Exhibit 10.7
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SENIOR SUBORDINATED NOTE AND SUBORDINATED CONVERTIBLE NOTE
EXCHANGE AGREEMENT
DATED AS OF JULY 19, 2002
AMONG
CASTLE DENTAL CENTERS, INC.,
XXXXXX FINANCIAL, INC.,
AND
MIDWEST MEZZANINE FUND II, L.P.
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS........................ 1
Section 1.01 Certain Defined Terms..................... 1
Section 1.02 Accounting Terms and Determinations....... 9
ARTICLE II TENDER AND EXCHANGE OF SENIOR NOTES...................... 9
Section 2.01 Tender and Exchange of Senior Notes....... 9
Section 2.02 Release................................... 9
ARTICLE III CONDITIONS PRECEDENT.................................... 10
Section 3.01 Conditions to Purchase.................... 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................... 11
Section 4.01 Corporate Existence....................... 12
Section 4.02 No Breach................................. 12
Section 4.03 Authority................................. 12
Section 4.04 Approvals................................. 12
Section 4.05 No Material Misstatements................. 13
Section 4.06 Capitalization............................ 13
Section 4.07 Offering.................................. 14
Section 4.08 Registration Rights....................... 14
Section 4.09 Restructuring Documents................... 14
ARTICLE V AFFIRMATIVE COVENANTS..................................... 14
Section 5.01 Reporting Requirements.................... 14
Section 5.02 Litigation................................ 16
Section 5.03 Other Covenants........................... 16
ARTICLE VI NEGATIVE COVENANTS....................................... 17
Section 6.01 Non-Disclosure............................ 17
ARTICLE VII HOLDER REPRESENTATIONS AND WARRANTIES................... 17
Section 7.01 Investment Representations................ 17
ARTICLE VIII MISCELLANEOUS.......................................... 18
Section 8.01 Waiver.................................... 18
Section 8.02 Notices................................... 18
Section 8.03 Payment of Expenses, Indemnities, etc..... 18
Section 8.04 Amendments, Etc........................... 20
Section 8.05 Successors and Assigns.................... 20
Section 8.06 Assignments............................... 20
Section 8.07 Invalidity................................ 21
Section 8.08 Counterparts.............................. 21
Section 8.09 References................................ 21
Section 8.10 Captions.................................. 21
Section 8.11 No Oral Agreements........................ 21
Section 8.12 Governing Law; Submission to Jurisdiction. 22
Section 8.13 Confidentiality........................... 22
Section 8.14 Effectiveness............................. 23
Section 8.15 Exculpation Provisions.................... 23
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EXHIBITS AND SCHEDULES
Exhibit A Form of Certificate of Designations
Exhibit B Form of Investors Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Release
Exhibit E Form of Stockholders Agreement
Exhibit F Form of Amended and Restated Bylaws
Exhibit G Form of Compliance Certificate
Schedule 4.06 Capitalization
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THIS SENIOR SUBORDINATED NOTE AND SUBORDINATED CONVERTIBLE NOTE EXCHANGE
AGREEMENT, dated as of July 19, 2002, is by and among CASTLE DENTAL CENTERS,
INC., a Delaware corporation (the "Company"), XXXXXX FINANCIAL, INC., a Delaware
corporation ("Xxxxxx"), and MIDWEST MEZZANINE FUND II, L.P., a Delaware limited
partnership ("Midwest"; Xxxxxx and Midwest are sometimes referred to
individually as a "Holder" and collectively, as the "Holders").
R E C I T A L S
WHEREAS, $17,928,000 in aggregate principal and interest (including default
interest) as of the date hereof (the "Indebtedness") is outstanding under the
Senior Subordinated Notes and Subordinated Convertible Notes (collectively, the
"Senior Notes") issued to the Holders pursuant to the Senior Subordinated Note
Purchase Agreement between the Company and the Holders dated January 31, 2000;
WHEREAS, Xxxxxx is the holder of Senior Notes representing $11,952,000 of
the Indebtedness and desires to exchange the Indebtedness held by Xxxxxx for
shares of Series A-1 Preferred Stock;
WHEREAS, Midwest is the holder of Senior Notes representing $5,976,000 of
the Indebtedness and desires to exchange the Indebtedness held by Midwest for
shares of Series A-1 Preferred Stock;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"Affiliate" of any Person shall mean (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person, (ii)
any director or officer of such first Person or of any Person referred to in
clause (i) above and (iii) if any Person in clause (i) above is an individual,
any member of the immediate family (including parents, spouse and children) of
such individual and any trust whose principal beneficiary is such individual or
one (1) or more members of such immediate family and any Person who is
controlled by any such member or trust. For purposes of this definition, any
Person which owns directly or indirectly ten percent (10%) or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or ten percent (10%) or more of the
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partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
such corporation or other Person.
"Agreement" shall mean this Agreement, as the same may from time to time be
amended, restated, supplemented or otherwise modified from time to time.
"Authorized Share Amendment" shall have the meaning assigned such term in
Section 4.02.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Chicago, Illinois.
"Certificate of Designations" means the Certificate of Designations,
Preferences and Rights of Series A-1 Convertible Preferred Stock and Series A-2
Convertible Preferred Stock of the Company, in the form attached hereto as
Exhibit A.
"Closing Date" shall mean July 19, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time and any successor statute.
"Common Stock" shall mean the common stock, $.001 par value, of the
Company.
"Company" has the meaning set forth in the preamble of this Agreement.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Company
(whether now existing or hereafter created or acquired), the financial
statements of which shall be (or should have been) consolidated with the
financial statements of the Company in accordance with GAAP.
"Corpus Transactions" shall mean, collectively: (a) the Severance Agreement
between the Company, Xxxx X. Xxxxxx, Xx. ("Castle"), Xxxxxxx, Inc., a Texas
corporation ("Xxxxxxx"), and Castle 1995 Gift Trust F/b/o Xxxx X. Xxxxxx, Xx.
(the "Trust"); (b) the Settlement Agreement between the Company, Xxxx X. Xxxxxx,
D.D.S. and the Estate of Xxxx X. Xxxxxx, D.D.S. (collectively, the "Seller"),
Castle Dental Centers of Texas, Inc., a Texas corporation ("Castle Texas"),
Castle Dental Associates of Texas, P.C. (formerly Xxxx X. Xxxxxx, D.D.S., P.C.),
a Texas professional corporation (the "PC"), Castle Interests, Ltd. ("Castle
Interests"), and Xxxxxxx X. Xxxxxx ("Xxx. Xxxxxx"); and (c) the sale by the
Company of two (2) locations in Corpus Christi, Texas and one (1) location in
Beaumont Texas pursuant to the Asset Purchase Agreement ("Asset Purchase
Agreement") among Dentists Choice 1 L.P., a Texas limited partnership
("Purchaser"), Castle, Texas Dental Associates, P.A., a Texas professional
association ("Purchaser PC"), Castle Texas, and the PC.
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"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all jurisdictions
in which the Company or any Subsidiary is conducting or at any time has
conducted business, or where any Property of the Company or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. The term "oil" shall
have the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (ii)
to the extent the laws of the state in which any Property of the Company or any
Subsidiary is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company or any Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"Exchange" shall have the meaning assigned such term in Section 2.01.
"Exchange Agreement Documents" shall mean this Agreement, the Stockholders
Agreement, the Registration Rights Agreement, the Investors Agreement, the
Certificate of Designations, and any agreement, certificate or instrument
delivered pursuant to or entered into in connection with any such agreement or
instrument.
"Existing Seller Notes" shall mean, collectively, each of those certain
subordinated promissory notes issued by the Company prior to the Closing Date
to: Xxxxxx X. Xxxxxxxxx, D.D.S.; Xxxx X. Xxxxxxx, D.D.S.; Xxxxxxxxx Xxxxxxxxx,
D.M.D.; Xxxxxx Xxxxxxx, D.D.S.; Xxxxxx Xxxxxxxxx, D.D.S.; Xxxxxxx X. Xxxxxxxxx,
D.D.S.; Dental Advisory Group, LLC; DCA Limited Partnership, L.L.P.; and Dental
Administrators of Texas Limited Partnership, L.L.P., in an aggregate amount
outstanding of $3,650,000 at June 30, 2002 (including principal and interest
that has accrued thereunder, but excluding default interest).
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"Florida Transaction" shall mean the sale of substantially all of the
property, assets and business relating to the Company's dental centers located
in Sarasota and Venice, Florida pursuant to the Asset Purchase Agreement dated
as of June 14, 2002, by and among Xxxxx Dentistry, P.A., a Florida professional
association, Castle Dental Centers of Florida, Inc., a Florida corporation, and
Castle 1st Dental Care, P.A., a Florida professional association, in exchange
for a release of the 9% Subordinated Note of the Company issued to Xxxxx
Dentistry, P.A. on July 9, 1998, in the original principal amount of $370,000.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" shall include the country, the state, county, city
and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Company, its Subsidiaries or any of their Property or any Holder.
"Governmental Requirement" shall mean any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(whether or not having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
"Xxxxxx" has the meaning set forth in the preamble of this Agreement.
"Holder" has the meaning set forth in the preamble of this Agreement.
"Indebtedness" has the meaning set forth in the recitals of this Agreement.
"Indemnified Parties" shall have the meaning assigned such term in Section
8.03(a)(ii).
"Indemnity Matters" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands and
causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent
negligence of such Person seeking indemnification.
"Information Statement" shall have the meaning assigned such term in
Section 5.04.
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"Information Statement Period" shall have the meaning assigned such term in
Section 5.04.
"Investors Agreement" shall mean that certain Investors Agreement, dated as
of even date herewith, by and among the Company, Xxxxxx and Midwest, in the form
attached hereto as Exhibit B.
"Lien" shall mean any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purposes of this Agreement, the Company or any Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
"Material Adverse Effect" shall mean any material and adverse effect on (i)
the assets, liabilities, financial condition, business, operations or affairs of
the Company and its Subsidiaries taken as a whole different from those reflected
in the financial statements of the Company and its Consolidated Subsidiaries
contained in the Company Documents or from the facts represented or warranted in
any of the Exchange Agreement Documents or Subordinated Note and Warrant
Documents, or (ii) the ability of the Company and its Subsidiaries taken as a
whole to carry out their business as at the Closing Date or as proposed as of
the Closing Date to be conducted or meet their obligations under the Exchange
Agreement Documents or the Restructuring Documents on a timely basis.
"Midwest" has the meaning set forth in the preamble of this Agreement.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization,
Governmental Authority or any other form of entity.
"Plan" shall mean any employee pension benefit plan, as defined in Section
3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Company, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Company, any Subsidiary or an ERISA Affiliate.
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"Prior Registration Rights Agreement" shall mean that certain Registration
Rights Agreement, dated as of January 31, 2000, by and among the Company, Xxxxxx
Financial, Inc., and Midwest Mezzanine Fund II, L.P
"Prior Stockholders Agreement" shall mean that certain Stockholders
Agreement, dated as of January 31, 2000, by and among the Company, Xxxx X.
Xxxxxx, Xx., Xxxxxx Financial, Inc., Midwest Mezzanine Fund II, L.P., Delaware
State Employees' Retirement Fund, Declaration of Trust For Defined Benefit Plan
of ICI American Holdings Inc., Declaration of Trust for Defined Benefit Plan of
Zeneca Holdings Inc., Xxxx X. Xxxxxx, Xx., as Trustee of the Castle 1995 Gift
Trust F/B/O Xxxx X. Xxxxxx, Xx., Castle Interests, Ltd., Xxxx X. Xxxxxx, D.D.S.,
Xxxxxxx X. Xxxxxx, and Gulfstar Investments, Ltd.
"Prior Subordination Agreement" shall mean that certain Subordination and
Intercreditor Agreement, dated as of January 31, 2000, by and among Xxxxxx,
Midwest, the Company, Castle Dental Centers of California, L.L.C., a Delaware
limited liability company, Dental World, Inc., a Texas corporation, Castle
Dental Centers of Austin, Inc., Castle dental Centers of Florida, Inc., a
Florida corporation, Castle Dental Centers of Tennessee, Inc., a Tennessee
corporation, Castle Dental Centers of Texas, Inc., a Texas corporation, Dentcor,
Inc., a Florida corporation, CDC of California, Inc., a Delaware corporation,
Castle Texas Holdings, Inc., a Delaware corporation, Academy for Dental
Assistants, Inc., a Florida corporation, and Bank of America, N.A., a national
banking association formerly known as NationsBank, N.A.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Registration Rights Agreement" shall mean that certain Registration Rights
Agreement, dated as of even date herewith, by and among the Company, Xxxxx X.
Usdan, Heller, Midwest and the Senior Lenders and certain other stockholders of
the Company, in the form attached hereto as Exhibit C.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Release" shall mean a letter agreement, in the form attached hereto as
Exhibit D, dated as of the Closing Date and executed by the Company and each of
its Subsidiaries in favor of Xxxxxx and Midwest.
"Responsible Officer" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with respect to
financial matters, the term "Responsible Officer" shall include the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Company.
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"Restructuring Transactions" shall mean, collectively, the transactions
contemplated by the Exchange Agreement Documents, the Senior Credit Documents
and the Subordinated Note and Warrant Documents, the Xxxxxxx Settlement, the
Seller Debt Exchange, the Corpus Transactions, the San Antonio Transaction and
the Florida Transaction.
"Restructuring Documents" shall mean the Senior Credit Documents, the
Subordinated Note and Warrant Documents, the Exchange Agreement Documents and
each other document executed or delivered in connection with any of the
Restructuring Transactions.
"Xxxxxxx" shall mean, collectively, Xxxx X. Xxxxxxx, D.M.D., Xxxx X.
Xxxxxxx, D.M.D., Inc., a California corporation and Xxxxxxx Acquisition Company,
a California corporation.
"Xxxxxxx Judgment" shall mean that certain judgment in favor of Xxxxxxx
rendered against CDC of California, Inc. and Castle Dental Centers of
California, L.L.C., in LACSC Case # BS058068 dated as of October 23, 2000, in
the initial amount of $1,108,210.62 plus interest at 10% (ten percent) per annum
from the date of the judgment.
"Xxxxxxx Settlement" shall mean the execution and delivery of that certain
Forbearance Agreement dated as of July 3, 2002 by and among, CDC of California,
Inc., a Delaware corporation, Castle Dental Centers of California, LLC, a
Delaware limited liability company, and Xxxxxxx, with respect to the Xxxxxxx
Judgment.
"San Antonio Transaction" means the issuance of Series A-1 Preferred Stock
pursuant to the Settlement Agreement among the Company, Castle Texas, Castle PC,
Xxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Hebron X. Xxxxxx, Xxxx X. Xxxx, Xxxxxx X.
Xxxx, Dental Centers of America, Inc., Dental Administrators, Inc., the Senior
Agent, the Senior Lenders and the Holders.
"SEC" shall mean the Securities and Exchange Commission or any successor
Governmental Authority.
"Seller Debt Exchange" shall mean the exchange by the holders of Existing
Seller Notes of all liabilities and obligations owed to them by the Company
pursuant to the Existing Seller Notes and all documents related thereto for an
aggregate of 32,002 shares of Series A-1 Preferred Stock pursuant to the Seller
Note Exchange Agreement.
"Seller Note Exchange Agreement" means, collectively, those certain
Exchange Agreements, each dated July 19, 2002, between the Company and each of
the holders of the Existing Seller Notes.
"Senior Agent" shall mean Bank of America, N.A., a national banking
association formerly known as NationsBank of Texas, N.A. (together with any duly
appointed successor) for the Senior Lenders.
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"Senior Credit Agreement" shall mean that certain Second Amended and
Restated Credit Agreement, dated as of even date herewith, between the Company,
the Senior Agent and the Senior Lenders.
"Senior Credit Documents" shall mean the Senior Credit Agreement and the
"Loan Documents" (as defined in the Senior Credit Agreement).
"Senior Lenders" shall mean each Person that is or shall become a lender
under the Senior Credit Agreement for so long as such Person shall be a party to
that Agreement.
"Senior Notes" has the meaning set forth in the recitals to this Agreement.
"Senior Subordinated Note and Warrant Purchase Agreement" means the Senior
Subordinated Note and Warrant Purchase Agreement, dated as of the date of this
Agreement, by and among the Company, Xxxxxx, Midwest and Xxxxx X. Xxxxx.
"Series A-1 Preferred Stock" shall mean the Company's Convertible Preferred
Stock, Series A-1, par value $.001 per share, of the Company.
"Special Entity" shall mean any joint venture, limited liability company or
partnership, general or limited partnership or any other type of partnership or
company other than a corporation in which the Company or one or more of its
other Subsidiaries is a member, owner, partner or joint venturer and owns,
directly or indirectly, at least a majority of the equity of such entity or
controls such entity, but excluding any tax partnerships that are not classified
as partnerships under state law. For purposes of this definition, any Person
which owns directly or indirectly an equity investment in another Person which
allows the first Person to manage or elect managers who manage the normal
activities of such second Person will be deemed to "control" such second Person
(e.g. a sole general partner controls a limited partnership).
"Stockholders Agreement" shall mean that certain Stockholders Agreement,
dated as of even date herewith, by and among the Company, the Senior Lenders,
Xxxxx X. Xxxxx, Xxxxxx and Midwest, in the form attached hereto as Exhibit E.
"Subordinated Note and Warrant Documents" shall mean the Senior
Subordinated Note and Warrant Purchase Agreement, the senior subordinated
convertible promissory notes and the warrants to be issued pursuant thereto, the
Stockholders Agreement, the Registration Rights Agreement and any other
agreements, certificates or instruments executed or delivered pursuant to or
entered into in connection with any of the foregoing.
"Subsidiary" shall mean (i) any corporation of which at least a majority of
the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the
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Company or one (1) or more of its Subsidiaries or by the Company and one (1) or
more of its Subsidiaries and (ii) any Special Entity. Unless otherwise indicated
herein, each reference to the term "Subsidiary" shall mean a Subsidiary of the
Company.
Section 1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to Holders hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent with the audited financial statements
of the Company contained in the Company Documents (except for changes concurred
with by the Company's independent public accountants).
ARTICLE II
TENDER AND EXCHANGE OF SENIOR NOTES
Section 2.01 Tender and Exchange of Senior Notes. Upon the terms and
subject to the conditions specified in this Agreement, each Holder hereby agrees
to sell, transfer and assign to the Company, and the Company agrees to purchase
from each such Holder, on the Closing Date, all of, and not a partial interest
in, such Holder's Indebtedness represented by the Senior Notes held by such
Holder in exchange for shares of Series A-1 Preferred Stock, with 119,520 shares
to be issued to Xxxxxx and 59,760 shares to be issued to Midwest (collectively,
the "Exchange"). No additional payment will be made for default interest or
interest accrued after June 30, 2002 on the Senior Notes, which is hereby
irrevocably waived. On the Closing Date, the Company will deliver to the each
Holder certificates issued in such Holder's name representing the number of
shares of Series A-1 Preferred Stock for which such Holder's Indebtedness is
being exchanged against delivery of the original executed copies of the Senior
Notes representing the Indebtedness.
Section 2.02 Release.
(a) Effective upon the consummation of the Exchange, each Holder, on behalf
of itself, its Affiliates, its successors and assigns, irrevocably and
unconditionally releases, relinquishes, waives, and forever discharges the
Company and each of the Senior Lenders, and each of their respective
subsidiaries, Affiliates, and present and former agents, employees, officers,
directors, attorneys, advisors, stockholders, plan fiduciaries, successors and
assigns (the "Released Parties") forever, from and against any and all claims,
debts, obligations, demands, actions, suits, causes of action, costs, fees, and
all liability whatsoever, whether known or unknown, fixed or contingent, in
contract or in tort, or based on any statute or other law, state or federal
(collectively "Claims"), which the Exchanging Holder has, had, or may have in
the future against the Released Parties, relating to or arising out of the
Senior Notes, the previous failure to pay interest and principal thereon, and
the issuance thereof.
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(b) Each Holder hereby declares and agrees that, on the Closing Date
following the consummation of the Exchange, the Senior Notes will be deemed paid
in full and in all respects terminated and of no further force or effect.
(c) Each Holder hereby agrees not to bring any claim of any kind against
any Released Party concerning any matter released by this Section 2.02. Each
Holder agrees that this Agreement constitutes a bar to any such future claim.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01 Conditions to Purchase. The obligation of Holders to exchange
their Senior Notes for Series A-1 Preferred Stock pursuant to this Agreement is
subject to the receipt by Holders of all of the following documents and
satisfaction of the other conditions provided in this Section 3.01, each of
which shall be reasonably satisfactory to Holders in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Company, dated the Closing Date, setting forth (i) resolutions of its board of
directors with respect to the authorization of the Company to execute and
deliver certificates representing the Series A-1 Preferred Stock, the Exchange
Agreement Documents and the Restructuring Documents to which it is a party and
to enter into the transactions contemplated in those documents (including,
without limitation, the filing of the Certificate of Designations and the
issuance of the Series A-1 Preferred Stock in connection with the Exchange),
(ii) the officers of the Company who are authorized to sign the Exchange
Agreement Documents and the Restructuring Documents to which Company is a party
and, (iii) specimen signatures of the authorized officers, (iv) the certificate
of incorporation of the Company (which shall include the Certificate of
Designations) and the bylaws of the Company (which shall be the Amended and
Restated Bylaws in the form attached hereto as Exhibit F), certified as being
the true and complete certificate of incorporation and bylaws of the Company,
respectively, and (v) the members of the board of directors of the Subsidiaries
of the Company which shall be Xxxxx X. Xxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxxx
Xxxx.
(b) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Company and its Subsidiaries.
(c) Certificates representing the Series A-1 Preferred Stock, duly
completed, executed and delivered to each Holder, as applicable.
(d) A compliance certificate which shall be substantially in the form
attached hereto as Exhibit G, duly and properly executed by a Responsible
Officer and dated as of the Closing Date.
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(e) Opinions of Xxxxxx and Xxxxx, LLP, counsel to the Company, in form and
substance satisfactory to Holders, as to such matters incident to the
transactions herein contemplated as Holders may reasonably request.
(g) Unaudited pro forma projected consolidated balance sheet of the Company
and its Consolidated Subsidiaries at the Closing Date (which pro forma shall be
based on the consolidated balance sheet of the Company and its Consolidated
Subsidiaries as of March 31, 2002).
(h) Certified copies of the Senior Debt Documents.
(i) The Stockholders Agreement, the Registration Rights Agreement and the
Investors Agreement duly completed, executed by the Company and the other
signatories thereto and delivered to Holders.
(j) The Release, duly executed by the Company and each of its Subsidiaries.
(k) Consummation of the Restructuring Transactions, including without
limitation, the exchange of each of the Existing Seller Notes for an aggregate
of 32,002 shares of Series A-1 Preferred Stock, on terms and conditions, and
pursuant to the Restructuring Documents, acceptable in form and substance to the
Holders.
(l) Termination of the Prior Subordination Agreement, the Prior
Registration Rights Agreement and the Prior Stockholders Agreement.
(m) With respect to Midwest, duly executed and completed (i) SBA Form 480
(Size Status Declaration) and SBA Form 652 (Assurance of Compliance), (ii) SBA
Form 1031 (Portfolio Finance Report), Part A and B, and (iii) letter regarding
SBA matters in form and substance acceptable to Midwest.
(n) Certified copies of the Employment Agreements between the Company and
each of Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and Xxxx X. Xxxxx.
(o) Payment of all legal fees and other reasonable expensed incurred by
Xxxxxx and Midwest in connection with the preparation, execution and delivery of
this Agreement and the other Exchange Agreement Documents and the transaction
contemplated hereby.
(o) such other documents as Holders or special counsel to Holders may
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Holder:
11
Section 4.01 Corporate Existence. Each of the Company and each Subsidiary:
(i) is a corporation or limited liability company duly organized, legally
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation; (ii) has all requisite corporate or limited
liability company power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Material Adverse Effect.
Section 4.02 No Breach. Neither the execution and delivery of the Exchange
Agreement Documents or the Restructuring Documents, nor compliance with the
terms and provisions hereof or thereof (including, without limitation, the
filing of the Certificate of Designations and the issuance of the Series A-1
Preferred Stock pursuant to the Exchange, and, subject to the filing with the
Delaware Secretary of State of a certificate of amendment to the Company's
certificate of incorporation increasing the number of authorized shares of the
Company's common stock or effecting a reverse stock split with respect to the
Company's common stock (the "Authorized Share Amendment"), the issuance of the
Common Stock upon the conversion of the Series A-1 Preferred Stock) will
conflict with or result in a breach of, or require any consent which has not
been obtained as of the Closing Date under, the respective charter or by-laws of
the Company or any Subsidiary, or any Governmental Requirement or any material
agreement or instrument to which the Company or any Subsidiary is a party or by
which it is bound or to which it or its Properties are subject, or constitute a
default under any such material agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Company or any Subsidiary pursuant to the terms of any such material agreement
or instrument other than the Liens created by the Senior Credit Documents.
Section 4.03 Authority. The Company and each Subsidiary have all necessary
corporate power and authority to execute, deliver and perform its respective
obligations under the Exchange Agreement Documents and the Restructuring
Documents to which it is a party (including, without limitation, the filing of
the Certificate of Designations and the issuance of the Series A-1 Preferred
Stock pursuant to the Exchange and Common Stock upon conversion of the Series
A-1 Preferred Stock). The execution, delivery and performance by the Company and
each Subsidiary of the Exchange Agreement Documents and the Restructuring
Documents to which it is a party, have been duly authorized by all necessary
corporate action on its part. The Exchange Agreement Documents and the
Restructuring Documents constitute the legal, valid and binding obligations of
the Company and each Subsidiary, enforceable in accordance with their terms.
Section 4.04 Approvals. No authorizations, approvals or consents of, and no
filings or registrations with, any Governmental Authority are necessary for the
execution, delivery or performance by the Company or any Subsidiary of the
Exchange Agreement Documents or the Restructuring Documents to which it is a
party (including, without limitation, the filing of the Certificate of
Designations and the issuance of the Series A-1 Preferred Stock pursuant to the
Exchange and the issuance of the Common Stock upon the conversion of the Series
A-1
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Preferred Stock) or for the validity or enforceability thereof, other than the
filing of the Authorized Share Amendment, which will not be filed until it is
approved at the Company's next meeting of stockholders, which meeting shall take
place no later than 75 days following the date of this Agreement.
Section 4.05 No Material Misstatements. No written information, statement,
exhibit, certificate, document or report furnished to Holders by the Company or
any Subsidiary in connection with the negotiation of this Agreement contained
any material misstatement of fact or omitted to state a material fact or any
fact necessary to make the statement contained therein not materially misleading
in the light of the circumstances in which made and with respect to the Company
and its Subsidiaries taken as a whole. The information contained in the
following documents (the "Company Documents") was true and correct in all
material respects as of the respective filing date of the applicable Company
Document:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001;
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal quarter
ended March 31, 2002; and
(c) all other documents, if any, filed by the Company with the Commission
since June 30, 2001 pursuant to Section 13, 14 or 15 of the Exchange
Act.
As of their respective filing dates, the Company Documents (i) complied in
all material respects with the requirements of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act") and (ii) did not contain any untrue
statement of material fact or omit a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company has timely filed with the SEC
all documents required to be filed by the Company under the Exchange Act.
Section 4.06 Capitalization. The authorized capital stock and other equity
securities of each of the Company and each of its Subsidiaries is as set forth
on Schedule 4.06. All issued and outstanding shares of capital stock and other
equity securities of each of the Company and each of its Subsidiaries are duly
authorized and validly issued, fully paid, non-assessable, free and clear of all
Liens other than those in favor of Senior Agent, and such shares were issued in
compliance with all applicable state and federal laws concerning the issuance of
securities. No shares of the capital stock of Company or any of its
Subsidiaries, other than those described above, are issued and outstanding.
Except as set forth on Schedule 4.06, all of the issued and outstanding capital
stock and other equity securities of Subsidiaries of the Company are owned by
the Company. Upon issuance, the Series A-1 Preferred Stock will be duly
authorized and validly issued, fully paid, non-assessable, free and clear of all
Liens. Following the filing of the Authorized Share Amendment, the Common Stock
issuable upon conversion of the Series A-1 Preferred Stock will, when issued, be
duly authorized, validly issued, fully paid and non-assessable. Except as
provided in the Stockholders Agreement and as set forth on Schedule 4.06,
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there are no preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for the purchase or
acquisition from the Company or any of its Subsidiaries, of any shares of
capital stock or other securities of any such entity.
Section 4.07 Offering. Subject in part to the truth and accuracy of the
representations of the Holders set forth in this Agreement, the offer, sale and
issuance of the Series A-1 Preferred Stock, and the shares of Common Stock
issuable upon conversion of the Series A-1 Preferred Stock as contemplated by
this Agreement, are exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act") and applicable state securities
laws.
Section 4.08 Registration Rights. Except as set forth on Schedule 4.08 and
as provided for in the Registration Rights Agreement, as of the Closing Date,
the Company is not under any obligation to register under the Securities Act any
of its currently outstanding securities or any of its securities which may
hereinafter be issued.
Section 4.09 Restructuring Documents. Each of the representations and
warranties of the Company and each of its Subsidiaries contained in each of the
Restructuring Documents, including, without limitation, the Senior Subordinated
Note and Warrant Purchase Agreement, is true, correct and complete and is hereby
incorporated herein by this reference thereto. For purposes hereof, if a
representation contained in a Restructuring Document is qualified by the term
"Material Adverse Effect", then, in making the representation in this Section
4.09 the term "Material Adverse Effect" will mean a "Material Adverse Effect" as
defined herein.
ARTICLE V
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any of the Holders or an
Affiliate thereof (including, for such purpose, partners of any Holder which is
a partnership) hold SeriesA-1 Preferred Stock or Common Stock issued upon
conversion of all or any portion of the Series A-1 Preferred Stock:
Section 5.01 Reporting Requirements. The Company shall deliver, or shall
cause to be delivered, to each Holder:
(a) Annual Financial Statements. As soon as available and in any event
within one hundred twenty (120) days after the end of each fiscal year of the
Company, the audited consolidated and unaudited consolidating statements of
operations, changes in stockholders' equity, changes in financial position and
cash flow of the Company and its Consolidated Subsidiaries for such fiscal year,
and the related consolidated and consolidating balance sheets of the Company and
its Consolidated Subsidiaries as at the end of such fiscal year, and setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal year, and accompanied by the related opinion of independent
public accountants of recognized national
14
standing acceptable to Holders which opinion shall state that said financial
statements fairly present the consolidated financial condition and results of
operations of the Company and its Consolidated Subsidiaries as at the end of,
and for, such fiscal year and that such financial statements have been prepared
in accordance with GAAP, except for such changes in such principles with which
the independent public accountants shall have concurred and such opinion shall
not contain a "going concern" or like qualification or exception, and a
certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as specifically
stated, of any default.
(b) Quarterly Financial Statements. As soon as available and in any event
within forty five (45) days after the end of each of the first three (3) fiscal
quarterly periods of each fiscal year of the Company, consolidated and
consolidating statements of income, stockholders' equity, changes in financial
position and cash flow of the Company and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated and consolidating balance
sheets as at the end of such period, and setting forth in each case in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of operations of
the Company and its Consolidated Subsidiaries in accordance with GAAP, as at the
end of, and for, such period (subject to normal year-end audit adjustments).
(c) Monthly Financial Statements. As soon as available and in any event
within thirty (30) days after the end of each of the first eleven (11) months of
each fiscal year of the Company, consolidated and consolidating statements of
income, stockholders' equity, changes in financial position and cash flow of the
Company and its Consolidated Subsidiaries for such period and for the period
from the beginning of the respective fiscal year to the end of such period, and
the related consolidated and consolidating balance sheets as at the end of such
period, and setting forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year, accompanied
by the certificate of a Responsible Officer, which certificate shall state that
said financial statements fairly present the consolidated and consolidating
financial condition and results of operations of the Company and its
Consolidated Subsidiaries in accordance with GAAP, as at the end of, and for,
such period (subject to normal year-end audit adjustments).
(d) Budget. As soon as available and in any event within thirty (30) days
after the end of each fiscal year of the Company, a budget for the Company and
its Consolidated Subsidiaries, as approved by the Board of Directors of the
Company, for the following fiscal year setting forth in comparative form
corresponding figures from the preceding fiscal year, in reasonable detail and
certified as to its good-faith preparation by a Responsible Officer.
(e) Other Accounting Reports. Promptly upon receipt thereof, a copy of each
other report or letter submitted to the Company or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made by them
of the books of the Company
15
or any of its Subsidiaries, and a copy of any response by the Company or any
Subsidiary of the Company, or the Board of Directors of the Company or any
Subsidiary of the Company, to such letter or report.
(f) SEC Filings, Etc. Promptly upon its becoming available, each financial
statement, report, notice or proxy statement sent by the Company to stockholders
generally and each regular or periodic report and any registration statement,
prospectus or written communication (other than transmittal letters) in respect
thereof filed by the Company with or received by the Company in connection
therewith from any securities exchange or the SEC or any successor agency.
(g) Annual Revenue Reports. As soon as available and in any event within
one hundred twenty (120) days after the end of each fiscal year of the Company,
a report prepared by the Company for each dental center setting forth the
revenues, expenses and contributions to profit of such dental center, in form
and substance acceptable to Holders.
(h) Quarterly Revenue Reports. As soon as available and in any event within
forty five (45) days after the end of each of the first three (3) fiscal
quarterly periods of each fiscal year of the Company, a report by the Company
for each dental center setting forth the revenues, expenses and contributions to
profit of such dental center, in form and substance acceptable to Holders.
(i) Other Information. From time to time, such other information regarding
the business, affairs or financial condition of the Company or any Subsidiary
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA), as any Holder may
reasonably request.
Section 5.02 Litigation. The Company shall promptly give to each Holder
notice of: (i) all legal or arbitral proceedings, and of all proceedings before
any Governmental Authority affecting the Company or any Subsidiary, except
proceedings which, if adversely determined, would not have a Material Adverse
Effect, and (ii) of any litigation or proceeding against or adversely affecting
the Company or any Subsidiary in which the amount involved is not covered in
full by insurance (subject to normal and customary deductibles and for which the
insurer has not assumed the defense), or in which injunctive or similar relief
is sought. The Company will, and will cause each of its Subsidiaries to,
promptly notify each Holder of any claim, judgment, Lien or other encumbrance
affecting any Property of the Company or any Subsidiary if the value of the
claim, judgment, Lien, or other encumbrance affecting such Property shall exceed
$250,000.
Section 5.03 Other Covenants. The Company shall comply with all covenants
contained in Sections 8.03, 8.04, and 8.07 of the Senior Subordinated Note and
Warrant Purchase Agreement.
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Section 5.04 Schedule 14f-1. The Company has duly appointed Xxxx Xxxxx, Xxx
Xxxxxx and Xxxxx Xxxxx to the Company's Board of Directors subject to the
expiration of the ten-day period (the "Information Statement Period") following
the later of (a) the filing of an Information Statement on Schedule 14f-1 (the
"Information Statement") with the SEC disclosing the appointment of new
directors to the Company's Board of Directors, and (b) the mailing of the
Information Statement to the stockholders of the Company. Immediately following
the Information Statement Period, the Company's Board of Directors shall consist
solely of Xxxxx X. Xxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxx Xxxx. On the Closing
Date, the Board of Directors of each Subsidiary of the Company shall consist
solely of Xxxxx X. Xxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxx Xxxx. The Company
shall file the Information Statement with the SEC and mail the Information
Statement to stockholders of the Company by _______________. The Company's Board
of Directors will not take any action at a meeting of the Board of Directors or
pursuant to a written consent, prior to the expiration of the Information
Statement Period.
ARTICLE VI
NEGATIVE COVENANTS
The Company covenants and agrees that, so long as any of the Holders or an
Affiliate thereof (including, for such purpose, partners of any Holder which is
a partnership) hold Series A-1 Preferred Stock or Common Stock issued upon
conversion of all or any part of the Series A-1 Preferred Stock:
Section 6.01 Non-Disclosure. The Company will not and will not permit any
of its Affiliates to, in the future, issue any press release or other public
disclosure using the name of Xxxxxx, Midwest or any of their respective
Affiliates or referring to this Agreement or referring to the other Exchange
Agreement Documents without at least two (2) Business Days prior written notice
to Xxxxxx or Midwest, as applicable, and without the prior written consent of
Xxxxxx or Midwest, as applicable, unless (and only to the extent that) the
Company or such Affiliate of the Company is required to so disclose under law
and then, in any event, the Company or such Affiliate will consult with Xxxxxx
or Midwest, as applicable, before issuing such press release or other public
disclosure. The Company consents to the publication by Xxxxxx and/or Midwest of
a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement, the other Exchange Agreement
Documents and/or the Restructuring Documents.
ARTICLE VII
HOLDER REPRESENTATIONS AND WARRANTIES
Section 7.01 Investment Representations. Each Holder represents and
warrants to the Company that it is an "accredited investor" within the meaning
of Regulation D promulgated under the Securities Act.
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ARTICLE VIII
MISCELLANEOUS
Section 8.01 Waiver. No failure on the part of a Holder to exercise and no
delay in exercising, and no course of dealing with respect to, any right, power
or privilege under any of the Exchange Agreement Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under any of the Exchange Agreement Documents preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 8.02 Notices. All notices and other communications provided for
herein and in the other Exchange Agreement Documents (including, without
limitation, any modifications of, or waivers or consents under, this Agreement
or the other Exchange Agreement Documents) shall be given or made by telex,
telecopy, courier or U.S. Mail or in writing and telexed, telecopied, mailed or
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof or in the Exchange Agreement Documents;
or, as to any party, at such other address as shall be designated by such party
in a notice to each other party. Except as otherwise provided in this Agreement
or in the other Exchange Agreement Documents, all such communications shall be
deemed to have been duly given when transmitted, if transmitted before 1:00 p.m.
local time on a Business Day (otherwise on the next succeeding Business Day) by
telex or telecopier and evidence or confirmation of receipt is obtained, or
personally delivered or, in the case of a mailed notice, three (3) Business Days
after the date deposited in the mails, postage prepaid, in each case given or
addressed as aforesaid.
Section 8.03 Payment of Expenses, Indemnities, etc.
(a) The Company agrees:
(i) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of Holders in the
administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of a Holder with respect
thereto) of, and in connection with the negotiation, investigation,
preparation, execution and delivery of, preservation of rights under,
enforcement of, and renegotiation or restructuring of, the Exchange
Agreement Documents and any amendment, waiver or consent relating thereto
(including, without limitation, travel, photocopy, mailing, courier,
telephone and other similar expenses of Holders, the cost of environmental
audits, surveys and appraisals at reasonable intervals, the reasonable fees
and disbursements of counsel and other outside consultants for Holders and,
in the case of enforcement (including, without limitation, bankruptcy and
workout matters); and promptly reimburse a Holder for all amounts expended,
advanced or incurred by such Holder to satisfy any obligation of the
Company under this Agreement;
18
(ii) to indemnify each holder and each of its Affiliates and each of
its officers, directors, employees, representatives, agents, attorneys,
accountants and experts ("Indemnified Parties") from, hold each of them
harmless against and promptly upon demand pay or reimburse each of them
for, the Indemnity Matters which may be incurred by or asserted against or
involve any of them (whether or not any of them is designated a party
thereto) as a result of, arising out of or in any way related to (i) the
execution, delivery and performance of the Exchange Agreement Documents,
(ii) the operations of the business of the Company and its Subsidiaries,
(iii) the failure of the Company or any Subsidiary to comply with the terms
of this Agreement, or with any Governmental Requirement, (iv) any
inaccuracy of any representation or any breach of any warranty of the
Company set forth in this Agreement or any of the Exchange Agreement
Documents, or (v) any other aspect of the this Agreement or any of the
Exchange Agreement Documents, including, without limitation, the reasonable
fees and disbursements of counsel and all other expenses incurred in
connection with investigating, defending or preparing to defend any such
action, suit, proceeding (including any investigations, litigation or
inquiries) or claim and including all Indemnity Matters arising by reason
of the ordinary negligence of any Indemnified Party, but excluding all
Indemnity Matters arising solely by reason of the gross negligence or
willful misconduct on the part of the Indemnified Party; and
(iii) to indemnify and hold harmless from time to time the Indemnified
Parties from and against any and all losses, claims, cost recovery actions,
administrative orders or proceedings, damages and liabilities to which any
such Person may become subject (i) under any Environmental Law applicable
to the Company or any Subsidiary or any of their Properties, including
without limitation, the treatment or disposal of hazardous substances on
any of their Properties, (ii) as a result of the breach or non-compliance
by the Company or any Subsidiary with any Environmental Law applicable to
the Company or any Subsidiary, (iii) due to past ownership by the Company
or any Subsidiary of any of their Properties or past activity on any of
their Properties which, though lawful and fully permissible at the time,
could result in present liability, (iv) the presence, use, release,
storage, treatment or disposal of hazardous substances on or at any of the
Properties owned or operated by the Company or any Subsidiary, or (v) any
other environmental, health or safety condition in connection with the
Exchange Agreement Documents.
(b) No Indemnified Party may settle any claim to be indemnified without the
consent of the indemnitor, such consent not to be unreasonably withheld.
(c) In the case of any indemnification hereunder, the Indemnified Party
shall give notice to the Company of any such claim or demand being made against
the Indemnified Party and the Company shall have the non-exclusive right to join
in the defense against any such claim or demand provided that if the Company
provides a defense, the Indemnified Party shall bear its own cost of defense
unless there is a conflict between the Company and such Indemnified Party.
19
(d) The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or character
whatsoever, whether active or passive, whether an affirmative act or an
omission, including without limitation, all types of negligent conduct
identified in the restatement (second) of torts of one or more of the
Indemnified Parties or by reason of strict liability imposed without fault on
any one or more of the Indemnified Parties. to the extent that an Indemnified
Party is found to have committed an act of gross negligence or willful
misconduct, this contractual obligation of indemnification shall continue but
shall only extend to the portion of the claim that is deemed to have occurred by
reason of events other than the gross negligence or willful misconduct of the
Indemnified Party.
(e) The Company's obligations under this Section 8.03 shall survive any
termination of this Agreement, and shall continue thereafter in full force and
effect.
(f) The Company shall pay any amounts due under this Section 8.03 within
thirty (30) days of the receipt by the Company of notice of the amount due.
Section 8.04 Amendments, Etc. Any provision of this Agreement may be
amended, modified or waived with the prior written consent of the Company and
the holders of sixty-six and two-thirds percent (66 2/3%) of voting power
represented by the Series A-1 Preferred Stock and Common Stock issued upon
conversion of all or any portion of the Series A-1 Preferred Stock held by the
Holders at the time of any such amendment, modification or waiver; provided,
however, no amendment, modification or waiver can be effected without the prior
written consent of all Holders if, by its terms, such amendment, modification or
waiver adversely affects one (1) Holder without having the same adverse effect
on all other Holders.
Section 8.05 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
Section 8.06 Assignments.
(a) The Company may not assign its rights or obligations hereunder without
the prior consent of Holders.
(b) Prior to the Closing Date, each Holder covenants not to transfer,
pledge, hypothecate, assign or grant an option to otherwise acquire any interest
in the Senior Notes unless the transferee of such Senior Notes agrees, in
writing, to be bound by the terms of this Agreement. Subject to the preceding
sentence, applicable securities laws and to the terms and conditions of the
Stockholders Agreement, Holders (and its permitted assigns) may assign to one
(1) or more assignees all or a portion of its rights and obligations under this
Agreement and the other Exchange Agreement Documents to any Person, and any such
assignee may further assign such rights and obligations to any Person. Any such
assignment will become effective upon the execution and delivery to the
assigning Holder of the assignment. Upon the assigning Holder's request, the
Company, will, at its own expense, execute and deliver new certificates
representing Series A-1 Preferred Stock and/or Common Stock, as applicable, to
the assignor and/or assignee,
20
as appropriate, in accordance with their respective interests as they appear.
Upon the effectiveness of any assignment pursuant to this Section 8.06(b), all
references to "Holders" or a "Holder" in this Agreement, and the other Exchange
Agreement Documents shall mean and include each such assignee, each such
assignee shall be deemed a party to this Agreement and bound by all the
agreements and covenants of Holders contained herein and all actions which are
to be taken, and all consents or waivers to be granted or consents, amendments,
waivers and other writings required to be signed by Holders or a party (other
than the Company) to this Agreement thereafter shall be, in each case, effective
only if taken or executed or delivered by Holders and all such assignees.
(c) A Holder may furnish any information concerning the Company in its
possession from time to time to assignees (including prospective assignees);
provided that, such Persons agree to be bound by the provisions of Section 8.13.
(d) Notwithstanding any other provisions of this Section 8.06, no transfer
or assignment of the interests or obligations of a Holder or any grant of
participations therein shall be permitted if such transfer, assignment or grant
would require the Company to file a registration statement with the SEC or to
qualify the Series A-1 Preferred Stock or Common Stock issued or issuable upon
conversion of all or any portion of the Series A-1 Preferred Stock under the
"Blue Sky" laws of any state.
Section 8.07 Invalidity. In the event that any one (1) or more of the
provisions contained in any of the Exchange Agreement Documents shall, for any
reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement.
Section 8.08 Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
Section 8.09 References. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
Section 8.10 Captions. Captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
Section 8.11 No Oral Agreements. The Exchange Agreement Documents embody
the entire agreement and understanding between the parties and supersede all
other agreements and understandings between such parties relating to the subject
matter hereof and thereof. The
21
Exchange Agreement Documents represent the final agreement between the parties
and may not be contradicted by evidence of prior, contemporaneous or subsequent
oral agreements of the parties. There are no unwritten oral agreements between
the parties.
Section 8.12 Governing Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Illinois.
(b) Subject to Section 8.15, Any legal action or proceeding with respect to
the Exchange Agreement Documents shall be brought in the courts of the State of
Illinois or of the United States of America for the Northern District of
Illinois, and, by execution and delivery of this Agreement, each of the Company
and each holder hereby accepts for itself and (to the extent permitted by law)
in respect of its Property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the Company and each holder hereby irrevocably
waives any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(c) Nothing herein shall affect the right of any holder to serve process in
any other manner permitted by law.
(d) The Company and each holder hereby (i) irrevocably and unconditionally
waive, to the fullest extent permitted by law, trial by jury in any legal action
or proceeding relating to this Agreement and for any counterclaim therein; (ii)
irrevocably waive, to the maximum extent not prohibited by law, any right it may
have to claim or recover in any such litigation any special, exemplary, punitive
or consequential damages, or damages other than, or in addition to, actual
damages; (iii) certify that no party hereto nor any representative or agent of
counsel for any party hereto has represented, expressly or otherwise, or implied
that such party would not, in the event of litigation, seek to enforce the
foregoing waivers, and (iv) acknowledge that it has been induced to enter into
this Agreement, and the transactions contemplated hereby, among other things,
the mutual waivers and certifications contained in this Section 8.12.
Section 8.13 Confidentiality. In the event that the Company provides to a
Holder written confidential information belonging to the Company, if the Company
shall denominate such information in writing as "confidential", such Holder
shall thereafter maintain such information in confidence in accordance with the
standards of care and diligence that each utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to such
portions of the information which (i) are in the public domain, (ii) hereafter
become part of the public domain without a Holder breaching its obligation of
confidence to the Company, (iii) are previously known by a Holder from some
source other than the Company, (iv) are hereafter developed by a Holder without
using the Company's information, (v) are hereafter obtained by or available to a
Holder from a third party who owes no obligation of confidence to the Company
with respect to such information or through any other means other
22
than through disclosure by the Company, (vi) are disclosed with the Company's
consent, (vii) must be disclosed either pursuant to any Governmental Requirement
or to Persons regulating the activities of a Holder, or (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding. Further, a Holder may disclose
any such information to any independent consultants, any independent certified
public accountants, any legal counsel employed by such Person in connection with
this Agreement, including without limitation, the enforcement or exercise of all
rights and remedies thereunder, or any assignee (including prospective
assignees) in the Series A-1 Preferred Stock; provided, however, that such
Holder shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon such Holder
hereunder. Notwithstanding anything to the contrary provided herein, this
obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Company requests in writing at least
thirty (30) days prior to the expiration of such three year period, to maintain
the confidentiality of such information for an additional three year period. The
Company waives any and all other rights it may have to confidentiality as
against a Holder arising by contract, agreement, statute or law except as
expressly stated in this Section 8.13.
Section 8.14 Effectiveness. This Agreement shall be effective on the
Closing Date.
Section 8.15 Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and agrees that it
is charged with notice and knowledge of the terms of this Agreement; that it has
in fact read this Agreement and is fully informed and has full notice and
knowledge of the terms, conditions and effects of this Agreement; that it has
been represented by independent legal counsel of its choice throughout the
negotiations preceding its execution of this Agreement; and has received the
advice of its attorney in entering into this Agreement; and that it recognizes
that certain of the terms of this Agreement result in one party assuming the
liability inherent in some aspects of the transaction and relieving the other
party of its responsibility for such liability. Each party hereto agrees and
covenants that it will not contest the validity or enforceability of any
exculpatory provision of this Agreement on the basis that the party had no
notice or knowledge of such provision or that the provision is not
"conspicuous."
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
23
The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
COMPANY:
CASTLE DENTAL CENTERS, INC., a
Delaware corporation
By: ______________________________
Name: ______________________________
Title: ______________________________
Address for Notices:
0000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopier No.: 713.490.8420
Telephone No.: 000.000.0000
Attention: Xxxxx Xxxxx
24
The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
XXXXXX:
XXXXXX FINANCIAL, INC., a Delaware
corporation
By: ______________________________
Name: ______________________________
Title: ______________________________
Address for Notices:
XXXXXX FINANCIAL, INC.
c/o Heller Healthcare Financial Services
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
ATTN: Xxxxxxx Xxxxxxxx
Telecopy: 312.441.7598
With a copy to:
XXXXXX FINANCIAL, INC.
c/o Heller Healthcare Financial Services
0 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
ATTN: Xxxxxxxxx X. Xxxxx, Esq.
Telecopy: 301.664.9866
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
25
The parties hereto have caused this Agreement to be duly executed as of the
day and year first above written.
MIDWEST:
MIDWEST MEZZANINE FUND II, L.P., a
Delaware limited partnership
By: ABN AMRO Mezzanine
Management II, L.P., its general
partner
By: ABN AMRO Mezzanine
Management II, Inc., its
general partner
By: _________________________
Name: Xxxx Xxxxx
Title: _________________________
Address for Notices:
Midwest Mezzanine Fund II, L.P.
000 Xxxxx XxXxxxx Xxxxxx, 00xx xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
ATTN: J. Xxxxx Xxxxxx
Telecopy: 312.553.6647
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
26
EXHIBIT A to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Certificate of Designations
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
27
EXHIBIT B to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Investors Agreement
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
28
EXHIBIT C to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Registration Rights Agreement
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
29
EXHIBIT D to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Release
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
30
EXHIBIT E to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Stockholders Agreement
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
31
EXHIBIT F to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Amended and Restated Bylaws
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
32
EXHIBIT G to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Compliance Certificate
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
33
