POST-PETITION LOAN AND SECURITY AGREEMENT
Dated as of May 12, 2003
among
InterDent, Inc. and InterDent Service Corporation
Debtors-in-Possession,
as Borrowers,
and
B III-A Capital Partners, L.P.; B IV Capital
Partners, L.P.; General Motors Employees
Global Group Pension Trust; and Xxxxxx
Xxxxxxxxx Capital Partners II, L.P.
as Lenders,
$7,500,000 REVOLVING CREDIT FACILITY
341814v2
POST-PETITION LOAN AND SECURITY AGREEMENT
THIS POST-PETITION LOAN AND SECURITY AGREEMENT ("Agreement") is made as
of this 12th day of May, 2003, by and among InterDent Inc., a Delaware
corporation ("InterDent"), and InterDent Service Corporation ("ISC"), a
Washington corporation, as borrowers, debtors and debtors-in-possession
("Borrower") (each, a "Borrower" and a Debtor-in-Possession, and collectively,
the "Borrowers"), and B III-A Capital Partners, L.P.; B IV Capital Partners,
L.P.; General Motors Employees Global Group Pension Trust (each of which is
managed by DDJ Capital Management, LLC ("DDJ"), and collectively, the "DDJ
Lenders"), and Xxxxxx Xxxxxxxxx Capital Partners II, L.P., a California limited
partnership ("LLCP"). (The DDJ Lenders and LLCP are each a "Lender" and together
the "Lenders.")
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, on May 9, 2003, the Borrowers each filed a voluntary petition
for relief under the Bankruptcy Code with the United States Bankruptcy Court for
the Central District of California (the "Voluntary Petitions"), and the
Borrowers each continue to operate their respective businesses and manage their
respective properties as debtors-in-possession pursuant to Sections 1107 and
1108 of the Bankruptcy Code; and
WHEREAS, from time to time the Borrowers may request Lenders to make
loans and advances to and extend certain credit accommodations to the Borrowers,
and the parties wish to provide for the terms and conditions upon which such
loans, advances and credit accommodations shall be made.
NOW, THEREFORE, in consideration of any loans, advances and credit
accommodations (including any loans by renewal or extension) hereafter made to
any Borrower (as defined herein) by Lenders, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each Borrower, the parties agree as follows:
SECTION 1. DEFINITIONS.
Section 1.1 General Definitions.
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"Additional Credit" has the meaning specified in Subsection 6.2(e)
hereof.
"Affiliate" means any Person who owns at least 5% of the outstanding
capital stock of Borrower, and any Person directly or indirectly controlling,
controlled by or under common control with any Borrower.
"Agent's Fee" has the meaning specified in Subsection 2.3(c) hereof.
"Applicable Rate" means a rate of interest per annum at 10% for the
first 60 days following the Closing Date, 10.5% for the next 30 days, 11% for
the next 30 days, 11.5% for the next 30 days, 12% for the next 30 days and 13%
thereafter.
"Approved Amount" means the lesser of $7,500,000, or the amount of the
indebtedness that the Borrowers are authorized to incur hereunder by an order of
the Bankruptcy Court .
"Approved Reorganization Plan" means any proposed plan of
reorganization in the Bankruptcy Cases approved by Lenders in their sole
discretion. Lenders have approved the "Plan of Reorganization Dated May ___,
2003."
"Available Amount" shall have the meaning specified in Subsection
2.1(a) hereof.
"Bankruptcy Cases" means those certain Chapter 11 Bankruptcy Cases,
Nos. SA-03-13593-JR and SA-03-13594-JR, jointly administered, in the United
States Bankruptcy Court for the Central District of California, pursuant to
which the Borrowers are debtors-in-possession.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"Bankruptcy Court" means the United States Bankruptcy Court before
which the Bankruptcy Cases are pending, or any other court of competent
jurisdiction before which the Bankruptcy Cases are pending.
"Blocked Account" and "Blocked Accounts" have the meanings specified in
Section 4.5(a) hereof.
"Borrowers" means InterDent and ISC, and "Borrower" means either of
them.
"Budget" means the monthly budget for the period ending on the 180th
day after the Filing Date, a copy of which is attached hereto as Exhibit B, as
the same shall be updated from time to time in accordance with this Agreement.
"Business Day" means any day other than a Saturday, Sunday, or such
other day as banks in Boston, Massachusetts are authorized or required to be
closed for business, and a day on which banks and other financial institutions
are open for the transaction of business.
"Capital Expenditures" means, with respect to any period, the aggregate
of all expenditures (whether paid in cash, in kind or accrued as liabilities and
including Capital Lease obligations incurred during such period) that are
required by GAAP to be included or reflected in the property, plant or equipment
or similar fixed asset accounts (or in intangible accounts subject to
amortization) on a balance sheet.
"Capital Lease" means any lease of Property required by GAAP to be
reflected as a liability on the applicable Borrower's balance sheet.
"Carve-Out" has the meaning set forth in Section 3 hereof.
"Casualty Event" means, with respect to any Property of any Borrower,
any loss of or damage to, or any condemnation or other taking of, such Property
for which such Borrower receives insurance proceeds, or proceeds of a
condemnation award or other compensation.
"CERCLA" means the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, 42 U.S.C.
ss. 9601 et seq.
"Charges" has the meaning specified in Subsection 5.1(f) hereof.
"Closing Commitment Fee" has the meaning specified in Subsection 2.3(a)
hereof.
"Closing Date" means the date upon which the initial Loan is made.
"Collateral" has the meaning specified in Section 4.1 hereof.
"Commission" means the Securities and Exchange Commission or any other
federal agency then administering the Securities Act of 1933, as amended, and
other federal securities laws.
"Consolidated EBITDA" means, for any period, (a) net operating income
of the Borrowers (determined on a consolidated basis without duplication in
accordance with GAAP) for such period (calculated before fees and expenses paid
to professionals (other than ordinary course professionals) to the extent
permitted under Section 10.13 hereof), plus (b) taxes, interest expense,
depreciation, amortization and any other non-cash income or charges accrued for
such period, plus (c) (except to the extent received or paid in cash by the
Borrowers) income or loss attributable to equity in Affiliates for such period,
excluding any extraordinary and unusual gains or losses during such period and
excluding the proceeds of any Casualty Events and Dispositions.
"1999 Credit Agreement" means the "Amended and Restated Credit
Agreement Dated as of June 15, 1999," with InterDent Service Corporation, as
Borrower, the Guarantors named therein, the Lenders named therein, BNY Asset
Solutions LLC, as administrative agent for the Lenders, and XX Xxxxxx Chase Bank
(formerly known as The Chase Manhattan Bank), as syndication agent for the
Lenders, as amended from time to time.
"2000 Credit Agreement" means the Amended and Restated Credit Agreement
Dated as of March 31, 2000," with InterDent Service Corporation, as Borrower,
the Guarantors named therein, the Lenders named therein, BNY Asset Solutions
LLC, as administrative agent for the Lenders, and XX Xxxxxx Xxxxx Bank (formerly
known as The Chase Manhattan Bank), as syndication agent for the Lenders, as of
June 15, 1999," as amended from time to time.
"DDJ" means DDJ Capital Management, LLC.
"DDJ Lenders" means the three funds managed by DDJ that are listed on
the first page of this Agreement, or their successors and assigns.
"Default" means any event, condition or default which, with the giving
of notice, the lapse of time or both, would be an Event of Default.
"Default Rate" has the meaning specified in Section 2.2(a) hereof.
"Disposition" means any sale, assignment, transfer or other disposition
of any Property (whether now owned or hereafter acquired) by any Borrower to any
Person other than another Borrower.
"Eligible Receivables" shall mean all of the Borrower's accounts
receivable (a) that have not been collected, written down or off; (b) that are
not more than ninety (90) days past the original invoice date or more than sixty
(60) days past the due date; (c) that are not the subject of litigation and have
not been turned over to attorneys or agencies for collection; and (d) with
respect to which the account debtor is not the subject of a bankruptcy petition,
maintains a current address and, if the account debtor is an individual, is
alive and over 18 years of age.
"Environmental Laws" means all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety, hazardous substances, and environmental
matters applicable to each Borrower's business and facilities (whether or not
owned by it) as any of the same may be from time to time hereafter amended.
"Event of Default" has the meaning specified in Section 11.1 hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated thereunder.
"Existing Purchase Money Liens" means Liens existing as of the Filing
Date securing purchase money Indebtedness (including Capital Leases) existing as
of the Filing Date, which Liens and purchase money Indebtedness are more fully
described on Schedule 5.1(b) hereto.
"Exit Facility" has the meaning specified in subsection 2.3(d) hereof.
"Filing Date" means the date of filing of the Voluntary Petitions.
"Final Order" means the Final Order of the Bankruptcy Court referred to
in Subsection 6.2.(e) hereof.
"Fiscal Year" means the twelve month period ending on December 31st of
each calendar year.
"GAAP" means generally accepted accounting principles and practices as
in effect from time to time, consistently applied during each interval and from
period to period.
"Hazardous Substances" means all materials, substances, compounds and
solutions the use, transportation, storage, generation or disposal of which are
regulated by any Environmental Law. Without limiting the generality of the
foregoing, Hazardous Substances shall include (a) "hazardous substances", as
defined in CERCLA 42 U.S.C. ss. 9601 (14), (b) "petroleum" as defined in RCRA 42
U.S.C. ss. 6991(2)(B), and (c) "pollutant" and "contaminant", each as defined in
CERCLA 42 U.S.C. ss. 9601 (33).
"Indebtedness" means all liabilities, obligations and indebtedness of
any and every kind and nature, including, without limitation, the Obligations
and all obligations to trade creditors whether heretofore, now or hereafter
owing, arising, due, or payable from any Borrower to any Person and howsoever
evidenced, created, incurred, acquired, or owing, whether primary, secondary,
direct, contingent, fixed, or otherwise. Without in any way limiting the
generality of the foregoing, Indebtedness specifically includes (i) all
obligations or liabilities of any Person that are secured by any lien, claim,
encumbrance, or security interest upon Property owned by any Borrower, even
though such Borrower has not assumed or become liable for the payment thereof;
(ii) obligations or liabilities created or arising under any lease of real or
personal property or conditional sale or other title retention agreement with
respect to property used or acquired by a Borrower, even though the rights and
remedies of the lessor, seller or lender thereunder are limited to repossession
of such property; (iii) all unfunded pension fund obligations and liabilities;
and (iv) all deferred or accrued taxes.
"Indemnified Party" has the meaning specified in Section 13 hereof.
"Insolvency Proceeding" means, with respect to the Person in question,
the commencement or filing by or against it of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other similar relief under the bankruptcy, insolvency,
or similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment for the benefit of creditors; the appointment of a receiver, trustee
or custodian for it or for any of its assets; the institution by or against it
of any of the foregoing or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding up of
its affairs; the sale, assignment, or transfer of all or any material part of
its assets; the nonpayment generally of its debts as they become due; or the
cessation of its business as a going concern.
"ISC" means InterDent Service Corporation, Inc., a Washington
corporation.
"InterDent" means InterDent Inc., a Delaware corporation.
"Interim Order" means the Interim Order of the Bankruptcy Court
described in Subsection 6.1(a) hereof.
"Investment" means (a) any stock, evidence of Indebtedness or other
security of, or interest in, another Person, (b) any loan, advance, contribution
to capital, extension of credit (except for current trade and customer accounts
receivable for inventory sold or services rendered in the ordinary course of
business and payable in accordance with customary trade terms) to another
Person, or (c) any other investment in or with any other Person, in all cases
whether existing on the Filing Date or thereafter made.
"Lenders' Security Interest" means the Liens created for the benefit of
Lenders pursuant to this Agreement, the Orders and the other Loan Documents and
more fully described in Section 4.1 hereof.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement. "Lien" includes
reservations, exceptions, easements, leases and other restrictions and
encumbrances affecting real property. For purposes hereof a Person shall be
deemed to own property acquired or held pursuant to a conditional sale or
similar security arrangement.
"LLCP" means Xxxxxx Xxxxxxxxx Capital Partners II, L.P. or its
designee.
"Loan Documents" means this Agreement and the Other Agreements.
"Loans" means all loans and advances made by Lender to the Borrowers
hereunder.
"Lock Box" and "Lock Boxes" have the meanings specified in Subsection
4.5(a) hereof.
"Lock Box Agreement" has the meaning specified in Subsection 4.5(b)
hereof.
"Material Adverse Effect" means with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of the
business, property, assets, operations, condition (financial or otherwise) or
prospects of the Borrowers, taken as a whole; provided, however, the following
events shall be not be deemed to have a Material Adverse Effect on the
Borrowers: (i) the negative impact on the Borrowers caused by Phase II Budget
Reductions pursuant to the Oregon Health Plan, implemented by the State of
Oregon; and (ii) the destruction of the Debtors' office in Moore, Oklahoma by a
tornado, or any uninsured damages resulting therefrom.
"Material Contract" has the meaning specified in Subsection 5.1(c)
hereof.
"New Purchase Money Liens" means Liens arising after the Filing Date on
property acquired by the Borrowers after the Filing Date securing purchase money
Indebtedness (including Capital Leases) permitted under Subsection 10.1(d)
hereof.
"Obligations" means and includes (without duplication) the aggregate of
the unpaid principal balance of all Loans made hereunder and all accrued and
unpaid interest thereon, and all other amounts due and owing from the Borrowers
to Lenders hereunder, including, without limitation, all interest, fees, charges
or other costs and payments that any Borrower is required to pay to Lenders
under or as a result of the Loan Documents or by law; all fees, costs and
expenses required to be paid by any Borrower to Lenders pursuant to any Loan
Document; and all amounts, if any, paid by Lenders to fund the Carve-Out
pursuant to this Agreement and the Orders.
"Orders" means the Interim Order and the Final Order.
"Other Agreements" means, collectively, the Orders, all agreements,
instruments and documents including, without limitation, notes, guarantees,
mortgages, trust deeds, pledges, powers of attorney, consents, assignments,
contracts, notices, security agreements, leases, financing statements and all
other writings heretofore, now or from time to time hereafter executed by or on
behalf of any Borrower or any other Person and delivered to Lenders or to any
parent, affiliate or subsidiary of Lenders in connection with the Obligations or
the transactions contemplated hereby.
"Overadvanced Amount" means the amount by which the outstanding
Obligations exceed the Available Amount.
"Permitted Expenses" means (i) fees and expenses of professionals
incurred by the Borrowers after the Filing Date and approved by the Bankruptcy
Court in an aggregate amount for any month (or portion thereof) not to exceed
the aggregate amount for such month (or portion thereof) set forth in the
Budget, and (ii) the Carve-Out.
"Permitted Liens" means: (i) Liens for taxes not yet payable or being
contested in good faith and by appropriate proceedings diligently pursued,
provided that the reserve or other appropriate provision, if any, as shall be
required by GAAP shall have been made therefor; (ii) deposits or pledges to
secure the payment of workmen's compensation, unemployment insurance, old age
pensions or other social security benefits or obligations; (iii) deposits or
pledges to secure the performance of bids, tenders, contracts, leases, public or
statutory obligations, surety or appeal bonds, or other deposits or pledges for
purposes of a like general nature made or given in the ordinary course of
business and not in connection with the borrowing of money, including the
Borrowers' deposit in the approximate amount of $115,000 with its credit card
processor, First National Bank, N.A.; (iv) Liens in favor of Lenders hereunder
and under the Orders; (v) such utility, access and other easements, rights of
way, restrictions, exceptions, minor defects or irregularities in or clouds on
title or encumbrances not arising out of the borrowing of money or the securing
of advances or credit, and which will not interfere with or impair in any
respect the utility, operation or value of any properties of Borrower; (vi) the
Liens in favor of the Administrative Agent (under the 1999 Credit Agreement and
the 2000 Credit Agreement) for the ratable benefit of the Agent and the holders
of the Senior Secured Claims; (vii) Existing Purchase Money Liens; and (viii)
mechanics', materialmen's, repairmen's or other like Liens imposed by statute or
common law for goods and/or services obtained by the Borrowers in the ordinary
course of business prior to or after the Filing Date that are junior in priority
to the Lender's Security Interest.
"Person" means any individual, trust, firm, partnership, corporation or
any other form of public, private or governmental entity or authority.
"Pre-Petition Payment" means a payment (by way of adequate protection
or otherwise) of principal or interest or otherwise on account of any
pre-petition Indebtedness or trade payables or other pre-petition claims against
one or more of the Borrowers.
"Phase II Budget Reductions" means the next phase of budget reductions
to the Oregon Health Plan implemented by the State of Oregon.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Receivables Report" has the meaning specified in Subsection 2.1(a)
hereof.
"Release" has the meaning assigned to such term in CERCLA 42 X.X.X.xx.
9601(22).
"Reorganization Plan" means any proposed plan of reorganization in the
Bankruptcy Cases.
"Reportable Event" has the meaning specified in Subsection 5.1(e)
hereof.
"Revolving Loan Commitment" shall mean the Approved Amount.
"Senior Secured Banks" means JPMorgan Chase Bank, Fleet Capital
Corporation and U.S. Bank National (and in the case of each of the Banks, any
successors, assigns or designees).
"Senior Secured Claims" means all of the obligations under the 1999
Credit Agreement and the 2000 Credit Agreement and, in the case of each credit
agreement, the other Loan Documents (as defined in the 1999 Credit Agreement and
2000 Credit Agreement) including, without limitation, the Obligations (as
defined in the 1999 Credit Agreement and the 2000 Credit Agreement).
"Special Collateral" has the meaning specified in Subsection 4.5(e)
hereof.
"Sponsor Protection Order" means the order to be entered by the
Bankruptcy Court, in form and substance acceptable to Lenders in their sole
discretion, providing that, in exchange for the Lenders' commitment to and
support of the Approved Reorganization Plan: (a) upon the effective date of the
Approved Plan of Reorganization, the Lenders shall be entitled to reimbursement
of each of their reasonable out-of-pocket expenses (including reasonable
attorneys' fees) and transaction fees of $500,000 (DDJ Lenders) and $333,333
(LLCP); and (b) upon either (i) the confirmation of any Plan of Reorganization
that is not an Approved Plan; or (ii) the consummation of a sale of all or
substantially all of the assets of either Borrower, each Lender shall be paid
its reasonable out-of-pocket expenses (including reasonable attorneys' fees),
and each Lender shall be paid a break-up fee of one million dollars
($1,000,000).
"Stop Loss Condition" means the condition that exists if, during any
rolling four week period the Borrowers' (a) cash on deposit is less than 70% of
the amount set forth in the Budget for such time; or (b) Capital Expenditures
exceed 100% of the amount set forth in the Budget for any month; provided that
to the extent the maximum permitted amount of Capital Expenditures for any
fiscal month as set forth in the Budget and Schedule 8.2 hereto shall exceed the
actual amount of Capital Expenditures made by the Borrowers during such fiscal
month, the Borrowers shall have the right to utilize such excess amount in any
future fiscal month.
"Subordinated Debt" means Indebtedness of any Borrower which is
subordinated to the Obligations in a manner satisfactory in form and substance
to Lenders.
"Subsidiary" means any corporation (or other legal entity) of which
more than 50% of the outstanding stock (or other equity interests) having by its
terms the ordinary voting power to elect a majority of the board of directors,
managers or trustees of such corporation (or other legal entity) is at the time,
directly or indirectly through one or more intermediaries, owned or controlled
by a Borrower and/or one or more of its Subsidiaries, irrespective of whether or
not, at the time, stock (or other equity interests) of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency.
"Superpriority Claim" means a claim against Borrower or any of the
other Borrowers in any of the Bankruptcy Cases which is an administrative
expense claim having priority over any or all administrative expenses of the
kind specified in Sections 503(b) or 507(b) of the Bankruptcy Code.
"Term" has the meaning specified in Section 12 hereof.
"Termination Date" has the meaning specified in Section 12 hereof.
"Termination Fee" has the meaning specified in Subsection 2.3(d)
hereof.
"UCC" means the Uniform Commercial Code (or any successor statute) as
adopted and in effect in California or as adopted and in effect in any other
state the laws of which are required by Division 9109(c)(3) of the California
Commercial Code to be applied in connection with the issue of perfection of
security interests as it shall be in effect from time to time.
"Unused Line Fee" has the meaning specified in Subsection 2.3(b)
hereof.
SECTION 2. LOANS AND TERMS OF PAYMENT.
Section 2.1 Revolving Loans.
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(a) Upon Borrower's requests made during the Term, Lenders will make Loans to
Borrower for the benefit of any Borrower in an aggregate principal amount at any
time outstanding not to exceed the lesser of (i) the Revolving Loan Commitment
or (ii) an amount equal to seventy-five percent (75%) of Eligible Receivables;
such amount shall be referred to herein as the "Available Amount." Each request
for a Loan must be accompanied by a certificate, signed by an officer of each
Borrower, that (i) indicates the date and amount of the requested Loan; (ii)
certifies that, as of the date of the certificate and the date of the requested
Loan (both before and after giving effect thereto) each of the representations
and warranties made by the Borrowers in this Agreement is true and accurate,
that the Borrowers are in compliance with each of the covenants contained in
this Agreement, and that no Default or Event of Default has occurred; and (iii)
certifies the accuracy of an accompanying report ("Receivables Report"), which
shall include an aging of all of the Borrowers' accounts receivable (as of a
date not more than ten (10) Business Days prior to the date of the Loan
request), and indicate the amount and composition of the Eligible Receivables.
(b) Borrower shall request each Loan not later than 4:00 p.m. (Boston,
Massachusetts time) at least five (5) Business Days before the Business Day on
which Borrower requests Lenders to make such Loan; provided that Lenders need
not make the initial Loan to be made hereunder until the second business day
after the Interim Order is entered. Each such request shall be made in writing,
and shall specify the requested date and amount of such Loan. Each such notice
shall be irrevocable. Each telephonic request for a Loan shall be conclusively
presumed to be made by a person authorized by Borrowers to do so and shall be
confirmed in writing by delivery to Lenders of a written request the next
Business Day. Subject to Subsection 2.1(a) hereof, each Loan shall be in an
amount not less than $500,000 and in integral multiples of $100,000 each
thereafter. All Loans shall be repaid in full upon the earlier to occur of (i)
expiration of the Term as provided in Section 12 of this Agreement, and (ii) the
acceleration of the Obligations pursuant to Subsection 11.2 of this Agreement.
If, at any time and for any reason, the outstanding principal amount of all
Loans made pursuant to this Agreement shall exceed the Revolving Loan
Commitment, then each Borrower shall be obligated to immediately pay to Lender,
in cash, the amount of such excess.
(c) The DDJ Lenders will make 60% of such Loans available to Borrowers, and LLCP
will make 40% of such loans available to Borrowers. Unless Borrowers are
instructed otherwise in writing by the DDJ Lenders and LLCP, all payments made
by Borrowers under this Agreement shall be paid 60% to DDJ (on behalf of all of
the DDJ Lenders), and 40% to LLCP.
Section 2.2 Interest.
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(a) The Borrowers will pay interest to Lenders on the unpaid principal amount of
all Loans made hereunder at the Applicable Rate. Interest will be calculated
with respect to the outstanding principal balance of the Loans at the close of
each day computed on the basis of the actual number of days elapsed over a
360-day year. At any time when an Event of Default has occurred and is
continuing the unpaid principal amount of all Loans and the unpaid amount of all
other Obligations shall bear interest from the date of occurrence of such Event
of Default through the date that such Loans or other Obligations are paid in
full at a rate per annum (the "Default Rate") equal to the Applicable Rate plus
two percent (2%). During the term of this Agreement, all interest payable by a
Borrower shall be due and payable on the first Business Day of the first
calendar month following the month during which such interest accrued.
(b) It is the intent of the parties that the rate of interest and the other
charges to the Borrowers under this Agreement shall be lawful; therefore, if for
any reason the interest or other charges payable under this Agreement are found
by a court of competent jurisdiction, in a final determination, to exceed the
limit that Lenders may lawfully charge the Borrowers, then the obligation to pay
interest and other charges shall automatically be reduced to such limit and, if
any amount in excess of such limit shall have been paid, then such amount shall
be applied to reduce the outstanding principal amount of the Obligations or, if
such application is not permitted by applicable law, then such amount shall be
refunded to the Borrowers.
Section 2.3 Fees. The Borrowers will pay the fees described below to Lenders
during the term of this Agreement.
(a) A "Closing Commitment Fee" of 2.5% of the Approved Amount, earned in full on
the date hereof. The initial Closing Commitment Fee based on the Approved Amount
in the Interim Order shall be payable by the Borrowers to Lenders on the Closing
Date. If the Final Order increases the Approved Amount the additional Closing
Commitment Fee equal to 2.5% of the increase in the Approved Amount shall be
payable two (2) Business Days after entry of the Final Order.
(b) An "Unused Line Fee" of 1% per annum calculated from the Closing Date, and
equal to 1% of the average daily difference between (i) the Approved Amount and
(ii) the aggregate outstanding Loans, and shall be payable monthly in arrears,
and on the Termination Date.
(c) An "Agent's Fee" of $15,000, which shall be payable monthly, in arrears, if
an interest in the Loans is sold to any entity not managed by the DDJ Lenders or
LLCP.
(d) A "Termination Fee" of 2.5% of the Approved Amount, which shall be paid on
the Termination Date, unless the Senior Secured Banks provide the Borrowers with
an alternate exit financing facility on terms that are no less favorable to the
Borrowers than the terms of the exit facility offered by Lenders and described
herein. In exchange for this fee, Lenders agree that if the Bankruptcy Court
confirms the Approved Reorganization Plan, then the Borrowers will have the
right to roll the this loan facility into a post-confirmation revolver equal to
the Approved Amount (the "Exit Facility") that will share collateral pari passu
with the Senior Secured Banks and any other holders of the instruments that will
be issued under the Approved Reorganization Plan to the holders of the Senior
Secured Claims. The Exit Facility will be repaid and re-borrowed from time to
time and the outstanding balance will bear interest at the rate of 12% per
annum.
(e) In the event that Lenders, in the exercise of their commercially reasonable
judgment, elect to conduct or to cause any representative or agent of Lenders to
conduct, an examination of the Collateral or any of Borrowers' properties,
facilities or books and records, the Borrowers shall pay to Lenders or to such
representative or agent as directed by Lenders, all reasonable out-of-pocket
fees and expenses (not to exceed $3,000 per day), for each examination performed
by or at Lenders' direction, all such fees and expenses to be paid upon the
completion of each such examination.
(f) All reasonable expenses of Lenders (including reasonable attorneys' fees and
expenses of counsel to LLCP and the DDJ Lenders) described in Section 14.2,
which expenses shall be paid upon submission of an invoice by Lenders (or their
counsel or other professionals) to Borrower.
Section 2.4 Changes in Laws and Increased Costs of Loans. Notwithstanding
anything to the contrary contained herein, in the event that any change in
applicable law or regulation (or the interpretation or administration thereof)
shall either (i) make it unlawful for Lenders to make or maintain any Loans or
to comply with the terms hereof in connection with any Loans, by an amount
deemed by Lenders to be material, or (ii) shall result in the increase in the
costs to Lenders of making or maintaining any Loans, or (iii) reduce the amounts
received or receivable by Lenders in respect thereof, by an amount deemed by
Lenders to be material, then, in each case, the Borrowers shall pay to Lenders,
upon demand by Lenders any amounts required to compensate Lenders for any such
loss (including loss of anticipated profits), cost or expense resulting from the
foregoing. A certificate of Lenders setting forth the basis for the
determination of such amount necessary to compensate Lenders as aforesaid shall
be delivered to Borrower and shall be conclusive, absent manifest error.
Section 2.5 Payment of Obligations.
----------------------
(a) Maturity. Upon the maturity (whether by acceleration or otherwise) of any of
the Obligations under this Agreement or any of the other Loan Documents, the
Borrowers shall immediately pay to Lenders cash in an amount equal to the
aggregate outstanding principal amount of the Loans and all accrued and unpaid
interest thereon, together with any and all fees, expenses and other Obligations
owing to Lenders hereunder.
(b) Mandatory Prepayments.
---------------------
(i) Collateral Proceeds:
-------------------
During any calendar year or part thereof, the
Borrowers shall be entitled to retain the first one
million dollars ($1,000,000) of the aggregate amount
of proceeds from the following: (a) the net sale
proceeds from all asset sales that are not sales in
the ordinary course of business; (b) any insurance or
condemnation proceeds received by either Borrower;
and (c) other proceeds of or from Collateral, which
proceeds are not received in the ordinary course of
business. Any and all proceeds in excess of the first
one million dollars ($1,000,000) shall, immediately
upon the Borrowers' receipt of such funds, be paid in
the following order: First, to pay down any
Obligations that are outstanding hereunder as of the
date the Borrowers receive such proceeds; and second,
to pay down the Senior Secured Claims. To the extent
the Obligations hereunder are paid down in accordance
with this subsection, then the Revolving Loan
Commitment and the commitment under the Exit Facility
shall be reduced permanently by such amount;
provided, however, that if the Borrowers can
demonstrate, to the satisfaction of the Senior
Secured Banks and the Exit Facility lenders (a
determination to be made each in their reasonable
discretion of the Senior Secured Banks and the Exit
Facility lenders), that the Borrowers need more
liquidity following the effective date of an Approved
Reorganization Plan, then the commitment amount under
the Exit Facility (as it may have been reduced in
accordance with this paragraph) can be increased (at
the election of the Borrowers) by an amount equal to
the lesser of: (i) one million dollars ($1,000,000);
and (ii) the amount necessary to bring the commitment
under the Exit Facility back up to the Approved
Amount. The Lenders agree that any and all amounts
that they receive on account of their Senior Secured
Claims in accordance with this subsection 2.5(b)(i)
shall be returned to the Borrowers' bankruptcy
estates as a condition to the effectiveness of the
Approved Reorganization Plan and, pursuant to the
terms thereof, shall be distributed to the Senior
Secured Banks on the effective date of such Plan,
with such amounts to be applied against the principal
payments to be made to the holders of the
restructured Senior Secured Claims under the Approved
Reorganization Plan in inverse order of maturity.
(ii) Overadvanced Amount:
-------------------
At any time when there exists an Overadvanced Amount,
Borrowers shall, within twenty-four (24) hours of
such occurrence, make a principal payment in an
amount equal to the Overadvanced Amount.
Section 2.6 Use of Proceeds. The Borrowers shall use the proceeds of the Loans
provided by Lenders to Borrower hereunder: (a) for costs, expenses and fees in
connection with the preparation, negotiation, execution and delivery of this
Agreement and the other Loan Documents, (b) for general operating and working
capital purposes, (c) for Capital Expenditures and (d) for Permitted Expenses.
None of the proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security or for the purposes of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of the Loans to
be considered a "purpose credit" within the meaning of Regulations U, T and X of
the Board of Governors of the Federal Reserve System, as amended.
SECTION 3. ALLOWANCE AND PRIORITY OF CLAIMS.
Upon entry of the Interim Order pursuant to Section 364(c)(l) of the
Bankruptcy Code, the Obligations of the Borrowers hereunder shall at all times
constitute allowed administrative expense claims in the Bankruptcy Case having
priority over all administrative expenses of the kind specified in Sections
503(b) or 507(b) of the Bankruptcy Code; provided, however, such priority of
claims shall be subordinate only to a carve-out not to exceed $1 million (the
"Carve-Out") for (a) following an Event of Default under this Agreement, the
payment of (i) unpaid fees and disbursements incurred by professionals (other
than ordinary course professionals) retained, pursuant to Sections 327 or
1103(a) of the Bankruptcy Code (provided that such professional fees and
disbursements are incurred following the occurrence of an Event of Default,
acceptable to the Lenders, and allowed by the Bankruptcy Court) plus (b)
quarterly fees required to be paid pursuant to 28 U.S.C. ss.1930(a)(6) and any
fees payable to the Clerk of the Bankruptcy Court; provided, however, that the
Carve-Out shall not include professional fees, disbursements, costs, or expenses
incurred in connection with any claim or cause of action asserted against the
Lenders or the Senior Secured Banks and/or any challenge or defense to
prepetition (including, without limitation, any Liens in favor of the holders of
the Senior Secured Claims) or postpetition obligations (including, without
limitation, the amount due hereunder) of the Borrowers to Lenders or the holders
of the Senior Secured Claims or prepetition or postpetition Liens of Lenders or
the Administrative Agent (under the 1999 Credit Agreement and 2000 Credit
Agreement) for the ratable benefit of the holders of the Senior Secured Claims.
So long as no Event of Default shall have occurred and be continuing, the
Debtors shall be permitted to pay compensation and reimbursement of expenses
allowed and payable under Code ss.ss.330 and 331, as the same may be due and
payable, but only to the extent such amounts do not exceed the amounts set forth
in the Budget, and the same shall not reduce the Carve-Out. The Lenders waive
the right to seek the recovery or disgorgement of any fees paid out to the
professionals under the foregoing terms and conditions, notwithstanding their
rights under Sections 503(b) and 507(b). Any prepetition retainers held by any
such professionals shall be fully applied against and utilized prior to such
professionals receiving any postpetition payments from the Debtors. The
foregoing provisos are without prejudice to Lenders' right to object to any such
fees or expenses.
SECTION 4. SECURITY INTEREST IN FAVOR OF LENDER.
Section 4.1 Security Interest in Collateral. As security for the Loans and all
other Obligations, each Borrower hereby pledges, assigns and grants to Lenders
first priority Liens on all of the tangible and intangible real and personal
property and fixtures of such Borrower, whether now owned or existing or
hereafter acquired or arising, together with any and all additions thereto and
replacements therefor and all proceeds and products thereof, including without
limitation all Property described below, and all other Property and interests in
Property, real or personal, now owned or leased or hereafter acquired or leased,
now or hereafter pledged or assigned as collateral security for payment of any
of the Obligations (hereinafter referred to collectively as the "Collateral"):
(a) all tangible personal property, including without limitation all present and
future goods, inventory, equipment, merchandise, furniture, fixtures, supplies,
motor vehicles, rolling stock, machinery, tools, computers, computer software
and associated equipment now owned or hereafter acquired, including, without
limitation, all tangible personal property used in the operation of the business
of such Borrower;
(b) all rights under all present and future authorizations, permits, licenses
and franchises issued, granted or licensed to each Borrower for the operation of
its business;
(c) all patents, patent registrations and patent applications, processes,
formulae, trade secrets, registered and common law trademarks (including service
marks), trademark registrations and applications, trade names, exclusive and
nonexclusive licenses from third parties of the right to use patents, patent
applications, processes, formulae, trade secrets and trademarks of such third
parties, along with any and all (i) renewals thereof, (ii) income, royalties,
damages and payments now and hereafter due and/or payable with respect thereto,
including, without limitation, damages, claims and payments for past or future
infringements thereof, (iii) rights to xxx for past, present and future
infringements thereof, and (iv) foreign patents, patent registrations and patent
applications, trademarks, trademark registrations, and trade name applications
for any thereof and any other rights corresponding thereto throughout the world;
(d) all copyrights, whether statutory or common law, owned by or assigned to
such Borrower, all exclusive and nonexclusive licenses from third parties or
rights to use copyrights owned by such third parties, along with any and all (i)
renewals and extensions thereof, (ii) income, royalties, damages, claims and
payments now and hereafter due and/or payable with respect thereto, including,
without limitation, damages and payments for past, present or future
infringements thereof, (iii) rights to xxx for past, present and future
infringements thereof, and (iv) foreign copyrights and any other rights
corresponding thereto throughout the world;
(e) any other intellectual property of such Borrower;
(f) all rights under all present and future contracts and agreements and all
present and future leases of real and personal property;
(g) all shares of capital stock of and/or other equity interests in any Borrower
or any other Person held by such Borrower, except the stock in the entities
listed on Schedule 4.1;
(h) all other personal property, including, without limitation, all present and
future accounts, accounts receivable, cash, cash equivalents, deposits, deposit
accounts, loss carry back, tax refunds, all causes of action and choses in
action (other than the net proceeds of causes of action arising under avoidance
provisions of the Bankruptcy Code, to the extent of the costs of collection and
amounts in excess of the sum of the costs of collection and the Carve-Out),
investment property, capital stock, securities, partnership interests, limited
liability company interests, contracts, contract rights, general intangibles
(including without limitation, all customer and advertiser mailing lists,
intellectual property, patents, copyrights, trademarks, trade secrets, trade
names, domain names, goodwill, customer lists, advertiser lists, indexes, lists,
data and other documents and papers relating thereto, blueprints, designs,
charts, and research and development, whether on paper, recorded electronically
or otherwise), all websites (including without limitation, all content, HTML
documents, audiovisual material, software, data, hardware, access lines,
connections, copyrights, trademarks, patents and trade secrets relating to such
websites) and domain names, any information stored on any medium, including
electronic medium, related to any of the personal property of such Borrower, all
financial books and records and other books and records relating, in any manner,
to the business of such Borrower, all proposals and cost estimates and rights to
performance, all instruments and promissory notes, documents and chattel paper,
and all debts, obligations and liabilities in whatever form owing to such
Borrower from any person, firm or corporation or any other legal entity, whether
now existing or hereafter arising, now or hereafter received by or belonging or
owing to such Borrower, and all guaranties and security therefor, and all letter
of credit and other supporting obligations in respect of such debts, obligations
and liabilities;
(i) all right, title and interest of such Borrower in and to all real property,
whether now owned or hereafter acquired by such Borrower, together with all
improvements now or hereafter located on such real property and all easements
and appurtenances thereto, the land lying within any street or roadway adjoining
any such real property, any vacated or hereafter vacated street or alley
adjoining any such real property; and any strips and gores adjoining any such
real property, all and singular the passages, waters, water rights (whether
tributary or non-tributary or not non-tributary), water courses, riparian
rights, xxxxx, well permits, water stock, other rights, liberties and privileges
thereof or in any way now or hereafter appertaining to any such real property,
including homestead and any other claim at law or in equity, as well as any
after-acquired title, franchise or license, and the reversion and reversions and
remainder and remainders thereof, all rents, royalties, income (including,
without limitation, operating income), receipts, revenues, issues, and profits
of and from the use, operation, or enjoyment of any such real property and
improvements, all machinery, apparatus, equipment, fittings, fixtures (whether
actually or constructively attached or incorporated, and including all trade,
domestic, and ornamental fixtures) now or hereafter located in, upon, or under
any such real property or improvements and used or usable in connection with any
present or future operation thereof, including but not limited to all lighting,
utility, and power equipment, engines, pipes, pumps, tanks, motors, conduits,
utility systems, plumbing, lifting, cleaning, fire prevention, fire
extinguishing, signage, heating, air-conditioning, communication apparatus,
water heaters, ranges, furnaces, appliances, refrigerators, stoves, shades,
awnings, screens, storm doors and windows, attached cabinets, rugs, carpets and
draperies and all additions thereto and replacements therefor, all plans and
specifications for the improvements on any such real property, soil,
environmental, engineering, land planning maps, surveys and other studies and
reports concerning any such real property or prepared for the orderly planning
and development of any such real property, including all plans, drawings and
studies concerning the platting or replatting of any such real property, all
marketing related materials prepared to market the improvements on any such real
property, including, but not limited to, any sales center, scale models,
marketing brochures, presentations and advertising signs, all contracts and
subcontracts relating to the improvements on any such real property, or any
thereof, all awards and payments, including interest thereon, resulting from the
exercise of any right of eminent domain or any other public or private taking
of, casualty or injury to, or decrease in the value of, any of such real
property, including without limitation all property insurance payments, proceeds
and policies related to such real property, and all other and greater rights and
interests of every nature in all such real property and in the possession or use
thereof and income therefrom, whether now owned or subsequently acquired by such
Borrower;
(j) all right, title and interest of such Borrower in and to all fixtures,
fittings, building machinery, building apparatus, building equipment, building
and other materials intended to be affixed to or incorporated into any real
property, supplies, and other tangible personal property in the nature of
fixtures affixed to any such real property for the operation of the buildings
now owned or hereafter acquired by any Borrower and used, intended for use, or
reasonably required in the development, construction, reconstruction,
alteration, repair, or operation of any such real property and any improvements
or infrastructure located thereon, together with all accessions thereto,
replacements and substitutions therefor, proceeds thereof and appurtenances
thereto; and
(k) all licenses, permits, franchises, and other entitlements to use and all
rights thereto which have been issued by or which are pending before any
governmental or quasi-governmental agency which are necessary or appropriate for
the use or operation of any real property or improvements thereon, and all water
taps, sewer taps, building permits, curb cut permits, storm water discharge
permits, refunds, rebates or deposits due or to become due from any utility
companies or governmental entity, agency, authority, board, commission, or
governing body authorized by federal, state or local laws or regulations as
having jurisdiction over any real property, and the absolute right to all of
such Borrower's rights in and to contract rights related to the ownership or
operation of any real property, leases, concessions, operating systems,
warranties, licenses, plans, drawings and other items of intangible personal
property relating to the ownership or operation of any such real property.
Any of the foregoing terms that are defined in the Uniform Commercial
Code shall have the meaning provided in the Uniform Commercial Code, as amended
and in effect from time to time, as supplemented and expanded by the foregoing.
The Uniform Commercial Code shall incorporate reference to Article 9 as in
effect on the date hereof and as amended by Revised Article 9 with an effective
date of July 1, 2001.
The pledge, assignment and grant of Liens in favor of Lenders on the
Collateral is sometimes referred to herein as the "Lenders' Security Interest".
Notwithstanding anything to the contrary in this Section 4.1, the Collateral
does not include any shares of capital stock of or property or assets of Capitol
Dental Care, Inc., an Oregon corporation ("Capitol Dental"), Managed Dental Care
of Oregon, Inc., an Oregon corporation ("Managed Dental"), and Dedicated Dental
Systems, Inc., a California corporation ("Dedicated Dental").
Section 4.2 Priority of Lender's Security Interest; Relief from Stay.
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(a) Upon entry of the Interim Order, the Obligations shall be secured pursuant
to Sections 364(c)(2) and 364(d)(1) of the Bankruptcy Code in accordance with
the terms of the Interim Order and the Lenders' Security Interest shall be
senior to all other Liens on the Collateral except that the Permitted Liens
shall be senior to Lenders' Security Interest, but only to the extent that such
Permitted Liens are valid and perfected under applicable non-bankruptcy law and
are not avoided or subordinated under the Bankruptcy Code.
The Orders shall provide that, with respect to relief from the
Automatic Stay, that if: (a) an Event of Default occurs and is not cured within
the applicable cure period, if any, set forth in Section 11, then the Lenders
may set an expedited hearing for relief from the automatic stay on not less than
three (3) Business Days' notice and at such hearing (i) the only issue will be
whether an uncured Default exists; and (ii) Lenders shall be granted relief from
stay if an uncured Default is found to exist; (b) the Loan is not paid on such
maturity date, the automatic stay shall be deemed lifted without further order
of the Court and Lenders may exercise any and all available remedies.
(b) Subject to Subsection 4.2(a) of this Agreement, upon entry of the Interim
Order, the automatic stay provisions of 11 U.S.C. ss. 362 shall be vacated and
modified to the extent necessary to permit the Lenders to exercise all rights
and to effectuate the provisions of this Agreement and the Orders, without the
need for filing further pleadings or application to or order of the Bankruptcy
Court. Upon entry of the Interim Order, no party in interest shall have the
right to contest the enforcement of the remedies set forth in this Agreement on
any basis other than the fact that an Event of Default has not occurred. No
party in interest shall have the right to seek injunctive relief against such
enforcement under Section 105 of the Bankruptcy Code or otherwise, or to seek
injunctive relief in conflict with the provisions of this Agreement or the
Orders if these Obligations have become all due and payable pursuant to ss.
12(e) or 12(f).
Section 4.3 Preservation of Collateral; Perfection of Lender's Security
Interest. Each Borrower shall, at Lenders' request, at any time and from time to
time, execute and deliver to Lenders such security agreements, mortgages,
financing statements, documents and other agreements and instruments (and pay
the cost of filing or recording the same in all public offices deemed reasonably
necessary or desirable by Lenders) and do such other acts and things as Lenders
may deem necessary or desirable in order to establish and maintain the validity,
attachment and perfection of the Lenders' Security Interest (free and clear of
all other Liens, claims and rights of third parties whatsoever, whether
voluntarily or involuntarily created, except Permitted Liens and the Carve Out).
Each Borrower irrevocably hereby makes, constitutes and appoints Lenders (and
all Persons designated by Lenders for that purpose) as such Borrower's true and
lawful attorney and agent-in-fact to execute such security agreements,
mortgages, financing statements, documents and other agreements and instruments
and do such other acts and things as may be necessary or appropriate to preserve
and perfect Lenders' Security Interest. Each Borrower further agrees that a
carbon, photographic, photostatic or other reproduction of this Agreement, the
Orders or of a financing statement shall be sufficient as a financing statement.
Section 4.4 Possession of and Rights to Access Collateral. Until an Event of
Default has occurred, each Borrower shall have the right, except as otherwise
provided in this Agreement, in the ordinary course of such Borrower's business,
(a) to sell, lease or furnish under contracts of service any of such Borrower's
inventory normally held by it for any such purpose, (b) to use and operate the
machinery, equipment, real property and improvements thereon consistent with
past practices, and (c) subject to the terms of this Agreement, the Orders and
any other orders issued by the Bankruptcy Court, to use cash collateral for
Permitted Expenses and for working capital and Capital Expenditures in
accordance with the Budget.
Section 4.5 Collection of Proceeds of Accounts Receivable.
---------------------------------------------
(a) Within two (2) Business Days after receiving the written request of Lenders,
each Borrower shall (i) direct all of its account debtors to make all payments
on such Borrower's accounts receivable directly to post office boxes (each a
"Lock Box" and collectively the "Lock Boxes") with one or more financial
institutions reasonably acceptable to, and in the name and under exclusive
control of, Lenders, (ii) establish accounts (each a "Blocked Account" and
collectively the "Blocked Accounts") in Lenders' name for the benefit of each
Borrower with financial institutions reasonably acceptable to Lenders, into
which all payments received in the Lock Boxes shall be deposited, and into which
each Borrower will immediately deposit all payments made for services rendered
by such Borrower and received by it in the identical form in which such payments
were made, whether by cash or check, and (iii) cause each Borrower, any
Affiliate of a Borrower, and any shareholder, officer, director, employee or
agent of a Borrower or any Affiliate, and any other Person acting for or in
concert with a Borrower that receives any monies, checks, notes, drafts or other
payments relating to or as proceeds of Borrowers' accounts receivable or other
Collateral, to receive and hold such items in trust for, and as the sole and
exclusive property of, Lender and, immediately upon receipt thereof, shall remit
the same (or cause the same to be remitted) in hand to the Blocked Accounts.
(b) Within two (2) Business Days of any written request made by Lenders pursuant
to Subsection 4.5(a), each Borrower shall cause each financial institution with
which a Lock Box and Blocked Account has been established to enter into an
agreement (a "Lock Box Agreement" or "Blocked Account Agreement") on terms
satisfactory to Lender, confirming that the amounts on deposit in such Lock Box
and Blocked Account are the sole and exclusive property of Lenders, that such
financial institution has no right to setoff against such Lock Box or Blocked
Account or against any other account maintained by such financial institution
into which the contents of such Blocked Account are transferred, and that upon
written notice from Lenders, such financial institution shall wire, or otherwise
transfer in immediately available funds in a manner satisfactory to Lenders,
funds deposited in the Blocked Account on a daily basis as such funds are
collected.
(c) Each Borrower agrees to pay all reasonable fees, costs and expenses which
the Borrowers incur in connection with opening and maintaining a Lock Box and
Blocked Account. All of such fees, costs and expenses which remain unpaid
pursuant to any Lock Box or Blocked Account Agreement with the Borrowers, to the
extent same shall have been paid by Lenders hereunder, shall constitute Loans
hereunder, shall be payable to Lenders by the Borrowers upon demand, and, until
paid, shall bear interest at the highest rate then applicable to Loans
hereunder. All checks, drafts, instruments and other items of payment or
proceeds of Collateral delivered to Lenders in kind shall be endorsed by the
requisite Borrower, to Lenders, and, if that endorsement of any such item shall
not be made for any reason, Lenders are hereby irrevocably authorized to endorse
the same on such Borrower's behalf. For the purpose of this Subsection 4.5(c),
each Borrower irrevocably hereby makes, constitutes and appoints Lenders (and
all Persons designated by Lenders for that purpose) as such Borrower's true and
lawful attorney and agent-in-fact (i) to endorse such Borrower's name upon said
items of payment and/or proceeds of Collateral of the Borrowers and upon any
chattel paper, document, instrument, invoice or similar document or agreement
relating to any account receivable of a Borrower or goods pertaining thereto;
(ii) to take control in any manner of any item of payment or proceeds thereof;
(iii) to have access to any lock box or postal box into which any of the
Borrowers' mail is deposited; and (iv) open and process all mail addressed to
any Borrower and deposited therein; provided, however, that Lenders shall not
exercise any such powers described in clauses (i), (ii), (iii) and (iv) of this
Subsection 4.5(c) unless and until an Event of Default has occurred.
(d) Lenders may, at any time and from time to time after the occurrence and
during the continuance of an Event of Default, whether before or after
notification to any account debtor and whether before or after the maturity of
any of the Obligations (and subject only to the notice required to be given in
accordance with Subsection 4.2(b) hereof), (i) enforce collection of any of the
Borrowers' accounts receivable or contract rights by suit or otherwise; (ii)
exercise all of the Borrowers' rights and remedies with respect to proceedings
brought to collect any accounts receivable; (iii) surrender, release or exchange
all or any part of any accounts receivable of the Borrowers, or compromise or
extend or renew for any period (whether or not longer than the original period)
any indebtedness thereunder; (iv) sell or assign any account receivable of a
Borrower upon such terms, for such amount and at such time or times as Lenders
deem advisable; (v) prepare, file and sign the requisite Borrower's name on any
proof of claim in bankruptcy or other similar document against any account
debtor indebted on an account receivable of such Borrower; and (vi) do all other
acts and things which are necessary, in Lenders' sole discretion, to fulfill
each Borrower's Obligations under this Agreement and to allow Lenders to collect
the accounts receivable. In addition to any other provision hereof, Lenders may
at any time on or after the occurrence of an Event of Default, at the Borrowers'
sole expense, notify any parties obligated on any of the accounts receivable of
the Borrowers to make payment directly to Lenders of any amounts due or to
become due thereunder.
(e) Immediately upon a Borrower's receipt of any portion of the Collateral
evidenced by an instrument or document including, without limitation, any
chattel paper, trade acceptances, documents of title and/or warehouse receipts
(the "Special Collateral"), such Borrower shall deliver the original thereof to
DDJ, as agent for the benefit of Lenders, together with an appropriate
endorsement or other specific evidence of assignment thereof to DDJ (in form and
substance acceptable to Lenders). If an endorsement or assignment of any such
items shall not be made for any reason, DDJ, as agent for the benefit of
Lenders, is hereby irrevocably authorized, as such Borrower's attorney and
agent-in-fact, to endorse or assign the same on such Borrower's behalf.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
Section 5.1 General Representations and Warranties. Each Borrower represents and
warrants to Lenders as of the Closing Date:
(a) Each Borrower is duly organized and existing and in good standing under the
laws of the state of its incorporation and is qualified or licensed to do
business in all other countries, states and provinces the laws of which require
such Borrower to be so qualified or licensed and in which Borrower conducts any
material business, except where such circumstance cannot reasonably be expected
to have a Material Adverse Effect;
(b) Each Borrower has good, indefeasible and merchantable title to and ownership
of the Collateral, free and clear of Liens, except Lenders' Security Interest,
Permitted Liens and the Carve-Out;
(c) No Borrower is a party to any contract, lease, license agreement or other
agreement, or subject to any charge, corporate restriction, judgment, decree or
order, which could reasonably be expected to have a Material Adverse Effect, and
each contract, license, lease or other agreement that is material to maintain
Borrowers' operations at a level equal to or better than their level as of the
Closing Date (each, a "Material Contract") is in full force and effect and no
event has occurred or failed to occur which, with the giving of notice or
passage of time or both, would constitute a default under any such Material
Contract (other than the type of default described in Bankruptcy Code ss.
365(b)(2)); provided, however, that Borrowers have disclosed to Lenders that
they are in default under one agreement, as disclosed in an email sent to
counsel to the DDJ Lenders from counsel for the Borrowers on May 9, 2003.
(d) No Borrower is in violation of any applicable statute, regulation or
ordinance of any governmental entity; or of any agency thereof, which could
reasonably be expected to have a Material Adverse Effect;
(e) No Borrower has received any notice to the effect that it is not in full
compliance with any of the requirements of ERISA, and the regulations
promulgated thereunder and, to the best knowledge of each Borrower's executive
officers, there exists no event described in Section 4043(b)(3) thereof
("Reportable Event") except where such circumstance cannot reasonably be
expected to have a Material Adverse Effect;
(f) Except for filings and payments which could not reasonably be expected to
have a Material Adverse Effect, each Borrower has filed all federal, state and
local tax returns and other reports it is required by law to file and has paid,
to the extent due and payable, all taxes, levies, assessments, charges, liens,
claims or encumbrances upon or relating to the Collateral, the Obligations, its
employees, payroll, income, and gross receipts, its ownership or use of any of
its assets, and any other aspect of its business (collectively, the "Charges");
(g) The offices or locations where each Borrower keeps the Collateral and books
and records concerning the Collateral, including, without limitation, computer
programs, printouts and other computer materials, are at the locations set forth
on Schedule 5.1(g) hereto;
(h) The addresses specified on Schedule 5.1(g) hereto include and designate each
Borrower's chief executive office, chief place of business and other offices and
places of business and are the Borrowers' sole offices and places of business;
(i) Upon execution of this Agreement and the other Loan Documents by Lenders and
so long as one or both Orders have been entered, each Borrower has the right and
power and is duly authorized and empowered to enter into, execute, deliver and
perform this Agreement and the other Agreements, and its officers executing and
delivering the Loan Documents are duly authorized and empowered to do so;
(j) The execution, delivery and performance by each Borrower of the Loan
Documents shall not, by the lapse of time, the giving of notice or otherwise,
constitute a violation of any applicable law or a breach of any provision
contained in its Articles or Certificate of Incorporation or By-Laws;
(k) Each Borrower has, and is current and in good standing with respect to, all
governmental approvals, permits, certificates, inspections, consents and
franchises necessary to continue to conduct its business as heretofore
conducted, and to own or lease and operate the properties now owned or leased by
it, except where such failure cannot reasonably be anticipated to have a
Material Adverse Effect;
(l) The execution and delivery of the Loan Documents by each Borrower does not
directly or indirectly violate or result in a violation of Section 7 of the
Securities and Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations U, T and X of the
Board of Governors of the Federal Reserve System, and no Borrower owns or
intends to purchase or carry any "margin security" as defined in said
Regulations;
(m) Schedule 5.1(m) hereto lists all owned and leased real property and, except
as described in Schedule 5.1(m), no Borrower is a party to any contract or
agreement for the sale, transfer, assignment or other disposition of the real
property or any portion thereof or interest therein;
(n) The Liens granted to Lenders pursuant to this Agreement are fully perfected
first priority Liens in and to the Collateral, subject only to the Permitted
Liens and the Carve-Out. Each Borrower has good and marketable title to all of
its properties and assets subject to no liens, mortgages, pledges, security
interests, encumbrances or charges of any kind, except Lenders' Security
Interest, Permitted Liens and the Carve-Out;
(o) Except as disclosed in Schedule 5.1(o), all premises and facilities owned,
leased, used or operated by any Borrower or any Subsidiary of a Borrower or, to
the knowledge of any of the Borrowers' executive officers, after a reasonable
investigation, any predecessor in interest, have been, and continue to be,
owned, leased, used or operated in compliance in all material respects with all
applicable Environmental Laws except where the failure to be in compliance would
not reasonably be expected to have a Material Adverse Effect;
(p) No broker or finder acting on behalf of any Borrower brought about the
obtaining, making or closing of the loans pursuant to this Agreement and no
Borrower has any obligation to any other Person in respect of any finder's or
brokerage fees in connection with the loans contemplated by this Agreement;
(q) There has been no change in the credit terms or policies which any Borrower
offers to its customers from those disclosed to Lender prior to the date of this
Agreement;
(r) No information contained in the Loan Documents, or any written statement
furnished by or on behalf of any Borrower pursuant to the terms of this
Agreement, which has previously been delivered to Lender, contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained herein or therein not misleading at the time and in
light of the circumstances under which made;
(s) Except for actions to collect Indebtedness incurred before the Filing Date
or as disclosed on Schedule 5.1(s), there are no actions, suits, claims,
investigations or proceedings which are pending or, to the best knowledge of the
Borrowers' executive officers, threatened, against or affecting any Borrower,
its assets, goodwill or business or any other Person which could reasonably be
expected to have a Material Adverse Effect or would impair the ability of any
Borrower to perform its obligations under the Loan Documents or would impair
Lenders' ability to enforce any Obligations or realize upon any Collateral; and
(t) Set forth on Schedule 5.1(t) hereto is a complete list of all deposit and
other accounts maintained by the Borrowers with any bank or other financial
institution as of the Closing Date.
(u) Borrowers have, and shall maintain, a valid, perfected and enforceable
first-priority security interest in (i) all amounts owed to Borrowers by or on
behalf of their Affiliates (including all affiliated dental practices); and any
and all related contracts, contract rights, and accounts receivable; and (ii)
any accounts assigned to them from any third parties who assigned or assign such
accounts.
Section 5.2 Warranty and Reaffirmation of Warranties and Representations;
Survival of Warranties and Representations. Each request made by Borrower for a
Loan pursuant to the Loan Documents shall constitute (i) a warranty and
representation by each Borrower to Lenders that there does not then exist an
Event of Default or a Default, except as otherwise notified to Lenders by a
Borrower and (ii) a reaffirmation as of the date of said request of the
representations and warranties of the Borrowers contained in Subsections 5.1(a)
through 5.1(s) hereof. All representations and warranties of the Borrowers
contained in the Loan Documents shall survive the execution, delivery and
acceptance thereof by the parties thereto and the closing of the transactions
described therein or related thereto.
SECTION 6. CONDITIONS PRECEDENT.
Section 6.1 Conditions to Effectiveness of Agreement and Initial Loans. This
Agreement, and the obligation of Lender to make the initial Loans shall not
become effective until the date on which each of the following conditions is
satisfied (or waived by Lenders in their sole discretion):
(a) Interim Order. The Bankruptcy Court shall have entered, and Lenders shall
have received a true copy of, an order in substantially the form of Exhibit A
attached hereto with such changes as Lenders shall have approved in its sole
discretion (the "Interim Order") approving the Loan Documents, the granting of
the Superpriority Claim status and Lenders' Security Interest in all of the
Collateral, which Interim Order (i) shall have been entered upon motion of
Borrower satisfactory in form and substance to Lenders, (ii) shall be in full
force an effect, and (iii) shall not have been stayed, reversed, modified or
amended in any respect and, if the Interim Order is the subject of a pending
appeal in any respect, neither the making of such Loans nor the performance by
any Borrower of any of its obligations hereunder or under the Loan Documents or
under any other instrument or agreement referred to herein shall be the subject
of an effective stay pending appeal.
(b) Counterparts of Agreement. This Agreement or counterparts thereof shall have
been duly executed and delivered by the Borrowers to Lenders.
(c) Corporate and Judicial Proceedings. All corporate and judicial proceedings
required to be taken in connection with the execution of this Agreement, the
making of the Loans, the granting of the Security Interest, the use of cash
collateral, and the incurrence of any obligations with respect to the execution
and delivery of the Loan Documents and all documents and papers relating
thereto, shall have been taken, executed and delivered, and shall be
satisfactory to Lenders in all material respects. Lender shall have received
copies of such documents and papers as Lenders may reasonably request in
connection therewith, all in form and substance satisfactory to Lender.
(d) Fees and Expenses. All fees and expenses (including reasonable fees and
expenses of counsel to LLCP and the DDJ Lenders, whether incurred before or
after the Filing Date) required to be paid to Lenders on or before the Closing
Date have been paid.
(e) Bankruptcy Documents. All motions and other documents to be filed with the
Bankruptcy Court in connection with this Agreement and the approval thereof
shall be in form and substance satisfactory to Lenders.
(f) Budget and Projections. Borrowers shall have delivered to Lender copies of
the Budget and projections, which shall be acceptable to Lenders, in their sole
discretion.
(g) Material Adverse Effect. There shall have occurred no Material Adverse
Effect since March 31, 2003.
(h) Other Documents. Lenders shall have received such other documents,
certificates and opinions as Lenders may reasonably request, including all
documents necessary to grant, perfect and enforce the Lenders' Security
Interest, which documents shall include one or more control agreements to
provide Lenders with a first-priority security interest in the Debtors' bank
accounts.
(i) Total Asset Representation. Borrowers shall present to Lenders financial
statements that were prepared in accordance with GAAP and are dated no earlier
than ninety (90) days prior to the funding of the initial Loan to be made
hereunder, demonstrating that each Borrower has total assets of at least two
million dollars ($2,000,000).
Section 6.2 Conditions to Each Loan. The obligation of Lenders to make the
initial Loans and each other Loan shall also be subject to the satisfaction (or
waiver by Lenders in their sole discretion) of the following conditions:
(a) Representations and Warranties. All of the representations and warranties of
each Borrower contained in the Loan Documents shall be correct in all material
respects on and as of the date of each Loan, except (i) to the extent that any
such representation or warranty expressly relates to an earlier date, and (ii)
for changes therein permitted or contemplated by this Agreement.
(b) No Events of Default. No event shall have occurred and be continuing, or
would result from the funding of the such Loan, which constitutes or would
constitute a Default or an Event of Default.
(c) Legality. The making of such Loan shall not violate any requirement of law
and shall not be enjoined temporarily, preliminarily or permanently.
(d) Material Adverse Effect. There shall have occurred no Material Adverse
Effect since March 31, 2003.
(e) Bankruptcy Court Order. The Interim Order shall be in full force and effect
and shall not have been stayed, reversed, modified or amended in any respect,
and, not later than 30 days after the entry of the Interim Order, the Bankruptcy
Court shall have entered a final order approving the Loan Documents, granting
the Superpriority Claim status and Lenders' Security Interest in all of the
Collateral, and authorizing the use of cash collateral in form and substance
satisfactory to Lenders in their sole discretion (the "Final Order"); provided,
that at the time of the making of any Loan the aggregate amount of which, when
added to the sum of the principal amount of all Loans then outstanding would
exceed the amount thereof that was authorized by the Bankruptcy Court in the
Interim Order (collectively, the "Additional Credit"), Lenders shall have
received a certified copy of the Final Order, and at the time of the extension
of any Additional Credit, the Final Order shall be in full force and effect, and
shall not have been stayed, reversed, modified or amended in any respect; and if
either the Interim Order or the Final Order is the subject of a pending appeal
in any respect, neither the making of the Loans nor the performance by Borrower
of any of its obligations under any of the Loan Documents shall be the subject
of an effective stay pending appeal.
(f) Total Asset Representation. Borrowers shall have provided to Lenders
financial statements that were prepared in accordance with GAAP and are dated no
earlier than ninety (90) days prior to the funding of such loan, demonstrating
that each Borrower has total assets of at least two million dollars
($2,000,000).
(g) Borrowers' Security Interest in Certain Assets. Borrowers shall have
provided to counsel for the lenders all information they reasonably deem
necessary to verify the representation made by the Borrowers in subsection
5.1(u) herein.
The request by any Borrower for the funding of any Loan and the receipt
by any Borrower of the proceeds of any Loan shall be deemed to constitute, as of
the date of such request or acceptance, (i) a representation and warranty by the
Borrowers that all of the conditions in this Section 6.2 have been satisfied,
and (ii) a confirmation by the Borrowers of the granting and continuance of
Lender's Security Interest pursuant hereto.
SECTION 7. REPORTS AND INFORMATION.
On and after the date hereof, until all of the Obligations shall have
been paid in full and Lenders shall have no commitment hereunder, the Borrowers
shall observe the following reporting covenants:
Section 7.1 Interim Financial Statements and Reports.
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(a) Weekly Reports. Not later than Wednesday of each week, Borrower shall
furnish to Lenders:
(i) an updated list of all deposit and other accounts maintained by the
Borrowers with any bank or other financial institution, together with a list of
the cash balances on deposit in each such account as of Friday of the prior
week;
(ii) a report showing the Borrowers' financial results for the prior week,
together with a comparison of the Borrowers' projected financial results for
such week, as well as a cumulative comparison from the Filing Date to the prior
week, which report shall be prepared in accordance with Borrowers' prior
practices, and in a form substantially similar to the Budget; and
(iii) a report containing all information necessary to determine whether a Stop
Loss Condition has occurred.
(b) Monthly Reports. Within thirty (30) days after the end of each fiscal month,
Borrower shall furnish to Lenders (i) an unaudited consolidated balance sheet of
Borrowers as of the end of such month and an unaudited consolidated statement of
income for the Borrowers for such monthly period and for the period from the
Filing Date through the end of such month, together with a comparison of the
Borrowers' actual financial results for such month and cumulatively from the
Filing Date against the projected results set forth in the Budget Plan; (ii) a
Receivables Report, dated as of the last Business Day of the preceding month;
and (iii) an officer's certificate, pursuant to which such officer certifies
that (x) the financial statements fairly and accurately represent the
consolidated financial condition of the Borrowers at that particular period; and
(y) during that particular period there has been no Default or Event of Default
under this Agreement; provided, however, that if any such officer has knowledge
that any Default or Event of Default has occurred during such period, the
existence of one and a detailed description of same shall be set forth; and (z)
the exhibits attached to such financial statements shall include detailed
calculations showing compliance with all financial covenants contained in this
Agreement.
(c) Other Reports. Borrower shall furnish to Lenders all financial reports
provided by the Borrowers to any other creditor at the same time such reports
are provided to such creditors.
Section 7.2 Annual Financial Statements. As soon as available, but in any event
within ninety (90) days after the end of each fiscal year of Borrower, Borrower
shall furnish to Lenders: (i) a consolidated balance sheet of the Borrowers as
of the end of such fiscal year and consolidated statements of income,
shareholders' equity and cash flow of the Borrowers for such fiscal year; and
(ii) an officer's certificate, pursuant to which such officer certifies that (x)
the financial statements fairly and accurately represent the Borrowers'
consolidated financial condition at the end of such fiscal year; and (y) during
such fiscal year there has been no Default or Event of Default under this
Agreement; provided, however, that if any such officer has knowledge that any
Default or Event of Default has occurred during such period, the existence of
one and a detailed description of same shall be set forth; and (z) the exhibits
attached to such financial statements shall include detailed calculations
showing compliance with all financial covenants contained in this Agreement.
Section 7.3 Notice of Defaults. As soon as possible, and in any event within two
(2) days after the occurrence of any Default or Event of Default, Borrower shall
furnish to Lenders the statement of its chief executive officer, chief operating
officer or senior financial officer setting forth details of such Default or
Event of Default and the action which the Borrowers have taken or propose to
take with respect thereto.
Section 7.4 Reportable Events. Borrower shall furnish to Lenders, as soon as
possible, but in any event within ten (10) days after any Borrower knows or has
reason to know that any Reportable Event has occurred, the statement of its
chief executive officer, chief operating officer or senior financial officer
setting forth the details of such Reportable Event and the action which the
Borrowers have taken or propose to take with respect thereto, together with a
copy of the notice of such Reportable Event to the Pension Benefit Guaranty
Corporation.
Section 7.5 Reports to other Creditors. Promptly after filing the same, Borrower
shall furnish to Lenders copies of any compliance certificate and other
information furnished to any other holder of the securities (including debt
obligations) of any Borrower pursuant to the terms of any indenture, loan or
credit or similar agreement and not otherwise required to be furnished to
Lenders pursuant to any other provision of this Agreement.
Section 7.6 Information Regarding Bank Accounts. Prior to the opening by any
Borrower of any new deposit or other account with any bank or other financial
institution, Borrower shall furnish to Lenders written notice setting forth the
number of such new account, the name and address of the bank or other financial
institution at which such new account shall be maintained, and the reasons for
opening and maintaining such account.
Section 7.7 Environmental Reports. Borrower shall furnish to Lenders: (a) not
later than seven (7) days after notice thereof, notice of any enforcement
actions, or, to the knowledge of any Borrower, threatened enforcement actions
affecting the Borrowers by any Governmental Agency related to Environmental
Laws; (b) copies, promptly after they are received, of all orders, notices of
responsibility, notices of violation, notices of enforcement actions, and
assessments, and other written communications pertaining to any such orders,
notices, claims and assessments received by the Borrowers from any Governmental
Agency; (c) not later than seven (7) days after notice thereof, notice of any
civil claims or threatened civil claims affecting any Borrower by any third
party alleging any violation of Environmental Laws or harm to human health or
the environment; (d) copies of all cleanup plans, site assessment reports,
response plans, remedial proposals, or other submissions of any Borrower, other
third party (e.g., committee of potentially responsible parties at a superfund
site), or any combination of same, submitted to a Governmental Agency in
response to any communication referenced in subsections (a) and (b) herein
simultaneously with their submission to such Governmental Agency; and (e) from
time to time, on request of Lender, information regarding the Borrowers'
insurance coverage, if any, for any environmental liabilities.
Section 7.8 Modifications to Budget. Not later than five (5) days following the
end of each fiscal month, the Borrowers shall deliver to Lenders a report
setting forth any proposed modifications to the Budget, provided that no such
modifications to the Budget shall become effective without the prior approval of
Lenders in their sole discretion.
Section 7.9 Miscellaneous. The Borrowers shall provide Lenders with such other
information as Lenders may from time to time request respecting the Collateral
or the business, properties, prospects, condition or operations, financial or
otherwise, of the Borrowers.
SECTION 8. FINANCIAL COVENANTS.
On and after the date hereof, until all of the Obligations shall have
been paid in full and Lenders shall have no commitment hereunder, the Borrowers
shall observe the following financial covenants:
Section 8.1 Consolidated EBITDA. The Borrowers shall not permit Consolidated
EBITDA for any calendar month to be less than $1,000,000.
Section 8.2 Capital Expenditures. The Borrowers shall not make or incur any
Capital Expenditures, if after giving effect thereto, the aggregate amount of
all such Capital Expenditures made by the Borrowers during any fiscal month
commencing with the month ending May 31, 2003, would exceed the maximum amount
of permitted Capital Expenditures for such fiscal month set forth in the Budget
and Schedule 8.2 hereto; provided that to the extent the maximum permitted
amount of Capital Expenditures for any fiscal month as set forth in the Budget
and Schedule 8.2 hereto shall exceed the actual amount of Capital Expenditures
made by the Borrowers during such fiscal month, the Borrowers shall have the
right to utilize such excess amount in any future fiscal month.
Section 8.3 Stop Loss Condition. Borrowers shall not permit there to occur or
exist any Stop Loss Condition.
SECTION 9. AFFIRMATIVE COVENANTS.
On and after the date hereof, until all of the Obligations shall have
been paid in full and Lenders shall have no commitment hereunder, the Borrowers
shall observe the following affirmative covenants:
Section 9.1 Existence and Business. Each Borrower shall (a) preserve and
maintain its corporate existence and qualify and remain qualified as a foreign
corporation in each jurisdiction in which such qualification is required, (b)
preserve and maintain in full force and effect all material rights, licenses,
patents and franchises, (c) comply in all material respects with all valid and
applicable statutes, rules and regulations necessary for the conduct of
business, except to the extent that the provisions of the Bankruptcy Code
specifically conflict therewith and would govern, and (d) engage only in the
businesses which it is conducting on the date of this Agreement.
Section 9.2 Maintenance of Properties and Executory Contracts. Each Borrower
shall maintain, keep and preserve all of its properties (tangible and
intangible) in good repair and working order, ordinary wear and tear excepted.
Except to the extent required to do otherwise by the Bankruptcy Code, Bankruptcy
Rules, Local Bankruptcy Rules or U.S. Trustee Guidelines, each Borrower shall
comply in all material respects with (a) all of its postpetition obligations
under all prepetition executory contracts to which it is a party; and (b) all of
its obligations under all postpetition executory contracts to which it is a
party.
Section 9.3 Insurance. Each Borrower shall (a) keep its principal assets which
are of an insurable character insured by financially sound and reputable
insurers against loss or damage by fire, explosion or hazards, by extended
coverage in an amount sufficient to avoid co-insurance liability, and (b)
maintain with financially sound and reputable insurers insurance against other
hazards and risks and liability to persons and property to the extent and in a
manner satisfactory to Lenders, and in any event as customary for companies in
similar businesses similarly situated; provided, however, that on prior notice
to Lenders it may effect workmen's compensation insurance through an insurance
fund operated by such state or jurisdiction and may also be a self-insurer with
respect to workmen's compensation and with respect to group medical benefits
under any medical benefit plan; and provided, further, that no such notice will
be required as to any state insurance fund or self-insurance maintained as of
the date hereof. At the request of Lenders from time to time, but no more
frequently than once every six months, the Borrowers will render to Lender a
statement in reasonable detail as to all insurance coverage required by this
Section 9.3. A description of the material elements of insurance coverage of the
Borrowers as of the date hereof is set forth on Schedule 9.3.
Section 9.4 Records, Accounts and Places of Business. Each Borrower shall
maintain comprehensive and accurate records and accounts in accordance with
generally accepted accounting principles consistently applied. Each Borrower
shall promptly notify Lenders of (a) any changes in the places of business of
any Borrower and (b) any additional places of business which may arise
hereafter.
Section 9.5 Inspection. At any reasonable time during normal business hours and
from time to time, the Borrowers shall permit Lenders and any of Lenders' agents
or representatives to examine and make copies of and abstracts from the records
and books of account of, and visit the properties of, the Borrowers and to
discuss the affairs, finances and accounts of the Borrowers with any of their
officers or directors and with the Borrowers' independent accountants.
Section 9.6 Bankruptcy Documents. Borrowers shall deliver to Lenders and their
counsel copies of all pleadings, motions, notices and other documents filed with
the Bankruptcy Court within twenty-four (24) hours of the time such items are
actually filed with the Bankruptcy Court.
Section 9.7 Compliance With Law. Borrowers shall comply in all material respects
with all applicable laws and regulations.
Section 9.8 Maintenance of Security Interests. Borrowers shall, at their own
expense, take any and all steps necessary to ensure that the representations set
forth in subsection 5.1(u) hereof are true and correct in all material respects.
SECTION 10. NEGATIVE COVENANTS.
On and after the date hereof, until all of the Obligations shall have
been paid in full and Lenders shall have no commitments to make any loans or
advances to the Borrowers hereunder, the Borrowers covenant that no Borrower
will:
Section 10.1 Restrictions on Indebtedness. Create, incur, suffer or permit to
exist, or assume or guarantee, either directly or indirectly, or otherwise
become liable with respect to (a) any Indebtedness for money borrowed, or
liability incurred after the Filing Date, except the Obligations hereunder and
under the other Loan Documents; and (b) expenses incurred in the ordinary course
of operating the Borrowers' businesses, including but not limited expenses
associated with the pending Chapter 11 proceedings.
Section 10.2 Restriction on Liens. Create or incur or suffer to be created or
incurred or to exist any Lien on any property or assets of the Borrowers other
than Permitted Liens.
Section 10.3 Investments. Have outstanding or hold or acquire or make or commit
itself to acquire or make any Investment except the following:
(a) Investments having a maturity of less than one year from the date thereof by
the Borrowers in: (i) obligations of the United States of America or any agency
or instrumentality thereof; and (ii) commercial paper which is rated not less
than prime-one or A-1 or their equivalents by Xxxxx'x Investors Service, Inc. or
Standard & Poor's Corporation, respectively, or their successors.
(b) Loans or advances by one Borrower to another Borrower, permitted under
Section 10.1.
(c) The endorsement of instruments for collection or deposit in the ordinary
course of business.
(d) Investments by any Borrower in the stock or other equity interests of any
other Borrower existing as of the Filing Date.
(e) Investments as of the Petition Date in subsidiaries of the Borrowers.
Section 10.4 Dispositions of Assets. Sell, lease or otherwise dispose of any
material assets except for:
(a) sales in the ordinary course of business; and
(b) sales that (i) are approved by Lenders, in their sole discretion; or (ii)
provide for the payment of all Obligations in full, in cash, by the earlier of:
two (2) Business Days after entry of a Bankruptcy Court order approving such
transaction, or thirty (30) days after the filing of the motion seeking approval
of such sale.
Section 10.5 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons.
Assume, guarantee, endorse or otherwise be or become directly or contingently
liable (including, without limitation, by way of agreement, contingent or
otherwise, to purchase, provide funds for payment, supply funds to or otherwise
invest in any Person or otherwise assure the creditors of any such Person
against loss) in connection with any Indebtedness of any other Person, except
for Guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
Section 10.6 Mergers, Etc. Enter into any merger or consolidation with or
acquire all or substantially all of the assets of any Person, or sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person, unless such transaction has been approved by
Lenders in their sole discretion.
Section 10.7 Distributions. Make any dividend or distribution or other payment
on account of the purchase, acquisition, redemption, or other retirement of any
shares of stock, whether now or hereafter outstanding, except that any Borrower
which is a Subsidiary of another Borrower may make a dividend or distribution to
the Borrower of which it is a Subsidiary.
Section 10.8 Sale and Leaseback. Sell or transfer any of its properties with the
intention of taking back a lease of the same property or leasing other property
for substantially the same use as the property being sold or transferred.
Section 10.9 Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or the
rendering of any service, with any Affiliate, except that any Borrower (a) may
pay salaries, fees and bonuses to its directors, officers and employees as are
usual and customary in the Borrowers' business and (b) may enter into other
transactions with Affiliates on terms that are no less favorable to the
Borrowers than those which could be obtained at the time from Persons who are
not Affiliates.
Section 10.10 Superpriority Claims/Senior Liens. Incur, create, assume, suffer
to exist or permit any other Superpriority Claim or Lien that is pari passu with
or senior to the Liens or claims of Lenders against any Borrower hereunder,
except for the Permitted Liens and Carve-Out, or apply to the Bankruptcy Court
for the authority to incur, create, assume, suffer to exist or permit any such
Superpriority Claim or Lien.
Section 10.11 Reorganization Plan. File, support or endorse any Reorganization
Plan other than an Approved Reorganization Plan, or support or consent to the
termination of exclusivity to allow the filing of a Reorganization Plan other
than an Approved Reorganization Plan, unless all obligations hereunder are paid
in full in cash, and this Agreement is terminated, by the earlier of: (i) 2
Business Days after the Bankruptcy Court enters an order confirming such plan;
or (ii) the thirtieth (30th) day after such plan is filed with the Bankruptcy
Court.
Section 10.12 New Businesses. Engage in any business other than the business in
which it is currently engaged or a business reasonably related thereto, except
as authorized by the Bankruptcy Court and approved in writing by Lenders in
their sole discretion;
Section 10.13 Professional Expenses. Make any payment of fees or expenses to
professionals (other than ordinary course professionals) (a) prior to the
occurrence of an Event of Default, in excess of the amounts set forth in the
Budget or as otherwise approved by Lenders, or (b) following the occurrence and
during the continuance of an Event of Default, in excess of the Carve-Out;
(except to the extent such professional fees or expenses have been approved by
Lenders).
Section 10.14 Changes To Orders. Make or permit to be made, or support or
consent to the making of, any changes to either of the Orders.
SECTION 11. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.
Section 11.1 Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default," as set forth herein:
(a) Any Borrower fails to pay the Obligations when due and payable or declared
due and payable, and such condition is not corrected within two (2) Business
Days;
(b) Lenders notify the Borrowers that the outstanding balance of the Loans
exceeds the Revolving Loan Commitment and such condition is not corrected within
two (2) Business Days after such notice;
(c) Any Borrower fails or neglects to perform, keep or observe any of the
covenants set forth in Sections 7, 8, 9 or 10 hereof, and such condition is not
corrected within five (5) Business Days of the date on which Borrower receives
notice thereof;
(d) Any Borrower or any Affiliate fails to perform, keep or observe any other
term, provision, condition, covenant, warranty or representation contained in
the Loan Documents, which is required to be performed, kept or observed by such
Borrower or Affiliate, and such failure is not cured to Lenders' reasonable
satisfaction within five (5) Business Days after the sooner to occur of
Borrower's receipt from Lenders of notice of such failure or the date on which
such failure becomes known to any officer of a Borrower;
(e) Other than any default existing as of the Filing Date or as otherwise
disclosed herein, a default shall occur under any agreement, document or
instrument, other than the Loan Documents, to which any Borrower is a party, the
consequences of which could have a Material Adverse Effect, and such condition
is not corrected within five (5) Business Days of the date on which Borrower
receives notice thereof;
(f) Any statement, report, financial statement or certificate made or delivered
by a Borrower, or any of its officers, employees or agents, to Lenders is
untrue, incomplete or incorrect in any material respect;
(g) There shall occur any material uninsured damage to, or loss, theft, or
destruction of, any of the Collateral in excess of $250,000 in the aggregate;
(h) A Plan of Reorganization with respect to the Bankruptcy Cases that is not an
Approved Plan of Reorganization is filed with the Bankruptcy Court, unless all
Obligations hereunder are paid in full, in cash, and this Agreement is
terminated by the earlier of (i) two (2) Business Days after the Bankruptcy
Court enters an order confirming such plan; or (ii) the thirtieth (30th) day
after such plan is filed with the Bankruptcy Court;
(i) A notice of lien, levy or assessment is filed of record with respect to all
or any assets of any Borrower by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipal or other
governmental agency, including, without limitation, the Pension Benefit Guaranty
Corporation, or if any taxes or debts owing at any time or times hereafter to
any one of these becomes a lien or encumbrance upon any assets of any Borrower
and the same is not released within five (5) days after the same becomes a lien
or encumbrance; provided that such Borrower shall have the right to contest in
good faith and by appropriate proceedings any such lien, levy or assessment if
such Borrower provides Lender with a bond or indemnity satisfactory to Lender
assuring the payment of such lien, levy or assessment;
(j) Except as permitted by the Orders, any Borrower shall make any Pre-Petition
Payment other than Pre-Petition Payments authorized by the Bankruptcy Court and
as approved by Lender, and such condition is not corrected within five (5)
Business Days of the date on which Borrower receives notice thereof;
(k) Any Borrower fails to (i) furnish Lenders, within five (5) days thereafter,
with written notice upon the occurrence of any of the following events (except
where such circumstance does not create a Material Adverse Effect): (a) the
happening of a Reportable Event with respect to any pension plan of such
Borrower governed by ERISA, (b) the termination of any such plan, (c) the
appointment of a trustee by an appropriate United States District Court to
administer any such plan, or (d) the institution of any proceedings by the
Pension Benefit Guaranty Corporation to terminate any such plan or to appoint a
trustee to administer any such plan; or (ii) notify Lender promptly upon receipt
by any Borrower of any notice of the institution of any proceeding or other
action which may result in the termination of such plan;
(l) Any non-money judgment or order with respect to a post-petition event shall
be rendered against any Borrower which does or would reasonably be expected to
(i) cause a Material Adverse Effect, (ii) have a material adverse effect on the
ability of any Borrower to perform its obligations under any Loan Document, or
(iii) have a material adverse effect on the rights and remedies of Lenders under
any Loan Document, and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect, and such condition is not corrected
within five (5) Business Days of the date on which Borrower receives notice
thereof;
(m) Any judgment or order as to a post-petition liability or debt for the
payment of money in excess of $100,000 shall be rendered against any Borrower
and the enforcement thereof shall not have been stayed, and such condition is
not corrected within five (5) Business Days of the date on which Borrower
receives notice thereof;
(n) The Bankruptcy Cases shall be dismissed or converted to a case under Chapter
7 of the Bankruptcy Code; there shall be appointed in the Bankruptcy Cases a
trustee under Chapter 7 or Chapter 11 of the Bankruptcy Code, a responsible
officer or an examiner with enlarged powers relating to the operation of the
business (powers beyond those set forth in Section 1106(a)(3) and (4) of the
Bankruptcy Code) under Section 1106(b) of the Bankruptcy Code; or an application
shall be filed by Borrower for the approval of any other Superpriority Claim
(other than the Carve-Out) in the Bankruptcy Case which is pari passu with or
senior to the claims of Lenders against Borrower, or there shall arise or be
granted any such pari passu or senior Superpriority Claim;
(o) The Bankruptcy Court shall enter an order or orders granting relief from the
automatic stay applicable under Section 362 of the Bankruptcy Code to the holder
or holders of any security interest to permit foreclosure (or the granting of a
deed in lieu of foreclosure or the like) on any assets of Borrower which have a
value in excess of $75,000;
(p) An order of the Bankruptcy Court shall be entered reversing, amending,
supplementing, staying for a period in excess of 10 days, vacating or otherwise
modifying either of the Orders or the relief granted thereby;
(q) The Final Order is not entered within 30 days after the entry of the Interim
Order; or
(r) Any event shall have occurred and be continuing which could reasonably be
expected to have a Material Adverse Effect.
(s) A Borrower shall be in default under any Material Contract.
(t) A default shall occur under any order or stipulation entered into the
Bankruptcy Case regarding either Borrowers' (i) ability to use cash collateral;
or (ii) obligation to provide "adequate protection" to the holders of the Senior
Secured Claims. For purposes of this Subsection, "cash collateral" and "adequate
protection" shall have the same meanings as they do under the Bankruptcy Code.
Section 11.2 Acceleration of the Obligations. Upon the occurrence and during the
continuance of an Event of Default or on the Termination Date all of the
Obligations may, at the option of Lenders be declared, and immediately shall
become, due and payable without, demand, notice, or legal process of any kind,
including without the necessity of any further order of or application to the
Bankruptcy Court, and in accordance with the Orders, but subject to Subsection
4.2 hereof, the automatic stay provisions of 11 U.S.C. ss. 362 shall be vacated
and modified to the extent necessary to permit the Lenders to exercise any or
all of the following rights and remedies set forth below; provided, however,
that, subject to the terms of Section 12 of the Agreement, Borrowers shall have
the right to seek injunctive relief with respect to Lenders' enforcement of such
rights and remedies.
(a) The right to terminate the Revolving Loan Commitment;
(b) In addition to any other rights and remedies contained in the Loan
Documents, all of the rights and remedies under all applicable law and all of
the rights and remedies of a secured party under the Bankruptcy Code, the UCC or
other applicable law, all of which rights and remedies shall be cumulative and
non-exclusive, to the extent permitted by law, and may be exercised, in Lenders'
discretion, alternatively, successively, or concurrently on any one or more
occasions and shall include, without limitation, the right to apply to a court
of equity for an injunction to restrain a breach or threatened breach by any
Borrower of this Agreement or any of the other Loan Documents. Lender may, at
any time or times, proceed directly against any Borrower or any obligor to
collect the Obligations without prior recourse to the Collateral;
(c) The right to open each Borrower's mail and collect any and all amounts due
any Borrower from account debtors;
(d) The right to (i) enter upon the premises of each Borrower, without any
obligation to pay rent to such Borrower, through self-help and without judicial
process, without first obtaining a final judgment or giving such Borrower notice
and opportunity for a hearing on the validity of Lenders' claim, or any other
place or places where the Collateral is located and kept, and remove the
Collateral therefrom to the premises of Lenders or any agent of Lenders, for
such time as Lenders may desire, in order to effectively collect or liquidate
the Collateral, or (ii) require the Borrowers, at their expense, to assemble the
Collateral and make it available to Lenders at a place to be designated by
Lenders, in their sole discretion;
(e) The right to (i) sell or to otherwise dispose of all or any Collateral at
public or private sale or sales, with such notice as may be required by law, in
lots or in bulk, for cash or on credit, all as Lenders, in its discretion, may
deem advisable; (ii) adjourn such sales from time to time with or without
notice; (iii) conduct such sales on any Borrower's premises or elsewhere and use
any Borrower's premises without charge for such sales for such time or times as
Lenders may see fit. Lenders are hereby granted a license or other right to use,
without charge, each Borrower labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and such Borrower's rights under all
licenses and all franchise agreements shall inure to Lenders' benefit. Lenders
shall have the right to sell, lease or otherwise dispose of the Collateral, or
any part thereof, for cash, credit or any combination thereof, and Lenders may
purchase all or any part of the Collateral at public or, if permitted by law,
private sale and, in lieu of actual payment of such purchase price, may setoff
the amount of such price against the Obligations. All proceeds realized from the
sale of any Collateral shall be applied in accordance with the provisions of
Section 11.3 hereof. If, after giving effect to the application of proceeds of
Collateral pursuant to the terms of this Agreement, any Obligations shall remain
outstanding, the Borrowers shall remain liable to Lenders therefor with interest
at the highest rate provided for herein and all costs and expenses of collection
or enforcement, including attorneys' fees and legal expenses.
Section 11.3 Application of Proceeds of Collateral. If Lenders receive or
realize any proceeds from the sale, collection or realization of any of the
Collateral following the occurrence and during the continuance of such Event of
Default, such proceeds shall be applied as follows: first to the reasonable
costs, expenses and attorneys' fees and expenses incurred by LLCP and the DDJ
Lenders for collection and for acquisition, completion, protection, removal,
storage, sale and delivery of the Collateral; second to the Carve Out; third to
the principal of the Loans and any other Obligations; fourth, to the holders of
the Senior Secured Claims; and fifth, the remainder, if any, shall be remitted
to the Borrowers or to such other Person as shall be entitled to the same.
Section 11.4 Notice. Any notice required to be given by Lenders of a sale,
lease, other disposition of the Collateral or any other intended action by
Lenders, if given ten (10) days prior to such proposed action, shall constitute
commercially reasonable and fair notice thereof to the Borrowers.
Section 11.5 Marshalling; Payments Set Aside. Lenders shall be under no
obligation to marshal any assets in favor of the Borrowers or any other party or
against or in payment of any or all of the Obligations. To the extent that the
Borrowers make a payment or payments to Lenders or Lenders enforce Lenders'
Security Interest or exercise any rights of set-off, and such payment or
payments or the proceeds of such enforcement or set-off or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such recovery, the Obligations or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred.
SECTION 12. TERMINATION OF COMMITMENT; MATURITY OF OBLIGATIONS.
The Revolving Loan Commitment shall be in effect during the
period (the "Term") commencing on the Closing Date and continuing until the
earliest to occur of: (a) the date occurring one hundred eighty (180) days from
the Closing Date, (b) the effective date of a Reorganization Plan, (c) any
termination of the Revolving Loan Commitment and/or acceleration of the Loans by
Lenders pursuant to Section 11.2 or 12 hereof, (d) the sale or liquidation of
the Borrowers or substantially all of their assets, (e) the thirtieth day after
either Borrower files with the Bankruptcy Court either (i) a Reorganization Plan
that is not an Approved Reorganization Plan, or (ii) a motion to sell, or to
approve the procedures relating to a motion to sell, substantially all of the
assets of the Borrowers, (f) the second (2nd) Business Day after (i) entry of a
Bankruptcy Court order granting any of the motions, or confirming any Plan of
Reorganization, referred to in clause (e) above, (g) the date on which Xxxx
Xxxxxx is terminated or resigns; or (h) June 26, 2003, but only if by that date
the Bankruptcy Court has not entered the Sponsor Protection Order, at which time
the Loans and all other Obligations shall become immediately due and payable in
full. If one or more of the events specified in clauses (a) through (h) above
occurs, then this Agreement shall terminate on that date or on the earlier date
that all of the Obligations shall have been indefeasibly paid in full
("Termination Date"). In the event of a Termination Date triggered by the
operation of Subsection (e) or (f) hereof, no party in interest, including the
Borrowers, shall have the right to seek injunctive relief (pursuant to
Bankruptcy Code section 105 or otherwise) enjoining or staying the enforcement
of this Agreement. At such time as the Borrowers have repaid all of the
Obligations and this Agreement shall have been terminated, (i) the Borrowers
shall deliver to Lenders a release, in form and substance reasonably
satisfactory to Lenders, of all obligations and liabilities of Lenders and their
officers, directors, partners, employees, advisors, representatives, agents,
parents, subsidiaries and affiliates to the Borrowers (provided that Lenders
shall not be entitled to a release of liabilities resulting from actions taken
by Lenders which, pursuant to a final adjudication, are determined to constitute
willful misconduct or bad faith); and (ii) Lenders shall deliver to such
Borrower a release in form and substance reasonably satisfactory to such
Borrower.
SECTION 13. INDEMNIFICATION, RELEASE AND CONFIRMATION OF CLAIMS.
Section 13.1 Indemnification. Each Borrower agrees to defend (with counsel
reasonably satisfactory to Lender), protect, indemnify and hold harmless (to the
fullest extent permitted by law) Lenders, each affiliate or subsidiary of
Lenders, and each of their respective affiliates, subsidiaries, officers,
directors, partners (general and limited), employees, members, attorneys,
agents, advisors, representatives and attorneys-in-fact (each an "Indemnified
Party") from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature (including, without limitation, the disbursements and the
reasonable fees of counsel for each Indemnified Party in connection with any
investigative, administrative or judicial proceeding, whether or not the
Indemnified Party shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against, any Indemnified Party (whether direct,
indirect or consequential and whether based on any federal, state or local laws
or regulations including, without limitation, securities, environmental and
commercial laws and regulations, under common law or in equity, or based on
contract or otherwise) in any manner relating to or arising out of the
execution, delivery, enforcement, performance and administration of any Loan
Document, or any act, event, transaction or omission, related or attendant
thereto, the making and the management of the Loans or the use or intended use
of the proceeds of the Loans and with respect to any investigation, litigation
or proceeding related to the Loan Documents; provided, however, that the
Borrowers shall not have any obligation hereunder to any Indemnified Party with
respect to matters finally adjudicated to have been caused by or to have
resulted from the willful misconduct or gross negligence of such Indemnified
Party. To the extent that the undertaking to indemnify set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, each Borrower shall satisfy such undertaking to the maximum
extent permitted by applicable law. Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to each
Indemnified Party on demand, and, failing prompt payment, shall, together with
interest thereon at the highest rate then applicable to Loans hereunder from the
date incurred by each Indemnified Party until paid by the Borrowers, be added to
the Obligations of the Borrowers and be secured by the Collateral. Expenses
(including reasonable attorneys' fees and other professional fees and costs)
incurred by an Indemnified Party in defending against any action in good faith
purported to be covered by this Subsection shall be paid promptly, upon
Borrowers' receipt of an undertaking by or on behalf of the Indemnified Party
committing such Indemnified Party to repay such amount, if it is ultimately
determined that the Indemnified Party is not entitled to indemnification. The
provisions of this Section 13.1 shall survive the satisfaction and payment of
the Obligations and the termination of this Agreement. The indemnification and
advancement of expenses provided by, or granted pursuant to this Agreement shall
not be deemed exclusive of any other rights that lenders may otherwise have.
Section 13.2 Validity of Existing Indebtedness and Other Claims. The Borrowers
stipulate and acknowledge that the obligations due to Lenders as of the Filing
Date are: (i) valid, binding, enforceable, and are not subject to avoidance or
subordination pursuant to the Bankruptcy Code or applicable non-bankruptcy law;
and (ii) not subject to any offsets, defenses, or counterclaims. A creditor
committee of creditors, or party in interest, in any of the Borrowers'
Bankruptcy Cases may only dispute or challenge such obligations or any Liens
granted to secure such claims if such committee commences an action within sixty
(60) days of the Filing Date. Any other challenge, objection, or other action in
this regard by a creditor committee of creditors, or party in interest in any of
the Borrowers' Bankruptcy Cases or any other party in interest shall be of no
force or effect.
SECTION 14. MISCELLANEOUS
Section 14.1 Modification of Agreement; Sale of Interest. The Loan Documents may
not be modified, altered or amended, except by an agreement in writing signed by
each Borrower and Lenders. The Borrowers may not sell, assign or transfer the
Loan Documents or any portion thereof, including, without limitation, their
rights, title, interests, remedies, powers, and/or duties hereunder or
thereunder. Each Borrower hereby consents to Lenders' participation, sale,
assignment, transfer or other disposition, at any time or times hereafter, of
the Loan Documents, or of any portion hereof or thereof, including, without
limitation, Lenders' rights, title, interests, remedies, powers, and/or duties
hereunder or thereunder.
Section 14.2 Expenses (Including Attorneys' Fees). Each Borrower shall reimburse
Lenders on demand for all of their expenses, regardless of whether such expenses
were incurred before or after the Filing Date (including, but not limited to,
reasonable attorneys' fees and expenses of each Lender) of, or incidental to:
(a) The preparation of, amendment of, restructuring of, modification of, or
enforcement of the Loan Documents;
(b) Any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Lenders, a Borrower or any other Person) in any way relating to
the Collateral, the Loan Documents, the Existing Lender Indebtedness, the
Bankruptcy Cases, or any Borrower's affairs;
(c) Any advice or any action in connection with the Bankruptcy Cases, any
Default or Event of Default, or any attempt to enforce any rights of Lender or
any participant or assignee of Lender against any Borrower or any other Person
which may be obligated to Lenders by virtue of the Loan Documents, the Existing
Lender Indebtedness or any other claim of Lenders against the Borrowers;
(d) Any attempt to inspect, verify, protect, collect, sell, liquidate or
otherwise dispose of the Collateral; and/or
(e) Any examination conducted by or at the request of Lenders, in their
commercially reasonable discretion, of each Borrower's properties, assets, books
and records and/or the Collateral, including auditor fees of Three Thousand
Dollars ($3,000) per day plus expenses.
Such expenses shall be additional Obligations hereunder secured by the
Collateral. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: paralegal fees, costs and expenses;
accountants' fees, costs and expenses; court costs and expenses; photocopying
and duplicating expenses; court reporter fees, costs and expenses; long distance
telephone charges; air express charges; telegram charges; secretarial over-time
charges; and expenses for travel, lodging and food.
Section 14.3 Payment of Charges and Claims.
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(a) If any Borrower, at any time or times hereafter, shall fail to pay the
Charges arising after the Filing Date when due or promptly obtain the discharge
of such Charges or of any Lien therefor or of any other claims against the
Collateral, subject to the provisions of Subsection 14.3(b) hereof, Lenders may,
without waiving or releasing any obligation or liability of the Borrowers
hereunder or any Event of Default, in its sole discretion, at any time or times
thereafter, make such payment, or any part thereof, or obtain such discharge and
take any other action with respect thereto which Lenders deem advisable. All
sums so paid by Lenders and any expenses, including reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be payable, upon
demand, by the Borrowers to Lenders and shall be additional Obligations
hereunder secured by the Collateral.
(b) Any Borrower may in good faith contest, by proper legal actions or
proceedings, the validity or amount of any Charges or claims, and provided that
such Borrower gives Lenders advance notice of its intention to contest the
validity or amount of any such Charge or claim, Lenders will forebear from
making any payment or otherwise obtaining the discharge of such Charge or claim
if at the time of the commencement of any such action or proceeding, and during
the pendency thereof (i) no Event of Default shall have occurred and be
continuing, (ii) reserves with respect thereto are maintained on the books of
such Borrower in an amount reasonably acceptable to Lender, (iii) such contest
operates to suspend collection of the contested Charges or claims and is
maintained and prosecuted continuously with diligence, (iv) none of the
Collateral will be subject to forfeiture or loss of any Lien in favor of Lenders
by reason of the institution or prosecution of such contest, (v) no Lien shall
exist for such Charges or claims during such action or proceeding, (vi) such
Borrower shall promptly pay or discharge such contested Charges and all
additional charges, interests, penalties and expenses, if any, and shall deliver
to Lenders evidence reasonably acceptable to Lenders of such compliance, payment
or discharge, if such contest is terminated or discontinued adversely to such
Borrower, and (vii) Lenders have not advised such Borrower in writing that
Lenders reasonably believe that non-payment or non-discharge thereof would have
a Material Adverse Effect.
Section 14.4 No Waiver by Lender. Lenders' failure, at any time or times
hereafter, to require strict performance by any of the Borrowers of any
provision of this Agreement shall not waive, affect or diminish any right of
Lenders thereafter to demand strict compliance and performance. Any suspension
or waiver by Lenders of an Event of Default by any Borrower under the Loan
Documents shall not suspend, waive or affect any other Event of Default by any
Borrower under the Loan Documents, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of the
Borrowers contained in the Loan Documents and no Event of Default by any
Borrower under the Loan Documents shall be deemed to have been suspended or
waived by Lenders, unless such suspension or waiver is by an instrument in
writing signed by an officer of Lenders and directed to each Borrower specifying
such suspension or waiver.
Section 14.5 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law. If, however, any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement, unless the
ineffectiveness of such provision materially and adversely alters the benefits
accruing to either party hereunder.
Section 14.6 Parties. The Loan Documents shall be binding upon and inure to the
benefit of the successors and assigns of each Borrower (including, without
limitation, any Chapter 11 trustee, Chapter 7 trustee, or other fiduciary
hereafter appointed for or on behalf of the Debtors or with respect to any of
the Debtors' property in the Debtors' bankruptcy proceedings or otherwise). This
provision, however, shall not be deemed to modify Section 14.1 hereof. Except
with respect to the Carve Out, no Persons other than the Borrowers, Lenders, the
Indemnified Parties, and their respective successors ad assigns, shall be
entitled to rely upon or enforce, whether as an alleged third party beneficiary
or otherwise, any term or provision of this Agreement.
Section 14.7 Joint and Several Liability; Rights of Contribution.
---------------------------------------------------
(a) Each Borrower states and acknowledges that: (i) pursuant to the Loan
Documents, each Borrower desires to utilize its borrowing potential on a
consolidated basis with the other Borrowers to the same extent possible if they
were merged into a single corporate entity; (ii) it has determined that it will
benefit specifically and materially from the advances of credit contemplated by
this Agreement; (iii) it is both a condition precedent to the obligations of
Lenders hereunder and a desire of each Borrower that each Borrower execute and
deliver to Lenders the Loan Documents; and (iv) the Borrowers have requested and
bargained for the structure and terms of security for the advances contemplated
by this Agreement.
(b) Each Borrower hereby irrevocably and unconditionally: (i) agrees that it is
jointly and severally liable to Lenders for the full and prompt payment of all
the Obligations and the full and prompt performance of all obligations of all
Borrowers under the Loan Documents, notwithstanding anything contained in any
Loan Document specifying that a particular party is responsible for a given
payment or performance; (ii) agrees to fully and promptly perform all of its
obligations hereunder with respect to each advance of credit hereunder as if
such advance had been made directly to it; and (iii) agrees as a primary
obligation to indemnify Lenders on demand for and against any loss incurred by
Lenders as a result of any of the obligations of the Borrowers being or becoming
void, voidable, unenforceable or ineffective for any reason whatsoever, whether
or not known to Lenders or any Person, the amount of such loss being the amount
which Lender would otherwise have been entitled to recover from any Borrower.
Section 14.8 Conflict of Terms. The Other Agreements and all Schedules and
Exhibits hereto are incorporated in this Agreement by this reference thereto.
Except as otherwise provided in this Agreement and except as otherwise provided
in the Other Agreements by specific reference to the applicable provision of
this Agreement, if any provision contained in this Agreement is in conflict
with, or inconsistent with, any provision in the Other Agreements, the provision
contained in this Agreement shall govern and control.
Section 14.9 Waivers by Borrowers. Except as otherwise provided for in this
Agreement, each Borrower waives (i) presentment, demand and protest and notice
of presentment, protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lenders on which a Borrower may in any way be liable and hereby
ratifies and confirms whatever Lenders may do in this regard; (ii) all rights to
notice of a hearing prior to Lenders' taking possession or control of, or to
Lenders' replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing Lenders to
exercise any of Lenders' remedies; and (iii) the benefit of all valuation,
appraisement and exemption laws. Each Borrower acknowledges that it has been
advised by counsel with respect to this Agreement and the transactions evidenced
by this Agreement.
Section 14.10 Remedies. Lenders' rights and remedies under this Agreement shall
be cumulative and nonexclusive of any other rights and remedies which Lender may
have under any other agreement, including without limitation, the Other
Agreements, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
Section 14.11 Power of Attorney. Each Borrower acknowledges and agrees that its
appointment of Lenders as its attorney and agent-in-fact for the purposes
specified in this Agreement is an appointment coupled with an interest and shall
be irrevocable until all of the Obligations shall have been indefeasibly paid in
full and this Agreement shall have been terminated.
Section 14.12 Mutual Waiver of Jury Trial. THE LENDERS AND THE BORROWERS EACH
AGREE THAT NONE OF THEM NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY
TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER ACTION BASED UPON OR
ARISING OUT OF, THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE COLLATERAL OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS SECTION 14.12 HAVE BEEN FULLY
DISCUSSED BY EACH OF THE LENDERS AND THE BORROWERS WITH THEIR RESPECTIVE
COUNSEL, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NONE OF THE
LENDERS OR THE BORROWERS HAS AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT
THE PROVISIONS OF THIS SECTION 14.12 WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
Section 14.13 Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY LOAN
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE BANKRUPTCY CODE
AND, TO THE EXTENT NOT PREEMPTED BY THE BANKRUPTCY CODE, THE LAWS OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN CALIFORNIA WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA. LENDERS AND EACH BORROWER AGREE TO SUBMIT TO PERSONAL
JURISDICTION AND TO WAIVE ANY OBJECTION AS TO VENUE IN THE BANKRUPTCY COURT AND
IN ANY LOCATION WITHIN THE CENTRAL DISTRICT OF CALIFORNIA. SERVICE OF PROCESS ON
A BORROWER OR LENDERS IN ANY ACTION ARISING OUT OF OR RELATING TO THE LOAN
DOCUMENTS SHALL BE EFFECTIVE IF MAILED TO SUCH PARTY AT THE ADDRESS LISTED IN
SECTION 14.14 HEREOF. EACH BORROWER AND EACH LENDER AGREE THAT NOTHING HEREIN
SHALL PRECLUDE LENDERS OR ANY BORROWER FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION.
Section 14.14 Notices. Except as otherwise provided herein, any notice or demand
which, by the provisions hereof, is required or which may be given to or served
upon any Borrower or Lenders shall be in writing and, if by telecopy, shall be
deemed to have been validly served, given or delivered when transmitted and
confirmed by telecopy answerback, if by personal delivery, shall be deemed to
have been validly served, given or delivered upon actual delivery, if by
overnight air courier, shall be deemed to have been validly served, given or
delivered one (1) Business Day after delivery to the overnight air courier, and,
if mailed, shall be deemed to have been validly served, given or delivered three
(3) Business Days after deposit in the United States mails, as registered or
certified mail, with proper postage prepaid and addressed to-the party to be
notified, at the following addresses (or such other addressees) as a party may
designate for itself by like notice):
(a) If to Lenders, to:
DDJ Capital Management, LLC
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
and
Xxxxxx Xxxxxxxxx Capital Partners, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxx Xxxxxxx
Fax: (000) 000-0000
with a copies to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx, Xxxxxxxx & Xxxxx
Professional Corporation
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
and
Xxxxxx X. Xxxxx, Esq.
Xxxxxxxxx Xxxxx Xxxxx Xxxxx & Xxxxx
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
If to any Borrower, to:
InterDent
000 Xxxxx Xxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xx Xxxxxxx, XX 00000-0000
Fax: (000) 000-0000
with a copy to:
Xxxx Xxxxxxxx, Esq.
Xxxxxxxx Xxxxxxx P.C.
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Section 14.15 Section Titles. The section titles contained in this Agreement are
and shall be without substantive meaning or content of any kind whatsoever and
are not a part of the agreement between the parties hereto.
Section 14.16 Entire Agreement. The Loan Documents set forth the entire
agreement of the parties hereto with respect to the matters addressed herein and
therein, and the Loan Documents supersede all prior written or oral agreements,
documents or instruments respecting such matters.
Section 14.17 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 and delivered shall be deemed to be an original and all
of which counterparts taken together shall constitute but one and the same
instrument.
[END OF TEXT]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year specified at the beginning hereof.
BORROWERS:
INTERDENT, INC.
By: __________/s/ Xxxxxx Hill_____________
--------------------------------------
Print Name: Xxxxxx Xxxx
Title President
INTERDENT SERVICE CORPORATION
By: __________/s/ Xxxxxx Hill_____________
--------------------------------------
Print Name: Xxxxxx Xxxx
Title President
LENDERS:
B III-A CAPITAL PARTNERS, L.P.
By: GP III-A, LLC,
Its General Partner
By: DDJ Capital Management, LLC,
Manager
By:_/s/ Xxxx X. Mencher____
------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
B IV CAPITAL PARTNERS, L.P.
By: GP Capital IV, LLC,
Its General Partner
By: DDJ Capital Management, LLC,
Manager
By:_/s/ Xxxx X. Mencher____
------------------------
Name: Xxxx X. Xxxxxxx
Title: Member
GENERAL MOTORS EMPLOYEES GLOBAL GROUP PENSION TRUST
By: State Street Bank & Trust, solely in its capacity as Custodian
for General Motors Employees Global Group Pension Trust, as
directed by DDJ Capital Management, LLC, and not in its
individual capacity
By:_/s/ Xxxxxx Blood____
---------------------
Name: Xxxxxx Blood
Title: AVP
XXXXXX XXXXXXXXX CAPITAL PARTNERS II, L.P.
By: LLCP California Equity Partners II, L.P.
Its: General Partner
By: Xxxxxx Xxxxxxxxx Capital Partners, Inc.
Its: General Partner
By:_/s/ Xxxxx Hartman____
----------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
