Funds for Loans...........................15
SECTION 2.05 Conversions and Continuances..............................16
SECTION 2.06 Voluntary Prepayments.....................................16
SECTION 2.07 Mandatory Repayments......................................16
SECTION 2.08 Method and Place of Payment...............................17
SECTION 2.09 Pro Rata Advances.........................................17
SECTION 2.10 Interest..................................................17
SECTION 2.11 Interest Periods..........................................18
SECTION 2.12 Interest Rate Not Ascertainable...........................19
SECTION 2.13 Change in Legality........................................19
SECTION 2.14 Increased Costs, Taxes or Capital Adequacy Requirements...20
SECTION 2.15 LIBOR Rate Loan Prepayment and Default Penalties..........21
SECTION 2.16 Voluntary Reduction of Commitment.........................22
SECTION 2.17 Tax Forms.................................................22
ARTICLE III FEES......................................................22
SECTION 3.01 Fees......................................................22
ARTICLE IV CONDITIONS PRECEDENT......................................23
SECTION 4.01 Conditions Precedent to the Initial Advance...............23
SECTION 4.02 Conditions Precedent to All Credit Events.................25
SECTION 4.03 Delivery of Documents.....................................26
ARTICLE V REPRESENTATIONS AND WARRANTIES..................................26
SECTION 5.01 Organization and Qualification...........................26
SECTION 5.02 Authorization and Validity...............................26
SECTION 5.03 Governmental Consents....................................26
SECTION 5.04 Conflicting or Adverse Agreements or Restrictions........27
SECTION 5.05 Title to Assets..........................................27
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SECTION 5.06 Litigation...............................................27
SECTION 5.07 Financial Statements.....................................27
SECTION 5.08 Default..................................................28
SECTION 5.09 Investment Company Act...................................28
SECTION 5.10 Public Utility Holding Company Act.......................28
SECTION 5.11 ERISA....................................................28
SECTION 5.12 Tax Returns and Payments.................................28
SECTION 5.13 Environmental Matters....................................28
SECTION 5.14 Purpose of Loans.........................................29
SECTION 5.15 Franchises and Other Rights..............................29
SECTION 5.16 Subsidiaries and Assets..................................29
SECTION 5.17 Solvency.................................................30
ARTICLE VI AFFIRMATIVE COVENANTS.....................................30
SECTION 6.01 Information Covenants....................................30
SECTION 6.02 Books, Records and Inspections...........................32
SECTION 6.03 Practicing Orthodontists Contracts.......................32
SECTION 6.04 Insurance and Maintenance of Properties..................32
SECTION 6.05 Payment of Taxes.........................................33
SECTION 6.06 Corporate Existence......................................33
SECTION 6.07 Compliance with Statutes.................................33
SECTION 6.08 ERISA....................................................33
SECTION 6.09 Additional Guaranties....................................34
ARTICLE VII NEGATIVE COVENANTS........................................35
SECTION 7.01 Change in Business.......................................35
SECTION 7.02 Consolidation, Merger or Sale of Assets..................35
SECTION 7.03 Indebtedness.............................................35
SECTION 7.04 Liens....................................................36
SECTION 7.05 Investments..............................................37
SECTION 7.06 Restricted Payments......................................37
SECTION 7.07 Change in Accounting.....................................38
SECTION 7.08 Change of Certain Indebtedness...........................38
SECTION 7.09 Transactions with Affiliates.............................38
SECTION 7.10 Minimum Net Worth........................................38
SECTION 7.11 Funded Indebtedness to EBITDA Ratio......................38
SECTION 7.12 Fixed Charge Coverage Ratio..............................38
SECTION 7.13 Capital Expenditures.....................................39
SECTION 7.14 Compensation Formula.....................................39
SECTION 7.15 Turnover.................................................39
SECTION 7.16 Foreign Subsidiaries....................................39
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ARTICLE VIII GUARANTY..................................................39
SECTION 8.01 Guaranty..................................................39
SECTION 8.02 Continuing Guaranty.......................................40
SECTION 8.03 Effect of Debtor Relief Laws..............................41
SECTION 8.04 Waiver of Subrogation.....................................41
SECTION 8.05 Subordination.............................................42
SECTION 8.06 Waiver....................................................42
SECTION 8.07 Full Force and Effect.....................................43
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES............................43
SECTION 9.01 Events of Default.........................................43
SECTION 9.02 Primary Remedies..........................................45
SECTION 9.03 Other Remedies............................................45
ARTICLE X THE AGENT................................................45
SECTION 10.01 Authorization and Action................................45
SECTION 10.02 Agent's Reliance........................................46
SECTION 10.03 Agent and Affiliates; TCB and Affiliates................47
SECTION 10.04 Bank Credit Decision....................................47
SECTION 10.05 Agent's Indemnity.......................................47
SECTION 10.06 Successor Agent........................................48
SECTION 10.07 Notice of Default.......................................49
ARTICLE XI MISCELLANEOUS.............................................49
SECTION 11.01 Amendments..............................................49
SECTION 11.02 Notices.................................................49
SECTION 11.03 No Waiver; Remedies.....................................51
SECTION 11.04 Costs, Expenses and Taxes...............................51
SECTION 11.05 Indemnity...............................................51
SECTION 11.06 Right of Setoff.........................................52
SECTION 11.07 Governing Law...........................................52
SECTION 11.08 Interest................................................52
SECTION 11.09 Survival of Representations and Warranties..............53
SECTION 11.10 Successors and Assigns; Participations..................54
SECTION 11.11 Confidentiality.........................................55
SECTION 11.12 Pro Rata Treatment......................................55
SECTION 11.13 Separability............................................56
SECTION 11.14 Execution in Counterparts...............................56
SECTION 11.15 Interpretation..........................................56
SECTION 11.16 Limited Recourse........................................57
SECTION 11.17 Submission to Jurisdiction..............................57
SECTION 11.18 Waiver of Jury Trial....................................58
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SECTION 11.19 Final Agreement of the Parties..........................58
EXHIBITS AND SCHEDULES:
Exhibit 1.01A Administrative Questionnaire
Exhibit 1.01B Compensation Formula
Exhibit 2.02(A) Form of Note
Exhibit 2.03 Form of Notice of Advance
Exhibit 2.05 Form of Notice of Conversion
Exhibit 6.01(d) Form of Compliance Certificate
Exhibit 11.10(c) Form of Assignment and Acceptance
Schedule 5.04 Agreements
Schedule 5.06 Litigation
Schedule 5.13 Exceptions to Environmental Matters
Schedule 5.16 Subsidiaries
Schedule 6.03 Practicing Orthodontists Contracts
Schedule 6.04 Existing Insurance Policies
Schedule 7.03(b) Existing Indebtedness
Schedule 7.04(a) Existing Liens
Schedule 7.05(b) Investments
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CREDIT AGREEMENT
This CREDIT AGREEMENT dated as of July 28, 1997 (this "AGREEMENT")
is among APPLE ORTHODONTIX, INC., a Delaware corporation (the "COMPANY"), the
Subsidiaries of the Company listed on the signature pages hereto as Guarantors
(together with each other person who subsequently becomes a Guarantor,
collectively the "GUARANTORS"), the banks and other financial institutions
listed on the signature pages hereto under the caption "Banks" (together with
each other person who becomes a Bank, collectively the "BANKS") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, individually as a Bank ("TCB") and as agent
for the other Banks (in such capacity together with any other Person who becomes
the agent, the "AGENT").
The Company has requested that the Banks provide the Company with a
credit facility, pursuant to which the Banks will commit to make revolving
credit loans of up to $15,000,000.00 outstanding at any time to be used by the
Company for working capital, general corporate purposes and for acquisitions
permitted herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the Company, the Agent, the Guarantors, and the
Banks agree as follows:
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION 1.01 DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"ADMINISTRATIVE QUESTIONNAIRE" means the questionnaire attached
hereto as EXHIBIT 1.01A to be completed by each Bank and returned to the
Agent.
"ADVANCE" or "ADVANCES" means an advance, pursuant to a Notice of
Advance, comprised of a single Type of Loan from all the Banks (or
resulting from a conversion or conversions on the same date except as
otherwise provided in this Agreement), made by all of the Banks
concurrently to the Company.
"ADVANCE DATE" means, with respect to each Advance, the Business Day
upon which the proceeds of such Advance are to be made available to the
Company.
"AFFILIATE" means any other Person directly or indirectly
controlling (including all directors and officers of such Person),
controlled by, or under direct or indirect common control with such
Person, and any other Person in which such Person's direct or indirect
equity interest is 10% or more of the total outstanding equity interests
of such Person.
"AGENT" has the meaning specified in the introduction to this
Agreement.
"AGREEMENT" has the meaning specified in the introduction to this
Agreement.
"ALTERNATE BASE RATE" means, for any date, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a)
the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and
(b) the Prime Rate in effect on such day. For purposes hereof, the term
"PRIME RATE" means, as of a particular date, the prime rate of TCB most
recently announced by TCB and in effect on such date, automatically
fluctuating upward or downward, as the case may be, with and at the time
of each change therein without notice to the Company or any other Person,
which prime rate may not necessarily represent the lowest or best rate
actually charged to a customer. "FEDERAL FUNDS EFFECTIVE RATE" means, for
any day, the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. If, for any reason, the Agent shall
have reasonably determined (which determination shall be prima facie
evidence of the correctness thereof) that it is unable to ascertain the
Federal Funds Effective Rate, including the inability or failure of the
Agent to obtain sufficient quotations in accordance with the terms hereof,
the Alternate Base Rate shall be determined without regard to clause (a)
of the first sentence of this definition until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate
or the Federal Funds Effective Rate, respectively.
"ALTERNATE BASE RATE ADVANCE" means any Advance bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance
with the provisions of ARTICLE II.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank, such
Bank's Domestic Lending Office in the case of an Alternate Base Rate
Advance and such Bank's LIBOR Lending Office in the case of a LIBOR Rate
Advance.
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in SECTION
11.10 (C).
"BANK" has the meaning provided in the introduction to this
Agreement.
"BANKRUPTCY CODE" has the meaning specified in SECTION 9.01(E).
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"BOARD" means the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"BUSINESS DAY" means any day (other than a day which is a Saturday,
Sunday or legal holiday in the State of Texas) on which most banks are
open for business in Houston, Texas.
"CAPITALIZED LEASE OBLIGATIONS" means all lease or rental
obligations which, pursuant to GAAP, are capitalized for balance sheet
purposes.
"CHANGE OF CONTROL" means any of (i) the acquisition by any Person,
or two or more Persons acting in concert, of beneficial ownership of 50%
or more of the outstanding shares of voting stock of the Company, (ii) all
or substantially all of the assets of the Company are sold in a single
transaction or series of related transactions to any Persons, or (iii) the
Company merges or consolidates with or into any other Person and the
Company is not the surviving entity.
"CODE" means the Internal Revenue Code of 1986 and the regulations
promulgated thereunder.
"COLLATERAL" means the property described in the Security Document.
"COMMITMENT" and "COMMITMENTS" means the obligation of each of the
Banks to make available the Loans to the Company in the amounts shown on
the signature page of each Bank hereto in accordance with the terms
hereof.
"COMMITMENT FEE" has the meaning specified in SECTION 3.01(A).
"COMPANY" has the meaning specified in the introduction to this
Agreement.
"CONSOLIDATED INTANGIBLES" means as to the Company and its
Subsidiaries, any items which are treated as intangibles in conformity
with GAAP determined on a consolidated basis.
"CONSOLIDATED NET WORTH" means, the sum of the par value or stated
value of the capital stock, (excluding treasury stock) capital in excess
of par or stated value of shares of capital stock, retained earnings (or
minus accumulated deficit) and any other account which, in accordance with
GAAP, constitute stockholders' equity, of the Company and its Subsidiaries
determined on a consolidated basis, excluding any effect of foreign
currency translation computed pursuant to Financial Accounting Standards
Board Statement No. 52, as amended, supplemented or modified from time to
time, or otherwise in accordance with GAAP.
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"CONSOLIDATED TANGIBLE ASSETS" means, as at any date of
determination, the excess of (a) the total assets of the Company and its
Subsidiaries appearing on a consolidated balance sheet prepared under GAAP
as of the date of determination, after deducting any reserves applicable
thereto and after eliminating all intercompany transactions and all
amounts properly attributable to minority interests, if any, in the stock
and surplus of Subsidiaries, over (b) the net book value of all
Consolidated Intangibles at such time.
"CONSOLIDATED TANGIBLE NET WORTH" means, as to the Company and its
Subsidiaries, the Consolidated Net Worth of the Company and its
Subsidiaries LESS Consolidated Intangibles.
"CONVERSION" or "CONVERT" (in each case whether or not capitalized)
means the changing of a LIBOR Rate Advance to an Alternate Base Rate
Advance or vice versa in accordance with the provisions hereof.
"CREDIT EVENT" means the making of any Advance, the conversion or
continuation of any Advance into a LIBOR Rate Advance.
"DEFAULT" means the occurrence of any event which with or without
the giving of notice or the passage of time or both could become an Event
of Default.
"DEFAULT RATE" means the lesser of (i) the Highest Lawful Rate and
(ii) the Alternate Base Rate plus two percent (2%).
"DESIGNATED PAYMENT DATE" means September 30, December 31, March 31
and June 30; PROVIDED, HOWEVER, if a Designated Payment Date shall be a
day which is not a Business Day, such Designated Payment Date shall be the
next succeeding Business Day, and such extension of time shall be included
in determining the amount of interest to be paid on such date.
"DOMESTIC LENDING OFFICE" means, with respect to any Bank, the
office of such Bank designated from time to time as its "Domestic Lending
Office" hereunder.
"EBITDA" means, for any period, the consolidated pre-tax income for
such period, plus the aggregate amount which was deducted for such period
in determining such consolidated, pre-tax income in respect of interest
expense (including amortization of debt discount, imputed interest and
capitalized interest), plus depreciation and amortization, excluding any
income attributable to any minority interest in any Person or any Foreign
Subsidiaries of the Company (other than Foreign Subsidiaries organized
under the laws of Canada or one of its provinces, which Canadian
Subsidiaries EBITDA shall be allowed up to a maximum of twenty percent
(20%) of total consolidated EBITDA), unless remitted to the Company or any
of its Subsidiaries that is not a Foreign Subsidiary. For purposes of
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calculating EBITDA for ratios required by SECTIONS 7.11 and 7.12, the
calculation of EBITDA: (a) for the period from the Execution Date until
the date the financial statements for the quarter ending September 30,
1997 are required to be delivered pursuant to SECTION 6.01(A), EBITDA
shall be equal to $4,247,392.00; (b) for the quarter ending September 30,
1997, shall be made and said sum multiplied by four (4); (c) for the two
quarters ending December 31, 1997, shall be made and said sum multiplied
by two (2); (d) for the three quarters ending March 31, 1998, shall be
made and said sum multiplied by four-thirds (4/3), and (e) for all periods
thereafter, shall be on an actual rolling four quarter basis.
"EFFECTIVE DATE" means the date on which all conditions to make an
Advance set forth in SECTION 4.01 are first met or waived in accordance
with SECTION 11.01 hereof.
"ELIGIBLE ASSIGNEE" means (a) any Bank; (b) a commercial bank
organized under the laws of the United States, or any state thereof, and
having total assets in excess of $1,000,000,000.00; (c) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development or any successor
organization, or a political subdivision of any such country, and having
total assets in excess of $1,000,000,000.00; PROVIDED that such bank is
acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the Organization
for Economic Cooperation and Development or any successor organization;
(d) the central bank of any country which is a member of the Organization
for Economic Cooperation and Development or any successor organization;
and (e) any other bank or similar financial institution approved by the
Agent, the Company and the Majority Banks.
"ENVIRONMENTAL LAWS" means (a) federal, state or local laws
pertaining to conservation or protection of the environment in effect at
the time in question, including, without limitation, the Clean Air Act, as
amended, the Comprehensive Environmental Response Compensation and
Liability Act, as amended ("CERCLA"), the Federal Water Pollution Control
Act, as amended, the Occupational Safety and Health Act, as amended, the
Resource Conservation and Recovery Act, as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as amended, the
Superfund Amendment and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, and comparable state
and local laws, and other environmental conservation and protection laws,
(b) final rules or regulations of any governmental regulatory agency (or
interim or temporary rules or regulations in respect of which the issuing
agency has appropriately indicated their present applicability pending the
finalization process) adopted pursuant to authority granted pursuant to
any law listed in (a) above, and (c) any judicial, arbitral or
administrative interpretation or administrative order, judgment, permit,
approval, decision or determination of any law listed in (a) or rule or
regulation listed in (b), to the extent that such interpretation, order,
judgment, permit, approval, decision or determination is binding upon a
Person or its property or assets.
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"ERISA" means the Employee Retirement Income Security Act of 1974
and the regulations promulgated thereunder.
"ERISA AFFILIATE" means (a) any trade or business (whether or not
incorporated) which is either a member of the same "controlled group" or
under "common control," within the meaning of Section 414 of the Code and
the regulations thereunder, with the Company and (b) any Subsidiary of the
Company.
"EVENTS OF DEFAULT" has the meaning specified in SECTION 9.01.
"EXECUTION DATE" means the date upon which this Agreement shall have
been executed by the Company, the Guarantors and the Banks.
"FEDERAL FUNDS EFFECTIVE RATE" has the meaning specified in the
definition of the term "ALTERNATE BASE RATE."
"FEES" has the meaning specified in SECTION 3.01.
"FINANCIALS" has the meaning specified in SECTION 5.07.
"FOREIGN SUBSIDIARY" or "FOREIGN SUBSIDIARIES" means as of any date
of determination, a Subsidiary of the Company which is incorporated or
organized under the laws of any jurisdiction other than the District of
Columbia or the United States of America or any state thereof.
"FUNDED INDEBTEDNESS" means any Indebtedness evidenced by a note or
similar instrument and being subject to periodic payments of principal and
interest.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States as set forth in the opinions,
statements and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, the Financial
Accounting Standards Board and such other Persons who shall be approved by
a significant segment of the accounting profession and concurred in by the
independent certified public accountants certifying any audited financial
statements of the Company.
"GUARANTEED OBLIGATIONS" has the meaning specified in SECTION 8.01.
"GUARANTORS" has the meaning provided in the introduction to this
Agreement.
"GUARANTY" means the obligations contained in ARTICLE VIII hereof
and in any document containing similar obligations executed by subsequent
Guarantors.
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"HAZARDOUS MATERIALS" means (a) hazardous waste as defined in the
Resource Conservation and Recovery Act of 1976, or in any applicable
federal, state or local law or regulation, (b) hazardous substances, as
defined in CERCLA, or in any applicable state or local law or regulation,
(c) gasoline, or any other petroleum product or by-product, (d) toxic
substances, as defined in the Toxic Substances Control Act of 1976, or in
any applicable federal, state or local law or regulation or (e)
insecticides, fungicides, or rodenticides, as defined in the Federal
Insecticide, Fungicide, and Rodenticide Act of 1975, or in any applicable
federal, state or local law or regulation, as each such Act, statute or
regulation may be amended from time to time.
"HIGHEST LAWFUL RATE" means, as to any Bank, the maximum nonusurious
rate of interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by such Bank on the Loans or under the Loan
Documents at any time or from time to time. If the maximum rate of
interest which, under applicable law, any of the Banks are permitted to
charge the Company on the Loans shall change after the date hereof, to the
extent permitted by applicable law, the Highest Lawful Rate shall be
automatically increased or decreased, as the case may be, as of the
effective time of such change without notice to the Company or any other
Person.
"INTERCOMPANY SUBORDINATION AGREEMENT" has the meaning assigned to
such term in SECTION 4.01(L).
"INDEBTEDNESS" means, without duplication, (a) all indebtedness for
borrowed money (whether by loan or the issuance and sale of debt
securities) or for the deferred purchase price of property or services,
(b) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property, (c) all
Capitalized Lease Obligations, (d) all guaranties, hedge or swap
agreements or other contingent liabilities of any kind (including letter
of credit reimbursement obligations) and (e) all other indebtedness, to
the extent it would constitute a liability on a balance sheet prepared in
accordance with GAAP or would be disclosed as a contingent liability in
respect of Funded Indebtedness in a footnote to financial statements of
such Person prepared in accordance with GAAP.
"INTEREST EXPENSE" means, with respect to the Company and its
Subsidiaries determined on a consolidated basis, for any period the total
interest expense for such period determined in conformity with GAAP,
including any interest expense attributable to Capitalized Lease
Obligations.
"INTEREST PERIOD" has the meaning specified in SECTION 2.11.
"INVESTMENT" means, as applied to any Person, any direct or indirect
purchase or other acquisition by such Person of the assets, stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, and any other
item which would be classified as an "investment" on a balance sheet
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of such Person, including any direct or indirect contribution by such
Person of property or assets to a joint venture, partnership or other
business entity in which such Person retains an interest.
"LIBOR LENDING OFFICE" means, with respect to each Bank, the office
of such Bank designated from time to time as its LIBOR Lending Office
hereunder.
"LIBOR RATE" means, with respect to any LIBOR Rate Loan, the rate
per annum (rounded to 1/16 of 1%) at which dollar deposits approximately
equal in principal amount to the entire amount of the LIBOR Rate Loan and
for a maturity equal to the applicable Interest Period are offered in
immediately available funds to the Agent by prime banks in whatever London
interbank market may be selected by the Agent in its sole and absolute
discretion at the time of determination and in accordance with the then
usual practice in such market at approximately 10:00 a.m. (Houston, Texas
time) two (2) Business Days prior to the commencement of such Interest
Period.
"LIBOR RATE ADVANCE" means an Advance bearing interest at a rate
determined by reference to the LIBOR Rate in accordance with the
provisions of ARTICLE II.
"LIBOR RATE LOAN" means any Loan bearing interest at a rate
determined by reference to the LIBOR Rate in accordance with the
provisions of ARTICLE II.
"LIEN" means, when used with respect to any Person, any mortgage,
lien, charge, pledge, security interest or encumbrance of any kind
(whether voluntary or involuntary and whether imposed or created by
operation of law or otherwise) upon, or pledge of, any of its property or
assets, whether now owned or hereafter acquired, or any lease intended as
security, any capital lease in the nature of the foregoing, any
conditional sale agreement or other title retention agreement, in each
case, for the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an obligation.
"LOAN" and "LOANS" has the meaning assigned thereto in SECTION 2.01.
"LOAN DOCUMENTS" means this Agreement, the Security Documents, all
exhibits and schedules thereto, and the Intercompany Subordination
Agreement.
"MAJORITY BANKS" means Banks holding at least 662/3% of the Advances
outstanding under the Loans, or, if no Advances are outstanding, Banks
holding such percentage of the Total Commitment (notwithstanding any
reduction or termination of the Total Commitment).
"MARGIN" means with respect to any Advance, the percentage
determined in accordance with the following table as a function of the
Indebtedness to EBITDA ratio:
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FUNDED INDEBTEDNESS/ ALTERNATE BASE LIBOR RATE
EBITDA RATIO RATE MARGIN MARGIN
------------------------------------------------------- ----- -----
(is greater than or equal to) 2.50 0.50% 1.75%
(is greater than or equal to) 2.00 but (less than) 2.50 0.25% 1.50%
(is greater than or equal to) 1.50 but (less than) 2.00 0.00% 1.25%
(is greater than or equal to) 1.00 but (less than) 1.50 0.00% 1.00%
(less than) 1.00 0.00% 0.75%
If sufficient information does not exist to calculate the Margin,
the Margin shall be 0.50% for Base Rate Advances and 1.75% of LIBOR Rate
Advances.
"MARGIN PERIOD" means a period commencing on the date on which the
quarterly or annual financial statements of the Company are required to be
delivered pursuant to SECTION 6.01(A) or SECTION 6.01(B), as the case may
be, and ending on the next date such financial statement are required to
be so delivered.
"MATERIAL ADVERSE EFFECT" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding), and after taking
into account insurance and indemnification with respect to such matter (a)
a material adverse effect on the financial condition, business or
operations of the Company and its Subsidiaries taken as a whole or (b) a
material impairment of the collective ability of the Company and its
Subsidiaries taken as a whole to make payment hereunder or under the Notes
and the Guaranty or the right of any Bank to enforce any of its material
remedies to collect any amounts owing under the Loan Documents.
"MATURITY DATE" means a date which is three years after the
Execution Date, PROVIDED that said Maturity Date may be extended for a
term of one year upon the request of the Company for such an extension and
said request for extension is approved by all Banks.
"MAXIMUM GUARANTEED AMOUNT" means for each Guarantor the maximum
amount which any Guarantor could pay under the Guaranty without having
such payment set aside as a fraudulent transfer or conveyance or similar
action under the Bankruptcy Code or any applicable state or foreign law.
"MULTIEMPLOYER PLAN" means any plan which is a "multiemployer plan"
(as such term is defined in Section 4001(a)(3) of ERISA).
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"NON-WHOLLY OWNED SUBSIDIARY" means any Subsidiary that is not a
Wholly Owned Subsidiary.
"NOTE" and "NOTES" have the meaning specified in SECTION 2.02.
"NOTICE OF ADVANCE" has the meaning provided in SECTION 2.03(A).
"NOTICE OF CONVERSION" has the meaning provided in SECTION 2.05.
"NOTICE OF DEFAULT" has the meaning specified in SECTION 9.02.
"OBLIGATIONS" means all the obligations of the Company now or
hereafter existing under the Loan Documents, whether for principal,
interest, Fees, expenses, indemnification or otherwise.
"OTHER ACTIVITIES" has the meaning specified in SECTION 10.03.
"OTHER FINANCINGS" has the meaning specified in SECTION 10.03.
"PAYMENT OFFICE" means the office of the Agent located at 0000
Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, or such other office as the Agent may
hereafter designate in writing as such to the other parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"PERMITTED INVESTMENTS" means, as to any Person:
(a) securities issued or directly and fully guaranteed or
insured by the United States or any agency or instrumentality
thereof (PROVIDED that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition thereof,
(b) time deposits and certificates of deposit with maturities
of not more than twelve months from the date of acquisition by such
Person which deposits or certificates are either: (a) fully insured
by the Federal Deposit Insurance Corporation or (b) in any Bank or
other commercial bank incorporated in the United States or any U.S.
branch of any other commercial bank, in each case having capital,
surplus and undivided profits aggregating $100,000,000.00 or more
with a long-term unsecured debt rating of at least A- from Standard
& Poor's Ratings Group or A3 from Xxxxx'x Investors Service,
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(c) commercial paper issued by any Person incorporated in the
United States rated at least A2 or the equivalent thereof by
Standard & Poor's Ratings Group or at least P2 or the equivalent
thereof by Xxxxx'x Investors Service and, in each case, maturing not
more than 270 days after the date of issuance,
(d) investments in money market mutual funds having assets in
excess of $2,000,000,000.00 substantially all of whose assets are
comprised of securities of the types described in clauses (a)
through (c) above,
(e) repurchase or reverse purchase agreements respecting
obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above entered into
with any bank listed in or meeting the qualifications specified in
clause (b) above, and
(f) banker's acceptances maturing within one year from the
date of origin issued by a bank or trust company organized under the
law of the United States having capital, surplus and undivided
profits aggregating at least $100,000,000 and a long-term debt
deposit rating of A- or higher by Standard & Poor's Ratings Group or
its equivalent by Xxxxx'x Investors Services, Inc.
"PERMITTED LIENS" shall mean: (a) Liens for taxes, assessments,
levies or other governmental charges not yet due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves are maintained in accordance with GAAP or are otherwise permitted
under SECTION 6.05; (b) Liens in connection with worker's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good
faith by appropriate proceedings and for which adequate reserves are
maintained in accordance with GAAP; (c) operator's, vendors', carriers',
warehousemen's, repairmen's, mechanics', workers', materialmen's or other
like Liens arising by operation of law in the ordinary course of business
(or deposits to obtain the release of any such Lien) and securing amounts
not yet due or which are being contested in good faith by appropriate
proceedings and for which adequate reserves are maintained in accordance
with GAAP; (d) deposits to secure insurance in the ordinary course of
business; (e) deposits to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money or the deferred
purchase price of goods or services), leases, licenses, franchises, trade
contracts, statutory obligations, surety and appeal bonds and performance
bonds and other obligations of a like nature incurred in the ordinary
course of business; (f) easements, rights of way, covenants, restrictions,
reservations, exceptions, encroachments, zoning and similar restrictions
and other similar encumbrances (other than to secure the payment of
borrowed money or the deferred purchase price of goods or services) or
title defects, in each case incurred in the ordinary course of business
which, in the aggregate, which do not singly or in the aggregate
materially detract from the value or usefulness of the Property subject
thereto for the business conducted by the Company and its Subsidiaries or
materially interfere with the ordinary conduct of the
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business of the Company and its Subsidiaries; (g) bankers' liens and other
off-set rights arising by operation of law; (h) inchoate Liens arising
under ERISA to secure contingent liabilities of the Company and its
Subsidiaries; (i) Liens on assets of Subsidiaries to secure Indebtedness
to the Company, PROVIDED, same are collaterally assigned to the Agent,
PROVIDED FURTHER, such Liens may be incurred only to the extent the
underlying Indebtedness is otherwise permitted under the terms of this
Agreement.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a foreign or
domestic state or political subdivision thereof or any agency of such
state or subdivision.
"PLAN" means any employee pension benefit plan (as defined in
Section 3(2) of ERISA), subject to Title IV of ERISA or Section 412 of the
Code, other than a Multiemployer Plan, with respect to which the Company
or an ERISA Affiliate contributes or has an obligation or liability to
contribute, including any such plan that may have been terminated.
"PRACTICE" means any Practicing Orthodontist or group of Practicing
Orthodontists under contract with the Company.
"PRACTICING ORTHODONTIST" or "PRACTICING ORTHODONTISTS" means any
professional corporation who has executed a contract with the Company.
"PRACTICING ORTHODONTIST COMPENSATION FORMULA" means the
compensation formula between the Company and the Practicing Orthodontists
attached hereto as EXHIBIT 1.01B.
"PRACTICING ORTHODONTIST TURNOVER" means (i) the total number of
contracts executed between the Practicing Orthodontists and the Company
that have been canceled, terminated or not renewed during the preceding
twelve (12) month period other than those not renewed because the
Orthodontist is retiring and another Orthodontist replaces him or her on
or before the date of retirement (or if the period is less than twelve
(12) months, multiplied by the quotient of 365 divided by the actual
number of days in the period), DIVIDED BY (ii) the total number of
contracts executed by and between the Practicing Orthodontists and the
Company at the beginning of such period.
"PRESCRIBED FORMS" shall mean such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time,
be prescribed by law and which, pursuant to applicable provisions of the
Code or an income tax treaty between the United States and the country of
residence of the Bank providing the form(s) or statement(s), permit each
of the Company and the Agent to make payments hereunder for the account of
such Bank free of deduction or withholding of income and other taxes.
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"PROPERTY" or "assets" (whether or not capitalized) means any
interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible.
"REGULATIONS A, D, G, T, U AND X" means Regulations A, D, G, T, U
and X of the Board as the same are from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"REPORTABLE EVENT" means an event described in Section 4043(b) of
ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"REQUIREMENTS OF ENVIRONMENTAL LAWS" means, as to any Person, the
requirements of any applicable Environmental Law relating to or affecting
such Person or the condition or operation of such Person's business or its
properties, both real and personal.
"RESERVE PERCENTAGE" means, for any Interest Period and for any
Bank, the reserve percentage applicable during such Interest Period under
regulations issued from time to time by the Board (or if more than one
such percentage is so applicable, the daily average for such percentages
for those days in such Interest Period during which any such percentage
shall be so applicable) for determining the maximum reserve requirement
(including any marginal, supplemental or emergency reserves) for such Bank
in respect of liabilities or assets consisting of or including
Eurocurrency Liabilities.
"RESPONSIBLE OFFICER" means, with respect to the Company, the
chairman of the board of directors, president, chief executive officer,
chief operating officer, general counsel or chief financial officer of the
Company.
"SECURITY DOCUMENT" means the document described in SECTION 4.01(D)
as Pledge Agreements, executed by the Company and its Subsidiaries in
favor of TCB, as Agent, for the benefit of the Banks, pursuant to the
terms hereof.
"SUBSIDIARY" means and includes, with respect to any Person, (a) any
corporation more than 50% of whose stock of any class or classes having by
the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person, directly or indirectly and (b) any partnership,
association, joint venture or other entity in which such Person, directly
or indirectly, has greater than 50% of (i) the directors (or Persons
performing similar functions) thereof or (ii) the equity interest. Unless
otherwise provided or the context otherwise requires, the term
"Subsidiary" or "Subsidiaries" shall mean a Subsidiary or Subsidiaries of
the Company.
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"TCB" means Texas Commerce Bank National Association, 000 Xxxx
Xxxxxx, Xxxxxxx, Xxxxx 00000.
"TOTAL COMMITMENT" means the sum of the Commitments for each Bank,
totaling a maximum of $15,000,000.00 for all Banks.
"UNUTILIZED COMMITMENT" means the Total Commitment less the
outstanding Advances under the Loan, as same may be reduced pursuant to
SECTION 2.16.
"WHOLLY OWNED SUBSIDIARY" means any Subsidiary to the extent (i) all
of the capital stock or other ownership interests in such Subsidiary,
other than any director's qualifying shares mandated by applicable law, is
owned directly or indirectly by the Company or (ii) such Subsidiary is
organized in a foreign jurisdiction and is required by the applicable laws
and regulations of such foreign jurisdiction to be partially owned by the
government of such foreign jurisdiction or individual or corporate
citizens of such foreign jurisdiction in order for such Subsidiary to
transact business in such foreign jurisdiction, provided that the Company,
directly or indirectly, owns the remaining capital stock or ownership
interest in such Subsidiary.
SECTION 1.02 TYPES OF ADVANCES. Advances hereunder are distinguished
by "Type". The Type of an Advance refers to the determination whether such
Advance is a LIBOR Rate Advance or an Alternate Base Rate Advance.
SECTION 1.03 ACCOUNTING TERMS. All accounting terms not defined
herein shall be construed in accordance with GAAP, as applicable, and all
calculations required to be made hereunder and all financial information
required to be provided hereunder shall be done or prepared in accordance with
GAAP.
SECTION 1.04 SCHEDULES. Schedules hereto may be updated by the
Company from time to time to reflect transactions and other matters not
prohibited by the Loan Documents.
ARTICLE II
THE LOANS
SECTION 2.01 THE LOANS. Subject to the terms and conditions hereof,
each Bank severally agrees at any time and from time to time on and after the
Execution Date and prior to the Maturity Date, to make and maintain a loan or
loans (each a "LOAN" and collectively, the "LOANS") to the Company not to exceed
at any time outstanding the maximum amount of its Commitment, which Loans (i)
shall, at the option of the Company, be made and maintained pursuant to one or
more Advances comprised of Alternate Base Rate Advances or LIBOR Rate Advances;
PROVIDED that, except as otherwise specifically provided herein, all Advances
made simultaneously under the Loan shall be of the same Type, (ii) shall be made
in the minimum amount of $500,000.00 and
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integral multiples of $100,000.00 or, in the remaining balance of the Total
Commitment, (iii) may be repaid and, so long as no Default or Event of Default
exists hereunder, reborrowed, at the option of the Company in accordance with
the provisions hereof, and (iv) shall, in the aggregate principal amount at any
time outstanding, not exceed the Total Commitment. There shall be no further
Loans or Advances after the Maturity Date.
SECTION 2.02 THE NOTES. The Loans shall be evidenced by a Note in
favor of each Bank (individually a "NOTE" and collectively, the "NOTES"),
substantially in the form of EXHIBIT 2.02A.
SECTION 2.03 NOTICE OF ADVANCE. (a) Whenever the Company desires an
Advance, it shall give written notice thereof (a "NOTICE OF ADVANCE") (or
telephonic notice promptly confirmed in writing) to the Agent (i) in the case of
an Alternate Base Rate Advance, not later than 10:00 a.m. (Houston, Texas time)
on the date of such Advance and (ii) in the case of a LIBOR Rate Advance, not
later than 11:00 a.m. (Houston, Texas time) three Business Days prior to the
date of such Advance. Each Notice of Advance shall be irrevocable and shall be
in the form of EXHIBIT 2.03 hereto, specifying (iii) the aggregate principal
amount of the Advance to be made, (iv) the date of such Advance (which shall be
a Business Day), (iii) whether it is to be an Alternate Base Rate Advance or a
LIBOR Rate Advance and (v) if the proposed Advance is to be a LIBOR Rate
Advance, the initial Interest Period to be applicable thereto.
(b) The Agent shall promptly give the Banks written notice or
telephonic notice (promptly confirmed in writing) of each proposed Advance, of
each Bank's proportionate share thereof and of the other matters covered by each
Notice of Advance.
SECTION 2.04 DISBURSEMENT OF FUNDS FOR LOANS. (a) No later than 1:00
p.m. (Houston, Texas time) on any Advance Date for Loans, each Bank shall make
available its pro rata portion of the amount of such Advance in U.S. dollars and
in immediately available funds at the Payment Office. At such time, the Agent
shall credit the amounts so received to the general deposit account of the
Company maintained with the Agent in immediately available funds.
(b) Unless the Agent shall have been notified by any Bank prior to
disbursement of the Advance by the Agent that such Bank does not intend to make
available to the Agent such Bank's portion of the Advance to be made on such
date, the Agent may assume that such Bank has made such amount available to the
Agent on such Advance Date and the Agent may, in reliance upon such assumption,
make available to the Company a corresponding amount. If such corresponding
amount is not in fact made available to the Agent by such Bank and the Agent has
made available same to the Company, the Agent shall be entitled to recover such
corresponding amount on demand from such Bank. If such Bank does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Company, and the Company shall pay such corresponding amount
to the Agent within two (2) Business Days after demand therefor. The Agent shall
also be entitled to recover from such Bank or the Company, as the case may be,
interest on such corresponding amount from the date such corresponding amount
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was made available by the Agent to the Company to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to the Alternate
Base Rate or the LIBOR Rate PLUS the applicable Margin, as appropriate. Nothing
herein shall be deemed to relieve any Bank from its obligation to fulfill its
Commitments hereunder or to prejudice any rights which the Company may have
against any Bank as a result of any default by such Bank hereunder.
SECTION 2.05 CONVERSIONS AND CONTINUANCES. The Company shall have
the option to convert or continue on any Business Day all or a portion of the
outstanding principal amount of one Type of Advance for any Loan into another
Type of Advance, PROVIDED, no Advances may be converted into or continued as
LIBOR Rate Advances if a Default or Event of Default is in existence on the date
of the conversion. Any continuation of an Advance as the same Type of Advance in
the same amount shall be effected by the Company giving notice to the Agent, in
writing, or by telephone promptly confirmed in writing, of its intention to
continue such Advance as an Advance of the same Type. Each such conversion shall
be effected by the Company giving the Agent written notice (each a "NOTICE OF
CONVERSION"), substantially in the form of EXHIBIT 2.05 hereto, prior to 11:00
a.m. (Houston, Texas time) at least (a) three (3) Business Days prior to the
date of such conversion in the case of conversion into or continuance as LIBOR
Rate Advances and (b) prior to 10:00 a.m. (Houston, Texas time) one Business Day
prior to the date of conversion in the case of a conversion into Base Rate
Advances, specifying each Advance (or portions thereof) to be so converted and,
if to be converted into or continued as LIBOR Rate Advances, the Interest Period
to be initially applicable thereto. The Agent shall thereafter promptly notify
each Bank of such Notice of Conversion.
SECTION 2.06 VOLUNTARY PREPAYMENTS. The Company shall have the right
to voluntarily prepay any Loan in whole or in part at any time on the following
terms and conditions: (a) no LIBOR Rate Advance may be prepaid prior to the last
day of its Interest Period unless, simultaneously therewith, the Company pays to
the Agent for the benefit of the Banks, all sums necessary to compensate the
Banks for all costs and expenses resulting from such prepayment, as reasonably
determined by the Banks, including but not limited to those costs described in
SECTIONS 2.10(F), 2.14, and SECTION 2.15 hereof; and (b) each prepayment
pursuant to this section shall be applied first, to the payment of accrued and
unpaid interest, and then, to the outstanding principal of such Advances in the
inverse order of maturity thereof.
SECTION 2.07 MANDATORY REPAYMENTS. The Company shall repay Loans on
any day on which the aggregate outstanding principal amount of the Loans exceeds
the Total Commitment, in the amount of such excess. The aggregate amount under
the Notes (and all accrued, unpaid interest) shall be due and payable, and the
Commitments shall terminate, on the Maturity Date.
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SECTION 2.08 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement due from the
Company shall be made to the Agent for the benefit of the Banks not later than
11:00 a.m. (Houston, Texas time) on the date when due and shall be made in
lawful money of the United States in immediately available funds at the Payment
Office.
SECTION 2.09 PRO RATA ADVANCES. All Advances under this Agreement
shall be incurred from the Banks pro rata, on the basis of their respective
Commitments. It is understood that no Bank shall be responsible for any default
by any other Bank in its obligation to make Loans hereunder and that each Bank
shall be obligated to make the Loans provided to be made by it hereunder,
regardless of the failure of any other Bank to fulfill its commitments
hereunder.
SECTION 2.10 INTEREST. (a) Subject to SECTION 11.08, the Company
agrees to pay interest on the total outstanding principal balance of all
Alternate Base Rate Advances from the date of each respective Advance to
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the lesser of (i) the Highest Lawful Rate and (ii) the
Alternate Base Rate in effect from time to time plus the Margin for Alternate
Base Rate Advances, which Margin shall be adjusted on the first day of each
Margin Period. If the Alternate Base Rate is based on the Prime Rate, interest
shall be computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be. If the Alternate Base Rate is based on
the Federal Funds Effective Rate, interest shall be computed on the basis of the
actual number of days elapsed over a year of 360 days.
(b) Subject to SECTION 11.08, the Company agrees to pay interest on
the total outstanding principal balance of all LIBOR Rate Advances from the date
of each respective Advance to maturity (whether by acceleration or otherwise) at
a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 360 days) which shall, during each Interest Period applicable
thereto, be equal to the lesser of (i) the Highest Lawful Rate and (ii) the
applicable LIBOR Rate for such Interest Period plus the Margin for LIBOR Rate
Advances. The applicable LIBOR Rate shall be fixed for each Interest Period and
shall not change during said Interest Period, but the applicable Margin, which
is added to said LIBOR Rate to determine the total interest payable to the Banks
in respect of the applicable LIBOR Rate Advance, may be adjusted, if applicable,
effective on the first day of each Margin Period, whether or not said adjustment
occurs at a time other than the beginning of an Interest Period.
(c) Subject to SECTION 11.08, overdue principal and, to the extent
permitted by law, overdue interest in respect of any Advance and all other
overdue amounts owing hereunder shall bear interest for each day that such
amounts are overdue at a rate per annum equal to the Default Rate.
(d) Interest on each Advance shall accrue from and including the
date of such Advance to but excluding the date of any repayment thereof and
shall be payable (i) in respect of LIBOR Rate Advances (A) on the last day of
the Interest Period applicable thereto and on each
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(B) Designated Payment Date during any Interest Period in excess of three (3)
months and on the date of any voluntary or mandatory repayment or any conversion
or continuance, (ii) in respect of Alternate Base Rate Advances (A) on each
Designated Payment Date, and (B) on the date of any voluntary or mandatory
repayment of such Advances on the principal amount repaid and (iii) in respect
of each Advance, at maturity (whether by acceleration or otherwise) and, after
maturity, on demand.
(e) The Agent, upon determining the LIBOR Rate for any Interest
Period, shall notify the Company thereof. Each such determination shall be prima
facie evidence of the correctness thereof. In addition, prior to the due date
for the payment of interest on any Advances set forth in the immediately
preceding paragraph, the Agent shall notify the Company of the amount of
interest due by the Company on all outstanding Advances on the applicable due
date, but any failure of the Agent to so notify the Company shall not reduce the
Company's liability for the amount owed.
(f) The Company shall pay to the Agent for the Account of each Bank,
so long as the Banks shall be required under regulations of the Board to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities or such amounts are not included in the
applicable LIBOR Rate, additional interest on the unpaid principal amount of
each such LIBOR Rate Advance, from the date of such Advance until such principal
amount is paid in full, at an interest rate per annum equal at all times during
the Interest Period for such Advance to the lesser of (i) the Highest Lawful
Rate and (ii) the remainder obtained by subtracting (A) the LIBOR Rate for such
Interest Period from (B) the rate obtained by dividing such LIBOR Rate referred
to in clause (C) above by that percentage equal to 100% minus the Reserve
Percentage of such Bank for such Interest Period. Such additional interest shall
be determined by such Bank as incurred and shall be payable upon demand therefor
by the Bank to the Company. Each determination by such Bank of additional
interest due under this Section shall be prima facie evidence of the correctness
thereof.
SECTION 2.11 INTEREST PERIODS. (a) At the time the Company gives any
Notice of Advance or Notice of Conversion or provides notice of its intent to
continue a loan as the same Type in respect of the making of, or conversion
into, a LIBOR Rate Advance, the Company shall have the right to elect, by giving
the Agent on the dates and at the times specified in SECTION 2.03 or SECTION
2.05, as the case may be, notice of the interest period (each an "INTEREST
PERIOD") applicable to such LIBOR Rate Advance, which Interest Period shall be
either a one, two, three or six month period; PROVIDED, that:
(i) the initial Interest Period for any LIBOR Rate Advance
shall commence on the date of such LIBOR Rate Advance (including the date
of any conversion thereto or continuance thereof pursuant to SECTION
2.05); each Interest Period occurring thereafter in respect of such LIBOR
Rate Advance shall commence on the expiration date of the immediately
preceding Interest Period;
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(ii) if any Interest Period relating to a LIBOR Rate Advance
begins on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar month;
(iii) if any Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the next
succeeding Business Day, PROVIDED, that if there are no more Business Days
in that month, the Interest Period shall expire on the preceding Business
Day;
(iv) no Interest Period for Advances shall extend beyond the
applicable Maturity Date; and
(v) the Company shall be entitled to have a maximum of five
(5) separate LIBOR Rate Advances hereunder for all Loans outstanding at
any one time.
(b) If, upon the expiration of any Interest Period applicable to a
LIBOR Rate Advance, the Company has failed to elect a new Interest Period to be
applicable to such Advance as provided above, the Company shall be deemed to
have elected to convert such Advance into an Alternate Base Rate Advance
effective as of the expiration date of such current Interest Period.
SECTION 2.12 INTEREST RATE NOT ASCERTAINABLE. In the event that the
Agent shall reasonably determine (which determination shall be prima facie
evidence of the correctness thereof) that on any date for determining the LIBOR
Rate for any Interest Period, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of LIBOR Rate, then, and in any such event, the Agent shall forthwith
give notice to the Company and to the Banks of such determination. Until the
Agent notifies the Company that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Banks to make LIBOR
Rate Advances shall be suspended.
SECTION 2.13 CHANGE IN LEGALITY. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Bank or
its LIBOR Lending Office to make or maintain any LIBOR Rate Advance, then, by
prompt written notice to the Company, such Bank may:
(i) declare that LIBOR Rate Advances will not thereafter be
made by such Bank hereunder, whereupon the Company shall be prohibited
from requesting LIBOR Rate Advances from such Bank hereunder unless such
declaration is subsequently withdrawn, PROVIDED, such request for a LIBOR
Rate Advance shall, if the Company so indicates, be automatically
converted (as to such Bank) into a request for an Alternate Base Rate
Advance and the affected Bank or Banks shall respond thereto as provided
herein; and
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(ii) require that all outstanding LIBOR Rate Advances made by
such Bank be converted to Alternate Base Rate Advances, in which event (A)
all such LIBOR Rate Advances shall be automatically converted to Alternate
Base Rate Advances as of the effective date of such notice as provided in
paragraph (b) below if required by applicable law or regulation, or if not
so required, at the end of the current Interest Period and (B) all
payments and prepayments of principal which would otherwise have been
applied to repay the converted LIBOR Rate Advances shall instead be
applied to repay the Alternate Base Rate Advances resulting from the
conversion of such LIBOR Rate Advances.
(b) For purposes of this Section, a notice to the Company by the
Agent pursuant to paragraph (a) above shall be effective on the date of receipt
thereof by the Company.
SECTION 2.14 INCREASED COSTS, TAXES OR CAPITAL ADEQUACY
REQUIREMENTS. (a) If any change in the application or effectiveness of any
applicable law or regulation or compliance by any Bank with any applicable
guideline or request issued by any central bank or governmental authority having
jurisdiction over such Bank (whether or not having the force of law) (i) shall
change the basis of taxation of payments to such Bank of the principal of or
interest on any LIBOR Rate Advance made by such Bank or any other fees or
amounts payable hereunder with respect to LIBOR Rate Advances (other than taxes
imposed on the overall net income of such Bank or its Applicable Lending Office
or franchise taxes (or takes in lieu of such income or franchise taxes) imposed
upon it by the jurisdiction in which such Bank or its Applicable Lending Office
has an office), (ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement with respect to LIBOR Rate Advances
against assets of, deposits with or for the account of, or credit extended by,
such Bank (without duplication of any amounts paid pursuant to SECTION 2.10(F))
or (iii) shall impose on such Bank any other condition affecting this Agreement
with respect to LIBOR Rate Advances or any LIBOR Rate Advance made by such Bank,
and the result of any of the foregoing shall be to increase the cost to such
Bank of maintaining its Commitment or of making or maintaining any LIBOR Rate
Advance or to reduce the amount of any sum received or receivable by such Bank
hereunder (whether of principal, interest or otherwise) in respect thereof by an
amount deemed in good faith by such Bank to be material, then the Company shall
pay to such Bank such additional amount as will compensate it for such increase
or reduction within ten (10) days after notice thereof pursuant to SECTION
2.14(C).
(b) If any Bank shall have determined in good faith that any change
in any law, rule, regulation or guideline regarding capital adequacy, or any
change therein or any change in the interpretation or administration thereof or
compliance with any new or changed request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency has or would have the effect of reducing the rate of
return on the capital of such Bank as a consequence of, or with reference to,
such Bank's obligations hereunder to a level below that which it could have
achieved but for such adoption, change or compliance by an amount deemed by such
Bank to be material, then, from time to time, the Company shall pay to the Agent
for the benefit of such Bank such additional amount as will reasonably
compensate it for such reduction within thirty (30) days after notice thereof
pursuant to SECTION 2.14(C).
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(c) Each Bank will notify the Company through the Agent of any event
occurring which will entitle it to compensation pursuant to this Section, as
promptly as practicable after it becomes aware thereof and determines to request
compensation and in any case, within 180 days after the incurrence thereof. A
certificate setting forth in reasonable detail the amount necessary to
compensate the Bank in question as specified in paragraph (a) or (b) above, as
the case may be, and the calculation of such amount shall be delivered to the
Company and shall be conclusive absent manifest error. The Company shall pay to
the Agent for the account of such Bank the amount shown as due on any such
certificate within ten (10) days after its receipt of the same. Each Bank
agrees, to the extent it may lawfully do so without incurring additional costs,
to use its best efforts to minimize costs arising under this section by
designating another lending office for the Loans affected, PROVIDED no Bank
shall be required to do so.
(d) In the event any Bank gives a notice to the Company pursuant to
SECTION 2.13 or 2.14 that it cannot fund certain Loans or that such funding will
be at an increased cost, or is unable to deliver the Prescribed Forms as
required by SECTION 2.17 below, the Company may give notice in response, with
copies to the Agent, that it wishes to seek one or more banks to replace such
Bank in accordance with the provisions set forth in SECTION 11.10. Each Bank
giving such a notice agrees that, at the request of the Company, it will assign
all of its interests hereunder and under the Notes and the Commitment to a
designated, Eligible Assignee for the full amount then owing to it, all in
accordance with SECTION 11.10. Thereafter, said assignee shall have all of the
rights hereunder and obligations of the Assigning Bank (except as otherwise
expressly set forth herein) and such Bank shall have no further obligations to
the Company hereunder.
(e) Any notice given pursuant to this SECTION 2.14 shall be deemed
to contain a representation by the Bank issuing such notice that the increased
costs and charges are common to substantially all of the loan customers of such
Bank and are not unique to the Company and that such Bank is requesting similar
compensation from substantially all such customers to the extent it may legally
do so.
SECTION 2.15 LIBOR RATE LOAN PREPAYMENT AND DEFAULT PENALTIES.
Subject to SECTION 11.08, the Company shall indemnify each Bank against any loss
or expense (excluding loss of anticipated profits) which it may sustain or incur
as a consequence of (a) an Advance of, or a conversion from or into, LIBOR Rate
Advances that does not occur on the date specified therefor in a Notice of
Advance or Notice of Conversion, (b) any payment, prepayment or conversion of a
LIBOR Rate Advance required by any other provision of this Agreement or
otherwise made on a date other than the last day of the applicable Interest
Period or (c) any default in the payment or prepayment of the principal amount
of any LIBOR Rate Advance or any part thereof or interest accrued thereon, as
and when due and payable (at the due date thereof, by notice of prepayment or
otherwise). Such loss or expense shall include an amount equal to the excess
determined by each Bank of (i) its cost of obtaining the funds for the Advance
being paid, prepaid or converted or not borrowed (based on the LIBOR Rate) for
the period from the date of such payment, prepayment or conversion or failure to
borrow to the last day of the Interest Period for such Advance (or, in the case
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of a failure to borrow, the Interest Period for the Advance which would have
commenced on the date of such failure to borrow) OVER (ii) the amount of
interest (as reasonably determined by each Bank) that would be realized in
reemploying the funds so paid, prepaid or converted or not borrowed for such
period or Interest Period, as the case may be. The Agent, on behalf of the
Banks, will notify the Company of any loss or expense which will entitle the
Banks to compensation pursuant to this Section, as promptly as possible after it
becomes aware thereof and in no event later than 180 days after becoming aware.
A certificate of any Bank setting forth any amount which it is entitled to
receive pursuant to this Section shall be delivered to the Company and shall be
conclusive absent manifest error if such determination is made on a reasonable
basis. The Company shall pay to the Agent for the account of the Banks the
amount shown as due on any certificate within thirty (30) days after its receipt
of the same. Without prejudice to the survival of any other obligations of the
Company hereunder, the obligations of the Company under this Section shall
survive the termination of this Agreement and the assignment of any of the
Notes. In the event that any Bank fails to demand any compensation payable under
this SECTION 2.15 within 180 days after incurring the amount for which
compensation is payable under this SECTION 2.15, such Bank shall have been
deemed to have waived its right to recover such compensation.
SECTION 2.16 VOLUNTARY REDUCTION OF COMMITMENT. Upon at least three
(3) Business Days' prior written notice, the Company shall have the right,
without premium or penalty, to reduce or terminate the Commitments, in whole or
in part, in the amount of $5,000,000.00 or integral multiples thereof.
SECTION 2.17 TAX FORMS. With respect to any Bank which is organized
under the laws of a jurisdiction outside the United States, on the date of the
initial Advance hereunder or on the date it becomes a party hereto, and from
time to time thereafter if requested by the Company or the Agent, each such Bank
shall provide the Agent and the Company with the Prescribed Forms. Unless the
Company and the Agent have received such Prescribed Forms, the Agent, if
required by applicable law or regulation, may withhold taxes from payments under
the Loan Documents at the applicable rate in the case of payments to or for any
Bank organized under the laws of a jurisdiction outside the United States,
PROVIDED the Company shall, unless otherwise directed in writing by the Agent or
unless otherwise required by law, make all payments in full to the Agent without
deducting any withholding or similar taxes.
ARTICLE III
FEES
SECTION 3.01 FEES. Subject to SECTION 11.08 hereof, the Company
agrees to pay the following fees (the "FEES"):
(a) The Company agrees to pay to the Agent for the ratable account
of the Banks a Commitment fee (the "COMMITMENT FEE") for the period from and
including the Execution Date to the Maturity Date, respectively, computed at a
rate per annum determined by the grid set forth
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below and calculated on the basis of a 360 day-year on the daily average of the
Unutilized Commitment of each Bank. Commitment Fees shall be due and payable in
arrears on each Designated Payment Date commencing on the first such date
following the Execution Date and on the Maturity Date.
FUNDED INDEBTEDNESS/ EBITDA RATIO COMMITMENT FEE
------------------------------------------------------- -------
(is greater than or equal to) 2.50 0.40%
(is greater than or equal to) 2.00 but (less than) 2.50 0.35%
(is greater than or equal to) 1.50 but (less than) 2.00 0.30%
(is greater than or equal to) 1.00 but (less than) 1.50 0.25%
(less than) 1.00 0.20%
(b) The Company agrees to pay the fees described in that one certain
Fee Letter among the Company, the Agent and Chase Securities, Inc. dated June
10, 1997.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. The
obligation of each Bank to make its initial Advance to the Company is subject to
the occurrence of or receipt by the Agent of the following, all in form and
substance satisfactory to the Agent, and, where relevant, executed by all
appropriate parties:
(a) this Agreement (which includes the Guaranty);
(b) one Note for each Bank;
(c) a Notice of Advance with respect to the initial Advance meeting
the requirements of SECTION 2.03(A);
(d) the following security document (the "SECURITY DOCUMENT")
granting a first and prior Lien (except for Liens permitted under SECTION 7.04)
or security interest on the Collateral to the Agent for the benefit of itself
and the Banks as security for the Obligation;
(i) Pledge Agreements pledging to the Agent 100% of the stock
owned by the Company or any Subsidiary in any Subsidiaries other than any
Foreign Subsidiary, and 65% of the voting stock of such Foreign
Subsidiary, accompanied by original stock certificates evidencing such
shares and executed stock powers for such certificates;
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Failure of the Agent to request the information contained in this
paragraph prior to the Execution Date shall not preclude it from requesting such
information at any time thereafter, in its sole discretion, during the time the
Loan is outstanding;
(e) a certificate of an officer and of the secretary or an assistant
secretary of the Company certifying, INTER ALIA, (i) true and complete copies of
each of the articles or certificate of incorporation, as amended and in effect
of the Company and each of the Guarantors, the bylaws, as amended and in effect,
of the Company and each of the Guarantors and the resolutions adopted by the
Board of Directors of the Company and each of the Guarantor (A) authorizing the
execution, delivery and performance by the Company and each of its Subsidiaries
of this Agreement and the other Loan Documents to which it is or will be a party
and, in the case of the Company, the Advances to be made hereunder, (B)
approving the forms of the Loan Documents to which it is or will be a party and
which will be delivered at or prior to the date of the initial Advance and (C)
authorizing officers of the Company and each of its Subsidiaries to execute and
deliver the Loan Documents to which it is or will be a party and any related
documents, including, any agreement contemplated by this Agreement, (ii) the
incumbency and specimen signatures of the officers of the Company and each of
its Subsidiaries executing any documents on its behalf and (iii) that there has
been no change in the businesses or financial condition of the Company which
could reasonably be expected to have a Material Adverse Effect since May 23,
1997, the date upon which the IPO occurred.
(f) a favorable, signed opinion addressed to the Agent and the Banks
from Xxxxx & Xxxxx L.L.P., counsel to the Company and the Guarantors;
(g) the payment to the Agent and the Banks of all Fees owing on the
Execution Date and all reasonable fees and expenses (including the reasonable
fees and disbursements of Xxxxxxx & Xxxxx L.L.P.) agreed upon by such parties to
be paid on the Execution Date;
(h) certificates of appropriate public officials as to the
existence, good standing and qualification to do business as a foreign
corporation, as applicable, of the Company and its Subsidiaries in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualifications and where the failure to so qualify would
have a Material Adverse Effect;
(i) copies of a specimen form of service contract between the
Company and its Practicing Orthodontists as contemplated by SECTION 6.03,
together with a schedule summarizing the economic arrangements between the
Company and each said Practicing Orthodontist.
(j) certificates of insurance as contemplated by SECTION 6.01(H);
(k) UCC searches and other title information reasonably requested by
the Agent on the Company and each of its Subsidiaries; and
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(l) A subordination agreement in the form of EXHIBIT 4.01(L)
attached hereto in respect of all Intercompany Indebtedness among the Company
and its Subsidiaries ("the Intercompany Subordination Agreement").
The acceptance of the benefits of the initial Credit Event shall
constitute a representation and warranty by the Company to the Agent and each of
the Banks that, all of the conditions specified in this Section above shall have
been satisfied or waived as of that time.
SECTION 4.02 CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The
obligation of the Banks to make any Advance is, including, without limitation,
the initial Advance, subject to the further conditions precedent that on the
date of such Credit Event:
(a) The representations and warranties set forth in ARTICLE V shall
be true and correct in all material respects as of, and as if such
representations and warranties were made on, the date of the proposed Advance
(unless such representation and warranty expressly relates to an earlier date or
is no longer true and correct solely as a result of transactions permitted by
the Loan Documents), and the Company shall be deemed to have certified to the
Agent and the Banks that such representations and warranties are true and
correct in all material respects by submitting a Notice of Advance.
(b) The Company shall have complied with the provisions of SECTION
2.03 hereof.
(c) No Default or Event of Default shall have occurred and be
continuing or would result from such Credit Event.
(d) No Material Adverse Effect shall have occurred since May 23,
1997.
(e) Except for any Foreign Subsidiaries, all Persons that have
become Subsidiaries subsequent to the Execution Date shall have executed this
Agreement.
(f) The Agent shall have received such other approvals, opinions or
documents as the Agent or the Banks may reasonably request.
The acceptance of the benefits of each such Credit Event shall
constitute a representation and warranty by the Company to the Agent and each of
the Banks that all of the conditions specified in this Section above exist as of
that time.
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SECTION 4.03 DELIVERY OF DOCUMENTS. All of the Notes, certificates,
legal opinions and other documents and papers referred to in this ARTICLE IV,
unless otherwise specified, shall be delivered to the Agent for the account of
each of the Banks and, except for the Notes, in sufficient counterparts for each
of the Banks and shall be reasonably satisfactory in form and substance to the
Banks.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement and to
make the Advances provided for herein, the Company, as to itself and each of its
Subsidiaries, makes, on or as of the occurrence of each Credit Event (except to
the extent such representations or warranties relate to an earlier date or are
no longer true and correct in all material respects solely as a result of
transactions not prohibited by the Loan Documents), the following
representations and warranties to the Agent and the Banks:
SECTION 5.01 ORGANIZATION AND QUALIFICATION. Each of the Company and
its Subsidiaries (a) is duly formed or organized, validly existing and is in
good standing under the laws of the state of its organization, (b) has the
corporate power to own its property and to carry on its business as now
conducted, except where the failure to do so would not have a Material Adverse
Effect and (c) is duly qualified to do business and is in good standing in every
jurisdiction in which the failure to be so qualified would have a Material
Adverse Effect.
SECTION 5.02 AUTHORIZATION AND VALIDITY. Each of the Company and its
Subsidiaries has the corporate power and authority to execute, deliver and
perform its obligations hereunder and under the other Loan Documents to which it
is a party and all such action has been duly authorized by all necessary
corporate proceedings on its part. The Loan Documents to which each of the
Company and its Subsidiaries is a party have been duly and validly executed and
delivered by such Person and constitute a valid and legally binding agreement of
such Person enforceable in accordance with the respective terms thereof, except,
in each case, as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally, and by general
principles of equity regardless of whether such enforceability is a proceeding
in equity or at law.
SECTION 5.03 GOVERNMENTAL CONSENTS. No authorization, consent,
approval, license or exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is necessary for the valid execution, delivery or
performance by the Company or any Subsidiary of any Loan Document.
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SECTION 5.04 CONFLICTING OR ADVERSE AGREEMENTS OR RESTRICTIONS.
Neither the Company nor any Subsidiary is a party to any contract or agreement
or subject to any restriction which would reasonably be expected to have a
Material Adverse Effect. All agreements of the Company relating to the lending
of money or the issuance of letters of credit by any party as of the Effective
Date are described hereto on SCHEDULE 5.04. Neither the execution nor delivery
of the Loan Documents nor compliance with the terms and provisions hereof or
thereof will be contrary to the provisions of, or constitute a default under (a)
the charter or bylaws of the Company or any of its Subsidiaries or (b) any law,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality that is applicable to the Company or any of its Subsidiaries or
(c) any material agreement to which the Company or any of its Subsidiaries is a
party or by which it is bound or to which it is subject.
SECTION 5.05 TITLE TO ASSETS. Each of the Company and its
Subsidiaries has good title to all material personalty and good and indefeasible
title to all material realty as reflected on the Company's and the Subsidiaries'
books and records as being owned by them, except for properties disposed of in
the ordinary course of business, subject to no Liens, except those permitted
hereunder, except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect. All of such assets have been and are being
maintained by the appropriate Person in good working condition in accordance
with industry standards, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect.
SECTION 5.06 LITIGATION. No proceedings against or affecting the
Company or any Subsidiary are pending or, to the knowledge of the Company,
threatened before any court or governmental agency or department which could
reasonably be expected to have a Material Adverse Effect, except those listed on
SCHEDULE 5.06 hereof.
SECTION 5.07 FINANCIAL STATEMENTS. Prior to the Execution Date, the
Company has furnished to the Banks its audited consolidated balance sheet,
audited consolidated income statement and statement of cash flows for the twelve
(12) months ended December 31, 1996 and unaudited consolidated balance sheet,
unaudited consolidated income statement and statement of cash flows for quarter
ended March 31, 1997 (such financials, the "FINANCIALS"). The Financials have
been prepared in conformity with GAAP (except for the quarterly statements that
may be subject to audit-adjustments and include abbreviated footnotes)
consistently applied (except as otherwise disclosed in such financial
statements) throughout the periods involved and present fairly, in all material
respects, the consolidated financial condition of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations for the periods then ended in accordance with GAAP (except
for the quarterly statements that may be subject to audit-adjustments and
include abbreviated footnotes). As of the Execution Date, no Material Adverse
Effect has occurred since May 22, 1997, the date upon which the IPO occurred.
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SECTION 5.08 DEFAULT. Neither the Company nor any Subsidiary is in
default under any material provisions of any instrument evidencing any
Indebtedness or of any agreement relating thereto, or in default in any respect
under any order, writ, injunction or decree of any court, or in default in any
respect under or in violation of any order, injunction or decree of any
governmental instrumentality, in each case in such manner as to cause a Material
Adverse Effect.
SECTION 5.09 INVESTMENT COMPANY ACT. Neither the Company nor any
Subsidiary is, or is directly or indirectly controlled by or acting on behalf of
any Person which is, an "investment company," as such term is defined in the
Investment Company Act of 1940, as amended.
SECTION 5.10 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Company
nor any Subsidiary is a non-exempt "holding company," or subject to regulation
as such, or, to the knowledge of the Company's or such Subsidiary's officers, an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
SECTION 5.11 ERISA. No accumulated funding deficiency (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived, exists
or is expected to be incurred with respect to any Plan. No liability to the PBGC
(other than required premium payments) has been or is expected by the Company to
be incurred with respect to any Plan by the Company or any ERISA Affiliate.
Neither the Company nor any ERISA Affiliate has incurred any withdrawal
liability under Title IV of ERISA with respect to any Multi-Employer Plans.
SECTION 5.12 TAX RETURNS AND PAYMENTS. Each of the Company and its
Subsidiaries has filed all federal income tax returns and other tax returns,
statements and reports (or obtained extensions with respect thereto) which are
required to be filed and has paid or deposited or made adequate provision, in
accordance with GAAP for the payment of all taxes (including estimated taxes
shown on such returns, statements and reports) which are shown to be due
pursuant to such returns, except for such taxes as are being contested in good
faith and by appropriate proceedings.
SECTION 5.13 ENVIRONMENTAL MATTERS. Each of the Company and its
Subsidiaries (a) possesses all environmental, health and safety licenses,
permits, authorizations, registrations, approvals and similar rights necessary
under law or otherwise for the Company or such Subsidiary to conduct its
operations as now being conducted (other than those with respect to which the
failure to possess or maintain would not, individually or in the aggregate for
the Company and such Subsidiaries, reasonably be expected to have a Material
Adverse Effect) and (b) each of such licenses, permits, authorizations,
registrations, approvals and similar rights is valid and subsisting, in full
force and effect and enforceable by the Company or such Subsidiary, and each of
the Company and its Subsidiaries is in compliance with all effective terms,
conditions or other provisions of such permits, authorizations, registrations,
approvals and similar rights except for such failure or noncompliance that,
individually or in the aggregate for the Company and such
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Subsidiaries, would not reasonably be expected to have a Material Adverse
Effect. Except as disclosed on SCHEDULE 5.13, neither the Company nor any of its
Subsidiaries has received any notices of any violation of, noncompliance with,
or remedial obligation under, Requirements of Environmental Laws (which
violation or non-compliance has not been cured), and there are no writs,
injunctions, decrees, orders or judgments outstanding, or lawsuits, claims,
proceedings, investigations or inquiries pending or, to the knowledge of the
Company or any Subsidiary, threatened, relating to the ownership, use,
condition, maintenance or operation of, or conduct of business related to, any
property owned, leased or operated by the Company or such Subsidiary or other
assets of the Company or such Subsidiary, other than those violations, instances
of noncompliance, obligations, writs, injunctions, decrees, orders, judgments,
lawsuits, claims, proceedings, investigations or inquiries that, individually or
in the aggregate for the Company and such Subsidiaries, would not have a
Material Adverse Effect. Except as disclosed on SCHEDULE 5.13, there are no
material obligations, undertakings or liabilities arising out of or relating to
Environmental Laws to which the Company or any of its Subsidiaries has agreed,
assumed or retained, or by which the Company or any of its Subsidiaries is
adversely affected, by contract or otherwise and, further, except as disclosed
on SCHEDULE 5.13, neither the Company nor any of its Subsidiaries has received a
written notice or claim to the effect that the Company or any of its
Subsidiaries is or may be liable to any other Person as the result of a Release
or threatened Release of a Hazardous Material which, in either case, could
reasonably be expected to have a Material Adverse Effect.
SECTION 5.14 PURPOSE OF LOANS. (a) The proceeds of the Loan will be
used solely for general corporate purposes and to finance acquisitions permitted
hereunder.
(b) None of the proceeds of any Advance will be used directly or
indirectly for the purpose of purchasing or carrying any "margin stock" within
the meaning of Regulation U or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any margin
stock.
SECTION 5.15 FRANCHISES AND OTHER RIGHTS. The Company and each of
its Subsidiaries has all franchises, permits, licenses and other authority as
are necessary to enable them to carry on their respective businesses as now
being conducted and is not in default in respect thereof where the absence of
such or any such default could reasonably be expected to have a Material Adverse
Effect.
SECTION 5.16 SUBSIDIARIES AND ASSETS. The Subsidiaries listed on
SCHEDULE 5.16 are all of the Subsidiaries of the Company as of the Execution
Date and the address given for such Guarantors is the correct mailing address as
of the Execution Date.
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SECTION 5.17 SOLVENCY. After giving effect to the initial Advance
hereunder and all other Indebtedness of the Company existing at the time of such
Advance, the Company and its Subsidiaries, viewed as a consolidated entity have
at such time (a) capital sufficient to carry on their businesses and
transactions and (b) assets, the fair market value of which exceeds their
consolidated liabilities (as reflected on the Financials or on the financial
statements most recently delivered to the Banks).
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company, as to itself and each of its Subsidiaries, covenants
and agrees that on and after the date hereof and for so long as this Agreement
is in effect and until the Notes have been paid in full and the Commitments have
terminated:
SECTION 6.01 INFORMATION COVENANTS. The Company will furnish to each
Bank:
(a) As soon as available, and in any event within forty-five (45)
days after the close of each of the first 3 quarters of each fiscal year, the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such period and the related consolidated statements of income and
cash flow for such period, setting forth, in each case, comparative consolidated
figures for the related periods in the prior fiscal year, all of which shall be
certified by the chief financial officer or chief executive officer of the
Company as fairly presenting in all material respects, the financial position of
the Company and its Subsidiaries as of the end of such period and the results of
their operations for the period then ended in accordance with GAAP, subject to
changes resulting from normal year-end audit adjustments and inclusion of
abbreviated footnotes; provided, however, that delivery of the Quarterly Report
on Form 10-Q of the Company for such quarterly period filed with the Securities
and Exchange Commission shall be deemed to satisfy the requirements of this
SECTION 6.01(A).
(b) As soon as available, and in any event within one hundred twenty
(120) days after the close of each fiscal year of the Company, the audited
consolidated balance sheets of the Company and its Subsidiaries as at the end of
such fiscal year and the related consolidated statements of income, stockholders
equity and cash flows for such fiscal year, setting forth, in each case,
comparative figures for the preceding fiscal year and certified by independent
certified public accountants of recognized national standing, whose report shall
be without limitation as to the scope of the audit and reasonably satisfactory
in substance to the Banks; provided, however, that delivery of the Annual Report
on Form 10-K of the Company for such year filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this SECTION 6.01(B).
(c) Immediately after any Responsible Officer of the Company obtains
knowledge thereof, notice of:
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(i) any material violation of, noncompliance with, or remedial
obligations under, Requirements of Environmental Laws;
(ii) any material Release or threatened material Release of
Hazardous Materials affecting any property owned, leased or operated by
the Company or any of its Subsidiaries;
(iii) any event or condition which constitutes a Default or an
Event of Default;
(iv) any condition or event which, in the opinion of
management of the Company, could reasonably be expected to have a Material
Adverse Effect;
(v) any Person having given any written notice to the Company
or taken any other action with respect to a claimed material default or
event under any material instrument or material agreement;
(vi) the institution of any litigation which might reasonably
be expected in the good faith judgment of the Company either to have a
Material Adverse Effect or result in a final, non-appealable judgment or
award in excess of $1,000,000.00 with respect to any single cause of
action; and
(vii) all ERISA notices required by SECTION 6.07;
then, a notice of such event or condition will be delivered to each Bank
specifying the nature and period of existence thereof and specifying the notice
given or action taken by such Person and the nature of any such claimed default,
event or condition and, in the case of an Event of Default or Default, what
action has been taken, is being taken or is proposed to be taken with respect
thereto.
(d) As soon as available, and in any event within forty-five (45)
days after the close of each calendar quarter, a compliance certificate of a
Responsible Officer in the form attached hereto as EXHIBIT 6.01(D) to the effect
that, no Default or Event of Default exists or, if any Default or Event of
Default does exist, specifying the nature and extent thereof and the action that
is being taken or that is proposed to be taken with respect thereto, which
certificate shall set forth the calculations required to establish whether the
Company was in compliance with the provisions of SECTIONS 7.10 through 7.15 as
at the end of such calendar quarter or year, as the case may be (the "COMPLIANCE
CERTIFICATE").
(e) Promptly following request by the Agent such environmental
reports, studies and audits of the Company's procedures and policies, assets and
operations in respect of Environmental Laws as the Agent may reasonably request.
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(f) Promptly upon receipt thereof, a copy of any report, management
letter or similar item submitted to the Company by its independent accountants
in connection with any regular or special audit of the Company's records.
(g) Promptly following request by the Agent, such annual, unaudited
financial projections as the Agent may reasonably request.
(h) Annually, upon receipt, a listing of all insurance policies and
certificates and other evidence of insurance of the Company, as described in
SECTION 6.04.
(i) Copies of all reports filed with the Securities and Exchange
Commission, any other governmental agency, or any public stock exchange.
(j) Prior to any acquisition permitted under SECTION 7.05(D), at any
time when the total cash expended for similar acquisitions during the then
current year has exceeded the amount shown in the following chart, a summary
report describing the terms of such acquisition and showing the historical and
pro-forma financial information therefor and such other items as the Majority
Banks may reasonably request.
Year Cash Expended
---- ---------------
1997 $ 10,000,000.00
1998 20,000,000.00
1999 30,000,000.00
2000 30,000,000.00
(k) From time to time and with reasonable promptness, such other
information or documents as the Agent or any Bank through the Agent may
reasonably request.
SECTION 6.02 BOOKS, RECORDS AND INSPECTIONS. The Company and its
Subsidiaries will maintain, and will permit, or cause to be permitted, any
Person designated to the Company in writing by any Bank or the Banks upon one
Business Days' notice and without materially disrupting the operations of the
Company or any of its Subsidiaries, to visit and inspect any of the properties
of the Company and its Subsidiaries, to examine the corporate books and
financial records of the Company and its Subsidiaries and make copies thereof or
extracts therefrom and to discuss the affairs, finances and accounts of any such
corporations with the officers, employees and agents of the Company and its
Subsidiaries and with their independent public accountants, all at such
reasonable times and as often as the Agent or such Bank may request. Prior to an
Event of Default, one such inspection per year and, after an Event of Default
all such inspections shall be at the expense of the Company.
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SECTION 6.03 PRACTICING ORTHODONTISTS CONTRACTS. The Company shall
provide the Agent with both a listing and a specimen form of the service
contract as of the Execution Date between the Company and each Practicing
Orthodontist. A listing of each such presently existing contract between the
Company and each Practicing Orthodontist is attached hereto as SCHEDULE 6.03.
SECTION 6.04 INSURANCE AND MAINTENANCE OF PROPERTIES. (a) Each of
the Company and its Subsidiaries will keep reasonably adequately insured by
financially sound and reputable insurers all of its material property, which is
of a character, and in amounts and against such risks, usually and reasonably
insured by similar Persons engaged in the same or similar businesses, including,
without limitation, insurance against fire, casualty and any other hazards
normally insured against. Each of the Company and its Subsidiaries will at all
times maintain insurance against its liability for injury to Persons or
property, and for the negligent practice of dentistry and other forms of
malpractice generally, which insurance shall be by financially sound and
reputable insurers and in such amounts and form as are customary for
corporations of established reputation engaged in the same or a similar business
and owning and operating similar properties and which shall name the Agent, for
the benefit of the Banks, as an additional insured. A listing of all presently
existing policies of the Company and its Subsidiaries is attached hereto as
SCHEDULE 6.04.
(a) Subject to force majeure and ordinary wear and tear, each of the
Company and its Subsidiaries will cause all of its material properties used or
useful in the conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all reasonably necessary repairs, renewals and
replacements thereof, all as in the reasonable judgment of such Person may be
reasonably necessary so that the business carried on in connection therewith may
be properly conducted at all times, except where such failure could not
reasonably be expected to have a Material Adverse Effect.
SECTION 6.05 PAYMENT OF TAXES. Each of the Company and its
Subsidiaries will pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits, or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
except for such amounts that are being contested in good faith and by
appropriate proceedings, except where such failure could not reasonably be
expected to have a Material Adverse Effect.
SECTION 6.06 CORPORATE EXISTENCE. Each of the Company and its
Subsidiaries will do all things necessary to preserve and keep in full force and
effect (a) the existence of the Company, and (b) unless the failure to do so
would not reasonably be expected to have a Material Adverse Effect, the rights
and franchises of each of the Company and its Subsidiaries.
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SECTION 6.07 COMPLIANCE WITH STATUTES. Each of the Company and its
Subsidiaries will comply with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property, except to the extent the failure to do so would not reasonably
be expected to have a Material Adverse Effect.
SECTION 6.08 ERISA. Immediately after any Responsible Officer of the
Company or any of its Subsidiaries knows or has reason to know any of the
following items are true the Company will deliver or cause to be delivered to
the Banks a certificate of the chief financial officer of the Company setting
forth details as to such occurrence and such action, if any, the Company or its
ERISA Affiliate is required or proposes to take, together with any notices
required or proposed to be given to or filed with or by the Company or its ERISA
Affiliate with respect thereto: that a Reportable Event has occurred or that an
application may be or has been made to the Secretary of the Treasury for a
waiver or modification of the minimum funding standard; that a Multiemployer
Plan has been or may be terminated, reorganized, partitioned or declared
insolvent under Title IV of ERISA; that any required contribution to a Plan or
Multiemployer Plan has not been or may not be timely made; that proceedings may
be or have been instituted under Section 4069(a) of ERISA to impose liability on
the Company or an ERISA Affiliate or under Section 4042 of ERISA to terminate a
Plan or appoint a trustee to administer a Plan; that the Company or any ERISA
Affiliate has incurred or may incur any liability (including any contingent or
secondary liability) on account of the termination of or withdrawal from a Plan
or a Multiemployer Plan; and that the Company or an ERISA Affiliate may be
required to provide security to a Plan under Section 401(a)(29) of the Code.
SECTION 6.09 ADDITIONAL GUARANTIES. (a) Whenever the Company or any
of its Subsidiaries acquires any Subsidiary that is not a Foreign Subsidiary or
a Non-Wholly Owned Subsidiary, the Company shall cause such Subsidiary to
deliver to each Agent, with sufficient counterparts for each Bank within (i) 30
days after any such Subsidiary incorporated under the laws of any of the United
States or any of its territories is acquired which owns assets constituting at
least 5% of Consolidated Tangible Assets or EBITDA at such time or (ii) 45 days
after the end of the fiscal quarter in which any other Subsidiary incorporated
under the laws of any of the United States or any of its territories becomes a
Subsidiary or (iii) immediately upon request of the Agent (A) a guaranty
agreement in form and substance reasonably satisfactory to such Agent (an
"ADDITIONAL GUARANTY") and (B) a certificate of an officer and of the secretary
or an assistant secretary of such Subsidiary certifying a true and correct copy
of each of the articles or certificate of incorporation, as amended and in
effect of such Subsidiary, the bylaws, as amended and in effect of such
Subsidiary and the resolutions adopted by the Board of Directors of such
Subsidiary (or a duly authorized committee thereof) authorizing the execution,
delivery and performance of the Additional Guaranty. The Company shall, at the
same time, deliver the stock pledges described in and required by SECTION
4.01(D)(I).
(b) Subject to the provisions of SECTION 7.02 hereof, the Agent and
each Bank agree that in the case of:
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(i) a sale, transfer or other disposition (whether in a single
transaction or a series of related transactions and whether by merger,
consolidation, amalgamation or otherwise) permitted by this Agreement of
all of the issued and outstanding capital stock of any Subsidiary of the
Company to any Person that is not, at the time of such sale, transfer or
other disposition, the Company or a Subsidiary or Affiliate of the
Company; or
(ii) the dissolution of any Subsidiary of the Company
permitted by this Agreement and, in either event, following written notice
from the Company to the Agent of such sale or dissolution, without further
action upon an event described in clause (i) or (ii) above:
(Y) simultaneously with payment to the Agent of 100% of
the net, after tax (and expenses related thereto) sales proceeds of
any such sale, if requested by the Majority Banks, in their sole
discretion, the Guaranty of such Subsidiary (each such Subsidiary a
"RELEASED SUBSIDIARY") shall be deemed terminated and of no further
force and effect; and
(Z) no holder of any Obligations shall have any claim
against such Released Subsidiary under such Guaranty.
(c) The Agent and each Bank agree that the Company may, on behalf of
any Released Subsidiary, require the Agent, at the expense of the Company, to
execute and deliver to the Company, for the benefit of any Person, a written
release, disclaimer, termination or quitclaim, and such other release documents
as the Company may reasonably request to evidence such termination.
ARTICLE VII
NEGATIVE COVENANTS
The Company covenants and agrees, as to itself and, except as
otherwise provided herein, each of its Subsidiaries, that on and after the date
hereof and for so long as this Agreement is in effect and until the Commitments
have terminated:
SECTION 7.01 CHANGE IN BUSINESS. The Company will not, and will not
permit any of its Subsidiaries to, engage in any businesses other than the
physician practice management business in the field of dentistry.
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SECTION 7.02 CONSOLIDATION, MERGER OR SALE OF ASSETS. The Company
will not, and will not permit any of its Subsidiaries to, wind up, liquidate or
dissolve their affairs, or enter (unless the consummation of such merger or
consolidation is subject to the consent of the Majority Banks) into any
transaction of merger or consolidation unless either the Company or any of its
Subsidiaries (either before or after any such merger) is the survivor, or sell
or otherwise dispose of all or any substantial part of their property or assets,
including the capital stock of any Subsidiary, (other than sales of inventory
and surplus or obsolete assets in the ordinary course of business or property or
assets having a market value of 2.5% or less of Consolidated Tangible Assets).
SECTION 7.03 INDEBTEDNESS. Neither the Company nor any Subsidiary of
the Company will create, incur, assume or permit to exist any Indebtedness of
the Company or any Subsidiary except:
(a) Indebtedness existing hereunder;
(b) Indebtedness existing on the Execution Date and described in the
Financials or, if not shown, listed on SCHEDULE 7.03(B);
(c) Indebtedness arising as a result of the endorsement in the
ordinary course of business of negotiable instruments in the course of
collection;
(d) accounts payable and unsecured, current and long-term,
liabilities (including accrued insurance related liabilities), not the result of
indebtedness for borrowed money, to vendors, suppliers and other Persons for
goods and services in the ordinary course of business;
(e) Indebtedness incurred to finance or refinance the purchase price
of any asset or any Subsidiary acquired in accordance with the terms hereof and
Indebtedness for which any such Person becomes liable in connection with the
acquisition of any asset or entity, which asset or entity is at the time of such
acquisition, liable for or encumbered by such Indebtedness so long as the
principal amount of all Indebtedness incurred pursuant to this SECTION 7.03(E)
does not exceed the greater of (i) $2,000,000, or (ii) 10% of Consolidated
Tangible Assets at any one time outstanding;
(f) Intercompany Indebtedness of any Subsidiary of the Company to
the Company or any other Subsidiary and Indebtedness of the Company to any
Subsidiary of the Company provided that all of such Indebtedness is subordinate
to the Obligations in a manner satisfactory to the Agent;
(g) current and deferred taxes;
(h) Indebtedness of the Company or its Subsidiaries that contains
subordination terms and provisions approved in writing by the Majority Banks in
their sole discretion;
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(i) purchase money Indebtedness (including Capitalized Lease
Obligations) in connection with the purchase of equipment or other capital
assets not to exceed $500,000.00 outstanding at any one time; and
(j) renewals, refinancings, rearrangements and extensions with the
same lenders (in the same or lesser principal amount on similar terms and
conditions) of any Indebtedness listed in subparagraphs (a) through (i) above.
SECTION 7.04 LIENS. Neither the Company nor any Subsidiary of the
Company will create, incur, assume or suffer to exist any Lien upon or with
respect to any of its property or assets of any kind whether now owned or
hereafter acquired (nor will they covenant with any other Person not to grant
such a Lien to the Agent, except:
(a) Liens existing on the Execution Date and listed on SCHEDULE
7.04(A);
(b) Permitted Liens up to an aggregate maximum total dollar value of
$2,000,000.00 for all such Permitted Liens in the aggregate;
(c) Liens to secure Indebtedness allowed under SECTION 7.03(I); and
(d) any renewal, extension or replacement of any Lien referred to
above with the same lenders; PROVIDED, that no Lien arising or existing as a
result of such extension, renewal or replacement shall be extended to cover any
property not theretofore subject to the Lien being extended, renewed or replaced
other than improvements or accessions thereto and PROVIDED FURTHER that the
principal amount of the Indebtedness secured thereby shall not exceed the
principal amount of the Indebtedness so secured at the time of such extension,
renewal or replacement.
SECTION 7.05 INVESTMENTS. Neither the Company nor any Subsidiary
will, directly or indirectly, make or own any Investment in any Person, except:
(a) Permitted Investments;
(b) Investments owned on the Effective Date as set forth on SCHEDULE
7.05(B), including Investments in the Subsidiaries, direct and indirect;
(c) Investments arising out of loans and advances for expenses,
travel per diem and similar items in the ordinary course of business to
officers, directors and employees up to a maximum outstanding at any one time of
$750,000.00;
(d) Investments in all or substantially all of the stock, warrants,
stock appreciation rights, other securities and/or other assets of physician
practice management entities in the field of dentistry or assets of practicing
orthodontists or dentists, (i) in which, in the case of a Subsidiary, the
Company directly or indirectly owns a majority of the voting equity in such
Person or is the
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surviving entity, (ii) acquired at a time when no Default or Event of Default
exists hereunder and (iii) for which (y) the cash and assumed Indebtedness
consideration paid does not exceed $5,000,000.00 and (z) total consideration
paid, including cash, notes, debt owed by the entity acquired (whether or not
assumed by the Company) and the value of stock given to any selling entity for
any one such Investment which does not exceed $10,000,000.00.
(e) Investments in capital stock of Wholly-Owned Subsidiaries of the
Company.
(f) Investments in any Non-Wholly Owned Subsidiary in which (a) the
Company or a Guarantor is the managing partner or venturer of such Subsidiary,
(b) the equity interest of any partner or joint venturer which is not an
Affiliate of the Company does not entitle such Person to participate in the
control of such business and (c) no Funded Indebtedness exists in such
Subsidiary; and
(g) loans and advances to Practicing Orthodontists pursuant to the
service agreements among the Company and such Practicing Orthodontist not exceed
in aggregate principal amount at any time outstanding $2,500,000.00.
SECTION 7.06 RESTRICTED PAYMENTS. The Company will not pay any
dividends or redeem, retire, purchase or guaranty the value of or make any other
acquisition, direct or indirect, of any shares of any class of stock of the
Company, or of any warrants, rights or options to acquire any such shares, now
or hereafter outstanding, except to the extent that the consideration therefor
consists solely of shares of stock (including warrants, rights or options
relating thereto) of the Company or is approved by the Majority Banks.
SECTION 7.07 CHANGE IN ACCOUNTING. The Company will not and will not
permit any Subsidiary to, change its method of accounting except for (a) changes
permitted by GAAP in which the Company's auditors concur, (b) changes with
respect to any Person or assets acquired by the Company to conform with the
Company's policies and procedures and which are permitted by GAAP or (c) changes
required by GAAP. The Company shall advise the Agent in writing promptly upon
making any material change to the extent same is not disclosed in the financial
statements required under SECTION 6.01 hereof. In the event of any such change,
the Company, at the request of the Majority Banks, agrees to negotiate
amendments to SECTIONS 7.10 through 7.14 hereof (and related definitions, if
relevant) so as to equitably reflect such changes thereon with the intended
result that the criteria for evaluating the financial condition of the Company
and its Subsidiaries shall be substantially the same after such changes as
before.
SECTION 7.08 CHANGE OF CERTAIN INDEBTEDNESS. The Company will not,
and will not permit any of its Subsidiaries after the occurrence and during the
continuance of any Event of Default to make any voluntary prepayments of
principal or interest on any other of the Company's Funded Indebtedness.
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SECTION 7.09 TRANSACTIONS WITH AFFILIATES. The Company will not,
directly or indirectly, engage in any transaction with any Affiliate (other than
a Wholly Owned Subsidiary), including the purchase, sale or exchange of assets
or the rendering of any service, except in the ordinary course of business or
pursuant to the reasonable requirements of its business and, in each case, upon
terms that are no less favorable than those which might be obtained in an
arm's-length transaction at the time from non-Affiliates.
SECTION 7.10 MINIMUM NET WORTH. The Company will not permit its
Consolidated Net Worth to be less than 90% of the actual net worth as of the
Execution Date, plus, in all cases: (a) 100% of the net proceeds resulting from
the issuance of any capital stock by the Company or any Subsidiary subsequent to
the Execution Date at any time during the term hereof and (b) 75% of the
consolidated after tax income of the Company and its Subsidiaries (to be
adjusted each quarter) for each fiscal year during the term hereof (including
any Subsidiaries acquired subsequent hereto).
SECTION 7.11 FUNDED INDEBTEDNESS TO EBITDA RATIO. The Company will
not permit the ratio of its total Funded Indebtedness to EBITDA calculated for
the preceding four (4) quarters on a rolling four (4) quarter basis to be
greater than 3.0 to 1.0 at any time during the term hereof.
SECTION 7.12 FIXED CHARGE COVERAGE RATIO. The Company will not
permit the ratio of (a) EBITDA calculated for the preceding four (4) quarters on
a rolling four (4) quarter basis less taxes actually paid during such four (4)
quarters to (b) the sum of: the current portion of long-term debt for the
upcoming four (4) quarters, plus interest expense, plus cash Consolidated
Capital Expenditures up to a maximum of $2,000,000.00, both calculated for the
preceding four (4) quarters on a rolling four (4) quarter basis, to be less than
1.0 to 1.0 for the first four (4) quarters after the Execution Date, and to be
less than 2.0 to 1.0 at any time thereafter.
SECTION 7.13 CAPITAL EXPENDITURES. The Company will not permit total
consolidated capital expenditures (including Capitalized Lease Obligations) to
be greater than $10,000,000.00 for any fiscal year during the term hereof
(excluding acquisitions permitted under SECTION 7.05(D)).
SECTION 7.14 COMPENSATION FORMULA. The Company will not permit (i)
more than 10% of the Practicing Orthodontists to be compensated at a level
higher than that arrived at using the Practicing Orthodontist Compensation
Formula, or (ii) any Practicing Orthodontist (individually or in the aggregate)
that generates more than 10% of the Company's total revenues to be compensated
at a level higher than that arrived at using the Practicing Orthodontist
Compensation Formula. The Company will provide the following calculations as
required by the Compliance Certificate in SECTION 6.01(D), (a) the revenues and
expenses (on a cash and on an accrual basis) of each Practicing Orthodontist,
(b) the net profit and net profit margin of each Practice, (c) the compensation
of each Practicing Orthodontist as calculated pursuant to the Practicing
Orthodontist Compensation Formula, and (d) each Practicing Orthodontist's actual
compensation.
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SECTION 7.15 TURNOVER. The Company will not permit the Practicing
Orthodontist Turnover to be more than fifteen percent (15%).
SECTION 7.16 FOREIGN SUBSIDIARIES. (a) The Company will not permit
more than twenty percent (20%) of its total consolidated EBITDA to be from
Foreign Subsidiaries.
(b) The Company will not create or suffer to exist any Foreign
Subsidiary other than those organized under the laws of Canada or one of its
provinces.
ARTICLE VIII
GUARANTY
SECTION 8.01 GUARANTY. In consideration of, and in order to induce
the Banks to make the Loans hereunder, the Guarantors hereby absolutely,
unconditionally and irrevocably, jointly and severally guarantee the punctual
payment and performance when due, whether at stated maturity, by acceleration or
otherwise, of the Obligations, and all other obligations and covenants of the
Company now or hereafter existing under this Agreement, the Notes and the other
Loan Documents whether for principal, interest (including interest accruing or
becoming owing both prior to and subsequent to the commencement of any
proceeding against or with respect to the Company under any chapter of the
Bankruptcy Code), Fees, commissions, expenses (including reasonable attorneys'
fees and expenses) or otherwise, and all reasonable costs and expenses, if any,
incurred by the Agent or any Bank in connection with enforcing any rights under
this Guaranty (all such obligations being the "GUARANTEED OBLIGATIONS"), and
agree to pay any and all reasonable expenses incurred by each Bank and the Agent
in enforcing this Guaranty; PROVIDED that notwithstanding anything contained
herein or in any of the Loan Documents to the contrary, the maximum liability of
each Guarantor hereunder and under the other Loan Documents shall in no event
exceed such Guarantor's Maximum Guaranteed Amount, PROVIDED FURTHER, each
Guarantor shall be unconditionally required to pay all amounts demanded of it
hereunder prior to any determination of such Maximum Guaranteed Amount and the
recipient of such payment, if so required by a final non-appealable order of a
court of competent jurisdiction, shall then be liable for the refund of any
excess amounts. If any such rebate or refund is ever required, all other
Guarantors (and the Company) shall be fully liable for the repayment thereof to
the maximum extent allowed by applicable law. This Guaranty is an absolute,
unconditional, present and continuing guaranty of payment and not of
collectibility and is in no way conditioned upon any attempt to collect from the
Company or any other action, occurrence or circumstance whatsoever. Each
Guarantor agrees that the Guaranteed Obligations may at any time and from time
to time exceed the Maximum Guaranteed Amount of such Guarantor without impairing
this Guaranty or affecting the rights and remedies of the Banks hereunder.
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SECTION 8.02 CONTINUING GUARANTY. Each Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of
this Agreement, the Notes and the other Loan Documents. Each Guarantor agrees
that the Guaranteed Obligations and Loan Documents may be extended or renewed,
and Loans repaid and reborrowed in whole or in part, without notice to or assent
by such Guarantor, and that it will remain bound upon this Guaranty
notwithstanding any extension, renewal or other alteration of any Guaranteed
Obligations or Loan Documents, or any repayment and reborrowing of Loans. To the
maximum extent permitted by applicable law, the obligations of each Guarantor
under this Guaranty shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms hereof under any
circumstances whatsoever, including:
(a) any extension, renewal, modification, settlement, compromise,
waiver or release in respect of any Guaranteed Obligations;
(b) any extension, renewal, amendment, modification, rescission,
waiver or release in respect of any Loan Documents;
(c) any release, exchange, substitution, non-perfection or
invalidity of, or failure to exercise rights or remedies with respect to, any
direct or indirect security for any Guaranteed Obligations, including the
release of any Guarantor or other Person liable on any Guaranteed Obligations;
(d) any change in the corporate existence, structure or ownership of
the Company, any Guarantor, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Company, such Guarantor, any other
Guarantor or any of their respective assets;
(e) the existence of any claim, defense, set-off or other rights or
remedies which such Guarantor at any time may have against the Company, or the
Company or such Guarantor may have at any time against the Agent, any Bank, any
other Guarantor or any other Person, whether in connection with this Guaranty,
the Loan Documents, the transactions contemplated thereby or any other
transaction other than by the payment in full by the Company of the Guaranteed
Obligations after the termination of the Commitments of the Banks;
(f) any invalidity or unenforceability for any reason of this
Agreement or other Loan Documents, or any provision of law purporting to
prohibit the payment or performance by the Company, such Guarantor or any other
Guarantor of the Guaranteed Obligations or Loan Documents, or of any other
obligation to the Agent or any Bank; or
(g) any other circumstances or happening whatsoever, whether or not
similar to any of the foregoing.
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SECTION 8.03 EFFECT OF DEBTOR RELIEF LAWS. If after receipt of any
payment of, or proceeds of any security applied (or intended to be applied) to
the payment of all or any part of the Guaranteed Obligations, the Agent or any
Bank is for any reason compelled to surrender or voluntarily surrenders such
payment or proceeds to any Person (a) because such payment or application of
proceeds is or may be avoided, invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, fraudulent conveyance,
fraudulent transfer, impermissible set-off or a diversion of trust funds or (b)
for any other similar reason, including (i) any judgment, decree or order of any
court or administrative body having jurisdiction over the Agent, any Bank or any
of their respective properties or (ii) any settlement or compromise of any such
claim effected by the Agent or any Bank with any such claimant (including the
Company), then to the fullest extent permitted by applicable law, the Guaranteed
Obligations or part thereof intended to be satisfied shall be reinstated and
continue, and this Guaranty shall continue in full force as if such payment or
proceeds have not been received, notwithstanding any revocation thereof or the
cancellation of any Note or any other instrument evidencing any Guaranteed
Obligations or otherwise; and the Guarantors, jointly and severally, shall be
liable to pay the Agent and the Banks, and hereby do indemnify the Agent and the
Banks and hold them harmless for the amount of such payment or proceeds so
surrendered and all expenses (including reasonable attorneys' fees, court costs
and expenses attributable thereto) incurred by the Agent or any Bank in the
defense of any claim made against it that any payment or proceeds received by
the Agent or any Bank in respect of all or part of the Guaranteed Obligations
must be surrendered. The provisions of this paragraph shall survive the
termination of this Guaranty, and any satisfaction and discharge of the Company
by virtue of any payment, court order or any federal or state law.
SECTION 8.04 WAIVER OF SUBROGATION. Notwithstanding any payment or
payments made by any Guarantor hereunder, or any set-off or application by the
Agent or any Bank of any security or of any credits or claims, no Guarantor will
assert or exercise any rights of the Agent or any Bank or of such Guarantor
against the Company to recover the amount of any payment made by such Guarantor
to the Agent or any Bank hereunder by way of any claim, remedy or subrogation,
reimbursement, exoneration, contribution, indemnity, participation or otherwise
arising by contract, by statute, under common law or otherwise, and such
Guarantor shall not have any right of recourse to or any claim against assets or
property of the Company, in each case unless and until the Obligations of the
Company guaranteed hereby have been fully and finally satisfied. Until such
time, each Guarantor hereby expressly waives any right to exercise any claim,
right or remedy which such Guarantor may now have or hereafter acquire against
the Company that arises under this Agreement or any other Loan Document or from
the performance by any Guarantor of the Guaranty hereunder including any claim,
remedy or right of subrogation, reimbursement, exoneration, contribution,
indemnification or participation in any claim, right or remedy of the Agent or
any Bank against the Company or any Guarantor, or any security that the Agent or
any Bank now has or hereafter acquires, whether or not such claim, right or
remedy arises in equity, under contract, by statute, under common law or
otherwise. If any amount shall be paid to a Guarantor by the Company or another
Guarantor after payment in full of the Obligations, and the Obligations shall
thereafter be reinstated in whole or in part and the Agent or any Bank forced to
repay and sums received by any of them in payment of the Obligations, this
Guaranty shall be automatically
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reinstated and such amount shall be held in trust for the benefit of the Agent
and the Banks and shall forthwith be paid to the Agent to be credited and
applied to the Guaranteed Obligations, whether matured or unmatured. The
provisions of this paragraph shall survive the termination of this Guaranty, and
any satisfaction and discharge of the Company by virtue of any payment, court
order or any federal or state law.
SECTION 8.05 SUBORDINATION. If any Guarantor becomes the holder of
any indebtedness payable by the Company or another Guarantor, each Guarantor
hereby subordinates all indebtedness owing to it from the Company to all
indebtedness of the Company to the Agent and the Banks, and agrees that during
the continuance of any Event of Default it shall not accept any payment on the
same until payment in full of the Obligations of the Company under this
Agreement and the other Loan Documents after the termination of the Commitments
of the Banks and shall in no circumstance whatsoever attempt to set-off or
reduce any obligations hereunder because of such indebtedness. If any amount
shall nevertheless be paid in violation of the foregoing to a Guarantor by the
Company or another Guarantor prior to payment in full of the Guaranteed
Obligations, such amount shall be held in trust for the benefit of the Agent and
the Banks and shall forthwith be paid to the Agent to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured.
SECTION 8.06 WAIVER. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and waives presentment, demand of
payment, notice of intent to accelerate, notice of dishonor or nonpayment and
any requirement that the Agent or any Bank institute suit, collection
proceedings or take any other action to collect the Guaranteed Obligations,
including any requirement that the Agent or any Bank protect, secure, perfect or
insure any Lien against any property subject thereto or exhaust any right or
take any action against the Company or any other Person or any collateral (it
being the intention of the Agent, the Banks and each Guarantor that this
Guaranty is to be a guaranty of payment and not of collection). It shall not be
necessary for the Agent or any Bank, in order to enforce any payment by any
Guarantor hereunder, to institute suit or exhaust its rights and remedies
against the Company, any other Guarantor or any other Person, including others
liable to pay any Guaranteed Obligations, or to enforce its rights against any
security ever given to secure payment thereof. Each Guarantor hereby expressly
waives to the maximum extent permitted by applicable law each and every right to
which it may be entitled by virtue of the suretyship laws of the State of Texas,
including any and all rights it may have pursuant to Rule 31, Texas Rules of
Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code
and Chapter 34 of the Texas Business and Commerce Code. Each Guarantor hereby
waives marshaling of assets and liabilities, notice by the Agent or any Bank of
any indebtedness or liability to which such Bank applies or may apply any
amounts received by such Bank, and of the creation, advancement, increase,
existence, extension, renewal, rearrangement or modification of the Guaranteed
Obligations. Each Guarantor expressly waives, to the extent permitted by
applicable law, the benefit of any and all laws providing for exemption of
property from execution or for valuation and appraisal upon foreclosure.
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SECTION 8.07 FULL FORCE AND EFFECT. This Guaranty is a continuing
guaranty and shall remain in full force and effect until all of the Obligations
of the Company under this Agreement and the other Loan Documents and all other
amounts payable under this Guaranty have been paid in full (after the
termination of the Commitments of the Banks). All rights, remedies and powers
provided in this Guaranty may be exercised, and all waivers contained in this
Guaranty may be enforced, only to the extent that the exercise or enforcement
thereof does not violate any provisions of applicable law which may not be
waived.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
SECTION 9.01 EVENTS OF DEFAULT. The following events shall
constitute Events of Default ("EVENTS OF DEFAULT") hereunder:
(a) any installment of principal is not paid when due or any payment
of interest or Fees is not paid on the date on which such payment is due; or
(b) any representation or warranty made or deemed made by the
Company or any Subsidiary herein or in any of the Loan Documents or other
document, certificate or financial statement delivered pursuant to this
Agreement or any other Loan Document shall prove to have been incorrect in any
material respect when made or deemed made or reaffirmed, as the case may be; or
(c) the Company shall fail to perform or observe or cause any
Subsidiary to fail to perform or observe any duty or covenant contained in this
Agreement or any of the Loan Documents and such failure continues for a period
of twenty (20) days (other than Section 6.01(c), for which said period shall be
five (5) days) or ARTICLE VII for which there shall be no grace period; or
(d) the Company or any Subsidiary shall fail to duly observe,
perform or comply with any agreement with any Person or any term or condition of
any instrument of Indebtedness under which the Company or any of its
Subsidiaries are liable, in excess of $250,000.00, if the effect of such failure
is to cause, or to permit the holder or holders to cause, such obligations to
become due prior to any stated maturity; or
(e) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of the Company or any Subsidiary, or of a substantial part of the
property or assets of the Company or any Subsidiary, under Title 11 of the
United States Code, as now or hereafter in effect, or any successor thereto (the
"BANKRUPTCY CODE"), or any other federal or state bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of the property or assets of the Company
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or any Subsidiary or (iii) the winding-up or liquidation of the Company or any
Subsidiary; and such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be
entered; or
(f) the Company or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under the Bankruptcy Code or any
other federal or state bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and appropriate
manner, any proceeding or the filing of any petition described in clause (e)
above, (iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Company or any
Subsidiary or for a substantial part of the property or assets of the Company or
any Subsidiary, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general assignment
for the benefit of creditors, (vi) become unable, or admit in writing its
inability or fail generally to pay its debts as they become due or (vii) take
any action for the purpose of effecting any of the foregoing; or
(g) a judgment or order, which with other outstanding judgments and
orders against the Company and its Subsidiaries equal or exceed $1,000,000.00 in
the aggregate (to the extent not covered by insurance as to which the respective
insurer has acknowledged coverage), shall be entered against the Company or any
Subsidiary and such judgment shall not have been paid or discharged for a period
longer than the appeal time provided by applicable law; or
(h) the occurrence of a Reportable Event under ERISA; or
(i) the unenforceability of the Agreement, the Pledge Agreement or
the Notes; or
(j) a Change of Control shall occur.
SECTION 9.02 PRIMARY REMEDIES. At any time after the occurrence of
any of the above described events, or any occurrence which, with the giving of
notice or the passage of time, or both, would become a Default or an Event of
Default, the Agent, if directed by the Majority Banks, shall by written notice
to the Company (a "NOTICE OF DEFAULT") take any or all of the following actions
(without prejudice to the rights of any Bank to enforce any other rights it may
have against the Company, PROVIDED that, if an Event of Default specified in
SECTION 9.01(E) or SECTION 9.01(F) shall occur, the following shall occur
automatically without the giving of any Notice of Default): (a) declare the
Commitments terminated, whereupon the Commitments shall forthwith terminate
immediately and any Commitment Fee and any other owing and unpaid Fee shall
forthwith become due and payable without any other notice of any kind; (b)
declare the principal of and any accrued and unpaid interest in respect of all
Advances, and all obligations owing hereunder, to be, whereupon the same shall
become, forthwith due and payable without presentment, demand, notice of demand
or of dishonor and non-payment, protest, notice of protest, notice of intent to
accelerate, declaration or notice of acceleration or any other notice of any
kind (except as herein expressly
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provided), all of which are hereby waived by the Company; (c) set off any assets
or money of the Company or any Guarantor in its or any Bank's possession against
the Obligations; and (d) exercise any rights or remedies under any document
securing any of the Loan Documents or under any applicable state or federal law.
SECTION 9.03 OTHER REMEDIES. Upon the occurrence and during the
continuance of any Event of Default, the Agent may proceed to protect and
enforce its and the Banks' rights, either by suit in equity or by action at law
or both, whether for the specific performance of any covenant or agreement
contained in this Agreement or in any other Loan Document or in aid of the
exercise of any power granted in this Agreement or in any other Loan Document;
or may proceed to enforce the payment of all amounts owing to the Banks under
the Loan Documents and any accrued and unpaid interest thereon in the manner set
forth herein or therein; it being intended that no remedy conferred herein or in
any of the other Loan Documents is to be exclusive of any other remedy, and each
and every remedy contained herein or in any other Loan Document shall be
cumulative and shall be in addition to every other remedy given hereunder and
under the other Loan Documents or now or hereafter existing at law or in equity
or by statute or otherwise.
ARTICLE X
THE AGENT
SECTION 10.01 AUTHORIZATION AND ACTION. Each Bank hereby irrevocably
appoints and authorizes the Agent to act on its behalf and to exercise such
powers under this Agreement and the other Loan Documents as are specifically
delegated to or required of the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. The Agent may perform any of its
duties hereunder by or through its agents and employees. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not have by
reason of this Agreement or any other Loan Documents a fiduciary relationship in
respect of any Bank; and nothing in this Agreement or any other Loan Document,
expressed or implied, is intended to, or shall be so construed as to, impose
upon the Agent any obligations in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein. As to any matters not
expressly provided for by this Agreement, the Notes or the other Loan Documents
(including enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks, and such
instructions shall be binding upon the Banks and all holders of Notes and the
Obligations; PROVIDED, that the Agent shall not be required to take any action
which exposes the Agent to personal liability and shall not be required or
entitled to take any action which is contrary to any of the Loan Documents or
applicable law.
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SECTION 10.02 AGENT'S RELIANCE. (a) Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Banks for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement, the Notes or any of the other Loan Documents (i) with the
consent or at the request of the Majority Banks or (ii) in the absence of its or
their own gross negligence or willful misconduct, IT BEING THE EXPRESS INTENTION
OF THE PARTIES HERETO THAT THE AGENT AND ITS DIRECTORS, OFFICERS, AGENTS AND
EMPLOYEES SHALL HAVE NO LIABILITY TO THE BANKS FOR ACTIONS AND OMISSIONS UNDER
THIS SECTION RESULTING FROM THEIR SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE.
(b) Without limitation of the generality of the foregoing, the
Agent: (i) may treat the payee of each Note and the Obligations as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (ii) may
consult with legal counsel (including counsel for the Company), independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations made in or in connection with this
Agreement, any Note or any other Loan Document; (iv) except as otherwise
expressly provided herein, shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions of
this Agreement, any Note or any other Loan Document or to inspect the property
(including the books and records) of the Company; (v) shall not be responsible
to any Bank for the due execution, legality, validity, enforceability,
collectibility, genuineness, sufficiency or value of this Agreement, any Note,
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto; (vi) shall not be responsible to any Bank for the perfection
or priority of any Lien securing the Obligations; and (vii) shall incur no
liability under or in respect of this Agreement, any Note or any other Loan
Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, telecopier or cable) reasonably believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 10.03 AGENT AND AFFILIATES; TCB AND AFFILIATES. Without
limiting the right of any other Bank to engage in any business transactions with
the Company or any of its Affiliates, with respect to their Commitments, the
Loans made by them and the Notes issued to them, TCB and each other Bank who may
become the Agent shall have the same rights and powers under this Agreement and
its Notes as any other Bank and may exercise the same as though it was not the
Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly
indicated, include TCB and any such other Bank, in their individual capacities.
TCB, each other Person who becomes the Agent and their respective Affiliates may
be engaged in, or may hereafter engage in, one or more loan, letter of credit,
leasing or other financing activity not the subject of this Agreement
(collectively, the "OTHER FINANCINGS") with the Company, any Subsidiary or any
of its Affiliates, or may act as trustee on behalf of, or depositary for, or
otherwise engage in other business transactions with the Company, any Subsidiary
or any of its Affiliates (all Other Financings and other such business
transactions being collectively, the "OTHER ACTIVITIES") with no responsibility
to account therefor to the Banks. Without limiting the rights and remedies of
the Banks specifically set forth herein, no other Bank
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by virtue of being a Bank hereunder shall have any interest in (a) any Other
Activities, (b) any present or future guaranty by or for the account of the
Company not contemplated or included herein, (c) any present or future offset
exercised by the Agent in respect of any such Other Activities, (d) any present
or future property taken as security for any such Other Activities or (e) any
property now or hereafter in the possession or control of the Agent which may be
or become security for the Obligations of the Company hereunder and under the
Notes by reason of the general description of indebtedness secured, or of
property contained in any other agreements, documents or instruments related to
such Other Activities; PROVIDED, HOWEVER, that if any payment in respect of such
guaranties or such property or the proceeds thereof shall be applied to
reduction of the Obligations evidenced hereunder and by the Notes, then each
Bank shall be entitled to share in such application according to its pro rata
portion of such Obligations.
SECTION 10.04 BANK CREDIT DECISION. Each Bank acknowledges and
agrees that it has, independently and without reliance upon the Agent or any
other Bank and based on the financial statements referred to in SECTION 6.01 and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges and agrees that it will, independently and without reliance upon
the Agent or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
SECTION 10.05 AGENT'S INDEMNITY. (a) The Agent shall not be required
to take any action hereunder or to prosecute or defend any suit in respect of
this Agreement, the Notes or any other Loan Document unless indemnified to the
Agent's satisfaction by the Banks against loss, cost, liability and expense. If
any indemnity furnished to the Agent shall become impaired, it may call for
additional indemnity and cease to do the acts indemnified against until such
additional indemnity is given. In addition, the Banks agree to indemnify the
Agent (to the extent not reimbursed by the Company), ratably according to the
respective aggregate principal amounts of the Notes then held by each of them
(or if no Notes are at the time outstanding, ratably according to the respective
amounts of the Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Agent under this
Agreement, the Notes and the other Loan Documents. Without limitation of the
foregoing, each Bank agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including reasonable counsel fees)
incurred by the Agent in connection with the preparation, execution,
administration, or enforcement of, or legal advice in respect of rights or
responsibilities under, this Agreement, the Notes and the other Loan Documents
to the extent that the Agent is not reimbursed for such expenses by the Company.
The provisions of this Section shall survive the termination of this Agreement,
the payment of the Obligations and/or the assignment of any of the Notes.
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(b) Notwithstanding the foregoing, no Bank shall be liable under
this Section to the Agent for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements due to the Agent resulting from the Agent's gross negligence or
willful misconduct. EACH BANK AGREES, HOWEVER, THAT IT EXPRESSLY INTENDS, UNDER
THIS SECTION, TO INDEMNIFY THE AGENT RATABLY AS AFORESAID FOR ALL SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR RESULTING FROM THE AGENT'S
SOLE ORDINARY OR CONTRIBUTORY NEGLIGENCE.
SECTION 10.06 SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Company and may be removed as
Agent under this Agreement, the Notes and the other Loan Documents at any time
with or without cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right (with the consent of the
Company which may not be unreasonably denied) to appoint a successor Agent. If
no successor Agent shall have been so appointed by the Majority Banks, and shall
have accepted such appointment, within 30 calendar days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any state thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Agent hereunder and under the Notes and the other Loan Documents
by a successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement, the Notes and the other Loan Documents. After any retiring
Agent's resignation or removal as Agent hereunder and under the Notes and the
other Loan Documents, the provisions of this ARTICLE X shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement, the Notes and the other Loan Documents.
SECTION 10.07 NOTICE OF DEFAULT. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Agent shall have received notice from a Bank or the Company
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default." If the Agent receives such
notice, the Agent shall give notice thereof to the Banks; PROVIDED, HOWEVER, if
such notice is received from a Bank, the Agent also shall give notice thereof to
the Company. The Agent shall be entitled to take action or refrain from taking
action with respect to such Default or Event of Default as provided in SECTION
9.01 and SECTION 9.02.
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ARTICLE XI
MISCELLANEOUS
SECTION 11.01 AMENDMENTS. No amendment or waiver of any provision of
this Agreement, any Note or any other Loan Document, nor consent to any
departure by the Company herefrom or therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Company, as to amendments,
and by the Majority Banks in all cases, and then, in any case, such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given PROVIDED, no such amendment shall be effective unless
signed by all of the Banks if it attempts to: (a) change the definition of
"COMMITMENT", "DESIGNATED PAYMENT DATE", "MAJORITY BANKS", "MARGIN" or "MATURITY
DATE"; (b) modify this Section or SECTION 3.01; (c) release any Guarantor other
than in accordance with SECTION 6.09; (d) to waive any Default under SECTION
9.01(A) or (c), in any other manner change the repayment terms of the Loans,
including required principal payments, or rate, amount or time of interest
payments.
SECTION 11.02 NOTICES. Except with respect to telephone
notifications specifically permitted pursuant to ARTICLE II, all notices,
consents, requests, approvals, demands and other communications provided for
herein shall be in writing (including telecopy communications) and mailed,
telecopied, sent by overnight courier or delivered:
(a) If to the Company and the Guarantors:
Apple Orthodontix, Inc.
0000 Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
(b) If to the Agent:
Texas Commerce Bank National Association
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No: (000) 000-0000
Attention: Xxxxxxx Xxxxxxx
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with copies to:
Texas Commerce Bank National Association
Loan Syndication Services
0000 Xxxxxx
0xx Xxxxx, M.S. 46
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx Xxxxxxx
and, in the case of any notices given under SECTION 6.01(C),
to:
Xxxxxxx & Xxxxx L.L.P.
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Telephone No.:(000) 000-0000
Telecopy No.: (000) 000-0000
Attention: Xx. Xxxxxx X. Xxxxxx
or, in the case of any party hereto, such other address or telecopy number as
such party may hereafter specify for such purpose by notice to the other
parties.
(c) If to any Bank, to the address shown on the signature page
hereof or specified by such Bank (or the Agent on behalf of any Bank) to the
Company.
All communications shall, when mailed, telecopied or delivered, be
effective when mailed by certified mail, return receipt requested to any party
at its address specified above, or telecopied to any party to the telecopy
number set forth above, or delivered personally to any party at its address
specified above; PROVIDED, that communications to the Agent pursuant to ARTICLE
II shall not be effective until actually received by the Agent, and PROVIDED
FURTHER that communications sent by telecopy after 5:00 p.m., Houston, Texas
time, shall be effective on the next succeeding business day.
SECTION 11.03 NO WAIVER; REMEDIES. No failure on the part of any
Bank or the Agent to exercise, and no delay in exercising, any right hereunder,
under any Note or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right, or any
abandonment or discontinuance of any steps to enforce such right, preclude any
other or further exercise thereof or the exercise of any other right. No notice
to or demand on the Company in any case shall entitle the Company to any other
or further notice or demand in similar or other circumstances. The remedies
herein are cumulative and not exclusive of any other remedies provided by law,
at equity or in any other agreement.
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SECTION 11.04 COSTS, EXPENSES AND TAXES. The Company agrees to pay
on demand: (a) all reasonable out-of-pocket costs and expenses of the Agent in
connection with the preparation, execution and delivery of this Agreement, the
Notes, the other Loan Documents and the other documents to be delivered
hereunder, including the reasonable fees and out-of-pocket expenses of counsel
for the Agent with respect thereto and with respect to advising the Agent as to
its rights and responsibilities under this Agreement, the Notes and the other
Loan Documents, and any modification, supplement or waiver of any of the terms
of this Agreement or any other Loan Document, (b) all reasonable costs and
expenses of any Bank, and the Obligations of the Company hereunder and under the
Loan Documents, including reasonable legal fees and expenses, incurred in the
enforcement of this Agreement, the Notes and the other Loan Documents and (c)
reasonable costs and expenses incurred in connection with third party
professional services required by the Agent such as appraisers, environmental
consultants, accountants or similar Persons, PROVIDED THAT, so long as no Event
of Default hereunder has occurred and is continuing, the Agent will first obtain
the consent of the Company to such expense, which consent shall not be
unreasonably withheld. Without prejudice to the survival of any other
obligations of the Company hereunder and under the Notes, the obligations of the
Company under this Section shall survive the termination of this Agreement or
the replacement of the Agent and each assignment of the Notes.
SECTION 11.05 INDEMNITY. (a) The Company shall and hereby does
indemnify the Agent and each Bank and each Affiliate thereof and their
respective directors, officers, employees and agents from, and hold each of them
harmless against, any and all losses, liabilities, claims or damages (including
reasonable legal fees and expenses) to which any of them may become subject,
insofar as such losses, liabilities, claims or damages arise out of or result
from any actual or proposed use by the Company of the proceeds of any extension
of credit hereunder or any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the foregoing
or any of the other Loan Documents, and the Company shall reimburse each Bank
and each Affiliate thereof and their respective directors, officers, employees
and agents, upon demand for any expenses (including legal fees) reasonably
incurred in connection with any such investigation or proceeding; but excluding
any such losses, liabilities, claims, damages or expenses incurred by reason of
the gross negligence or willful misconduct of the Person to be indemnified (the
"INDEMNIFIED OBLIGATIONS").
(B) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS THE
EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
HEREUNDER SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL INDEMNIFIED
OBLIGATIONS: (I) ARISING OUT OF OR RESULTING FROM THE ORDINARY SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH PERSON OR (II) IMPOSED UPON SAID PARTY UNDER ANY
THEORY OF STRICT LIABILITY. Without prejudice to the survival of any other
obligations of the Company hereunder and under the other Loan Documents, the
obligations of the Company under this Section shall survive the termination of
this Agreement and the other Loan Documents and the payment of the Obligations
or the assignment of the Notes.
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SECTION 11.06 RIGHT OF SETOFF. Without limiting the remedies
provided for in ARTICLE VIII, each Bank is hereby authorized at any time and
from time to time during the occurrence and continuation of a payment Event of
Default, to the fullest extent permitted by law, to set off and apply any and
all deposits held and other indebtedness owing by such Bank, or any branch,
subsidiary or Affiliate, to or for the credit or the account of the Company
against any and all the Obligations of the Company now or hereafter existing
under this Agreement and the other Loan Documents and other obligations of the
Company held by such Bank, irrespective of whether or not such Bank shall have
made any demand under this Agreement, its Note or the Obligations and although
the Obligations may be unmatured. The rights of each Bank under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Bank may have.
SECTION 11.07 GOVERNING LAW. This Agreement, all Notes, the other
Loan Documents and all other documents executed in connection herewith shall be
deemed to be contracts and agreements executed by the Company and each Bank
under the laws of the State of Texas and of the United States of America and for
all purposes shall be construed in accordance with, and governed by, the laws of
said state and of the United States of America. Without limitation of the
foregoing, nothing in this Agreement, or in the Notes or in any other Loan
Document shall be deemed to constitute a waiver of any rights which any Bank may
have under applicable federal legislation relating to the amount of interest
which such Bank may contract for, take, receive or charge in respect of the Loan
and the Loan Documents, including any right to take, receive, reserve and charge
interest at the rate allowed by the law of the state where any Bank is located.
The Agent, each Bank and the Company further agree that insofar as the
provisions of Article 5069-1.04, of the Revised Civil Statutes of Texas, as
amended, are applicable to the determination of the Highest Lawful Rate with
respect to the Notes and the Obligations hereunder and under the other Loan
Documents, the indicated rate ceiling of such Article shall be applicable;
PROVIDED, HOWEVER, that to the extent permitted by such Article, the Agent may
from time to time by notice to the Company revise the election of such interest
rate ceiling as such ceiling affects the then current or future balances of the
Loans. The provisions of Article 5069-15.01 ET SEQ. do not apply to this
Agreement, any Note issued hereunder or the other Loan Documents.
SECTION 11.08 INTEREST. Each provision in this Agreement and each
other Loan Document is expressly limited so that in no event whatsoever shall
the amount paid, or otherwise agreed to be paid, to the Agent or any Bank, or
charged, contracted for, reserved, taken or received by the Agent or any Bank,
for the use, forbearance or detention of the money to be loaned under this
Agreement or any Loan Document or otherwise (including any sums paid as required
by any covenant or obligation contained herein or in any other Loan Document
which is for the use, forbearance or detention of such money), exceed that
amount of money which would cause the effective rate of interest to exceed the
Highest Lawful Rate, and all amounts owed under this Agreement and each other
Loan Document shall be held to be subject to reduction to the effect that such
amounts so paid or agreed to be paid, charged, contracted for, reserved, taken
or received which are for the use, forbearance or detention of money under this
Agreement or such Loan Document shall in no event exceed that amount of money
which would cause the effective rate of interest to exceed the Highest Lawful
Rate. Anything in any Note or any other Loan Document to the contrary
-53-
notwithstanding, the Company shall not be required to pay unearned interest on
any Note and the Company shall not be required to pay interest on the
Obligations at a rate in excess of the Highest Lawful Rate, and if the effective
rate of interest which would otherwise be payable under such Note and such Loan
Documents would exceed the Highest Lawful Rate, or if the holder of such Note
shall receive any unearned interest or shall receive monies that are deemed to
constitute interest which would increase the effective rate of interest payable
by the Company under such Note and the other Loan Documents to a rate in excess
of the Highest Lawful Rate, then (a) the amount of interest which would
otherwise be payable by the Company shall be reduced to the amount allowed under
applicable law and (b) any unearned interest paid by the Company or any interest
paid by the Company in excess of the Highest Lawful Rate shall in the first
instance be credited on the principal of the Obligations of the Company (or if
all such Obligations shall have been paid in full, refunded to the Company). It
is further agreed that, without limitation of the foregoing, all calculations of
the rate of interest contracted for, reserved, taken, charged or received by any
Bank under the Notes and the Obligations and under the other Loan Documents are
made for the purpose of determining whether such rate exceeds the Highest Lawful
Rate, and shall be made, to the extent permitted by usury laws applicable to
such Bank, by amortizing, prorating and spreading in equal parts during the
period of the full stated term of the Notes and this Agreement all interest at
any time contracted for, charged or received by such Bank in connection
therewith. Furthermore, in the event that the maturity of any Note or other
obligation is accelerated or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under applicable
law may never include more than the maximum amount allowed by applicable law and
excess interest, if any, provided for in this Agreement, any Note or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore paid, shall be refunded to the Company.
SECTION 11.09 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants contained herein or made in writing by
the Company in connection herewith and the other Loan Documents shall survive
the execution and delivery of this Agreement, the Notes and the other Loan
Documents, the termination of the Commitments of the Banks for a period of 366
days and will bind and inure to the benefit of the respective successors and
assigns of the parties hereto, whether so expressed or not, PROVIDED, that the
Commitments of the Banks shall not inure to the benefit of any successor or
assign of the Company.
SECTION 11.10 SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a) All
covenants, promises and agreements by or on behalf of the Company or the Banks
that are contained in this Agreement shall bind and inure to the benefit of
their respective permitted successors and assigns. The Company may not assign or
transfer any of its rights or obligations hereunder.
(b) Any of the Banks may assign to or sell participations to one or
more banks of all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including all or a portion of its
Commitment, the Advances and the Obligations of the Company owing to it and the
Notes); PROVIDED, that the Company shall continue to deal solely and directly
with the Agent in connection with its rights and obligations under this
Agreement and the other Loan Documents. Except with respect to cost protections
provided to a participant pursuant to this
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paragraph and the items listed in SECTION 11.01 hereof, no participant shall be
a third party beneficiary of this Agreement nor shall it be entitled to enforce
any rights provided to the Banks against the Company under this Agreement.
(c) A Bank may assign to any other Bank or Banks or to any Affiliate
of a Bank and, with the prior written consent of the Company and the Agent
(which consent shall not be unreasonably withheld), a Bank may assign to one or
more other Eligible Assignees all or a portion of its interests, rights, and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment and the same portion of the Loans and other
Obligations of the Company at the time owing to it and the Note held by it);
PROVIDED, HOWEVER, that (i) each such assignment shall be in a minimum principal
amount of not less than $5,000,000.00 all Types of Loans and shall be of a
constant, and not a varying, percentage of all the assigning Bank's Commitment,
rights and obligations under this Agreement, (ii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance, an
Assignment and Acceptance, substantially in the form of EXHIBIT 11.10(C) hereto,
in form and substance satisfactory to the Agent (an "ASSIGNMENT AND ACCEPTANCE")
and any Note subject to such assignment and (iii) no assignment shall be
effective until receipt by the Agent of a reasonable service fee from the
Assignee Bank in respect of said assignment equal to $2,000.00. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date (unless
otherwise agreed to by the assigning Bank, the Eligible Assignee thereunder and
the Agent) shall be at least five Business Days after the execution thereof, (x)
the Eligible Assignee thereunder shall be a party hereto and to the other Loan
Documents and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Bank hereunder and under the other Loan
Documents and (y) the assignor Bank thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement and the other Loan Documents (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an assigning Bank's rights
and obligations under this Agreement and the other Loan Documents, such Bank
shall cease to be a party hereto).
(d) Notwithstanding any other provision herein, any Bank may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section, disclose to the assignee or participant
or proposed assignee or participant, any information relating to the Company
furnished to such Bank by or on behalf of the Company which Person shall have
agreed to maintain the confidentiality of such materials in accordance with the
terms hereof and agree to use such information only to consider an investment in
the Loan and after purchasing such investment shall be subject to SECTION 11.11.
SECTION 11.11 CONFIDENTIALITY. Each Bank agrees to exercise its best
efforts to keep any information delivered or made available by the Company to it
which is clearly indicated to be confidential information, confidential from
anyone other than Persons employed or retained by such Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans and only to use such information in connection with its
rights and obligations under this Agreement; PROVIDED that nothing herein shall
prevent any Bank from
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disclosing such information (a) to any other Bank, (b) pursuant to subpoena or
upon the order of any court or administrative agency, (c) upon the request or
demand of any regulatory agency or authority having jurisdiction over such Bank,
(d) which has been publicly disclosed without a breach of this SECTION 11.11,
(e) to the extent reasonably required in connection with any litigation to which
the Agent, any Bank, the Company or its respective Affiliates may be a party,
(f) to the extent reasonably required in connection with the exercise of any
remedy hereunder, (g) to such Bank's legal counsel and independent auditors and
(h) to any actual or proposed participant or assignee of all or part of its
rights hereunder which has agreed in writing to be bound by the provisions of
this Section. Each Bank will promptly notify the Company of any information that
it is required or requested to deliver pursuant to clause (b) or (c) of this
Section and, if the Company or any Subsidiary or Affiliate is a party to any
such litigation, clause (e) of this Section PROVIDED that the Company may move
to quash any subpoena or otherwise contest any demand for documents arising
under SECTION 11.11(B).
SECTION 11.12 PRO RATA TREATMENT. (a) Except as otherwise
specifically permitted hereunder, each payment or prepayment of principal, if
permitted under this Agreement, and each payment of interest with respect to an
Advance shall be made pro rata among the Banks.
(b) Except as otherwise specifically provided herein, each Bank
agrees that if, through the exercise of a right of banker's Lien, setoff or
claim of any kind against the Company as a result of which the unpaid principal
portion of the Notes and the Obligations held by it shall be proportionately
less than the unpaid principal portion of the Notes and Obligations held by any
other Bank, it shall be deemed to have simultaneously purchased from such other
Bank a participation in the Notes and Obligations held by such other Bank, in
the amount required to render such amounts proportional; PROVIDED, HOWEVER, that
if any such purchase or purchases or adjustments shall be made pursuant to this
Section and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustments restored without
interest.
SECTION 11.13 SEPARABILITY. Should any clause, sentence, paragraph
or section of this Agreement be judicially declared to be invalid, unenforceable
or void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
SECTION 11.14 EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Any Subsidiary of the Company that executes this Agreement after the
date of this Agreement shall, upon such execution, become a party hereto as a
Guarantor.
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SECTION 11.15 INTERPRETATION. (a) In this Agreement, unless a clear
contrary intention appears:
(i) the singular number includes the plural number and VICE
VERSA;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's successors
and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement, and reference to a Person in a particular
capacity excludes such Person in any other capacity or individually,
PROVIDED that nothing in this clause is intended to authorize any
assignment not otherwise permitted by this Agreement;
(v) except as expressly provided to the contrary herein,
reference to any agreement, document or instrument (including this
Agreement) means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms hereof, and reference
to any Note or other note includes any Note issued pursuant hereto in
extension or renewal thereof and in substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to any
Article, Section, Schedule or Exhibit means such Article or Section hereof
or such Schedule or Exhibit hereto;
(vii) the words "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, except as expressly provided to the contrary, the word "from" means
"from and including" and the word "to" means "to but excluding"; and
(ix) reference to any law, rule or regulation means such as
amended, modified, codified or reenacted, in whole or in part, and in
effect from time to time.
(b) The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
(c) No provision of this Agreement shall be interpreted or construed
against any Person solely because that Person or its legal representative
drafted such provision.
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(d) In the event of any conflict between the specific provisions of
this Agreement and the provisions of any application pertaining to any Letter of
Credit, the terms of this Agreement shall control.
SECTION 11.16 LIMITED RECOURSE. No shareholder, officer, director,
officer, or agent of the Company or any of its Subsidiaries shall have any
liability on Notes or under any Loan Document except to the extent such Person
is a party thereto or as otherwise pursuant to a written agreement expressly
assumed such liability. Each of the Agent and each Bank, by its acceptance of a
Note, hereby waives and releases any such liability.
SECTION 11.17 SUBMISSION TO JURISDICTION. (a) ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE
BROUGHT IN THE COURTS OF THE STATE OF TEXAS, IN XXXXXX COUNTY OR OF THE UNITED
STATES FOR THE SOUTHERN DISTRICT OF TEXAS AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE COMPANY AND EACH GUARANTOR HEREBY IRREVOCABLY ACCEPTS FOR
ITSELF AND IN RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. THE COMPANY AND
EACH GUARANTOR FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF
COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS
ADDRESS PROVIDED IN SECTION 11.02 AND WITH RESPECT TO ANY GUARANTOR, AT THE
ADDRESS PROVIDED ON SCHEDULE 5.16 HERETO, SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
THE AGENT OR ANY BANK TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY
OTHER JURISDICTION.
(b) EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM.
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SECTION 11.18 WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND EACH
GUARANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
ARISING FROM OR RELATING TO ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT, AND AGREES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 11.19 FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN
DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE
TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first above written.
BORROWER:
APPLE ORTHODONTIX, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President and
Chief Financial Officer
GUARANTORS:
APPLE ORTHODONTIX OF TEXAS, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President and
Chief Financial Officer
Credit Agreement
AGENT/BANK:
AMOUNT OF COMMITMENT: TEXAS COMMERCE BANK
$15,000,000.00 NATIONAL ASSOCIATION,
As Agent and Individually, as a Bank
By:
Xxxxxxx X. Xxxxxxx
Vice President
Credit Agreement