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EXHIBIT 4.4
[LETTERHEAD] XXXXXXX
August 1, 1997
Xx. Xxxxx Xxxxxx
Chairman of the Board
Coast Dental Services, Inc.
0000 Xxxxxxxx Xxxxxxxx Xxxxxxxx, Xxxxx 000
Xxxxx, XX 00000
Dear Terek:
Xxxxxxx Bank, N.A. - Tampa (the "Bank") is pleased to offer the following
credit facility to Coast Dental Services, Inc. (the "Borrower"), subject to the
following terms and conditions:
Borrower: Coast Dental Services, Inc.
Amount: $15,000,000.00 (Renewal and increase of existing Commercial
Revolving Line of Credit).
Type of Facility: Commercial Revolving Line of Credit.
Maturity: April 30, 1999.
Repayment: Monthly payments of accrued interest; principal payable at
maturity.
Rate: At the election of the Borrower, Xxxxxxx Bank's Prime rate,
floating daily or LIBOR options as follows:
Total Liab./EBITDA LIBOR +
------------------ -------
<1:1 1.50%
from 1:1 to 1.5:1 1.75%
from 1.5:1 to 2:1 2.00%
EBITDA shall be defined as Earnings Before Interest, Taxes,
Depreciation and Amortization.
Fees: $27,500.00 Loan Processing fee, $13,750.00 due upon acceptance
of commitment, $13,750.00 due at closing; plus 1/4% p.a.
non-usage fee billed quarterly.
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Xx. Xxxxx Xxxxxx
August 1, 1997
Page Two
Prepayment: Prepayment is permitted at any time without penalty
on Prime rate loans. LIBOR based loans will be
subject to customary LIBOR breakage indemnity.
Collateral: Blanket first lien on all corporate assets,
including accounts receivable, inventory, contract
rights, equipment and furnishings.
OTHER REQUIREMENTS AND CONDITIONS
Contingency: This commitment is contingent upon successful
completion of Xxxxxxxx's Secondary Public Offering
with a minimum of $25,000,000 net proceeds raised
no later than December 31, 1997.
Use of Proceeds: Draws to be used solely for building new, expanding
existing or acquiring existing dental offices within
the Southeastern U.S. (Alabama, Tennessee, North and
South Carolina, Georgia and Florida).
Services and
Support Agreement: Borrower will not modify, amend, or waive any
provisions of the Services and Support Agreement
between it and Coast Florida, P.A. without the prior
written consent of Bank. Xxxxxxxx agrees that it
will fully enforce all terms and conditions of the
Agreement and will notify the Bank immediately in
the event of any breach of the Agreement by Coast
Florida, P.A. Borrower will not enter into any other
Services and Support Agreements without the prior
written consent of the Bank. Any such new Agreements
will be subject to the same restrictions. Bank is
aware that Borrower intends to enter into Services
and Support Agreements with Coast Southeast, P.A.
and Coast Specialty, P.A. Bank will consider
granting its consent upon receipt and satisfactory
review of these Agreements.
Hazard Insurance: Borrower will maintain hazard insurance in an amount
acceptable to Bank on its inventory, equipment and
furnishings naming Bank as loss payee and will
furnish evidence of said coverage to Bank.
Financial Statements: Borrower will provide a copy of its annual audited
financial statements within 120 days of its fiscal
year end. Borrower will also provide copies of its
quarterly interim financial statements within 45
days after each quarter end. Borrower will provide
copies of all documents filed with the SEC
immediately after filing.
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Xx. Xxxxx Xxxxxx
August 1, 1997
Page Three
Financial Covenants: Borrower's Tangible Net worth shall not be less than
$18,000,000 at any time.
Borrower's Net Earnings after Taxes shall not be less
than 10% of Net Revenues, tested annually.
As of each fiscal quarter, Xxxxxxxx's Debt Service
Coverage ratio shall not be less than 4:1, defined as the
ratio of EBITDA to Interest Expense plus Current
Maturities of Long Term Debt plus Dividends plus
Current Maturities of Capital Leases, as measured on a
rolling four quarter basis. The one time $643,000
dividend paid in 1997 will be excluded when calculating
this ratio.
As of each fiscal quarter, Xxxxxxxx's Leverage ratio
shall not exceed 1.0:1. Leverage ratio shall be defined
as Total Liabilities divided by Tangible Net Worth.
Borrower will not acquire more than $5,000,000 in dental
offices in any one transaction or more than $8,000,000
in aggregate per quarter without prior Bank consent. No
default or event of default shall exist both before and
after giving effect to any acquisition.
Total Liabilities/EBITDA shall not exceed 2:1 at any
time.
Expenses: All costs and expenses incidental to closing the loan
shall be paid by the borrower. These costs include but
are not limited to documentary stamps, intangible taxes,
recording fees, and any legal fees that may be charged
relative to this loan.
This loan will be governed by a loan agreement to include certain
representations and warranties, conditions precedent, affirmative covenants,
negative covenants and events of default. Bank's obligation to lend will arise
only upon the preparation, execution and delivery of documentation satisfactory
in form and substance to the Bank, including, but not limited to the terms set
forth above.
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Xx. Xxxxx Xxxxxx
August 1, 1997
Page Four
Thank you for this opportunity to further enhance the relationship between
Coast Dental Services and Xxxxxxx. If this commitment is acceptable, please
sign below and return a copy of this letter along with your check for
$13,750.00 to me at your earliest convenience. If you have any questions or
would like to discuss this matter further, please do not hesitate to call me at
000-0000.
Sincerely,
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Vice President
Accepted:
Coast Dental Services, Inc.
By: /s/ Xxxxx Xxxxxx
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Xxxxx Xxxxxx
