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EXHIBIT 10.23
FIRST AMENDMENT TO RIGHTS AGREEMENT
This FIRST AMENDMENT TO RIGHTS AGREEMENT (the "Amendment") is entered into
as of July 8, 1999 by and between SAFEGUARD HEALTH ENTERPRISES, INC., a
Delaware corporation (the "Company"), and AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Rights Agent (in such capacity, the "Rights Agent").
RECITALS:
A. The Company and the Rights Agent are parties to that certain Rights
Agreement, dated as of March 22, 1996 (the "Rights Agreement"). Unless otherwise
defined herein, capitalized terms used herein shall have the respective meanings
ascribed thereto in the Rights Agreement; and
B. The Company has entered into a Debenture and Note Purchase Agreement,
dated as of June 29, 1999 (the "CAI Purchase Agreement"), by and among the
Company, CAI Partners and Company II, L.P., CAI Capital Partners and Company II,
L.P. and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively, the "Investors" and individually, an
"Investor"), pursuant to which, among other things, the Company has agreed to
issue and sell to the Investors, and the Investors have subscribed for and
agreed to purchase from the Company, a combination of (i) $20,000,000 aggregate
principal amount of the Company's 8% Convertible Debentures, in the form
attached to the CAI Purchase Agreement as Exhibit B (the "Debentures"), which
Debentures will be convertible, in the manner set forth in the Debentures, into
fully paid and nonassessable shares of the Common Stock at an initial conversion
price (subject to adjustment) of $4.00 and which Debentures shall have the
rights and power to vote in respect of the corporate affairs and management of
the Company as set forth in the form of Certificate of Amendment to the
Company's Certificate of Incorporation attached to the CAI Purchase Agreement as
Exhibit E, (ii) $20,000,000 aggregate principal amount of the Company's 8%
Senior Notes, in the form attached to the CAI Purchase Agreement as Exhibit C
(the "Senior Notes"), (iii) detachable warrants to purchase up to an aggregate
of 2,500,000 shares (subject to adjustment) of Common Stock, in the form
attached to the CAI Purchase Agreement as Exhibit D (the "Warrants"), and (iv)
in lieu of Debentures under certain circumstances described in the CAI Purchase
Agreement, up to 15,000 shares of the Company's 8% Cumulative Convertible
Preferred Stock, having the rights, preferences, powers and limitations set
forth in the form of Certificate of Designations attached to the CAI Purchase
Agreement as Exhibit F (the "CAI Preferred Stock"), all on the terms and subject
to the conditions set forth in the Purchase Agreement and the exhibits thereto
(collectively, the CAI Securities"); and
C. Certain stockholders of the Company have entered into Stockholder
Agreements dated June 20, 1999, agreeing to vote in favor of the foregoing
transactions and to provide proxies to vote in certain events (collectively,
the "Stockholder Agreements"), and
D. The Board of Directors of the Company has unanimously approved the
execution and delivery of the Purchase Agreement and the transactions
contemplated thereby, including, without limitation, the issuance of the CAI
Securities to the Investors and the issuance of the shares of Common Stock
issuable upon the exercise or conversion thereof;
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NOW, THEREFORE, in consideration of the premises, the parties hereby agree
as follows:
1. Certain Definitions. The Rights Agreement is hereby amended by adding
the following terms and definitions to Section 1 thereof:
(kk) "CAI Parties" shall mean CAI Partners and Company II, L.P., a
Canadian limited partnership, CAI Capital Partners and Company II, L.P., a
Canadian limited partnership, and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
(ll) "CAI Securities" shall mean Debentures, Senior Notes, 8% Preferred
Stock and Warrants, and any shares of Common Stock issued or issuable upon
conversion or exercise of the foregoing, of the Company issued and sold to the
CAI Parties pursuant to or in connection with the consummation of the
transactions contemplated by the Purchase Agreement.
(mm) "CAI Purchase Agreement" shall mean that certain Debenture and Note
Purchase Agreement, dated as of June 29, 1999, by and among the Company and the
CAI Parties, as the same may from time to time be amended, modified or
supplemented.
(nn) "Stockholder Agreements" shall mean those certain Stockholder
Agreements, dated as of June 29, 1999, by and among the CAI Parties, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, DDS, and the Baileys Family Trust.
2. The CAI Securities. The Rights Agreement is hereby further amended by
adding the following new Section 35 thereto:
"Section 35. The CAI Securities. Notwithstanding any provision of this
Agreement to the contrary, none of the CAI Parties or any of their respective
Affiliates or Associates shall be deemed to become an Acquiring Person, and no
Distribution Date or Stock Acquisition Date shall occur or be deemed to occur,
in either case solely by reason of: (i) the execution or delivery by the
Company of the Purchase Agreement or the performance by the Company of its
obligations thereunder; (ii) the execution or delivery by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
DDS, and the Baileys Family Trust of the Stockholder Agreements; (iii) the
issuance by the Company to the CAI Parties of the CAI Securities; (iv) the
issuance to, or the acquisition by, any of the CAI Parties or any of their
respective Affiliates or Associates of shares of Common Stock of the Company
issued or issuable upon exercise of the CAI Securities; or (v) the
announcement, commencement or consummation of any of the foregoing."
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the
day and year first above written.
SAFEGUARD HEALTH ENTERPRISES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, DDS
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, DDS
Chairman and Chief Executive Officer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Senior Vice President and Secretary
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: [SIG]
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Authorized Officer
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