Exhibit 10.49
EXECUTION COPY
CREDIT AGREEMENT
By and Among
GMS DENTAL GROUP MANAGEMENT, INC.
as Borrower,
GMS DENTAL GROUP, INC.
and
THE OTHER CREDIT PARTIES PARTY HERETO,
and
IMPERIAL BANK
as Agent,
and
THE FINANCIAL INSTITUTIONS PARTY HERETO
Dated as of October 10, 1996
$10,000,000
TABLE OF CONTENTS
Page(s)
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . .. . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions .. . . . . . . . . . . . 18
1.3 Accounting Principles . . . . .. . . . . . . . . . . . 19
ARTICLE II - THE CREDITS . . . . . . . . . . . . . . . . . . . . 20
2.1 Amounts and Terms of Commitments . . . . . . . . . . . 20
2.2 Loan Accounts . . . . . . . . . . . . . . . . . . . . 20
2.3 Procedure for Borrowing . . . . . . . . . . . . . . . 21
2.4 Conversion and Continuation Elections for
Borrowings . . . . . . . . . . . . . . . . . . . . . . 22
2.5 Voluntary Termination or Reduction of
Commitments . . . . . . . . . . . . . . . . . . . . . 23
2.6 Optional Prepayments . . . . . . . . . . . . . . . . . 23
2.7 Repayment . . . . . . . . . . . . . . . . . . . . . . 23
2.8 Interest . . . . . . . . . . . . . . . . . . . . . . . 24
2.9 Fees . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.10 Computation of Fees and Interest . . . . . . . . . . . 25
2.11 Payments by the Borrower. . . . . . . . . . . . . . . 25
2.12 Payments by the Banks to the Agent . . . . . . . . . . 26
2.13 Sharing of Payments, Etc . . . . . . . . . . . . . . . 27
2.14 Security Documents . . . . . . . . . . . . . . . . . . 27
ARTICLE III - TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . 27
3.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 27
3.2 Illegality . . . . . . . . . . . . . . . . . . . . . . 29
3.3 Increased Costs and Reduction of Return . . . . . . . 29
3.4 Funding Losses . . . . . . . . . . . . . . . . . . . . 30
3.5 Inability to Determine Rates . . . . . . . . . . . . . 31
3.6 Certificates of Banks . . . . . . . . . . . . . . . . 31
3.7 Survival . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE IV - CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . 32
4.1 Commitment Closing . . . . . . . . . . . . . . . . . . 32
4.2 Condition of Initial Loans . . . . . . . . . . . . . . 34
4.3 Conditions to All Borrowings . . . . . . . . . . . . . 36
ARTICLE V - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 36
5.1 Existence and Power . . . . . . . . . . . . . . . . . 36
5.2 Corporate Authorization; No Contravention . . . . . . 37
5.3 Governmental Authorization . . . . . . . . . . . . . . 37
5.4 Binding Effect . . . . . . . . . . . . . . . . . . . . 37
5.5 Litigation . . . . . . . . . . . . . . . . . . . . . . 37
5.6 No Default . . . . . . . . . . . . . . . . . . . . . . 38
5.7 Financial Condition. . . . . . . . . . . . . . . . . . 38
5.8 ERISA Compliance . . . . . . . . . . . . . . . . . . . 38
5.9 Use of Proceeds; Margin Regulations. . . . . . . . . . 39
5.10 Real Property. . . . . . . . . . . . . . . . . . . . . 39
5.11 Equipment. . . . . . . . . . . . . . . . . . . . . . . 39
5.12 Contracts. . . . . . . . . . . . . . . . . . . . . . . 39
5.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 40
5.14 Environmental Matters. . . . . . . . . . . . . . . . . 40
5.15 Regulated Entities . . . . . . . . . . . . . . . . . . 41
5.16 No Burdensome Restrictions . . . . . . . . . . . . . . 41
5.17 Copyrights, Patents, Trademarks and Licenses,
etc. . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.18 Capital Stock. . . . . . . . . . . . . . . . . . . . . 41
5.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . 42
5.20 Business Activity. . . . . . . . . . . . . . . . . . . 42
5.21 Accreditation, Etc . . . . . . . . . . . . . . . . . . 42
5.23 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . 42
5.24 Initial Acquisition Agreements . . . . . . . . . . . . 42
5.25 Full Disclosure. . . . . . . . . . . . . . . . . . . . 42
ARTICLE VI - AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 43
6.1 Financial Statements . . . . . . . . . . . . . . . . . 43
6.2 Certificates; Other Information. . . . . . . . . . . . 44
6.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . 45
6.4 Preservation of Corporate Existence, Etc . . . . . . . 46
6.5 Maintenance of Property. . . . . . . . . . . . . . . . 46
6.6 Insurance. . . . . . . . . . . . . . . . . . . . . . . 47
6.7 Payment of Obligations . . . . . . . . . . . . . . . . 47
6.8 Compliance with Laws . . . . . . . . . . . . . . . . . 47
6.9 Compliance with ERISA. . . . . . . . . . . . . . . . . 47
6.10 Inspection of Property and Books and Records . . . . . 47
6.11 Environmental Laws . . . . . . . . . . . . . . . . . . 48
6.12 Acquisitions . . . . . . . . . . . . . . . . . . . . . 48
6.13 Concentration Account. . . . . . . . . . . . . . . . . 49
6.14 Financial Covenants. . . . . . . . . . . . . . . . . . 49
6.15 Required Future Action . . . . . . . . . . . . . . . . 49
ARTICLE VII - NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 50
7.1 Limitation on Liens. . . . . . . . . . . . . . . . . . 50
7.2 Disposition of Assets. . . . . . . . . . . . . . . . . 51
7.3 Consolidations and Mergers . . . . . . . . . . . . . . 52
7.4 Change of Business . . . . . . . . . . . . . . . . . . 52
7.5 Loans and investments. . . . . . . . . . . . . . . . . 52
7.6 Limitation on Indebtedness . . . . . . . . . . . . . . 52
7.7 Contingent Obligations . . . . . . . . . . . . . . . . 52
7.8 Lease Obligations. . . . . . . . . . . . . . . . . . . 52
7.9 Restricted Payments. . . . . . . . . . . . . . . . . . 53
7.10 Prepayments of Subordinated Permitted
Indebtedness . . . . . . . . . . . . . . . . . . . . . 53
7.11 Transactions with Affiliates . . . . . . . . . . . . . 53
7.12 Use of Proceeds. . . . . . . . . . . . . . . . . . . . 53
7.13 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . 54
7.14 Accounting Changes . . . . . . . . . . . . . . . . . . 54
ARTICLE VIII - EVENTS OF DEFAULT . . . . . . . . . . . . . . . . 54
8.1 Event of Default . . . . . . . . . . . . . . . . . . . 54
8.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . 57
8.3 Rights Not Exclusive . . . . . . . . . . . . . . . . . 57
ARTICLE IX - THE AGENT . . . . . . . . . . . . . . . . . . . . . 58
9.1 Appointment and Authorization. . . . . . . . . . . . . 58
9.2 Delegation of Duties . . . . . . . . . . . . . . . . . 58
9.3 Liability of Agent . . . . . . . . . . . . . . . . . . 58
9.4 Reliance by Agent . . . . . . . . . . . . . . . . . . 59
9.5 Notice of Default . . . . . . . . . . . . . . . . . . 59
9.6 Credit Decision . . . . . . . . . . . . . . . . . . . 59
9.7 Indemnification of Agent . . . . . . . . . . . . . . . 60
9.8 Agent in Individual Capacity . . . . . . . . . . . . . 61
9.9 Successor Agent. . . . . . . . . . . . . . . . . . . . 61
9.10 Withholding Tax. . . . . . . . . . . . . . . . . . . . 61
ARTICLE X - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . 63
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . 63
10.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . 64
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . 64
10.4 Costs and Expenses . . . . . . . . . . . . . . . . . . 65
10.5 Borrower Indemnification . . . . . . . . . . . . . . . 65
10.6 Payments Set Aside . . . . . . . . . . . . . . . . . . 66
10.7 Successors and Assigns . . . . . . . . . . . . . . . . 66
10.8 Assignments, Participations, etc . . . . . . . . . . . 66
10.9 Confidentiality. . . . . . . . . . . . . . . . . . . . 68
10.10 Set-off. . . . . . . . . . . . . . . . . . . . . . . . 69
10.11 Notification of Addresses, Lending Offices, Etc. . . . 69
10.12 Counterparts . . . . . . . . . . . . . . . . . . . . . 69
10.13 Severability . . . . . . . . . . . . . . . . . . . . . 69
10.14 No Third Parties Benefited . . . . . . . . . . . . . . 70
10.15 Governing Law and Jurisdiction . . . . . . . . . . . . 70
10.16 Waiver of Jury Trial . . . . . . . . . . . . . . . . . 70
10.17 Entire Agreement . . . . . . . . . . . . . . . . . . . 71
10.18 Additional Credit Parties. . . . . . . . . . . . . . . 71
EXHIBITS
Exhibit A Form of Promissory Note
Exhibit B Form of Guaranty
Exhibit C Form of Security Agreement
Exhibit D Form of Compliance Certificate
Exhibit E Form of Notice of Borrowing
Exhibit F Form of Notice of Conversion/Extension
Exhibit G Form of Certificate re Real Property and Business
Locations
Exhibit H Terms and Conditions of Permitted Subordinated
Indebtedness
Exhibit I Form of Legal Opinion of Counsel to GMS Holding
and Its Subsidiaries
Exhibit J Form of Assignment and Acceptance Agreement
Exhibit K Form of Credit Agreement Supplement
SCHEDULES
Schedule 1.1(b) Existing Permitted Indebtedness
Schedule 2.1 Commitment
Schedule 4.1(f) Initial Permitted Acquisitions
Schedule 4.2(e) Perfection of Liens and Security Interests
Schedule 5.1 Jurisdictions of Subsidiaries
Schedule 5.5 Litigation
Schedule 5.8 ERISA Compliance
Schedule 5.12 Material Contracts
Schedule 5.14 Environmental Matters
Schedule 5.15 Regulated Entities
Schedule 5.17 Intellectual Property Rights
Schedule 5.18 Ownership of Subsidiaries
Schedule 5.19 Insured Properties
Schedule 7.1 Existing Liens
Schedule 7.6 Indebtedness on Closing Date
Schedule 7.7 Contingent Obligations of Credit Parties as
of Commitment Closing Date and Closing Date
Schedule 10.2 Addresses
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of October 10, 1996, among GMS
DENTAL GROUP MANAGEMENT, INC., a Delaware corporation (the "Borrower"), GMS
DENTAL GROUP, INC., a Delaware corporation ("GMS Holding"), GMS CALIFORNIA
ACQUISITION COMPANY, a Delaware corporation ("GMS California"), GMS HAWAII
ACQUISITION COMPANY, a Delaware corporation ("GMS Hawaii"), and the Additional
Credit Parties (as defined in Section 10.18 hereof) (each of the Borrower, GMS
Holding, GMS California, GMS Hawaii and the Additional Credit Parties herein
called a "Credit Party" and collectively the "Credit Parties"), the financial
institutions from time to time party to this Agreement (collectively, the
"Banks" and individually, a "Bank"), and IMPERIAL BANK, as agent (the "Agent")
for the Banks.
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. The following terms have the following meanings:
"Acquisition" means any transaction or series of related transactions for
the purpose of or resulting, directly or indirectly, in (a) the acquisition of
all or substantially all of the assets of a Person, or of any line or segment of
business or division of a Person or (b) the acquisition of in excess of 50% of
the capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary.
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management policies of the other Person, whether
through the owners of voting securities, membership interests, by contract,
otherwise; provided that no Person shall be deemed to be an Affiliate of GMS
Holding or any of its Subsidiaries solely as a result of management or
consulting agreements between such Person and GMS Holding or any of its
Subsidiaries executed by GMS Holding or any of its Subsidiaries in the ordinary
course of business and pursuant to which GMS Holding or its Subsidiaries provide
such services.
"Agent" means Imperial Bank in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 9.9 hereof.
"Agent-Related Persons" means Imperial Bank and any successor agent arising
under Section 9.9 hereof, together with
their respective Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Agent's Payment Office" means 0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxx Hills, 4th
Floor, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, or such other address as the Agent may
from time to time specify.
"Agreement" means this Credit Agreement.
"Applicable Margin" means, subject to the following proviso, the rates per
annum set forth below:
LEVERAGE RATIO REFERENCE RATE LIBOR
MARGIN MARGIN
less than 2.50:1 0.5% 2.50% o
2.50:1 but less than 3.00:1 0.5% 2.75% o
3.00:1 but less than 3.50:1 0.75% 3.00% o
3.50:1 1.0% 3.25%
The Applicable Margin shall be based on the Leverage Ratio as set forth in the
most recent Compliance Certificate, and shall be effective from and including
the date required by Section 6.2(b) hereof if the Agent receives such Compliance
Certificate on or before such date, to but excluding the next date of delivery
of the Compliance Certificate required by Section 6.2(b) hereof; provided,
however, that if the Agent does not receive the Compliance Certificate by the
date required by Section 6.2(b) hereof, the Applicable Margin shall be,
effective as of such date, the highest Applicable Margin to but excluding the
date the Agent receives such Compliance Certificate. Subject to the foregoing
proviso, until the delivery of the first Compliance Certificate after the
Closing Date, the Applicable Margin for Prime Rate Loans shall be 1.0% and the
Applicable Margin for LIBOR Loans shall be 3.25%.
"Assignee" has the meaning specified in Section 10.8.
"Attorney Costs" means and includes all reasonable fees and disbursements
of any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause hereto.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. 101, et seq.).
"Base LIBOR" means, for any Interest Period, the rate of interest per annum
determined by the Agent to be the arithmetic mean (rounded upward, if necessary,
to the nearest 1/16th of it) of the rates of interest per annum notified to the
Agent by the
Reference Bank as the rate of interest at which dollar deposits in the
approximate amount of the LIBOR Loan to be made by the Reference Bank, and
having a maturity comparable to such Interest Period, would be offered to major
banks in the London interbank market at their request at approximately 11:00
a.m. (London time) two (2) Business Days prior to the commencement of such
Interest Period.
"Borrower's Business" means providing, directly or indirectly, management,
administrative or other support services to providers of dental care services.
"Borrowing" means a Borrowing hereunder consisting of Loans made on the
same day by the Banks ratably according to their respective Pro Rata Shares and,
in the case of LIBOR Loans, having the same Interest Periods.
"Borrowing Date" means any date on which a Borrowing occurs under Sections
2.3 or 2.12 hereof.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in Los Angeles are authorized or required by law to close
and, if the applicable Business Day relates to any LIBOR Loan, means, in
addition to the foregoing, such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of GMS Holding and its
Subsidiaries for fixed or capital assets made during such period which, in
accordance with GAAP, would be classified as capital expenditures; and
(b) the aggregate amount of all monetary obligations of GMS Holding
or any of its Subsidiaries under any Capital Lease incurred during such period.
"Capital Lease" means any lease of property which in accordance with GAAP
should be capitalized on the lessee's balance sheet or disclosed in a footnote
thereto as a capitalized lease.
"Change of Control" means the acquisition by any Person or by two or more
Persons acting in concert of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 20% or more of the outstanding shares of voting stock of GMS
Holding or
the Borrower.
"Closing Date" means the date on which all conditions precedent set forth
in Section 4.2 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder.
"Combined Commitments" shall have the meaning set forth in Section 2.1
hereof.
"Commitment," as to each Bank, has the meaning specified in Section 2.1.
"Commitment Closing Date" means the date on which all conditions precedent
set forth in Section 4.1 are satisfied or waived by all Banks.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit D attached hereto.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or service primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; or (c) to purchase
any materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such service shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered. The amount of any Contingent Obligation shall, in the
case of Guaranty Obligations, be deemed equal to the stated or determinable
amount of the primary obligation-in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and in the case of other
Contingent Obligations, shall be equal to the maximum reasonably anticipated
liability in respect thereof.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Conversion/Continuation Date" means any date on which, under Section 2.4,
the Borrower (a) converts Loans of one Type to another Type, or (b) continues as
Loans of the same Type, but with a new Interest Period, Loans having Interest
Periods expiring on such date.
"Coverage Ratio" means, as of the last day of any fiscal quarter of GMS
Holding, the ratio of (i) EBITDAR for the period of four consecutive fiscal
quarters ending on or most recently ended prior to such date, to (ii) Fixed
Charges for such period; provided, however, that (A) the Coverage Ratio as of
the last day of each of the fiscal quarters ending December 31, 1996, March 31,
1997, June 30, 1997 and September 30, 1997 shall be determined by multiplying
EBITDAR as of each such date by four (4) and (B) the Coverage Ratio as of the
last day of each of the subsequent fiscal quarters, commencing with the fiscal
quarter ending December 31, 1997, shall be determined by multiplying EBITDAR for
two fiscal quarters ending on such date by two (2), in each case so as to
represent the four-quarter equivalent of EBITDAR for such periods.
"Current Assets" means, for any period, for GMS Holding and its
Subsidiaries on a consolidated basis, all items that would, in accordance with
GAAP, be classified as current assets of GMS Holding and its Subsidiaries, after
deducting adequate reserves in each case in which a reserve is proper in
accordance with GAAP.
"Current Liabilities" means, for any period, for GMS Holding and its
Subsidiaries on a consolidated basis, all items that would, in accordance with
GAAP, be classified as current liabilities of GMS Holding and its Subsidiaries,
including the current portion of long-term Indebtedness and the Loans hereunder.
"Current Ratio" means, as of the last day of any fiscal quarter of GMS
Holding, the ratio of (i) Current Assets for such period to (ii) Current
Liabilities for such period.
"Default" means any event or circumstance which, with the giving of notice,
the lapse of time, or both, would (if not cured or otherwise remedied during
such time) constitute an Event of Default.
"Dental Practices" means the dental groups engaged in the practice of
dentistry for which the Borrower, directly or indirectly, provides management,
administrative or other support services under long-term management agreements
or other similar agreements and which under GAAP are considered Subsidiaries of
the Borrower for the purposes of determining the Persons whose financial results
are to be consolidated with those of the Borrower.
"Dollars," "dollars" and "$" each mean lawful money of the United States.
"EBITDAR" means, for any fiscal period, for GMS Holding and its
Subsidiaries on a consolidated basis, earnings before Interest Expense, income
taxes, depreciation, amortization and Operating Lease Rentals.
"Eligible Assignee" means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having a combined capital and
surplus of at least $100,000,000, (b) a commercial bank organized under the laws
of any other country which is a member of the organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
United States and (c) a Person that is primarily engaged in the business of
commercial banking and that is (i) a Subsidiary of a Bank, (ii) a Subsidiary of
a Person of which a Bank is a Subsidiary, or (iii) a Person of which a Bank is a
Subsidiary, in each case approved by the Borrower pursuant to Section 10.8
hereof.
"Environmental Claims" means all claims asserted by any Governmental
Authority or other Person alleging potential liability or responsibility for
violation of any Environmental Law, or for release or injury to the environment.
"Environmental Laws" means all federal, state or local laws, statutes,
rules, regulations, ordinances and codes, together with all administrative
orders, directed duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the Borrower or any
ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer
Plan is in reorganization; (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" means any of the events or circumstances specified in
Section 8.1.
"Exchange Act" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)11) on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"Fee Letter" has the meaning specified in Section 2.9(a).
"Fixed Charges" means, for any period and without duplication, for GMS
Holding and its Subsidiaries on a consolidated basis, the sum of (i) Interest
Expense and fees paid on, and amortization of debt discount in respect of, all
Indebtedness plus (ii) Operating Lease Rentals paid during such period plus
(iii) the aggregate principal amount of all current maturities of long term
Indebtedness (including the principal portion of rentals under Capital Leases)
obligated to be paid by GMS Holding and its Subsidiaries.
"FRB" means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S. accounting
profession).
"GMS Holding" means GMS Dental Group, Inc., a newly-formed Delaware
corporation, and the sole shareholder of the Borrower.
"Governmental Approvals" shall mean any authorization, consent, approval,
license, lease, ruling, permit, waiver, exemption, filing, registration or
notice by or with any Governmental Authority.
"Governmental Authority" means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the definition of
"Contingent Obligation."
"Indebtedness" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than trade
payables entered into in the ordinary course of business on ordinary terms); (c)
all non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property); (f) all obligations with respect to Capital Leases; (g)
all indebtedness referred to in clauses (a) through (f) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including accounts
and contracts rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; and (h) all
Guaranty
Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (f) above.
"Indemnified Liabilities" has the meaning specified in Section 10.5.
"Indemnified Person" has the meaning specified in Section 10.5.
"Independent Auditor" has the meaning specified in Section 6.1(a).
"Insolvency Proceeding" means (a) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors; undertaken under U.S. Federal, state or foreign law, including the
Bankruptcy Code.
"Interest Expense" of GMS Holding and its Subsidiaries for any period means
the aggregate amount of interest paid, accrued or scheduled to be paid or
accrued in respect of any Indebtedness (including the interest portion of
rentals under Capital Leases) and all but the principal component of payments in
respect of conditional sales, equipment trust or other title retention
agreements or under a Capital Lease paid, accrued or scheduled to be paid or
accrued by GMS Holding and its Subsidiaries during such period, in each case
determined in accordance with GAAP on a consolidated basis and excluding
periodic maintenance, insurance, taxes and similar charges not properly
characterized as interest expense under GAAP.
"Interest Payment Date" means, as to any LIBOR Loan, the last day of each
Interest Period applicable to such Loan and, as to any Prime Rate Loan, the last
Business Day of each calendar quarter; provided, however, that if any Interest
Period for a LIBOR Loan exceeds three months, the date that falls three months
after the beginning of such Interest Period and after each Interest Payment Date
thereafter is also an Interest Payment Date.
"Interest Period" means, as to any LIBOR Loan, the period commencing on the
Borrowing Date on which such Loan is disbursed, or on the
Conversion/Continuation Date on which the Loan is converted into or continued as
a LIBOR Loan, and ending on the date one, two, three or six months thereafter as
selected by the Borrower in its Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be; provided, however, that:
(a) if any Interest Period would otherwise end on a
day that is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and
(c) no Interest Period for any Loan shall extend beyond the Maturity
Date.
"IRS" means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.
"Lending Office" means, as to any Bank, the office or as its "Lending
Office" or "Domestic Lending Office" or "Offshore Lending Office," as the case
may be, on Schedule 10.2 attached hereto, or such other office or offices as
such Bank may from time to time notify the Borrower and the Agent.
"Leverage Ratio" means, as of the last day of any fiscal quarter of GMS
Holding, the ratio of (i) the sum of (x) the aggregate principal amount of
Indebtedness (including the principal portion of rentals under Capital Leases
and Permitted Subordinated Indebtedness) of GMS Holding and its Subsidiaries on
a consolidated basis which matures more than one year from the date of
determination plus (y) the aggregate principal amount of all Indebtedness
(including the principal portion of rentals under Capital Leases) which is
scheduled to be paid by GMS Holding and its Subsidiaries on a consolidated basis
within one year from the date of determination to (ii) the Operating Cash Flow
for the period of four consecutive fiscal quarters ending on such date;
provided, however, that (A) the Leverage Ratio as of the last day of each of the
fiscal quarters ending December 31, 1996, March 31, 1997, June 30, 1997 and
September 30, 1997 shall be determined by multiplying Operating Cash Flow as of
each such date by four (4) and (B) the Leverage Ratio as of the last day of each
of the subsequent fiscal quarters, commencing with the fiscal quarter ending
December 31, 1997, shall be determined by multiplying Operating Cash Flow for
two fiscal quarters ending on such date by two (2), in each case so as to
represent the four-quarter equivalent of Operating Cash Flow for such periods.
"LIBOR Loan" means any Loan that bears interest based on the LIBOR Rate.
"LIBOR Rate" means, for any Interest Period with respect to a LIBOR Loan,
the rate per annum (rounded upward, if necessary,
to the nearest 1/100 of 1%) determined by the Agent to be equal to the Base
LIBOR for such Loan for such Interest Period divided by 1 minus the Reserve
Requirement for such Loan for such Interest Period.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law) and any
contingent or other agreement to provide any of the foregoing, but not including
the interest of a lessor under an operating lease.
"Loan" means a Loan by a Bank to the Borrower under Section 2.3, and may be
a LIBOR Loan or a Prime Rate Loan (each, a "Type" of Loan).
"Loan Documents" means this Agreement, any Notes, the Fee Letter, the
Guaranty, the Security Agreement and all other documents delivered to the Agent
or any Bank in connection herewith.
"Majority Banks" means at any time Banks holding more than 50% of the then
aggregate unpaid principal amount of the Loans, or, if no such principal amount
is then outstanding, Banks having in excess of 50% of the Combined Commitments.
"Margin Stock" means "margin stock" as such term is defined in Regulation
G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties or condition
(financial or otherwise) of GMS Holding and its Subsidiaries taken as a whole;
(b) a material impairment of the ability of GMS Holding or any of its
Subsidiaries, including the Borrower, to perform under any Loan Document and to
avoid any Event of Default; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against GMS Holding or any of its
Subsidiaries of any Loan Document.
"Maturity Date" shall mean the fifth anniversary of the Closing Date.
"Multiemployer Plan" means a "multiemployer plan", within the meaning of
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes,
is making, or is obligated to make
contributions or, during the preceding three calendar years, has made, or been
obligated to make, contributions.
"Net Worth" means, for any period, for GMS Holding and its Subsidiaries on
a consolidated basis an amount equal to the excess of Total Assets over Total
Liabilities.
"Note" means a promissory note executed by the Borrower in favor of a Bank
at its request pursuant to Section 2.2(b) substantially in the form of Exhibit A
attached hereto and evidencing such Bank's Loans.
"Notice of Borrowing" means a notice in substantially the form of Exhibit E
attached hereto.
"Notice of Conversion/Continuation" means a notice in substantially the
form of Exhibit F attached hereto.
"Obligations" means all advances, debts, liabilities, obligations,
covenants and duties arising under any Loan Document, owing by the Borrower to
any Bank, the Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
"Operating Cash Flow" means, for any period, for GMS Holding and its
Subsidiaries (i) net income (before extraordinary gains but after extraordinary
losses) for such period plus (ii) Interest Expense, income tax expense,
depreciation and amortization (all to the extent deducted in determining net
income) for such period, all determined on a consolidated basis in accordance
with GAAP.
"Operating Lease" means any noncancellable lease of property (real,
personal or mixed) which does not constitute a Capital Lease.
"Operating Lease Rentals" means all rents and other amounts paid or accrued
by the Borrower and its Subsidiaries under and with respect to operating Leases
during and for the relevant period, but excluding periodic maintenance,
insurance, taxes and similar charges not properly characterized as rent under
GAAP.
"Organization Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation.
"Other Taxes" means any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise
with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in Section 10.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.
"Pension Plan" means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Borrower sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.
"Permitted Acquisitions" means Acquisitions by the Borrower or any of its
Subsidiaries of assets of a Person which are to be used by Borrower or any of
its Subsidiaries in Borrower's Business, including, without limitation, the
Acquisitions described in Schedule 4.1(f) hereto (collectively, the "Initial
Permitted Acquisitions"); provided, however, that (a) immediately before and
after giving effect to the consummation of each such Acquisition, no Default has
occurred and is continuing or will exist; (b) for each such Acquisition, the
prior written consent of the Agent and the Majority Banks has been obtained; and
(c) the Borrower shall have complied with the requirements of Section 6.12(a)
hereof.
"Permitted Capital Expenditures" means Capital Expenditures made or used by
the Borrower or any of its Subsidiaries in connection with the Borrower's
Business, provided that (a) immediately before and after giving effect to the
consummation of each such Capital Expenditure, no Default has occurred and is
continuing or will exist, (b) such Capital Expenditures in excess of $250,000 in
the aggregate, computed on a cumulative consolidated basis for the Borrower and
the Subsidiaries, during any fiscal year of the Borrower shall have been
approved in writing by the Agent and the Majority Banks; and (c) the Borrower
shall have complied with the requirements of Section 6.12(b) hereof.
"Permitted Capital Leases" means Capital Leases entered into by the
Borrower or any of its Subsidiaries in the ordinary course of business during
any fiscal year of the Borrower, provided that the aggregate amount of all
obligations created, incurred or assumed thereunder during such fiscal year does
not exceed $500,000, computed on a cumulative consolidated basis for the
Borrower and the Subsidiaries.
"Permitted Encumbrances" has the meaning specified in Section 7.1 hereof.
"Permitted Indebtedness" means:
(i) The Obligations of the Borrower and its Subsidiaries under
the Loan Documents;
(ii) Indebtedness of the Borrower and its Subsidiaries listed
in Schedule 1.1(b) and existing on the date of this Agreement;
(iii) Indebtedness of the Borrower and its Subsidiaries arising
from the endorsement of instruments for collection in the ordinary course of the
Borrower's or a Subsidiary's business ;
(iv) Indebtedness of the Borrower and its Subsidiaries for
trade accounts payable, provided that (A) such accounts arise in the ordinary
course of business and (B) no material part of such account is more than ninety
(90) days past due (unless subject to a bona fide dispute and for which adequate
reserves have been established);
(v) Permitted Subordinated Indebtedness;
(vi) Indebtedness of the Borrower and its Subsidiaries under
initial or subsequent refinancings of any Indebtedness permitted by clause (ii)
above, provided that (A) the principal amount of any such refinancing does not
exceed the principal amount of the Indebtedness being refinanced and (B) the
material terms and provisions of any such refinancing (including maturity,
redemption, prepayment, default and subordination provisions) are no less
favorable to the Banks than the Indebtedness being refinanced;
(vii) Indebtedness of the Borrower and its Subsidiaries under
purchase money financing incurred by the Borrower or any of its Subsidiaries to
finance the acquisition by such Person of fixtures or equipment; provided,
however, that in each case (A) such Indebtedness is incurred at the time of the
acquisition of such fixture or equipment, (B) such Indebtedness does not exceed
100% of the purchase price of such fixture or equipment so financed and (C) such
Indebtedness in the aggregate at any time outstanding during any fiscal year of
the Borrower, together with the Indebtedness permitted under subsection (viii)
below, does not exceed $250,000;
(viii) Indebtedness of the Borrower and its Subsidiaries with
respect to Surety Instruments incurred in the ordinary course of business;
(ix) Guaranty Obligations of the Borrower in respect of
Permitted Indebtedness of its Subsidiaries;
(x) Indebtedness of the Borrower to any of its Subsidiaries,
Indebtedness of any of the Borrower's Subsidiaries to the Borrower or
Indebtedness of any of the Borrower's
Subsidiaries to any the Borrower's other Subsidiaries; provided, however, that
(A) such Subsidiaries shall be Credit Parties and (B) such Indebtedness shall be
evidenced by promissory notes and pledged to the Agent pursuant to the terms of
the Security Agreement.
"Permitted Market Investments" means investments having a maturity of not
greater than 180 days from the date of acquisition thereof in (a) obligations
issued or unconditionally guaranteed by the United States or any agency thereof,
(b) certificates of deposit of any commercial bank organized under the laws of
the United States or any State thereof reasonably acceptable to the Agent or (c)
other investments agreed to from time to time between the Borrower and the
Agent.
"Permitted Subordinated Indebtedness" means unsecured Indebtedness of the
Borrower or its Subsidiaries evidencing seller financing incurred in connection
with a Permitted Acquisition, which Indebtedness is subordinated to the
Obligations upon substantially the terms set forth on Exhibit H attached hereto
or upon such other terms as may be satisfactory to the Agent and the Majority
Banks.
"Person" means an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Borrower sponsors or maintains or to which the Borrower makes, is
making, or is obligated to make contributions and includes any Pension Plan.
"Prime Rate" means, for any day, the rate of interest in effect for such
day as publicly announced from time to time by Imperial Bank in Los Angeles,
California, as its "prime rate." (The "prime rate" is a rate set by Imperial
Bank based upon various factors including Imperial Bank's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate.) Any change in the prime rate announced by Imperial Bank
shall take effect at the opening of business on the day specified in the public
announcement of such change.
"Prime Rate Loan" means a Loan that bears interest based on the Prime Rate.
"Pro Rata Share" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at such
time of such Bank's Commitment divided by the Combined Commitments of all Banks.
"Real Property Certificate" means a certificate
substantially in the form of Exhibit G attached hereto.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA or the regulations thereunder, other than any such event for which the 30-
day notice requirement under ERISA has been waived in regulations issued by the
PBGC.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Reserve Requirement" shall mean, for any Interest Period with respect to a
LIBOR Loan, the average maximum rate in effect at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding one billion Dollars
against "Eurocurrency liabilities" (as such term is used in Regulation D).
Without limiting the effect of the foregoing, the Reserve Requirement shall
include any other reserves required to be maintained by such member banks by
reason of any regulatory change with respect to (i) any category of liabilities
that includes deposits by reference to which the LIBOR Rate is to be determined
as provided in the definition of "LIBOR Rate" in this Article I or (ii) any
category of extensions of credit or other assets that includes LIBOR Loans.
"Responsible Officer" means a chief executive officer, a president or a
chief financial officer of GMS Holding, or any other officer having
substantially the same authority and responsibility.
"Revolving Termination Date" means the earlier to occur
(a) the second anniversary of the Closing Date; and
(b) the date on which the Combined Commitments terminate in
accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.
"Solvent" means, when used with respect to any Person, that at the time of
determination:
(a) the fair value of its assets (both at fair valuation and at
present fair salable value) is in excess of the total amount of all of its debts
and liabilities, including contingent, subordinated, unmatured and unliquidated
liabilities; and
(b) it is then able to pay its debts as they become due; and
(c) it owns property having a value (both at fair valuation and at
present fair salable value) in excess of the total amount required to pay its
debts; and
(d) it has capital sufficient to carry on its business.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity interests (in
the case of Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of, the Person, or
a combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of the Borrower. The Dental
Practices shall not be deemed to be Subsidiaries except as provided in Section
1.3 hereof.
"Surety Instruments" means all letters of credit (including standby and
commercial), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Taxes" means any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Bank and the Agent, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by each Bank's net
income by the jurisdiction (or any politic subdivision thereof) under the laws
of which such Bank or the Agent, as the case may be, is organized or maintains a
lending office.
"Total Assets" means, for GMS Holding and its Subsidiaries on a
consolidated basis, all property, whether real, personal, tangible, intangible
or otherwise, that, in accordance with GAAP, should be included in determining
total assets as shown on the assets side of a consolidated balance sheet.
"Total Liabilities" means, for GMS Holding and its Subsidiaries on a
consolidated basis, all obligations that, in accordance with GAAP, should be
included in determining total liabilities as shown on the liabilities side of a
consolidated balance sheet.
"Type" has the meaning specified in the definition of "Loan."
"Unfunded Pension Liability" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance
with the assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.
"United States" and "U.S." each means the United States of America.
"Warrants" means warrants to purchase two and one-half percent (2.5%) of
GMS Holding's common stock, on a fully-diluted basis, at an exercise price of
$1.762 per share.
"Working Capital Loan" means a Loan of any Type made by a Bank to the
Borrower under Section 2.3 hereof the proceeds of which are used to meet the
working capital requirements of the Borrower.
1.2 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced. The term "including" is not limiting and means "including
without limitation." In the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and including'" the words
"to" and "until" each mean "to but excluding," and the word "through" means "to
and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto
(including, in the case of this Agreement, all amendments and modifications
validly entered into pursuant to Section 10.1 hereof), but only to the extent
such amendments and other modifications to agreements other than this Agreement
and the other Loan Documents are not prohibited by the terms of any Loan
Document, and (ii) references to any statute or regulation are to be construed
as including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the Borrower
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agent merely because of the
Agent's or Banks, involvement in their preparation.
1.3 Accounting Principles. Unless the context otherwise clearly requires,
(a) all accounting terms not expressly defined herein shall be construed, and
all financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied, (b) references herein to "fiscal
year" and "fiscal quarter" refer to such fiscal periods of GMS Holding (c)
references herein to "Subsidiary" in Sections 5.7, 6.1, 6.2 and 6.14 hereof
include Dental Practices.
ARTICLE II
THE CREDITS
2.1 Amounts and Terms of Commitments. Each Bank severally agrees, on the
terms and conditions set forth herein, to make revolving loans to the Borrower
(each such loan, a "Loan") from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date, in an aggregate
amount not to exceed at any time outstanding the amount set forth on Schedule
2.1 attached hereto (such amount as the same may be reduced under Section 2.5 or
as a result of one or more assignments under Section 10.8, the Bank's
"Commitment" and all such Commitments, referred to herein, collectively, as the
"Combined Commitments"); provided, however, that, after giving effect to any
Borrowing, (a) the aggregate principal amount of all outstanding Loans shall not
at any time exceed the Combined Commitments and (b) the aggregate principal
amount of all outstanding Working Capital Loans shall not at any time exceed
$2,000,000. Within the limits of each Bank's Commitment, and subject to the
other terms and conditions hereof, the Borrower may borrow under this Section
2.1, prepay under Section 2.6 and reborrow under this Section 2.1.
2.2 Loan Accounts.
(a) The Loans made by each Bank shall be evidenced by one or more
loan accounts or records maintained by such Bank in the ordinary course of
business. The loan accounts or records maintained by the Agent and each Bank
shall be conclusive absent manifest error of the amount of the Loans made by the
Banks to the Borrower and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit
or otherwise affect the obligation of the Borrower hereunder to pay any amount
owing with respect to the Loans.
(b) Upon the request of any Bank made through the Agent, the Loans
made by such Bank may be evidenced by one or more Notes, instead of loan
accounts. Each such Bank shall endorse on the schedules annexed to its Note the
date, amount and maturity of each Loan made by it and the amount of each payment
of principal made by the Borrower with respect thereto. Each such Bank is
irrevocably authorized by the Borrower to endorse its Note and each Bank's
record shall be conclusive absent manifest error; provided, however, that the
failure of a Bank to make, or an error in making, a notation thereon with
respect to any Loan shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any such Note to such Bank.
2.3 Procedure for Borrowing.
(a) Each Borrowing shall be made upon the Borrower's irrevocable
telephonic notice (such notice to be immediately confirmed in writing) delivered
to the Agent in the form of a Notice of Borrowing (which notice must be received
by the Agent prior to 9:00 a.m. (Los Angeles time) (i) three (3) Business Days
prior to the requested Borrowing Date, in the case of LIBOR Loans, and (ii) one
(1) Business Day prior to the requested Borrowing Date, in the case of Prime
Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be (1) in the case
of a Prime Rate Loan, in an aggregate minimum amount of $100,000 or any multiple
of $100,000 in excess thereof and (2) in the case of a LIBOR Loan, in an
aggregate minimum amount of $1,000,000 or any multiple of $500,000 in excess
thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Borrowing; and
(D) with respect to the LIBOR Loans only, the duration of the
Interest Period applicable to such Loans included in such notice. If the Notice
of Borrowing fails to specify the duration of the Interest Period for any
Borrowing comprised of LIBOR Loans, such Interest Period shall be three months.
(b) The Agent will promptly notify each Bank of receipt of any
Notice of Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Agent for the account of the Borrower at the Agent's
Payment Office by 12:00 noon (Los Angeles time) on the Borrowing Date requested
by the Borrower in
funds immediately available to the Agent. The proceeds of all such Loans will
then be made available to the Borrower or the Borrower's designee by the Agent
by wire transfer in accordance with written instructions provided to the Agent
by the Borrower in like funds as received by the Agent.
(d) After giving effect to any Borrowing, there may not be more than
3 different Interest Periods in effect in respect of all LIBOR Loans then
outstanding.
2.4 Conversion and Continuation Elections for Borrowings.
(a) The Borrower may, upon irrevocable telephonic notice (such
notice to be immediately confirmed in writing), to the Agent in accordance with
Section 2.4(b) elect, as of any Business Day, in the case of Prime Rate Loans,
or as of the last day of the applicable Interest Period, in the case of LIBOR
Loans, to convert any such Loans (or any part thereof in an amount not less than
$1,000,000, or that is in an integral multiple of $500,000 in excess thereof);
provided, however, that if at any time the aggregate amount of LIBOR Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Loans shall automatically
convert into Prime Rate Loans, and on and after such date the right of the
Borrower to continue such Loans as, and convert such Loans into, LIBOR Loans
shall terminate.
(b) The Borrower shall deliver a Notice of Conversion/Continuation
to be received by the Agent not later than 9:00 a.m. (Los Angeles time) at least
(i) three (3) Business Days in advance of the Conversion/Continuation Date, if
the Loans are to be converted into or continued as LIBOR Loans; and (ii) one (1)
Business Day in advance of the Conversion/Continuation Date, if the Loans are to
be converted into Prime Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or continued;
(C) the Type of Loans resulting from the proposed conversion or
continuation; and
(D) other than in the case of conversions into Prime Rate
Loans, the duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
LIBOR Loans, the Borrower has failed to select timely a new Interest Period to
be applicable to such LIBOR Loans, or if any Default or Event of Default then
exists, the Borrower shall be deemed to have elected to convert such LIBOR Loans
into Prime Rate Loans effective as of the expiration date of such Interest
Period.
(d) The Agent will promptly notify each Bank of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Borrower, the Agent will promptly notify each Bank and the Borrower of the
details of any automatic conversion. All conversions and continuation shall be
made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise agree, during the existence
of a Default or Event of Default, the Borrower may not elect to have a Loan be
made as or converted into or continued as a LIBOR Loan.
(f) After giving effect to any conversion or continuation of Loans,
there may not be more than three different Interest Periods in effect in respect
of all LIBOR Loans then outstanding.
2.5 Voluntary Termination or Reduction of Commitments. The Borrower may,
upon not less than five (5) Business Days' prior notice to the Agent, terminate
the Combined Commitments, or permanently reduce the Combined Commitments by an
aggregate minimum amount of $1,000,000 or any multiple of $500,000 in excess
thereof, unless, after giving effect thereto and to any prepayments of Loans
made on the effective date thereof, the then outstanding principal amount of the
Loans would exceed the amount of the Combined Commitments then in effect. Once
reduced in accordance with this Section 2.5, the Combined Commitments may not be
increased. Any reduction of the Combined Commitments shall be applied to each
Bank according to its Pro Rata Share. All accrued unused commitment fees due and
owing, pursuant to Section 2.9(b) hereof, to, but not including the effective
date of any reduction or termination of Combined Commitments, shall be paid on
the effective date of such reduction or termination.
2.6 Optional Prepayments. (a) Subject to Section 3.4, the Borrower may,
at any time or from time to time, upon not less than three (3) Business Days'
irrevocable notice to the Agent, ratably prepay Loans in whole or in part, in
minimum amounts of $1,000,000 or any multiple of $500,000 in excess thereof.
Such notice of prepayment shall specify the date and amount of such prepayment
and the Type(s) of Loans to be prepaid. The Agent will promptly notify each Bank
of its receipt of any such notice, and of such Bank's Pro Rata Share of such
prepayment. If such notice is given by the Borrower, the Borrower shall make
such prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein, together with, in the case of LIBOR Loans
only, accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 3.4.
2.7 Repayment. The Borrower shall repay to the Banks the
aggregate principal amount of Loans outstanding on the Revolving Termination
Date in 12 equal, consecutive quarterly installments commencing ninety days
after the second anniversary of the Closing Date and ending on the Maturity
Date; provided, however, that the last such installment shall be in the amount
necessary to pay in full the unpaid principal amount of the Loans.
2.8 Interest.
(a) Each Loan shall bear interest on the outstanding principal
amount thereof from the applicable Borrowing Date at a rate per annum equal to
the LIBOR Rate or the Prime Rate, as the case may be (and subject to the
Borrower's right to convert to other Types of Loans under Section 2.4), plus the
Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of conversion to another
Type of Loan, on the date of any prepayment for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during the
existence of any Event of Default, interest shall be paid on demand of the Agent
at the request or with the consent of the Majority Banks.
(c) Notwithstanding Section (a) of this Section, while any Event of
Default exists or after acceleration, the Borrower shall pay interest (after as
well as before entry of judgment thereon to the extent permitted by law) on the
principal amount of all outstanding Obligations, at a rate per annum which is
determined by adding 2% per annum, to the Applicable Margin then in effect for
such Loans; provided, however, that, on and after the expiration of any Interest
Period applicable to any LIBOR Loan outstanding on the date of occurrence of
such Event of Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after acceleration, bear
interest at a rate per annum equal to the Prime Rate, plus Applicable Margin
plus 2%.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Borrower shall pay such Bank interest at the highest rate permitted by
applicable law.
2.9 Fees.
(a) Agency Fees. The Borrower shall pay the
commitment fee to the Agent for the Agent's own account, as required by the
letter agreement between the Borrower and the Agent dated August 2, 1996, as
amended on September 13, 1996 and October 7, 1996 (the "Fee Letter").
(b) Unused Commitment Fees. The Borrower shall pay to the Agent,
for the period from and including the Commitment Closing Date to the Revolving
Termination Date, for the account of each Bank an unused-commitment fee at the
rate of 0.50% per annum on the average daily amount by which the Combined
Commitments exceeds the aggregate amount of all Loans outstanding from time to
time. Such commitment fee shall be payable in arrears on the last Business Day
of each calendar quarter and on the Revolving Termination Date.
2.10 Computation of Fees and Interest.
(a) All computations of fees and interest shall be made on the basis
of a 360-day year and actual days elapsed (which results in more interest being
paid than if computed on the basis of a 365-day year). Interest and fees shall
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent shall be
conclusive and binding on the Borrower and the Banks in the absence of manifest
error.
2.11 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Agent for the account
of the Banks to the Agent's account no. 00-000-000, regarding: GMS Dental Group
Management, Inc., ABA No. 000000000, or at such other account as the Agent may
from time to time designate by notice to the Borrower, and shall be made in
dollars and in immediately available funds, no later than 12:00 noon (Los
Angeles time) on the date specified herein. The Agent will promptly distribute
to each Bank its Pro Rata Share (or other applicable share as expressly provided
herein) of such payment in like funds as received. Any payment received by the
Agent later than 12:00 noon (Los Angeles time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior to the
date on which any payment is due to the Banks that the Borrower will not make
such payment in full as and when required, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent the Borrower has not made
such payment in full to the Agent, each Bank, shall repay to the Agent on demand
such amount distributed to such Bank, together with interest thereon at the
Federal Funds Rate for each day from the date such amount is distributed to such
Bank until the date repaid.
2.12 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at least
one Business Day prior to the date of such Borrowing, that such Bank will not
make available as and when required hereunder to the Agent for the account of
the Borrower the amount of that Bank's Pro Rata Share of the Borrowing, the
Agent may assume that each Bank has made such amount available to the Agent in
immediately available funds on the Borrowing Date and the Agent may (but shall
not be so required), in reliance upon such assumption, make available to the
Borrower on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made available to the
Borrower such amount, such Bank and the Borrower severally agree to repay to the
Agent forthwith on demand such corresponding amount, together with interest
thereon, for each day from the date such amount is made available to the
Borrower until the date such amount is repaid to the Agent, (i) in the case of
the Borrower, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing and (ii) in the case of such Bank,
at the Federal Funds Rate for each day during such period. A notice of the Agent
submitted to any Bank and the Borrower with respect to amounts owing under this
Section 2.12(a) shall be conclusive, absent manifest error. If such Bank shall
repay to the Agent such corresponding amount, such payment so repaid shall
constitute such Bank's Loan as part of such Borrowing for all purposes of this
Agreement.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
The Borrower reserves the right to seek compensation from any Bank wrongfully
failing to make a Loan on a Borrowing Date for any costs, losses and expenses
incurred by the Borrower resulting from such failure.
2.13 Sharing of Payments, Etc. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Agent of such fact, and (b) purchase from the other
Banks such participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower agrees
that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 10.10) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation. The Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section and will in each case notify the Banks following
any such purchases or repayments.
2.14 Security Documents. The Obligations shall be (a) unconditionally
guaranteed as set forth in a Guaranty to be executed and delivered by GMS
Holding and each of its Subsidiaries (other than the Borrower) (as amended,
modified or supplemented from time to time, the "Guaranty") in the form of
Exhibit B attached hereto and (b) secured by a Security Agreement to be executed
and delivered by each of GMS Holding, the Borrower and by each of the other
Subsidiaries of GMS Holding (as amended, modified or supplemented from time to
time, the "Security Agreement") in the form of Exhibit C attached hereto.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 Taxes. (a) Any and all payments by the Borrower to each Bank or the
Agent under this Agreement and any other Loan Document shall be made free and
clear of, and without deduction or withholding for any Taxes. In addition, the
Borrower shall pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless each Bank and
the Agent for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the Bank or the
Agent and any liability (including penalties, interest, additions to tax and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within thirty (30) days after the date the Bank or
the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Agent, then:
(i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including deductions and
withholdings applicable to additional sums payable under this Section) such Bank
or the Agent, as the case may be, receives an amount equal to the sum it would
have received had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance with
applicable law; and
(iv) the Borrower shall also pay to each Bank or the Agent for
the account of such Bank at the time interest is paid, all additional amounts
which the respective Bank specifies as necessary to preserve the after-tax yield
the Bank would have received if such Taxes or Other Taxes had not been imposed.
(d) Within thirty (30) days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Agent.
(e) If the Borrower is required to pay additional amounts to any
Bank or the Agent pursuant to subsection (c) of this Section, then such Bank
shall use reasonable efforts (consistent with legal and regulatory restrictions)
to change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue, if such change
in the judgment of such Bank is not otherwise disadvantageous to such Bank.
3.2 Illegality.
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other
Governmental Authority has asserted that it is unlawful, for any Bank or its
applicable Lending Office to make LIBOR Loans, then, on notice thereof by the
Bank to the Borrower through the Agent, any obligation of that Bank to make
LIBOR Loans shall be suspended until the Bank notifies the Agent and the
Borrower that the circumstances giving rise to such determination no longer
exist.
(b) If a Bank determines that it is unlawful to maintain any LIBOR
Loan, the Borrower shall, upon its receipt of notice of such fact and demand
from such Bank (with a copy to the Agent), prepay in full such LIBOR Loans of
that Bank then outstanding, together with interest accrued thereon and amounts
required under Section 3.4, either on the last day of the Interest Period
thereof, if the Bank may lawfully continue to maintain such LIBOR Loans to such
day, or immediately, if the Bank may not lawfully continue to maintain such
LIBOR Loan. If the Borrower is required to so prepay any LIBOR Loan, then
concurrently with such prepayment, the Borrower shall borrow from the affected
Bank, in the amount of such repayment, a Prime Rate Loan.
(c) If the obligation of any Bank to make or maintain LIBOR Loans
has been so terminated or suspended, the Borrower may elect, by giving notice to
the Bank through the Agent that all Loans which would otherwise be made by the
Bank as LIBOR Loans shall be instead Prime Rate Committee Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
LIBOR Loans if such designation will avoid the need for giving such notice or
making such demand and will not, in the judgment of the Bank, be illegal or
otherwise disadvantageous to the Bank.
3.3 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation or (ii)
the compliance by that Bank with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any LIBOR Loans then, in any such case, such Bank shall
notify the Borrower of any such event of which it has knowledge and shall
deliver to the Agent and the Borrower a written statement specifying in
reasonable detail the losses or expenses sustained or incurred. The Borrower
shall within ten (10) days following demand therefor, pay the amount sufficient
to compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change
in any Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or other
Governmental Authority charged with the interpretation or administration
thereof, or (iv) compliance by the Bank (or its Lending Office) or any
corporation controlling the Bank with any Capital Adequacy Regulation, affects
or would affect the amount of capital required or expected to be maintained by
the Bank or any corporation controlling the Bank and (taking into consideration
such Bank's or such corporation's policies with respect to capital adequacy and
such Bank's desired return on capital) determines that the amount of such
capital is increased as a consequence of its Commitment, loans, credits or
obligations under this Agreement; then, in any such case, such Bank shall notify
the Borrower of any such event of which it has knowledge and shall deliver to
the Agent and the Borrower a written statement specifying in reasonable detail
the losses or expense sustained or incurred. The Borrower shall within ten (10)
days following demand therefor, pay the amount sufficient to compensate such
Bank for such increased costs.
3.4 Funding Losses. The Borrower shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any
payment of principal of any LIBOR Loan;
(b) the failure of the Borrower to borrow, continue or convert a
Loan after the Borrower has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any prepayment of any Loan
in accordance with any notice delivered under Section 2.6;
(d) the prepayment (including pursuant to Section 2.6 or 3.7) or
other payment (including after acceleration thereof) of any LIBOR Loan on a day
that is not the last day of the relevant Interest Period; or
(e) the automatic conversion under Section 2.4(a) of any LIBOR Loan
to a Prime Rate Loan on a day that is not the last day of the relevant Interest
Period; including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its LIBOR Loans or from fees
payable to terminate the deposits from which such funds were obtained.
For purposes of calculating amounts payable by the Borrower to the Banks under
this Section and under subsection 3.3(a), each LIBOR Loan made by a Bank (and
each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR Rate for such LIBOR Loan by
a
matching deposit or other borrowing in the interbank eurodollar market for a
comparable amount and for a comparable period, whether or not such LIBOR Loan is
in fact so funded. Each Bank that claims compensation under this section shall
deliver to the Agent and the Borrower a written statement specifying in
reasonable detail any amounts due to the Banks as provided above.
3.5 Inability to Determine Rates. If the Agent determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR Rate
for any requested Interest Period with respect to a proposed LIBOR Loan, or that
the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will promptly so notify the Borrower and each Bank.
Thereafter, the obligation of the Banks to make or maintain LIBOR Loans,
hereunder shall be suspended until the Agent revokes such notice in writing.
Upon receipt of such notice, the Borrower may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Borrower does not
revoke such Notice, the Banks shall make, convert or continue the Loans, as
proposed by the Borrower, in the amount specified in the applicable notice
submitted by the Borrower, but such Loans shall be made, converted or continued
as Prime Rate Loans instead of LIBOR Loans.
3.6 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Borrower (with a copy
to the Agent) a certificate setting forth in reasonable detail the amount
payable to the Bank hereunder and such certificate shall be conclusive and
binding on the Borrower in the absence of manifest error.
3.7 Survival. The agreements and obligations of the Borrower in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 Commitment Closing. The obligation of each Bank to enter into this
Agreement is subject to the condition that the Agent has received on or before
the Commitment Closing Date all of the following, in form and substance
satisfactory to the Agent and each Bank, and in sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by each party
thereto;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors of each
of GMS Holding, the Borrower and other Subsidiaries parties to any Loan Document
authorizing the transactions contemplated hereby or thereby, certified as of the
Commitment Closing Date by the Secretary or an Assistant Secretary of such
party; and
(ii) A certificate of the Secretary or Assistant Secretary of
each of GMS Holding, the Borrower and other Subsidiaries parties to any Loan
Document certifying the names and true signatures of the officers of such party
authorized to execute, deliver and perform, as applicable, this Agreement and
all other Loan Documents to be delivered by such party hereunder;
(c) Organization Documents: Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the
bylaws of each of GMS Holding, the Borrower and other Subsidiaries parties to
any Loan Document as in effect on the Commitment Closing Date, certified by the
Secretary or Assistant Secretary of such party as of the Commitment Closing
Date; and
(ii) a good standing and tax good standing certificate for each
of GMS Holding, the Borrower and other Subsidiaries parties to any Loan Document
from the Secretary of State (or similar, applicable Governmental Authority) of
such party's state of incorporation and each state where such party is qualified
to do business as a foreign corporation as of a recent date;
(d) Payment of Fees. Evidence of payment to the Agent by the Borrower
of all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Commitment Closing Date, together with Attorney Costs of Imperial
Bank to the extent invoiced prior to or on the Commitment Closing Date, plus
such additional amounts of Attorney Costs as shall constitute Imperial Bank's
reasonable estimate of Attorney Costs incurred or to be incurred by it through
the closing proceedings (provided that such estimate shall not thereafter
preclude final settling of accounts between the Borrower and Imperial Bank);
including any such costs, fees and expenses arising under or referenced in
Section 2.9(a) and Section 10.4;
(e) Certificate. A certificate signed by a Responsible Officer,
dated as of the Commitment Closing Date:
(i) stating that the representations and warranties contained
in Article V are true and correct on and as of such date, as though made on and
as of such date;
(ii) stating that no Default or Event of Default exists; and
(iii) stating that there has occurred since June 30, 1996, no
event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(f) Initial Acquisition Agreements. Copies of all acquisition and
merger agreements (the "Initial Acquisition Agreements") relating to the Initial
Permitted Acquisitions described in Schedule 4.1(f) attached hereto, together
with copies of the business plans, financial projections and budgets relating
thereto and evidence satisfactory to the Banks that the Initial Permitted
Acquisitions have been consummated;
(g) Venture Commitment. Evidence satisfactory to the Banks that the
private placement of $10,500,000 in Series B-1 Preferred Stock under the Series
B Preferred Stock Purchase Agreement between GMS Holding and the investors named
therein, dated as of the date hereof (the "Series B Preferred Stock Purchase
Agreement"), has been consummated and the investors named therein have committed
to purchase from GMS Holding $10,500,000 in Series B-2 Preferred Stock upon the
satisfaction of certain milestones subject to and upon the conditions set forth
in the Series B Preferred Stock Purchase Agreement;
(h) Warrants. Imperial Bank shall have received the Warrants; and
(i) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may reasonably request.
4.2 Condition of Initial Loans. The obligation of each Bank to make its
initial Loan hereunder is subject to the condition that the Agent has received
on or before the Closing Date all of the following, in form and substance
satisfactory to the Agent and each Bank, and in sufficient copies for each Bank:
(a) Note. The Note executed by the Borrower;
(b) Security Documents. The Guaranty and the Security Agreement
executed by each party thereto;
(c) Resolutions; Incumbency. A certificate of the Secretary or
Assistant Secretary of each of GMS Holding, the Borrower and other Subsidiaries
parties to any Loan Document certifying that the resolutions of the board of
directors and the incumbency certificate of each of GMS Holding, the Borrower
and other Subsidiaries parties to any Loan Document previously delivered on the
Commitment Closing Date under Section 4.1(b) have not been amended, modified or
revoked and are in full force and effect on the Closing Date;
(d) Organization Documents: Good Standing. Each of the following
documents:
(i) the articles or certificate of incorporation and the
bylaws of each of GMS Holding, the Borrower and other Subsidiaries parties to
any Loan Document as in effect on the Closing Date, certified by the Secretary
or Assistant Secretary
of such party as of the Closing Date; and
(ii) a good standing and tax good standing certificate for each
of GMS Holding, the Borrower and other Subsidiaries parties to any Loan Document
from the Secretary of State (or similar, applicable Governmental Authority) of
such party's state of incorporation and each state where such party is qualified
to do business as a foreign corporation as of a recent date;
(e) Perfection of Liens and Security Interests. The Banks shall have
obtained assurance satisfactory to Majority Banks (including UCC search reports,
confirmation of filing or recording, and opinions of counsel) that the security
interests created by the Security Agreement and the Guaranty in the property
specified in Schedule 4.2(e) attached hereto shall have been duly perfected
under applicable law and shall be of first priority, subject only to Permitted
Encumbrances;
(f) Legal Opinion. An opinion of Pillsbury Madison & Sutro, counsel
to each of GMS Holding, the Borrower and other Subsidiaries parties to any Loan
Document, and addressed to the Agent and the Banks, substantially in the form of
Exhibit I attached hereto, together with opinions of counsel in Hawaii and Idaho
with respect to the laws of Hawaii and Idaho, respectively, in form reasonably
satisfactory to the Agent and the Banks;
(g) Payment of Fees. Evidence of payment to the Agent by the Borrower
of all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with Attorney Costs of Imperial Bank to
the extent invoiced prior to or on the Closing Date, plus such additional
amounts of Attorney Costs as shall constitute Imperial Bank's reasonable
estimate of Attorney Costs incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude final
settling of accounts between the Borrower and Imperial Bank); including any such
costs, fees and expenses arising under or referenced in Section 10.4;
(h) Certificate. A certificate signed by a Responsible Officer, dated
as of the Closing Date:
(i) stating that the representations and warranties contained
in Article V are true and correct on and as of such date, as though made on and
as of such date;
(ii) stating that no Default or Event of Default exists or
would result from the initial Borrowing; and
(iii) stating that there has occurred since June 30, 1996, no
event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(i) No Existing Default. No Event of Default or event which, upon the
lapse of time or the giving of notice or both, would constitute an Event of
Default shall exist on the Closing Date or after giving effect to the
transactions contemplated to take place hereunder on such date;
(j) Representations and Warranties Correct. The representations and
warranties set forth in Article V hereof shall be true and correct on the
Closing Date, and after giving effect to the transactions contemplated to occur
on such date;
(k) Insurance. Evidence of insurance called for in Section 5.19
hereof and evidence satisfactory to the Majority Banks that such insurance is in
effect;
(l) Solvency. The Agent shall have received a certificate of the
Responsible Officer, in form and substance satisfactory to the Majority Banks
that GMS Holding, the Borrower and each of its other Subsidiaries is Solvent on
and as of the Closing Date;
(m) Regulatory Compliance. A certificate of a Responsible Officer on
behalf of each of the Subsidiaries to the effect that such Subsidiary is in
compliance in all material respects with the Requirements of Law;
(n) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or any Bank may reasonably request.
4.3 Conditions to All Borrowings. The obligation of each Bank to make any
Loan to be made by it (including its initial Loan), is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date:
(a) Notice of Borrowing. As to any Loan, the Agent shall have
received (with, in the case of the initial Loan only, a copy for each Bank) a
Notice of Borrowing;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date with the same effect as if made on and as of such
Borrowing Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall exist
or shall result from such Borrowing. Each Notice of Borrowing submitted by the
Borrower hereunder shall constitute a representation and warranty by the
Borrower hereunder, as of the date of each such notice or request and as of each
Borrowing Date that the conditions in this Section 4.3 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each of the Credit Parties represents and warrants to the Agent and each
Bank that:
5.1 Existence and Power. Such Credit Party and each of its Subsidiaries
(a) is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, (b) has the power and
authority and all material Governmental Approvals to own its material assets,
carry on its business and to execute, deliver, and perform its obligations under
this Agreement and the other Loan Documents to which it is a party, (c) is duly
qualified as a foreign corporation and is licensed and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification or license
(except for jurisdictions in which the failure to so qualify or remain in good
standing could not reasonably be expected to have a Material Adverse Effect) and
(d) is in compliance in all material respects with all Requirements of Law. Set
forth in Schedule 5.1 attached hereto is a complete and accurate list of such
Credit Party's Subsidiaries, showing their respective jurisdictions of
incorporation or organization and, as of the Commitment Closing Date and the
Closing Date, the jurisdictions in which each is qualified to do business.
5.2 Corporate Authorization; No Contravention. The execution, delivery and
performance by such Credit Party of this Agreement and each other Loan Document
to which such Credit Party is party, have been duly authorized by all necessary
corporate action, and do not and will not (a) contravene the terms of any of
such Credit Party's Organization Documents, (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, any document
evidencing any material Contractual Obligation to which such Credit Party is a
party or any material order, injunction, writ or decree of any Governmental
Authority to which such Credit Party or its property is subject or (c) violate
any Requirement of Law.
5.3 Governmental Authorization. No Governmental Approval is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, such Credit Party of this Agreement or any other Loan
Document.
5.4 Binding Effect. This Agreement and each other Loan Document to which
such Credit Party is a party constitute the legal, valid and binding obligations
of such Credit Party, enforceable against such Credit Party in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable
principles relating to enforceability.
5.5 Litigation. Except as specifically disclosed in Schedule 5.5 attached
hereto, there are no actions, suits, proceedings, claims or disputes pending, or
to the best knowledge of such Credit Party, threatened or contemplated, at law,
in equity, in arbitration or before any Governmental Authority, against such
Credit Party, or its Subsidiaries or any of their respective properties which
(i) purport to affect or pertain to this Agreement or any other Loan Document,
or any of the transactions contemplated hereby or thereby, or (ii) if determined
adversely to such Credit Party or its Subsidiaries, would reasonably be expected
to have a Material Adverse Effect. No injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be consummated as herein or
therein provided.
5.6 No Default. No Default or Event of Default has occurred and is
continuing or would result from the execution, delivery or performance of this
Agreement, the Security Agreement and the other Loan Documents.
5.7 Financial Condition.
(a) The pro forma consolidated financial statements of Credit
Parties, dated as of the semi-annual period ended June 30, 1996, have been
delivered to the Agent. Except as disclosed in such financial statements or
otherwise disclosed in writing to the Banks, neither such Credit Party nor any
Subsidiary of such Credit Party is liable for any material liability, direct or
contingent, including, but not limited to, liabilities for taxes, long-term
leases or long-term commitments, which would be required to be shown as a
liability or otherwise disclosed in current financial statements.
(b) Since June 30, 1996, there has been no Material Adverse Effect
and there is no fact known to such Credit Party which could reasonably be
expected to have a Material Adverse Effect which has not been disclosed in
documents furnished to the Banks in connection with this Agreement.
5.8 ERISA Compliance. Except as specifically disclosed in Schedule 5.8
attached hereto:
(a) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law. Each
Plan which is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS and to the best knowledge of such
Credit Party, nothing has occurred which would cause the loss of such
qualification. Such Credit Party and each ERISA
Affiliate has made all required contributions to any Plan subject to Section 412
of the Code, and no application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code has been made with
respect to any Plan.
(b) There are no pending or, to the best knowledge of such Credit
Party, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (A) No ERISA Event has occurred or is reasonably expected to
occur, (B) no Pension Plan has any Unfunded Pension Liability, (C) neither such
Credit Party nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA), (D)
neither such Credit Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 421 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan and (E)
neither such Credit Party nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 406 or 4212(c) of ERISA.
5.9 Use of Proceeds; Margin Regulations. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Sections 6.12 and
7.12 of this Agreement. Neither such Credit Party nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
5.10 Real Property. Such Credit Party and each Subsidiary have good record
and marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as could not, individually or in
the aggregate, have a Material Adverse Effect. As of the Commitment Closing Date
and the Closing Date, the property of such Credit Party and its Subsidiaries is
subject to no Liens, other than Permitted Encumbrances.
5.11 Equipment. Such Credit Party and its Subsidiaries own or have the
right to use under valid and subsisting leases, equipment and fixtures,
reasonably necessary for the operation of their business as a whole.
Substantially all of the tangible property of such Credit Party and its
Subsidiaries used in connection with their business is in good operating
condition (ordinary wear and tear excepted), usable in the ordinary course of
business, and is adequate for the operation of their business.
5.12 Contracts. Schedule 5.12 attached hereto contains a list of each
material contract to which such Credit Party or any of its Subsidiaries is a
party (the "Material Contracts"). Each of the Material Contracts is in effect.
Except as disclosed in Schedule 5.12 attached hereto, neither such Credit Party,
nor any of its Subsidiaries nor, to the best knowledge of such Credit Party, any
other party to any of the Material Contracts is in material default thereunder,
and there are no presently existing facts or circumstances which, if continued
or on notice, could reasonably be expected to result in such a material default
on the part of such Credit Party or any of its Subsidiaries, or, to the best
knowledge of such Credit Party, on the part of the other party thereto. Such
Credit Party does not have any knowledge that any other party to any of the
Material Contracts intends to terminate such Material Contract. Each contract
with a supplier to which such Credit Party or any of its Subsidiaries is a party
is on normal trade terms and has been entered into in the ordinary course of
business. Each contract with a customer of such Credit Party or any of its
Subsidiaries has been entered into in the ordinary course of business.
Performance by the parties to all contracts and other commitments of such Credit
Party and its Subsidiaries would not in the aggregate have a Material Adverse
Effect.
5.13 Taxes. Such Credit Party and its Subsidiaries have filed all Federal
and other material tax returns and reports required to be filed, and have paid
all Federal and other material taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income or assets
otherwise due and payable, except those which are being contested in good faith
by appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP. There is no proposed tax assessment against such Credit
Party or any Subsidiary that would, if made, have a Material Adverse Effect.
5.14 Environmental Matters. Except as specifically disclosed in Schedule
5.14 attached hereto, (i) the properties and operations of such Credit Party and
each of its Subsidiaries comply in all material respects with all applicable
Environmental Laws; (ii) none of the properties or operations of such Credit
Party or any of its Subsidiaries is subject to any judicial or administrative
proceeding alleging the violation of any Environmental Law; (iii) none of the
properties or operations of such Credit Party or any of its Subsidiaries is the
subject of any federal or state investigation concerning any use or release of
any Hazardous Substance; (iv) neither such Credit Party nor any of its
Subsidiaries, nor, to the best knowledge of such Credit Party, any predecessor
of such Credit Party or any of its Subsidiaries, has filed any notice under any
federal or state law indicating past or present treatment, storage or disposal
of a Hazardous Substance or reporting a spill or release of a Hazardous
Substance into the environment; (v) neither such Credit Party nor any of its
Subsidiaries has any contingent liability in
connection with any release of any Hazardous Substance into the environment and
no such release which could, under applicable law, require remediation has
occurred; (vi) neither such Credit Party's nor any of its Subsidiaries'
operations involve the generation, transportation, treatment, storage or
disposal of Hazardous Substances, except for the generation of Hazardous
Substances in the ordinary course of business, and except for such activities
carried out through licensed independent contractors; (vii) neither such Credit
Party nor any of its Subsidiaries has disposed of any Hazardous Substance in, on
or about any premises owned, leased or used by such Credit Party or any of its
Subsidiaries and, to the best of the knowledge of such Credit Party, neither has
any lessee, prior owner, or other Person; and (viii) no surface impoundments or,
to the best of such Credit Party, underground storage tanks are located in, on
or about any of the premises owned, leased or used by such Credit Party or any
of its Subsidiaries.
5.15 Regulated Entities. None of such Credit Party, any Person controlling
such Credit Party, or any Subsidiary, is an "Investment Company" within the
meaning of the Investment Company Act of 1940. Such Credit Party is not subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or
except as specifically disclosed in Schedule 5.15 attached hereto, any other
Federal or state statute or regulation limiting its ability to incur
Indebtedness.
5.16 No Burdensome Restrictions. Neither such Credit Party nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
5.17 Copyrights, Patents, Trademarks and Licenses, etc. Schedule 5.17
attached hereto contains a complete and correct list of all material patents,
copyrights, trademarks, licenses, service marks, trade names and other similar
rights (the "Intellectual Property Rights") used by such Credit Party or any of
its Subsidiaries. No proceedings have been instituted or are pending or have
been threatened in writing which challenge the validity, ownership or use of any
such Intellectual Property Rights. To the best knowledge of such Credit Party,
no infringement of any Intellectual Property Right of any third party has
occurred or would result in any way from the operations or business of such
Credit Party or any of its Subsidiaries, and, except as set forth in Schedule
5.5 attached hereto, no claim has been made by any such third party based on
allegation of any such infringement.
5.18 Capital Stock. All of the outstanding capital stock of such Credit
Party and its Subsidiaries has been validly issued in compliance with all
federal and state securities laws and is fully paid and nonassessable. Schedule
5.18 attached hereto
contains a list of all Subsidiaries of such Credit Party and its ownership
interest in each of such Subsidiaries. All of the capital stock of or other
ownership interest in and each of such Subsidiaries is owned by such Credit
Party or one of its Subsidiaries free and clear of all mortgages, deeds of
trust, pledges, liens, security interests and other charges or encumbrances
other than pursuant to the Loan Documents. Neither such Credit Party nor any of
its Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock or any
other equity interest therein.
5.19 Insurance. Except as specifically disclosed in Schedule 5.19 attached
hereto, the properties of such Credit Party and its Subsidiaries are insured or
self-insured, in such amounts, with such deductibles and covering such risks as
are customary for companies of like size and nature.
5.20 Business Activity. Neither such Credit Party nor any of its
Subsidiaries is engaged in any line or lines of business activity other than the
Dentistry Business.
5.21 Accreditation, Etc. Each of such Credit Party and the Subsidiaries
maintains (i) all material licenses and certifications required pursuant to any
Requirement of Law, (ii) all material certifications and authorizations
necessary to ensure that each of such Credit Party and the Subsidiaries is
eligible for all reimbursements available under the Requirements of Law to the
extent applicable and (iii) all material licenses, permits, authorizations and
qualifications required under the Requirements of Law in connection with the
ownership or operation of its business.
5.22 Solvency. As of the Commitment Closing Date and the Closing Date and
after giving effect to the transactions contemplated by the Credit Agreement and
the other Loan Documents, including all of the Loans made and to be made
hereunder, such Credit Party is Solvent and each of the Subsidiaries is Solvent.
5.23 Fiscal Year. The fiscal year of such Credit Party ends on December 31.
5.24 Initial Acquisition Agreements. The Banks have received complete
copies of all Initial Acquisition Agreements relating to the Initial Permitted
Acquisitions. Each of the Initial Acquisition Agreements sets forth the entire
agreement among the parties thereto relating to the applicable Initial Permitted
Acquisition. Each of the Initial Acquisition Agreements is in full force and
effect and, to the best knowledge of such Credit Party, no default exists
thereunder on the part of any party thereto.
5.25 Full Disclosure. None of the representations or
warranties made by such Credit Party or any Subsidiary in this Agreement or in
any of the documents previously delivered to the Agent and the Banks as of the
date such representations and warranties are made or deemed made, and none of
the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of such Credit Party or any Subsidiary pursuant to
Sections 6.1, 6.2 or 6.3 hereof, contains any untrue statement of material fact
or omits any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they are
made, not materially misleading as of the time when made or delivered.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any of the
Obligations shall remain unpaid or unsatisfied, unless the Majority Banks waive
compliance in writing:
6.1 Financial Statements. GMS Holding shall deliver to the Agent and the
Banks, in form and detail reasonably satisfactory to the Agent and the Majority
Banks:
(a) as soon as available, but not later than ninety (90) days after
the end of each fiscal year (commencing with the fiscal year ended December 31,
1996), a copy of the audited consolidated and consolidating balance sheet of GMS
Holding and its Subsidiaries as at the end of such fiscal year and the related
consolidated and consolidating statements of income or operations, shareholders'
equity and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year (except for the
figures for the fiscal year ended December 31, 1995), and accompanied by the
opinion of a nationally-recognized independent public accounting firm (the
"Independent Auditor") which report shall state that such consolidated and
consolidating financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by the Independent Auditor of any material
portion of GMS Holding's or any Subsidiary's records;
(b) as soon as available, but not later than forty-five (45) days
after the end of each fiscal quarter of each fiscal year (commencing with the
fiscal quarter ended December 31, 1996), a copy of the unaudited consolidated
and consolidating balance sheet of GMS Holding and its Subsidiaries as of the
end of such fiscal quarter and the related consolidated and consolidating
statements of income, shareholders' equity and cash flows for the period
commencing on the first day and ending on the last day of such fiscal quarter,
and certified by a Responsible Officer as fairly presenting, in accordance with
GAAP
(subject to ordinary, good faith year-end audit adjustments), the financial
position and the results of operations of such Credit Party and the
Subsidiaries; and
(c) as soon as available, but not later than thirty (30) days after
the end of each calendar month (commencing with the calendar month ended October
1996), a copy of the unaudited consolidated balance sheet of GMS Holding and its
Subsidiaries as of the end of such calendar month and the related consolidated
statements of income, shareholders' equity and cash flows for the period
commencing on the first day and ending on the last day of such calendar month,
and certified by a Responsible Officer as fairly presenting, in accordance with
GAAP (subject to ordinary, good faith year-end audit adjustments), the financial
position and the results of operations of such Credit Party and the
Subsidiaries.
6.2 Certificates; Other Information. Such Credit Party shall furnish to
the Agent and the Banks:
R\M concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the Independent Auditor, to the
effect that in the course of the regular annual examination of the business of
GMS Holding and its Subsidiaries, which examination was conducted by the
Independent Auditor in accordance with generally accepted auditing standards,
the Independent Auditor has obtained no knowledge that a Default or an Event of
Default has occurred and is continuing as of the date of certification, or if,
in the opinion of the Independent Auditor, a Default or an Event of Default has
occurred and is continuing, a statement as to the nature thereof;
(b) concurrently with the delivery of the financial statements
referred to in Sections 6.1(a) and 6.1(b), a Compliance Certificate and a Real
Property Certificate each executed by a Responsible Officer;
(c) concurrently with the delivery of the financial statements
referred to in Section 6.1(b), an aging report on accounts receivable of GMS
Holding and its Subsidiaries in form and detail satisfactory to the Agent;
(d) promptly, copies of all financial statements and reports that
such Credit Party or any of its Subsidiaries sends to its shareholders, copies
of all letters and reports prepared by the Independent Auditor and delivered to
the management of such Credit Party, and copies of all financial statements and
regular, periodical or special reports (including Forms 10K, 10Q and 8K) that
such Credit Party or any Subsidiary thereof may make to, or file with, the SEC;
(e) promptly following the receipt of the same, a copy of each notice
relating to the loss by such Credit Party or any Subsidiary of any material
operating permit, license or
certification by any Governmental Authority;
DAT promptly following the receipt of the same, all correspondence
received by such Credit Party or any Subsidiary from a Governmental Authority
which asserts that such Credit Party or any Subsidiary is not in substantial
compliance with any Requirement of Law or which threatens the taking of any
action against such Credit Party or any Subsidiary under any Requirement of Law;
(g) from time to time upon receipt of a request by any Bank through
the Agent specifying in reasonable detail the types of documents to be provided,
copies of any and all statements, audits, studies or reports submitted by or on
behalf of such Credit Party or any Subsidiary to any Governmental Authority; and
(h) promptly, such additional information regarding the business,
financial or corporate affairs of such Credit Party or any Subsidiary as the
Agent, at the request of any Bank, may from time to time reasonably request.
6.3 Notices. Such Credit Party shall promptly, but in no event more than
three (3) Business Days thereafter, notify the Agent and each Bank:
(a) of the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) of any matter that has resulted or would be reasonably likely to
result in a Material Adverse Effect, including, without limitation, (A) breach
or non-performance of, or any default under, a material Contractual Obligation
of such Credit Party or any Subsidiary, (B) any material dispute, litigation,
investigation, proceeding or suspension between such Credit Party or any
Subsidiary and any Governmental Authority or (C) the commencement of, or any
material development in, any material litigation or proceeding affecting such
Credit Party or any Subsidiary, including pursuant to any applicable
Environmental Laws;
(c) of the occurrence of any of the following events affecting such
Credit Party or any ERISA Affiliate (but in no event more than ten (10) days
after such event), and deliver to the Agent and each Bank a copy of any notice
with respect to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to such Credit Party or any ERISA
Affiliate with respect to such event: (A) an ERISA Event; (B) a material
increase in the Unfunded Pension Liability of any Pension Plan; (C) the adoption
of, or the commencement of contributions to, any Plan subject to Section 412 of
the Code by such Credit Party or any ERISA Affiliate; or (D) the adoption of
any amendment to a Plan subject to Section 412 of the Code, if such amendment
results in a material increase in contributions or Unfunded Pension Liability;
and
(d) of any material change in accounting policies or financial
reporting practices by such Credit Party or any of its Subsidiaries.
Each notice under this Section 6.3 shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action such Credit Party or any affected
Subsidiary proposes to take with respect thereto and at what time. Each notice
under Section 6.3(a) shall describe with particularity any and all clauses or
provisions of this Agreement or other Loan Document that have been (or
foreseeably will be) breached or violated.
6.4 Preservation of Corporate Existence, Etc. Such Credit Party shall, and
shall cause each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction of
incorporation;
(b) except as otherwise expressly permitted by this Agreement,
preserve and maintain in full force and effect all material governmental rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business, including all material licenses
and certifications required pursuant to any Requirement of Law, all material
certifications and authorizations necessary to ensure that each of the
Subsidiaries is eligible for all reimbursements available under the Requirement
of Law to the extent applicable, and all material licenses, permits,
authorization and qualifications required under the Requirement of Law in
connection with the ownership or operation of dental practice groups;
(c) except as otherwise expressly permitted by this Agreement, use
reasonable efforts, in the ordinary course of business, to preserve its business
organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.
6.5 Maintenance of Property. Such Credit Party shall maintain, and shall
cause each Subsidiary to maintain, and preserve all its property which is
material to its business in good working order and condition, ordinary wear and
tear excepted.
6.6 Insurance. Such Credit Party shall maintain, and
shall cause each Subsidiary to maintain, insurance or self-insurance with
respect to its properties and business against loss or damage of such types and
in such amounts as are customary for companies of like size and nature.
6.7 Payment of Obligations. Such Credit Party shall, and shall cause each
Subsidiary to, pay and discharge as the same shall become due and payable, all
their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by such Credit Party or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law become a Lien
upon its property, except for any such claims that are being contested in good
faith and by appropriate proceedings; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness, and except for any such Indebtedness that is being contested
in good faith and by appropriate proceedings.
6.8 Compliance with Laws. Such Credit Party shall comply, and shall cause
each Subsidiary to comply, in all material respects with all Requirements of Law
of any Governmental Authority having jurisdiction over it or its business,
except such as may be contested in good faith or as to which a bona fide dispute
may exist.
6.9 Compliance with ERISA. Such Credit Party shall, and shall cause each
of its ERISA Affiliates to, (i) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law, (ii) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification and (iii) make all required contributions to
any Plan subject to Section 412 of the Code.
6.10 Inspection of Property and Books and Records. Such Credit Party shall
maintain, and shall cause each Subsidiary to maintain, proper books of record
and account to the extent necessary to permit the preparation of the financial
statements in conformity with GAAP consistently applied. Such Credit Party shall
permit, and shall cause each Subsidiary to permit, representatives and
independent contractors of the Agent, at the request of any Bank, or any Bank to
visit and inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and make copies thereof
or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and independent
public accountants, all at the expense of such Credit Party and at such
reasonable times during normal business hour and as often as may be reasonably
desired, upon reasonable advance notice to such Credit Party; provided, however,
when a Default or an Event of Default exists the Agent or any Bank may do any of
the foregoing at the expense of such Credit Party at any time during normal
business hours and without advance notice.
6.11 Environmental Laws. Such Credit Party shall, and shall cause each
Subsidiary to, conduct its operations and keep and maintain its property in
material compliance with all Environmental Laws.
6.12 Acquisitions. (a) Prior to consummating any Permitted Acquisition,
the Borrower shall have delivered to the Agent (in form and detail satisfactory
to each Bank and in sufficient copies for each Bank) the following: (i) At least
thirty (30) days prior to the consummation of such Permitted Acquisition, a
brief summary of the substantive terms thereof and a certified copy of the
executed purchase or acquisition agreement, together with copies of business
plans, financial projections and budgets; and (ii) an officer's certificate,
executed by a Responsible Officer, certifying that immediately before and after
giving effect to such Permitted Acquisition (A) no Default has occurred and is
continuing or will exist and (B) that the Borrower will be in compliance with
each of the financial ratios specified in Section 6.14 hereof, together with a
reasonably detailed worksheet setting forth the calculation of such ratios.
(b) Prior to consummating Capital Expenditures in excess of $250,000 in
the aggregate during any fiscal year of the Borrower, computed on a cumulative
consolidated basis, the Borrower shall have delivered to the Agent (in form and
detail satisfactory to each Bank and in sufficient copies for each Bank) a
written request for such Capital Expenditure, together with the following: (i)
At least thirty (30) days prior to the consummation of such Capital Expenditure,
a brief summary of the substantive terms thereof and a certified copy of the
executed purchase or acquisition agreement and (ii) an officer's certificate,
executed by a Responsible Officer, certifying that immediately before and after
giving effect to such Capital Expenditure (A) no Default has occurred and is
continuing or will exist and (B) that the GMS Holding and its Subsidiaries, on a
consolidated basis, will be in compliance with each of the financial ratios
specified in Section 6.14 hereof, together with a reasonably detailed worksheet
setting forth the calculation of such ratios. The Agent and each Bank may accept
or reject any such request in their sole and absolute discretion within 30 days
after receipt thereof. The failure by the Agent or a Bank to respond to such a
request shall be deemed to be a rejection thereof.
6.13 Concentration Account. GMS Holding shall maintain the Concentration
Account with the Agent. Within 30 days after the Closing Date, all other bank
accounts maintained by GMS Holding or any of its Subsidiaries shall be and at
all times remain subject to instructions to transfer all funds out of such
accounts into the Concentration Account no less frequently than Friday of each
week (or, when a Friday is not a Banking Day, then on the previous Banking Day).
6.14 Financial Covenants. GMS Holding shall, on a consolidated basis:
(a) maintain a Current Ratio not less than 1.50 to 1.00 at all
times;
(b) maintain a Leverage Ratio of not more that 3.75 to 1.00 at all
times after the fiscal year ended December 31, 1996;
(c) maintain a Net Worth at all times of not less than the sum of
(A) the Net Worth as of the Closing Date, minus $500,000, and (B) 100% of
extraordinary gains arising after the Closing Date, computed on a cumulative
consolidated basis, (C) 100% of net proceeds from any sale of common stock of
GMS Holding or any of its Subsidiaries arising after the Closing Date, computed
on a cumulative consolidated basis, (D) 100% of any capital stock issued by GMS
Holding or any of its Subsidiaries as consideration in the Permitted
Acquisitions arising after the Closing Date, computed on a cumulative
consolidated basis, and (E) 70% of positive net income of GMS Holding and its
Subsidiaries arising after the Closing Date, computed on a cumulative
consolidated basis; and
(d) maintain a Coverage Ratio of not less than 1.30 to 1.00 at all
times after the fiscal quarter ended December 31, 1996.
6.15 Required Future Action. Any Subsidiary of such Credit Party formed
after the Commitment Closing Date shall promptly execute and deliver this
Agreement and any Subsidiary of such Credit Party formed after the Closing Date
shall promptly execute and deliver all instruments and documents, including, but
not limited to, this Agreement, the Guaranty and the Security Agreement, that
may be necessary, or that the Agent may request, in order to enable the Agent to
exercise its rights hereunder.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:
7.1 Limitation on Liens. Such Credit Party shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, make, create, incur,
assume or suffer to exist any Lien upon or with respect to any part of its
property, whether now owned or hereafter acquired, other than the following
("Permitted Encumbrances"):
(a) Liens in favor of Agent or any Bank securing the Obligations;
(b) Liens listed in Schedule 7.1 and existing on the date of this
Agreement;
(c) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in good
faith, provided that adequate reserves for the payment thereof have been
established in accordance with GAAP;
(d) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords and other similar Liens imposed by law incurred in the
ordinary course of business for sums not overdue or being contested in good
faith, provided that adequate reserves for the payment thereof have been
established in accordance with GAAP;
(e) Deposits under workers' compensation, unemployment insurance and
social security laws or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or to secure
statutory obligations of surety or appeal bonds or to secure indemnity,
performance or other similar bonds in the ordinary course of business, provided
all such Liens in the aggregate would not (even if enforced) cause a Material
Adverse Effect;
(f) Zoning restrictions, easements, rights-of-way, title
irregularities and other similar encumbrances, which alone or in the aggregate
are not substantial in amount and do not materially detract from the value of
the property subject thereto or interfere with the ordinary conduct of the
business of Borrower or any of its Subsidiaries;
(g) Liens on property or assets of any corporation which becomes a
Subsidiary of the Borrower or which are acquired by a Subsidiary or the Borrower
after the date of this Agreement, provided that (i) such Liens exist at the time
the stock of such corporation or property is acquired and (ii) such Liens were
not created in anticipation of such acquisition and provided further that all
such Liens in the aggregate at any time outstanding, together with Liens
permitted under Section 7.1(h) below, do not exceed $500,000, computed on a
cumulative consolidated basis for the Borrower and the Subsidiaries;
(h) Liens securing Indebtedness which constitutes Permitted Capital
Expenditures provided that, in each case, such Lien (i) attaches solely to the
property financed by such Permitted Capital Expenditures and (ii) the principal
amount of such Indebtedness secured thereby does not exceed 100% of the cost of
such property;
(i) Liens on the property or assets of any Subsidiary of the
Borrower in favor of the Borrower or any other Subsidiary of the Borrower,
provided that such Subsidiary is a party to this Agreement, the Security
Agreement and the Guaranty;
(j) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by the Liens described in clause (b) or
(h) above, provided that any extension, renewal or replacement (i) is limited to
the property covered by the existing Lien and (ii) secures Indebtedness which is
no greater in amount and has material terms no less favorable to the Banks than
the Indebtedness secured by the existing Lien;
(k) Banker's Liens, rights of setoff or similar rights as to deposit
accounts; provided that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by such
Credit Party in excess of those set forth by regulations promulgated by the FRB
and (ii) such deposit account is not intended by such Credit Party to provide
collateral to the depository institution; and
(l) Rights of (i) vendors or lessors under conditional sale
agreements or other title retention agreements, provided that (A) any such right
covers only the equipment so acquired and (B) the Indebtedness secured thereby
is permitted under Section 7.6 hereof, (ii) lessors under Operating Leases
permitted by the Agent under Section 7.8(b) hereof and (iii) Permitted Capital
Leases.
7.2 Disposition of Assets. Such Credit Party shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of any property (including accounts and
notes receivable, with or without recourse) or enter into any agreement to do
any of the foregoing, except (a) dispositions of inventory, equipment or
operations, all in the ordinary course of business and (b) the sale of equipment
or operations to the extent that such assets are exchanged for credit against
the purchase price of similar replacement assets, or the proceeds of such sale
are reasonably promptly applied to the purchase price of such replacement
assets.
7.3 Consolidations and Mergers. Such Credit Party shall not, and shall
not suffer or permit any Subsidiary to, enter into any merger, consolidation,
reorganization or recapitalization, or any agreement to do any of the foregoing,
except that the Borrower or any of its Subsidiaries may make Permitted
Acquisitions.
7.4 Change of Business. Neither such Credit Party nor any of its
Subsidiaries shall change the nature of its business or engage in any other
business other than the businesses which are substantially similar to the lines
of business in which such Credit Party and its Subsidiaries are engaged as of
the Closing Date.
7.5 Loans and investments. Such Credit Party shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person, except
for (a) Permitted Market Investments, (b) extensions of credit in the nature of
accounts receivable or notes receivable arising from the sale or lease of goods
or services in the ordinary course of business, (c) Permitted Acquisitions and
(d) wholly-owned Subsidiaries of the Borrower formed in connection with
Permitted Acquisitions.
7.6 Limitation on Indebtedness. Such Credit Party shall not, and shall
not suffer or permit any Subsidiary to, create, incur, assume, suffer to exist,
or otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except Permitted Indebtedness.
7.7 Contingent Obligations. Such Credit Party shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist any
Contingent Obligations, except (a) endorsements for collection or deposit in the
ordinary course of business and (b) Contingent Obligations of such Credit Party
and its Subsidiaries existing as of the Closing Date and listed in Schedule 7.7
attached hereto or assumed in connection with Permitted Acquisitions.
7.8 Lease Obligations. Such Credit Party shall not, and shall not suffer
or permit any Subsidiary to, create or suffer to exist any obligations for the
payment of rent for any property under lease or agreement to lease, except for
(a) leases of such Credit Party and of Subsidiaries in existence on the Closing
Date, (b) Operating Leases entered into by such Credit Party or any Subsidiary
after the Closing Date in the ordinary course of business and (c) Permitted
Capital Leases approved by the Agent.
7.9 Restricted Payments. Such Credit Party shall not, and shall not
suffer or permit any Subsidiary to, (a) declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of its capital stock or (b)
purchase, redeem or otherwise acquire for value any shares of its capital stock
or any warrants, rights or options to acquire such shares, now or
hereafter outstanding; provided, however, GMS Holding may make the 10%
cumulative dividend payments payable on its Series B-1 and Series B-2 Preferred
Stock upon any initial public offering of the equity securities of GMS Holding.
7.10 Prepayments of Subordinated Permitted Indebtedness. Neither the
Borrower nor any of its Subsidiaries shall purchase, redeem, retire or otherwise
acquire for value, or set apart any money for a sinking, defeasance or other
analogous fund for, the purchase, redemption, retirement or other acquisition
of, or make any payment or prepayment of the principal of or interest on, or any
other amount owing in respect of, any Subordinated Permitted Indebtedness,
except that the Borrower or such Subsidiary may make regularly scheduled
payments of interest and principal in respect of such Permitted Subordinated
Indebtedness required pursuant to the instruments evidencing such Permitted
Subordinated Indebtedness in accordance with the terms and conditions set forth
in Exhibit H attached hereto.
7.11 Transactions with Affiliates. Such Credit Party shall not, and shall
not suffer or permit any Subsidiary to, enter into any transaction with any
Affiliate of such Credit Party, except upon fair and reasonable terms no less
favorable to such Credit Party or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of such
Credit Party or such Subsidiary.
7.12 Use of Proceeds. The Borrower shall not, and shall not suffer or
permit any Subsidiary to, use any portion of the Loan proceeds, directly or
indirectly, (a) for any purpose other than for Permitted Acquisitions, Permitted
Capital Expenditures, and working capital purposes, provided that the aggregate
outstanding principal amount of Working Capital Loans shall not exceed
$2,000,000 at any time, (b) to purchase or carry Margin Stock, (c) to repay or
otherwise refinance indebtedness of the Borrower or others incurred to purchase
or carry Margin Stock, (d) to extend credit for the purpose of purchasing or
carrying any Margin Stock or (e) to acquire any security in any transaction that
is subject to Section 13 or 14 of the Exchange Act. No part of the proceeds of
the Loans will be used for any purpose which violates the provisions of
Regulations G, T, U or X of the FRB.
7.13 ERISA. Such Credit Party shall not, and shall not suffer or permit
any of its ERISA Affiliates to: (a) engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Plan which
has resulted or could reasonably expected to result in liability of such Credit
Party in an aggregate amount in excess of $100,000; or (b) engage in a
transaction that could be subject to Section 4069 or 4212 (c) of ERISA.
7.14 Accounting Changes. Such Credit Party shall not, and shall not
suffer or permit any Subsidiary to, make any
significant change in accounting treatment or reporting practices, except as
required by GAAP or as required to conform the practices of a Person acquired in
connection with a Permitted Acquisition, or change the fiscal year of such
Credit Party or of any Subsidiary.
ARTICLE VIII
EVENTS OF DEFAULT
8.1 Event of Default. Any of the following shall constitute an "Event of
Default":
(a) Non-Payment. The Borrower fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan or any amount of
interest on any Loan, or (ii) within three (3) Business Days after the same
becomes due, any interest, fee or any other amount payable hereunder or under
any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
any Credit Party made or deemed made herein, in any other Loan Document, or
which is contained in any certificate, document or financial or other statement
by any Credit Party or any Responsible Officer, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made; or
(c) Specific Defaults. Any Credit Party fails to perform or observe
any term, covenant or agreement contained in (i) Section 6.3, 6.14 or 6.15; (ii)
any of Section 6.1, 6.2, or 6.9 and such default shall continue unremedied for a
period of ten (10) days after the earlier of (A) the date upon which a
Responsible Officer knew or reasonably should have known of such failure or (B)
the date upon which written notice thereof is given to such Credit Party by the
Agent or any Bank; or (iii) Article VII; or
(d) Other Defaults. Such Credit Party fails to perform or observe
any other term or covenant contained in this Agreement or any other Loan
Document, and such default shall continue unremedied for a period of thirty (30)
days after the earlier of (i) the date upon which a Responsible Officer knew or
reasonably should have known of such failure or (ii) the date upon which written
notice thereof is given to such Credit Party by the Agent or any Bank; or
(e) Cross-Default. Any Credit Party (i) fails to make any payment
in respect of any Indebtedness or Contingent Obligation having an aggregate
principal amount (including undrawn committed or available, amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $100,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) and such
failure continues after any applicable grace or notice period, if any; (ii)
fails to perform or observe any other condition or covenant, or any other event
shall occur or condition exist, under any agreement or instrument relating to
any such Indebtedness or Contingent Obligation, and such failure continues after
the applicable grace or notice period, if any, specified in the relevant
document on the date of such failure if the effect of such failure, event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness to be declared to be due and payable prior to its stated maturity,
or such Contingent Obligation to become payable or cash collateral in respect
thereof to be demanded; or (iii) fails to make any payment in respect of any
Permitted Subordinated Indebtedness when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) and such failure
continues after any applicable grace or notice period, if any; or
(f) Insolvency; Voluntary Proceedings. Any Credit Party (i) ceases
or fails to be Solvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii) except as
otherwise expressly provided in this Agreement, voluntarily ceases to conduct
its business in the ordinary course; (iii) commences any Insolvency Proceeding
with respect to itself; or (iv) takes any action to effectuate or authorize any
of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against any Credit Party, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of any Credit Party's properties, and any such
proceeding or petition shall not be dismissed, or such writ, judgment, warrant
of attachment, execution or similar process shall not be released, vacated or
fully bonded within sixty (60) days after commencement, filing or levy; (ii) any
Credit Party admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) any Credit Party
acquiesces in the appointment of a receiver, trustee, custodian, conservator,
liquidator, mortgagee it possession (or agent therefor), or other similar Person
for itself or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of any Credit Party under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC in an aggregate amount in excess of
$100,000; (ii) the aggregate amount of Unfunded Pension
Liability among all Pension Plans at any time exceeds $100,000; or (iii) any
Credit Party or any ERISA Affiliate shall fail to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a Multiemployer
Plan in an aggregate amount in excess of $100,000; or
(i) Monetary Judgments. One or more final judgments, final orders,
decrees or arbitration awards is entered against any Credit Party involving in
the aggregate a liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any single or
related series of transactions, incidents or conditions, of $100,000 or more,
and the same shall remain unsatisfied, unvacated and unstayed pending appeal for
a period of twenty (20) days after the entry thereof or such Credit Party shall
not settle such judgment or award for less than $100,000 within ten (10) days
after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree is entered against any Credit Party which does or would reasonably be
expected to have a Material Adverse Effect, and there shall be any period of ten
(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; or
(k) Change of Control. There occurs any Change of Control; or
(l) Material Adverse Effect. An event occurs which constitutes a
Material Adverse Effect; or
(m) Invalidity of Security Document Provisions. The provisions of
the Guaranty, the Security Agreement or any agreement or instrument relating
thereto is for any reason revoked or invalidated, or otherwise ceases to be in
full force and effect, any Person contests in any manner the validity or
enforceability thereof or denies that it has any further liability or obligation
thereunder, or the Indebtedness secured by the Security Agreement fails to
maintain, for any reason, the priority contemplated by the Security Agreement.
(n) Invalidity of Subordination Provisions. The subordination
provisions of the Permitted Subordinated Indebtedness set forth in Exhibit H
attached hereto or any agreement or instrument governing any such Permitted
Subordinated Indebtedness is for any reason revoked or invalidated, or otherwise
cease to be in full force and effect, any Person contests in any manner the
validity or enforceability thereof or denies that it has any further liability
or obligation thereunder, or the Indebtedness hereunder is for any reason
subordinated or does not have the priority contemplated by this Agreement or
such subordination provisions.
8.2 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,
(a) declare the Commitment of each Bank to make Loans to be
terminated, whereupon such Commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law; provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 8.1 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Bank to make Loans shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further act of the
Agent or any Bank.
8.3 Rights Not Exclusive. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX
THE AGENT
9.1 Appointment and Authorization. Each Bank hereby irrevocably (subject
to Section 9.9) appoints, designates and authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere in this Agreement or in any
other Loan Document, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent.
9.2 Delegation of Duties. The Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.3 Liability of Agent. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Borrower or any Subsidiary or
Affiliate of the Borrower, or any officer thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower or any of the
Borrower's Subsidiaries or Affiliates.
9.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the majority Banks as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Loan Document in accordance with a request or consent of the Majority
Banks and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Sections 4.1 and 4.2, each Bank that has executed this Agreement
shall be deemed to have consented to, approved or accepted or to be satisfied
with, each document or other matter either sent by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
9.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, except with
respect to defaults in the payment of principal, interest and fees required to
be paid to the Agent for the account of the Banks, unless the Agent shall have
received written notice from a Bank or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Majority Banks in accordance with Article
VIII; provided, however, that unless and until the Agent has received any such
request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
:\D Credit Decision. Each Bank acknowledges that none of the Agent-
Related Persons has made any representation or warranty to it and that no act by
the Agent hereinafter taken, including
any review of the affairs of the Borrower and its subsidiaries, shall be deemed
to constitute any representation or warranty by any Agent-Related Person to any
Bank. Each Bank represents to the Agent that it has, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial and
other condition and credit worthiness of the Borrower and its Subsidiaries, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and credit
worthiness of the Borrower. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the Agent, the Agent
shall not have any duty or responsibility to provide any Bank with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or credit worthiness of the Borrower which may
come into the possession of any of the Agent-Related Persons.
9.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to do so), pro
rata, from and against any and all Indemnified Liabilities; provided, however,
that no Bank shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on-behalf of the Borrower. The undertaking in
this Section 9.7 shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
9.8 Agent in Individual Capacity. Imperial Bank and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and
generally engage in any kind of banking, trust, financial advisory, underwriting
or other business with the Borrower and its Subsidiaries and Affiliates as
though Imperial Bank were not the Agent hereunder and without notice to or
consent of the Banks. The Banks acknowledge that, pursuant to such activities,
Imperial Bank or its Affiliates may receive information regarding the Borrower
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Subsidiary) and acknowledge that
the Agent shall be under no obligation to provide such information to them. With
respect to its Loans, Imperial Bank shall have the same rights and powers under
this Agreement as any other Bank and may exercise the same as though it were not
the Agent, and the terms "Bank" and "Banks" include Imperial Bank in its
individual capacity.
9.9 Successor Agent. The Agent may, and at the request of the Majority
Banks shall, resign as Agent upon thirty (30) days, notice to the Banks and the
Borrower. If the Agent resigns under this Agreement, the Majority Banks shall
appoint from among the Banks a successor agent for the Banks. If no successor
agent is appointed prior to the effective date of the resignation of the Agent,
the Agent may appoint, after consulting with the Banks and the Borrower, a
successor agent from among the Banks. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties as Agent
shall be terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Article IX and Sections 10.4, 10.5 and 10.6 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is thirty (30) days following a retiring Agent's notice
of resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the Majority Banks appoint a successor
agent as provided for above.
9.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed IRS Forms
1001 and W-8 prior to the Closing Date and prior to the first day of each
calendar year thereafter;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or business of
such Bank, two properly completed and executed copies of IRS Form 4224 prior to
the Closing Date and prior to the first day of each calendar year thereafter and
IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Bank, such Bank agrees to notify the
Agent of the percentage amount in which it is no longer the beneficial owner of
Obligations of the Borrower to such Bank. To the extent of such percentage
amount, the Agent will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such Bank
an amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to the Agent, then the Agent may withhold from
any interest payment to such Bank not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank (because the
appropriate form was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Bank shall indemnify the Agent fully for all amounts aid, directly
or indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section, together with all costs
and expenses (including Attorney Costs). The obligation of the Banks under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of the Agent.
ARTICLE X
MISCELLANEOUS
10.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower therefrom, shall be effective unless the same shall be
in writing and signed by the Majority Banks (or by the Agent at the written
request of the Majority Banks) and the Borrower and acknowledged by the Agent,
and then any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that
no such waiver, amendment, or consent shall, unless in writing and signed by all
the Banks and the Borrower and acknowledged by the Agent, do any of the
following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 8.2);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Combined Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder;
(e) amend this Section, Section 2.13 or Section 7.1, or any
provision herein providing for consent or other action by all Banks; or
(f) amend the definition of "Change of Control" or waive any Event
of Default under Section 8.1(k).
and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Majority Banks or all the
Banks, as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document, and (ii) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed by the parties
thereto.
10.2 Notices.
(a) All notices, requests and other communications shall be in
writing (including, unless the context expressly otherwise provides, by
facsimile transmission, provided that any matter transmitted by the Borrower by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 10.2, and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed, faxed or
delivered, to the address or facsimile number specified for notices on Schedule
10.2; or, as directed to the Borrower or the Agent, to such other address as
shall be designated by such party in a written notice to the other parties, and
as directed to any other party, at such other address as shall be designated by
such party in a written notice to the Borrower and the Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX shall not be effective until actually
received by the Agent.
(c) Any agreement of the Agent and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Borrower. The Agent and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Borrower to give such notice and the Agent and the Banks shall not have any
liability to the Borrower or other Person on account of any action taken or not
taken by the Agent or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Loans shall not be affected
in any way or to any extent by any failure by the Agent and the Banks to receive
written confirmation of any telephonic or facsimile notice or the receipt by the
Agent and the Banks of a confirmation which is at variance with the terms
understood by the Agent and the Banks to be contained in the telephonic or
facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Agent or any Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.
10.4 Costs and Expenses. The Borrower shall:
(a) subject to the terms of the Fee Letter, whether or not the
transactions contemplated hereby are consummated, pay
or reimburse the Agent within fifteen (15) Business Days after demand (subject
to Section 4.1(e)) for all costs and expenses incurred by the Agent in
connection with the development, preparation, delivery, administration and
execution of, and any amendment, supplement, waiver or modification to (in each
case, whether or not consummated), this Agreement, any Loan Document and any
other documents prepared in connection herewith or therewith, and the
consummation of the transactions contemplated hereby and thereby, including
reasonable Attorney Costs incurred by the Agent with respect thereto; and
(b) pay or reimburse the Agent and each Bank within five (5)
Business Days after demand for all costs and expenses (including Attorney Costs)
incurred by them in connection with the enforcement, attempted enforcement, or
preservation of any rights or remedies under this Agreement or any other Loan
Document during the existence of an Event of Default or after acceleration of
the Loans (including in connection with any "workout" or restructuring regarding
the Loans, and including in any Insolvency Proceeding or appellate proceeding).
10.5 Borrower Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Borrower shall indemnify and hold the
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Agent or replacement of any Bank) be imposed on, incurred by or asserted against
any such Person in any way relating to or arising out of this Agreement or any
document contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Person under or in connection
with any of the foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or appellate
proceeding) related to or arising out of this Agreement or the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Borrower shall have no obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities resulting solely from
the gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section shall survive payment of all other Obligations.
10.6 Payments Set Aside. To the extent that the Borrower makes a payment
to the Agent or the Banks, or the Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside
or required (including pursuant to any settlement entered into by the Agent or
such Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery the obligation 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 set-off had not occurred, and (b) each
Bank severally agrees to pay to the Agent upon demand its pro rata share of any
amount so recovered from or repaid by the Agent.
10.7 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agent and each Bank.
10.8 Assignments, Participations, etc.
(a) Any Bank may, with the written consents of the Borrower and the
Agent, which consents shall be at the sole discretion of the Borrower and the
Agent, at any time assign and delegate to one or more Eligible Assignees
(provided that (i) no written consent of the Borrower shall be required during
the existence of an Event of Default after the Agent has declared the Commitment
of each Bank to make Loans to be terminated and (ii) no written consent of the
Borrower or the Agent shall be required in connection with any assignment and
delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank)
(each an "Assignee") all, or any ratable part of all, of the Loans, the Combined
Commitments and the other rights and obligations of such Bank hereunder, in a
minimum amount of $5,000,000; provided, however, that the Borrower and the Agent
may continue to deal solely and directly with such Bank in connection with the
interest so assigned to an Assignee until (i) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrower and the Agent
such Bank and the Assignee; (ii) such Bank and its Assignee shall have delivered
to the Borrower and the Agent an Assignment and Acceptance in the form of
Exhibit J ("Assignment and Acceptance") together with any Note or Notes subject
to such assignment and (iii) the assignor Bank or Assignee has paid to the Agent
a processing fee in the amount of $2,500.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and (ii) the
assignor Bank shall, to the extent that rights and obligations hereunder and
under the other Loan Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents.
(c) Within five (5) Business Days after its receipt of notice by the
Agent that it has received an executed Assignment and Acceptance and payment of
the processing fee, (and provided that it consents to such assignment in
accordance with Section 10.8(a)), the Borrower shall execute and deliver to the
Agent, new Notes evidencing such Assignee's assigned Loans and Commitment and,
if the assignor Bank has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Loans retained by the assignor
Bank (such Notes to be in exchange for, but not in payment of, the Notes held by
such Bank). Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Combined Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or
other Persons not Affiliates of the Borrower (a "Participant") participating
interests in any Loans, the Commitment of that Bank and the other interests of
that Bank (the "Originator") hereunder and under the other Loan Documents;
provided, however, that (i) the Originator's obligations under this Agreement
shall remain unchanged, (ii) the Originator shall remain solely responsible for
the performance of such obligations, (iii) the Borrower and the Agent shall
continue to deal solely and directly with the Originator in connection with the
Originator's rights and obligations under this Agreement and the other Loan
Documents, and (iv) no Bank shall transfer or grant any participating interest
under which the Participant has rights to approve any amendment to, or any
consent or waiver with respect to, this Agreement or any other Loan Document,
except to waiver would require unanimous consent of the Banks as described in
the first proviso to Section 10.1. In the case of any such participation, the
Participant shall be entitled to the benefit of Sections 3.1, 3.3 and 10.5 as
though it were also a Bank hereunder, and if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set-off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Bank under
this Agreement.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time assign all or any portion of
its rights under and interest in this Agreement and the Note held by it for the
purpose of creating a security interest in favor of any Federal Reserve Bank in
accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR
203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
10.9 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "confidential" or
"secret" by the Borrower and provided to it by the Borrower or any Subsidiary,
or by the Agent on such Company's or Subsidiary's behalf, under this Agreement
or any other Loan Document, and neither it nor any of its Affiliates shall use
any such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Borrower or any Subsidiary;
except to the extent such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Borrower, provided that such source is not bound by a legal or contractual
obligation known to the Bank; provided, however, that any Bank may disclose such
information (A) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective Affiliates may be party; (E) after the occurrence of a
Default, to the extent reasonably required in connection with the exercise of
any remedy hereunder or under any other Loan Document; (F) to such Bank's
independent auditors and other professional advisors; (G) to any Participant or
Assignee, actual or potential, provided that such Person agrees in writing to
keep such information confidential to the same extent required of the Banks
hereunder; (H) as to any Ban or its Affiliates, as expressly permitted under the
terms of any other document or agreement regarding confidentiality to which the
Borrower or any Subsidiary is party with such Bank or such Affiliate; and (I) to
its Affiliates; provided, however, that in the event any Bank is requested to
disclose confidential information pursuant to this Section 10.9 (A), (B), (C) or
(D), such Bank shall notify the Borrower promptly, if it may lawfully so do, so
that the Borrower may seek a protective order or other appropriate remedy.
10.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank or any Affiliate, which is an Eligible Assignee, thereof
is authorized at any time and from time to time, without prior notice to the
Borrower, any such
notice being waived by the Borrower to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owing by, such Bank to or for the credit or the account of the Borrower against
any and all Obligations owing to such Bank, now or hereafter existing,
irrespective of whether or not the Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such obligations may be
contingent or unmatured and each such Affiliate is hereby irrevocably authorized
to permit such set-off and appropriation. Each Bank agrees promptly to notify
the Borrower and the Agent after any such set-off and application made by such
Bank; provided, however, that the failure to give such notice shall not affect
the validity of such set-off and application.
10.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agent shall reasonably request.
10.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
10.13 Severability. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
10.14 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and legal benefit of the Borrower, the Banks, the Agent
and the Agent-Related Persons, and successors and assigns and no other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents.
10.15 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT
AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
OR OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF The Borrower, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF The Borrower, THE AGENT AND THE BANKS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. The Borrower, THE AGENT AND THE BANKS
EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH
MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
10.16 Waiver of Jury Trial. THE CREDIT PARTIES, THE BANKS AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE CREDIT PARTIES,
THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.17 Entire Agreement. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Credit
Parties, the Banks and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
10.18 Additional Credit Parties. Upon the execution and delivery by any
Person of a supplement substantially in the form of Exhibit I hereto (each a
"Credit Agreement Supplement"), such Person shall be referred to as an
"Additional Credit Party" and shall be and become a Credit Party, and each
reference in this Agreement to "Credit Party" shall also mean and be a reference
to such Additional Credit Party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Los Angeles by their proper and duly authorized
officers as of the day and year first above written.
GMS DENTAL GROUP MANAGEMENT, INC.
By:
Title:
GMS DENTAL GROUP, INC.
By:
Title:
GMS CALIFORNIA ACQUISITION COMPANY
By:
Title:
GMS HAWAII ACQUISITION COMPANY
By:
Title:
IMPERIAL BANK, as Agent
By:
Title:
IMPERIAL BANK, as a Bank
By:
Title:
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in Los Angeles by their proper and duly authorized
officers as of the day and year first above written.
GMS DENTAL GROUP MANAGEMENT,
INC.
By: /s/ Xxxxx Xxxxxx
-------------------------
Title: President
GMS DENTAL GROUP, INC.
By: /s/ Xxxxx Xxxxxx
--------------------------
Title: President
GMS CALIFORNIA ACQUISITION
COMPANY
By: /s/ Xxxxx Xxxxxx
---------------------------
Title: President
GMS HAWAII ACQUISITION
COMPANY
By: /s/ Xxxxx Xxxxxx
--------------------------
Title: President
IMPERIAL BANK, as Agent
By: /s/ Xxxx Xxxxxx
--------------------------
Title: Senior Vice President
IMPERIAL BANK, as a Bank
By: /s/ Xxxx Xxxxxx
--------------------------
Title: Senior Vice President
-72-
EXECUTION COPY
FIRST AMENDMENT TO
CREDIT AGREEMENT
This Amendment, dated as of April 21, 1997, is entered into by among GMS
DENTAL GROUP MANAGEMENT, INC., a Delaware corporation (the "Borrower"), GMS
DENTAL GROUP, INC., a Delaware corporation ("GMS Holding"), GMS DENTAL GROUP
MANAGEMENT OF SOUTHERN CALIFORNIA, INC., a California corporation ("GMS
California"), GMS HAWAII ACQUISITION COMPANY, a Delaware corporation ("GMS
Hawaii Acquisition"), GMS DENTAL GROUP MANAGEMENT OF HAWAII, INC., a Hawaii
corporation ("GMS Hawaii"), and GMS DENTAL GROUP OF THE MOUNTAIN STATES, INC., a
Delaware corporation ("GMS Mountain") (each of the Borrower, GMS Holding, GMS
California, GMS Hawaii Acquisition, GMS Hawaii and GMS Mountain herein called a
"Credit Party" and collectively the "Credit Parties"), and the financial
institutions from time to time party hereto (collectively, the "Banks" and
individually, a "Bank"), and IMPERIAL BANK, as agent (the "Agent") for the
Banks.
Recitals
A. The Credit Parties, the Banks and the Agent have entered into the
Credit Agreement, dated as of October 10, 1996 (the "Credit Agreement"). Terms
defined in the Credit Agreement and not otherwise defined herein have the same
respective meanings when used herein, and the rules of construction set forth in
the Credit Agreement are incorporated herein by reference.
B. The Credit Parties, the Banks and the Agent have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective as of the date hereof, hereby amended as follows:
(a) The definition of "Permitted Subordinated Indebtedness" in Section 1.1
of the Credit Agreement is hereby amended in full to read as follows:
"'Permitted Subordinated Indebtedness' means unsecured Indebtedness of
GMS Holding evidencing seller financing incurred in connection with a
Permitted Acquisition, which Indebtedness is subordinated to the
Obligations upon substantially the terms set forth on Exhibit H attached
hereto or upon such other terms as may be satisfactory to the Agent and the
Majority Banks."
(b) Section 6.12 of the Credit Agreement is hereby amended to read in full
as follows:
"6.12 Acquisitions and Capital Expenditures. (a) Prior to consummating
any Permitted Acquisition, the Borrower shall have delivered to the Agent
(in form and detail satisfactory to each Bank and in sufficient copies for
each Bank) the following: (i) at least thirty (30) days prior to the
consummation of such Permitted Acquisition, a brief summary of the
substantive terms thereof and the proposed execution copies of all material
agreements relating to such Permitted Acquisition, including, without
limitation, the acquisition agreement, the management agreement, the
promissory note evidencing Permitted Subordinated Indebtedness and copies
of business plans, financial projections and budgets relating to such
Permitted Acquisition and (ii) an officer's certificate, executed by a
Responsible Officer, certifying that immediately before and after giving
effect to such Permitted Acquisition (A) no Default has occurred and is
continuing or will exist and (B) that the Borrower will be in compliance
with each of the financial ratios specified in Section 6.14 hereof,
together with a reasonably detailed worksheet setting forth the calculation
of such ratios.
(b) Prior to consummating Capital Expenditures in excess of
$250,000 in the aggregate during any fiscal year of the Borrower, computed
on a cumulative consolidated basis, the Borrower shall have delivered to
the Agent (in form and detail satisfactory to each Bank and in sufficient
copies for each Bank) a written request for such Capital Expenditure,
together with the following: (i) at least thirty (30) days prior to the
consummation of such Capital Expenditure, a brief summary of the
substantive terms thereof and the proposed execution copies of all material
agreements relating to such Capital Expenditure, including, without
limitation, the purchase or acquisition agreement and (ii) an officer's
certificate, executed by a Responsible Officer, certifying that immediately
before and after giving effect to such Capital Expenditure (A) no Default
has occurred and is continuing or will exist and (B) that GMS Holding and
its Subsidiaries, on a consolidated basis, will be in compliance with each
of the financial ratios
specified in Section 6.14 hereof, together with a reasonably detailed
worksheet setting forth the calculation of such ratios. The Agent and each
Bank may accept or reject any such request in their sole and absolute
discretion within 30 days after receipt thereof. The failure by the Agent
or a Bank to respond to such a request shall be deemed to be a rejection
thereof."
(c) Section 7.9 of the Credit Agreement is hereby amended to read in full
as follows:
"7.9 Restricted Payments. Such Credit Party shall not, and shall not
suffer or permit any Subsidiary to, (a) declare or make any dividend
payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its
capital stock or (b) purchase, redeem or otherwise acquire for value any
shares of its capital stock or any warrants, rights or options to acquire
such shares, now or hereafter outstanding; provided, however, (i) GMS
Holding may make the 10% cumulative dividend payments payable on its Series
B-1 and Series B-2 Preferred Stock upon any initial public offering of the
equity securities of GMS Holding and (ii) so long as no Default or Event of
Default has occurred and is continuing, the Borrower may make dividend
payments to GMS Holding from time to time in an amount not to exceed the
amount required to make the regularly scheduled payment of interest and
principal in respect of any Permitted Subordinated Indebtedness."
(d) Section 7.10 of the Credit Agreement is hereby amended to read in full
as follows:
"7.10 Prepayments of Subordinated Permitted Indebtedness. GMS Holding
shall not purchase, redeem, retire or otherwise acquire for value, or set
apart any money for a sinking, defeasance or other analogous fund for, the
purchase, redemption, retirement or other acquisition of, or make any
payment or prepayment of the principal of or interest on, or any other
amount owing in respect of, any Subordinated Permitted Indebtedness, except
that GMS Holding may make regularly scheduled payments of interest and
principal in respect of such Permitted Subordinated Indebtedness required
pursuant to the instruments evidencing such Permitted Subordinated
Indebtedness in accordance with the terms and conditions set forth in
Exhibit H attached hereto."
(e) Exhibit H to the Credit Agreement (Terms and Conditions of Permitted
Subordinated Indebtedness) is hereby amended and restated to read in full in the
form attached hereto as Exhibit H. On and after the date hereof, each reference
in the Credit Agreement and the other Loan Documents to "Exhibit H," "Terms and
Conditions of Permitted Subordinated Indebtedness" or words of like import shall
mean and be a reference to Exhibit H attached hereto.
SECTION 3. Reference to and Effect on the Credit Agreement. On and after
the date hereof, each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import, and each reference in
the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby. Except as hereby expressly amended,
the Credit Agreement shall remain in full force and effect, and is hereby
ratified and confirmed in all respects on and as of the date hereof.
SECTION 4. Execution in Counterparts. This Amendment 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 taken together shall constitute one and the same
instrument.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized representatives.
GMS DENTAL GROUP MANAGEMENT,
INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,
Secretary and
Treasurer
GMS DENTAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,
Secretary and
Treasurer
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,
Secretary and
Treasurer
GMS HAWAII ACQUISITION COMPANY
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,
Secretary and
Treasurer
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,
Secretary and
Treasurer
GMS DENTAL GROUP OF THE
MOUNTAIN STATES, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,
Secretary and
Treasurer
IMPERIAL BANK, as Agent
By: Xxxx Xxxxxx
---------------------------
Title: Sr. Vice-President
IMPERIAL BANK, as a Bank
By: Xxxx Xxxxxx
---------------------------
Title: Sr. Vice-President
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed by their duly authorized representatives.
GMS DENTAL GROUP MANAGEMENT,
INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman, Secretary
and Treasurer
GMS DENTAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman, Secretary
and Treasurer
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,Secretary
and Treasurer
GMS HAWAII ACQUISITION COMPANY
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,Secretary
and Treasurer
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman, Secretary
and Treasurer
GMS DENTAL GROUP OF THE
MOUNTAIN STATES, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------
Title: Chairman,Secretary
and Treasurer
-5-
IN WITNESS WHEREOF, the parties have caused this Amendment to
be executed by their duly authorized representatives.
GMS DENTAL GROUP MANAGEMENT, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Title: CHAIRMAN, SECRETARY & TREASURER
GMS DENTAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Title: CHAIRMAN, SECRETARY & TREASURER
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Title: CHAIRMAN, SECRETARY & TREASURER
GMS HAWAII ACQUISITION COMPANY
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Title: CHAIRMAN, SECRETARY & TREASURER
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Title: CHAIRMAN, SECRETARY & TREASURER
GMS DENTAL GROUP MANAGEMENT OF THE
MOUNTAIN STATES, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Title: CHAIRMAN, SECRETARY & TREASURER
-7-
IMPERIAL BANK, as Agent
By: /s/ Xxxx Xxxxxx
--------------------------
Title:
IMPERIAL BANK, as a Bank
By: /s/ Xxxx Xxxxxx
--------------------------
Title:
-8-
EXECUTION COPY
CREDIT AGREEMENT SUPPLEMENT
April 21, 1997
Imperial Bank, as Agent
0000 Xxxxx Xx Xxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Credit Agreement Made as of October 10, 1996 by the
Credit Parties Listed Therein and Imperial Bank, as
Agent
Ladies and Gentlemen:
Reference is made to the above-captioned Credit Agreement (said Credit
Agreement, as in effect on the date hereof and as it may hereafter be amended,
modified or supplemented from time to time, herein called the "Credit
Agreement"). Terms defined in or pursuant to the Credit Agreement and not
otherwise defined herein are used herein as therein defined.
Each of the undersigned hereby agrees, as of the date first written above,
to become a Credit Party under the Credit Agreement as if it were an original
party thereto and agrees that each reference in the Credit Agreement to "Credit
Party" shall also mean and be a reference to the undersigned.
Each of the undersigned has attached hereto supplements to all of the
Schedules to the Credit Agreement, and each of the undersigned hereby certifies
that such supplements have been prepared by the undersigned substantially in the
form of such schedules and are accurate and complete as of the date hereof.
Each of the undersigned hereby makes each representation and warranty set
forth in Article V of the Credit Agreement to the same extent as each other
Credit Party and hereby agrees to be bound as a Credit Party to each affirmative
covenant and negative covenant set forth in Articles VI and VII, respectively,
of the Credit Agreement and all other terms and provisions of the Credit
Agreement to the same extent as each other Credit Party.
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
EACH OF THE UNDERSIGNED WAIVES ANY RIGHT TO TRIAL BY JURY WITH
REGARD TO ANY ACTION OF ANY TYPE OR NATURE WHATSOEVER UNDER OR
CONCERNING THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR
IN ANY WAY RELATED TO THE ADMINISTRATION OR ENFORCEMENT THEREOF.
Very truly yours,
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC.
By: ___________________________
Title:
Address: 00000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC.
By: ___________________________
Title:
Address: 00000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
GMS DENTAL GROUP MANAGEMENT OF THE
MOUNTAIN STATES, INC.
By: ___________________________
Title:
Address: 00000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
EACH OF THE UNDERSIGNED WAIVES ANY RIGHT TO TRIAL BY JURY
WITH REGARD TO ANY ACTION OF ANY TYPE OR NATURE WHATSOEVER UNDER
OR CONCERNING THE CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR IN ANY WAY RELATED TO THE ADMINISTRATION OR
ENFORCEMENT THEREOF.
Very truly yours,
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Title: Chairman
Address: 00000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Title: Chairman
Address: 00000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
GMS DENTAL GROUP MANAGEMENT OF THE
MOUNTAIN STATES, INC.
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Title: Chairman
Address: 00000 Xxxx Xxxxx
Xxxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
EXECUTION COPY
SECOND AMENDMENT TO
CREDIT AGREEMENT
This Amendment, dated as of May 1, 1997, is entered into by and among GMS
DENTAL GROUP MANAGEMENT, INC., a Delaware corporation (the "Borrower"), GMS
DENTAL GROUP, INC., a Delaware corporation ("GMS Holding"), GMS DENTAL GROUP
MANAGEMENT OF SOUTHERN CALIFORNIA, INC., a California corporation ("GMS
California"), GMS HAWAII ACQUISITION COMPANY, a Delaware corporation ("GMS
Hawaii Acquisition"), GMS DENTAL GROUP MANAGEMENT OF HAWAII, INC., a Hawaii
corporation ("GMS Hawaii"), and GMS DENTAL GROUP MANAGEMENT OF THE MOUNTAIN
STATES, INC., a Delaware corporation ("GMS Mountain") (each of the Borrower, GMS
Holding, GMS California, GMS Hawaii Acquisition, GMS Hawaii and GMS Mountain
herein called a "Credit Party" and collectively the "Credit Parties"), and the
financial institutions from time to time party hereto (collectively, the "Banks"
and individually, a "Bank"), and IMPERIAL BANK, as agent (the "Agent") for the
Banks.
Recitals
A. The Credit Parties, the Banks and the Agent have entered into the
Credit Agreement, dated as of October 10, 1996, as amended by the First
Amendment to Credit Agreement, dated as of April 21, 1997 (as so amended, the
"Credit Agreement"). Terms defined in the Credit Agreement and not otherwise
defined herein have the same respective meanings when used herein, and the rules
of construction set forth in the Credit Agreement are incorporated herein by
reference.
B. The Credit Parties, the Banks and the Agent have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is,
effective retroactively as of October 10, 1996, hereby amended as follows:
(a) The definition of "Coverage Ratio" in Section 1.1 of
the Credit Agreement is hereby amended in full to read as follows:
"'Coverage Ratio' means, as of the last day of any fiscal quarter
of GMS Holding, the ratio of (i) EBITDAR for the fiscal quarter ending
on such date to (ii) Fixed Charges as of such date; provided, however,
that EBITDAR as of each such date shall be multiplied by four (4), so
as to represent the four-quarter equivalent of EBITDAR for such
period."
(b) The definition of "EBITDAR" in Section 1.1 of the Credit
Agreement is hereby amended in full to read as follows:
"'EBITDAR' means, for any fiscal period, for GMS Holding and its
Subsidiaries on a consolidated basis, earnings before Interest
Expense, income taxes, depreciation, amortization and Operating Lease
Rentals; provided, however, that with respect to any fiscal quarter
during which a Permitted Acquisition has been consummated, EBITDAR for
such quarter may be adjusted to reflect EBITDAR applicable to such
Permitted Acquisition for the entire quarter based on its annual run-
rate for such quarter as shown on the financial projections delivered
to and approved by the Agent in connection with such Permitted
Acquisition under Section 6.12(a) hereof."
(c) The definition of "Fixed Charges" in Section 1.1 of
the Credit Agreement is hereby amended in full to read as follows:
"'Fixed Charges' means, for any fiscal quarter and without
duplication, for GMS Holding and its Subsidiaries on a consolidated
basis the sum of (i) Interest Expense and fees paid on, and
amortization of debt discount in respect of, all Indebtedness,
multiplied by four (4) plus (ii) Operating Lease Rentals paid during
such period, multiplied by four (4) plus (iii) the aggregate principal
amount of all current maturities of long term Indebtedness (including
the principal portion of rentals under Capital Leases) obligated to be
paid by GMS Holding and its Subsidiaries.
(d) The definition of "Leverage Ratio" in Section 1.1 of the Credit
Agreement is hereby amended in full to read as follows:
"'Leverage Ratio' means, as of the last day of any fiscal quarter
of GMS Holding, the ratio of (i) the sum of (x) the aggregate
principal amount of Indebtedness (including the principal portion of
rentals under Capital Leases and Permitted Subordinated Indebtedness)
of GMS Holding and its Subsidiaries on a consolidated basis which
matures more than one year from the date of determination plus (y) the
aggregate principal amount of all Indebtedness (including the
principal portion of rentals under Capital Leases) which is scheduled
to be paid by GMS Holding and its Subsidiaries on a consolidated basis
within one year from the date of determination to (ii) the Operating
Cash Flow for the fiscal quarter ending on such date; provided,
however, that Operating Cash Flow as of each such date shall be
multiplied by four (4), so as to represent the four-quarter equivalent
of Operating Cash Flow for such period."
(e) The definition of "Operating Cash Flow" in Section 1.1 of the
Credit Agreement is hereby amended in full to read as follows:
"'Operating Cash Flow' means, for any period, for GMS Holding and
its Subsidiaries (i) net income (before extraordinary gains but after
extraordinary losses) for
such period plus (ii) Interest Expense, income tax expense,
depreciation and amortization (all to the extent deducted in
determining net income) for such period, all determined on a
consolidated basis in accordance with GAAP; provided, however, that
with respect to any fiscal quarter during which a Permitted
Acquisition has been consummated, Operating Cash Flow for such quarter
may be adjusted to reflect Operating Cash Flow applicable to such
Permitted Acquisition for the entire quarter based on its annual run-
rate for such quarter as shown on the financial projections delivered
to and approved by the Agent in connection with such Permitted
Acquisition under Section 6.12(a) hereof."
(f) Section 6.2(b) of the Credit Agreement is hereby amended to read
in full as follows:
"(b) concurrently with the delivery of the financial
statements referred to in Sections 6.1(a) and 6.1(b), a Compliance
Certificate and a Real Property Certificate each executed by a
Responsible Officer; provided, however, that with respect to any
fiscal quarter during which a Permitted Acquisition has been
consummated, the financial ratios described in the Compliance
Certificate for such fiscal quarter may be adjusted to reflect the
financial ratios applicable to such Permitted Acquisition for the
entire quarter based on its annual run-rate for such quarter as shown
on the financial projections delivered to and approved by the Agent in
connection with such Permitted Acquisition under Section 6.12(a)
hereof;"
(g) Section 6.12 of the Credit Agreement is hereby amended to read in
full as follows:
"6.12 Acquisitions. (a) Prior to consummating any Permitted
Acquisition, the Borrower shall have delivered to the Agent (in form
and detail satisfactory to each Bank and in sufficient copies for each
Bank) a written request for such Permitted Acquisition, together with
the following: (i) At least thirty (30) days prior to the consummation
of such Permitted Acquisition, a description of the substantive terms
and conditions thereof and certified copies of (A) the executed letter
of intent or a memorandum of understanding and (B) the most recent
drafts of the purchaser or acquisition agreement (including all
exhibits attached thereto) relating to such Permitted Acquisition,
together with copies of business plans, financial projections and
budgets; (ii) an officer's certificate, executed by a Responsible
Officer, certifying that immediately before and after giving effect to
such Permitted Acquisition (A) no Default has occurred and is
continuing or will exist and (B) that the Borrower will be in
compliance with each of the financial ratios specified in Section 6.14
hereof, together with a reasonably detailed worksheet setting forth
the calculation of such ratios; and (iii) copies of
the executed purchase or acquisition agreement, certified by a
Responsible Officer, as soon as such agreement is executed and
delivered by the parties thereto. The Agent and each Bank may accept
or reject any such request in their sole and absolute discretion
within 30 days after receipt thereof. The failure by the Agent or a
Bank to respond to such a request shall be deemed to be a rejection
thereof.
(b) Prior to consummating Capital Expenditures in excess of
$1,000,000 in the aggregate during any fiscal year of the Borrower,
computed on a cumulative consolidated basis, the Borrower shall have
delivered to the Agent (in form and detail satisfactory to each Bank
and in sufficient copies for each Bank) a written request for such
Capital Expenditure, together with the following: (i) At least thirty
(30) days prior to the consummation of such Capital Expenditure, a
description of the substantive terms and conditions thereof, including
a list of items being purchased and the source of funds for such
Capital Expenditure; (ii) an officer's certificate, executed by a
Responsible Officer, certifying that immediately before and after
giving effect to such Capital Expenditure (A) no Default has occurred
and is continuing or will exist and (B) that the GMS Holding and its
Subsidiaries, on a consolidated basis, will be in compliance with each
of the financial ratios specified in Section 6.14 hereof, together
with a reasonably detailed worksheet setting forth the calculation of
such ratios; and (iii) copies of the executed purchase agreement
relating to such Capital Expenditure, certified by a Responsible
Officer, as soon as such agreement is executed and delivered by the
parties thereto. The Agent and each Bank may accept or reject any such
request in their sole and absolute discretion within 30 days after
receipt thereof. The failure by the Agent or a Bank to respond to such
a request shall be deemed to be a rejection thereof."
(h) Section 6.14 of the Credit Agreement is hereby amended to read in
full as follows:
"6.14 Financial Covenants. GMS Holding shall, on a consolidated
basis:
(a) maintain a Current Ratio not less than 1.40 to 1.00 at
all times;
(b) maintain a Leverage Ratio of not more that 3.75 to 1.00
at all times after December 30, 1997;
(c) maintain a Net Worth at all times of not less than the
sum of (A) the Net Worth as of December 31, 1996 minus the sum of (1)
$500,000, (2) the lesser of (y) 100% of net losses incurred by GMS
Holding and its Subsidiaries during a fiscal quarter commencing
January 1, 1997, computed on a cumulative consolidated basis, or
(z) $650,000 and (3) the lesser of (y) 100% of net losses incurred by
GMS Holding and its Subsidiaries during a fiscal consecutive quarter
commencing April 1, 1997, computed on a cumulative consolidated basis,
or (z) $550,000, (4) the lesser of (y) 100% of net losses incurred by
GMS Holding and its Subsidiaries during a fiscal quarter commencing
July 1, 1997, computed on a cumulative consolidated basis, or (z)
$525,000 and (5) the lesser of (y) 100% of net losses incurred by GMS
Holding and its Subsidiaries during a fiscal quarter commencing
October 1, 1997, computed on a cumulative consolidated basis, or (z)
$450,000, (B) 100% of extraordinary gains arising after the December
31, 1996, computed on a cumulative consolidated basis, (C) 100% of net
proceeds from any sale of common stock of GMS Holding or any of its
Subsidiaries arising after the December 31, 1996, computed on a
cumulative consolidated basis, (D) 100% of any capital stock issued by
GMS Holding or any of its Subsidiaries as consideration in the
Permitted Acquisitions arising after the December 31, 1996, computed
on a cumulative consolidated basis, and (E) 70% of positive net income
of GMS Holding and its Subsidiaries arising after the December 31,
1996, computed on a cumulative consolidated basis; and
(d) maintain a Coverage Ratio of not less than (A) 0.90 to 1.00
at all times during the fiscal quarter ending December 31, 1997, (B)
1.05 to 1.00 at all times during the fiscal quarter ending March 31,
1998, (C) 1.15 to 1.00 at all times during the fiscal quarter ending
June 30, 1998, (D) 1.20 to 1.00 at all times during the fiscal quarter
ending September 30, 1998 and (E) 1.25 to 1.00 at all times after the
fiscal quarter ended September 30, 1998."
SECTION 3. Reference to and Effect on the Credit Agreement. On and after
the date hereof, each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import, and each reference in
the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby. Except as hereby expressly amended,
the Credit Agreement shall remain in full force and effect, and is hereby
ratified and confirmed in all respects on and as of the date hereof.
SECTION 4. Execution in Counterparts. This Amendment 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 taken together shall constitute one and the same instrument.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized representatives.
GMS DENTAL GROUP MANAGEMENT, INC.
By:
Title:
GMS DENTAL GROUP, INC.
By: Xxxxxxx X. Xxxxx
------------------------
Title: C.E.O
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC.
By: Xxxxxxx X. Xxxxx
------------------------
Title: C.E.O
GMS HAWAII ACQUISITION COMPANY
By: Xxxxxxx X. Xxxxx
------------------------
Title: C.E.O
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC.
By: Xxxxxxx X. Xxxxx
------------------------
Title: C.E.O
GMS DENTAL GROUP MANAGEMENT OF THE
MOUNTAIN STATES, INC.
By: Xxxxxxx X. Xxxxx
------------------------
Title: C.E.O
IMPERIAL BANK, as Agent
By: /s/ Xxxx Xxxxxx
------------------------
Title: Sr. Vice President
IMPERIAL BANK, as a Bank
By: /s/ Xxxx Xxxxxx
-------------------------
Title:
EXHIBIT 10.49
EXECUTION COPY
THIRD AMENDMENT TO
CREDIT AGREEMENT
This Amendment, dated as of July 23, 1997, is entered into by and among GMS
DENTAL GROUP MANAGEMENT, INC., a Delaware corporation (the "Borrower"), GMS
DENTAL GROUP, INC., a Delaware corporation ("GMS Holding"), GMS DENTAL GROUP
MANAGEMENT OF SOUTHERN CALIFORNIA, INC., a California corporation ("GMS
California"), GMS HAWAII ACQUISITION COMPANY, a Delaware corporation ("GMS
Hawaii Acquisition"), GMS DENTAL GROUP MANAGEMENT OF HAWAII, INC., a Hawaii
corporation ("GMS Hawaii"), and GMS DENTAL GROUP MANAGEMENT OF THE MOUNTAIN
STATES, INC., a Delaware corporation ("GMS Mountain") (each of the Borrower, GMS
Holding, GMS California, GMS Hawaii Acquisition, GMS Hawaii and GMS Mountain
herein called a "Credit Party" and collectively the "Credit Parties"), and the
financial institutions from time to time party hereto (collectively, the "Banks"
and individually, a "Bank"), and IMPERIAL BANK, as agent (the "Agent") for the
Banks.
Recitals
A. The Credit Parties, the Banks and the Agent have entered into the
Credit Agreement, dated as of October 10, 1996, as amended by the First
Amendment to Credit Agreement, dated as of April 21, 1997 and the Second
Amendment to Credit Agreement, dated as of May 1, 1997 (as so amended, the
"Credit Agreement"). Terms defined in the Credit Agreement and not otherwise
defined herein have the same respective meanings when used herein, and the rules
of construction set forth in the Credit Agreement are incorporated herein by
reference.
B. The Credit Parties, the Banks and the Agent have agreed to amend the
Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is
hereby amended as follows:
(a) Clause (v) in the definition of "Permitted Indebtedness" in
Section 1.1 of the Credit Agreement is hereby amended in full to read as
follows:
" (v) (A) Permitted Subordinated Indebtedness of GMS
Holding, (B) the Indebtedness of the Borrower evidenced by that
certain promissory note, dated July 23, 1997, in the principal amount
of up to $6,229,174 (the "Fremont Subordinated Indebtedness"), made by
the Borrower in favor of Fremont Dental Group, which Indebtedness is
subordinated to in right to payment to the Obligations hereunder
pursuant to that certain Intercreditor Agreement, dated as of July 23,
1997 (the "Fremont Intercreditor Agreement"), among the Borrower, GMS
Holding, the Agent and Fremont Dental Group and (C) the Guaranty
Obligations of GMS Holding in respect of the Fremont Subordinated
Indebtedness (the "Fremont Guaranty Obligations")."
(b) The following provision shall be added to Section 7.1 of the
Credit Agreement as paragraph (m) thereof:
" (m) Liens securing the Fremont Subordinated Indebtedness and the
Fremont Guaranty Obligations."
SECTION 3. Reference to and Effect on the Credit Agreement. On and after
the date hereof, each reference in the Credit Agreement to "this Agreement,"
"hereunder," "hereof," "herein" or words of like import, and each reference in
the other Loan Documents to the Credit Agreement, shall mean and be a reference
to the Credit Agreement as amended hereby. Except as hereby expressly amended,
the Credit Agreement shall remain in full force and effect, and is hereby
ratified and confirmed in all respects on and as of the date hereof.
SECTION 4. Execution in Counterparts. This Amendment 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 taken together shall constitute one and the same
instrument.
SECTION 5. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized representatives.
GMS DENTAL GROUP MANAGEMENT, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Title: C.E.O.
GMS DENTAL GROUP, INC.
BY: /s/ Xxxxxxx X. Xxxxx
---------------------
Title: C.E.O.
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC.
BY: /s/ Xxxxxxx X. Xxxxx
---------------------
Title: C.E.O.
GMS HAWAII ACQUISITION COMPANY
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Title: C.E.O.
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC.
By: /s/ Xxxxxxx X. Xxxxx
---------------------
Title: C.E.O.
GMS DENTAL GROUP MANAGEMENT OF THE
MOUNTAIN STATES, INC.
BY: /s/ Xxxxxxx X. Xxxxx
---------------------
Title: C.E.O.
IMPERIAL BANK, as Agent
By: /s/ Xxxx Xxxxxx
---------------------------------
Title: Sr. Vice President
IMPERIAL BANK, as Bank
By: /s/ Xxxx Xxxxxx
---------------------------------
Title: Sr. Vice President
