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EXHIBIT 10(h)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT
BE TRANSFERRED IN VIOLATION OF SUCH ACT.
9% Subordinated Note due September 18, 2005
$420,000 King of Prussia, Pennsylvania
December 12, 1995
SECTION 1. General. FOR VALUE RECEIVED, VALLEY FORGE DENTAL
ASSOCIATES, INC., a Delaware corporation ("VFD"), and RIVERHEARST, INC., a
Delaware corporation ("Riverhearst"), jointly and severally (VFD and Riverhearst
are collectively referred to herein as the "Maker"), hereby promise to pay to
BUSINESS DEVELOPMENT CAPITAL LIMITED PARTNERSHIP-III, a Massachusetts limited
partnership (herein called "BDC-III"), or order, the principal amount of Four
Hundred Twenty Thousand Dollars ($420,000), or, if less, the aggregate
outstanding principal amount of all loans which are made by BDC-III to the Maker
on or prior to September 18, 2005 and which are intended to be evidenced by this
Note as conclusively evidenced by a written endorsement with respect thereto by
a general partner of BDC-III on the schedule annexed hereto, in full on
September 18, 2005 (subject to prepayment in whole or in part in the manner
hereinafter in Section 3 hereof provided), in such coin or currency of the
United States of America as at the time of payment shall be legal tender therein
for the payment of
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public and private debts, and to pay interest on the unpaid balance of the
principal hereof from the date hereof, at the rate of 9% per annum, in like coin
or currency, quarterly on March 31, June 30, September 30 and December 31 each
year commencing March 31, 1996 (the payment due on such date to include all
accrued interest from the date hereof), and to pay interest at the rate of 10%
per annum on any overdue principal and (to the extent permitted by law) on any
overdue interest, from the due date thereof until the obligation of the Maker
with respect to the payment thereof shall be discharged; all payments and
prepayments of principal of this Note and all payments of interest on this Note
to be made to the holder hereof at the office of such holder at c/o Foster
Management Company, 0000 Xxxx Xxxxx Xxxxxx, Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
or such other office hereafter designated by such holder. Interest hereon for
any period other than a full quarterly period shall be computed on the basis of
a 360-day year of twelve 30-day months.
SECTION 2. Definitions. As used herein, the following terms
shall have the following respective meanings:
"Note" and "Notes" refer to this Note and to any Note or Notes
executed and delivered by the Maker in exchange or replacement thereof pursuant
to Section 9 hereof. Unless the context otherwise requires, the term
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"holder" is used herein to mean the person named as payee in Section 1 hereof
(herein sometimes called the "payee named herein") or any other person who shall
at the time be the registered holder of this Note.
"Maker" shall mean VALLEY FORGE DENTAL ASSOCIATES, INC., a
Delaware corporation, and RIVERHEARST, INC., a Delaware corporation, the joint
and several obligors under this Note, and shall also mean any successor
corporation of either of them which shall become such in the manner prescribed
in Section 6 hereof.
The term "corporation" shall include, except for the purposes
of Section 6 hereof, an association, joint stock company, business trust or
other similar organization.
The term "person" shall mean an individual, a corporation, a
partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
"Subsidiary" shall mean any present or future corporation at
least a majority of the outstanding voting stock of which shall at the time be
owned by the Maker. For purposes hereof, outstanding voting stock shall be
deemed to be capital stock of any class or classes, however designated, having
ordinary voting power for the election of the members of the board of directors
or other governing body of such corporation, other than stock having such power
only upon the happening of a contingency.
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"Senior Debt" shall mean the principal of, premium, if any,
and interest on and other amounts due on all indebtedness of the Maker, whether
outstanding on the date of this Note or hereafter created or incurred:
(a) for money borrowed by the Maker, and
(b) for money borrowed by others and guaranteed by the Maker
from any bank, insurance company or other institutional lender created or
evidenced by notes, bonds, debentures, guarantees or similar instruments or by a
loan agreement or loan agreements (excluding any of such indebtedness which by
the terms of the instrument creating or evidencing the payment is subordinated
to or pari passu with this Note).
SECTION 3. Prepayment. The Maker may at any time prepay the
whole or any part of the unpaid principal amount of this Note, without penalty
or premium, but with interest accrued to the date fixed for prepayment. Notices
of prepayment shall be given by the Maker by mail and shall be mailed to the
registered holder of this Note not less than 30 days from the date fixed for
prepayment. In case this Note is to be prepaid in part only, such notice shall
specify the principal amount thereof to be prepaid and shall state that this
Note shall be submitted to the Maker for notation thereon of the principal
amount thereof to be prepaid. Upon giving of notice of prepayment as aforesaid,
this Note or portion thereof so specified for prepayment
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shall on the prepayment date specified in such notice become due and payable;
and from and after the prepayment date so specified (unless the Maker shall
default in making such prepayment) interest on this Note or portion thereof so
specified for prepayment shall cease to accrue and, on presentation and
surrender thereof to the Maker for cancellation in the case of this Note being
prepaid in whole, or for notation thereon of the payment of the portion of the
principal amount thereof being prepaid in the case of a prepayment of this Note
in part only, this Note or portion thereof so specified for prepayment shall be
paid by the Maker at the prepayment price aforesaid.
SECTION 4. Subordination. The Maker hereby agrees, and the
holder of this Note by its acceptance hereof agrees, that the payment of the
principal of and interest on this Note is hereby expressly made subordinate and
junior in right of payment, to the extent set forth in the following paragraphs
(a) and (b), to the prior payment in full of all Senior Debt of the Maker:
(a) In the event of insolvency or bankruptcy proceedings, or
any receivership, liquidation, reorganization or other similar
proceedings in connection therewith, relative to the Maker or to any of
the property of the Maker, or in the event of any proceedings for
voluntary liquidation, dissolution, or other winding-up of the Maker,
whether or not involving
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insolvency or bankruptcy, then the holders of Senior Debt shall be
entitled to receive payment in full of all principal of, and premium,
if any, and interest on all Senior Debt before the holder of this Note
shall be entitled to receive any payment on account of principal of or
interest on this Note, and to that end the holders of Senior Debt shall
be entitled to receive for application in payment thereof any payment
or distribution of any kind or character, whether in cash or property
or securities, which may be payable or deliverable in any such
proceedings in respect of this Note, except securities of the Maker
which are subordinate and junior in right of payment to the payment of
all Senior Debt then outstanding.
(b) In the event that the holder of this Note shall have
received written notice to the effect that an event of default shall
have occurred on any Senior Debt and be continuing (under circumstances
in which the provisions of the foregoing paragraph (a) are not
applicable), then, during the continuance of any such event of default,
all principal of and premium, if any, and interest on all Senior Debt
outstanding at the time of such notice shall first be paid in full,
before any payment on account of principal or interest is made upon
this Note. The provisions of this Section 4 are for the purpose of
defining the relative rights of the
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holders of Senior Debt on the one hand, and the holder of this Note on
the other hand, against the Maker and its property; and nothing herein
shall impair, as between the Maker and the holder of this Note, the
obligation of the Maker, which is unconditional and absolute, to pay to
the holder thereof the principal thereof and interest thereon in
accordance with the terms and the provisions thereof; nor shall
anything herein prevent the holder of this Note from exercising all
remedies otherwise permitted by applicable law or hereunder upon
default under this Note, subject to the rights, if any, under this
Section 4 of holders of Senior Debt to receive cash, property, stock or
obligations otherwise payable or deliverable to the holder of this
Note.
SECTION 5. General Covenants. The Maker
covenants and agrees with the holder of this Note as
hereinbelow set forth, namely:
5.1. The Maker will punctually pay or cause to be paid the
principal of and interest on this Note according to the terms hereof.
5.2. The Maker will, and will cause each Subsidiary, if any,
to
(a) pay and discharge promptly, or cause to be paid and
discharged promptly, all taxes, assessments and governmental charges
or levies imposed upon it or
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upon its income or upon any of its property, real, personal or mixed,
or upon any part thereof, as well as all claims of any kind (including
claims for labor, materials and supplies which, if unpaid, might by law
become a lien or charge upon its property); provided, however, that
neither the Maker nor any Subsidiary shall be required to pay any such
tax, assessment, charge, levy or claim if the amount, applicability or
validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Maker or such Subsidiary, as the
case may be, shall have set aside on its books reserves (segregated to
the extent required by sound accounting practice) reasonably deemed by
it adequate with respect thereto; and
(b) except as otherwise specifically permitted in this Note
and as contemplated by Section 6 hereof, do or cause to be done all
things necessary or appropriate to preserve and keep in full force and
effect its corporate existence, rights and franchises, and use its best
efforts to qualify as a foreign corporation entitled to do business in
every jurisdiction in which the failure so to qualify would materially
adversely affect the Maker or such Subsidiary; provided, however, that
nothing in this paragraph shall prevent the abandonment or termination
of the corporate existence, rights and franchises of
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any Subsidiary if, in the opinion of the Board of Directors of the
Maker, such abandonment or termination is in the interest of the Maker
and not disadvantageous in any material respect to the holder of this
Note.
SECTION 6. Consolidation, Merger or Disposition of Assets. The
Maker will not consolidate with, merge into, or sell or otherwise dispose of all
or substantially all its properties as an entirety to, any person unless:
(a) the successor formed by or resulting from such
consolidation or merger or to which such sale or other disposition
shall have been made shall be a corporation organized under the laws of
the United States of America or any State, district or territory
thereof;
(b) such successor corporation shall expressly assume the due
and punctual payment of the principal of and interest on this Note
according to its tenor, and the due and punctual performance and
observance of all the covenants, agreements and conditions of this Note
to be performed or observed by the Maker to the same extent as if such
successor corporation had been the original maker of this Note (and
such assumption shall, upon the request of the holder of this Note, be
evidenced by the endorsing of an appropriate legend upon this Note, and
each Note executed pursuant to Section 9 hereof after such assumption
shall, unless
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executed in the name of such corporation, have a similar legend
endorsed thereon); and
(c) immediately after such consolidation, merger, sale or
other disposition, such successor corporation shall not be in default
in the performance of any of the covenants, agreements or conditions
contained in this Note.
SECTION 7. Registered Holders. The Maker may deem and treat
the registered holder of this Note as the absolute owner of this Note for the
purpose of receiving payment hereon or on account hereof and for all other
purposes, and the Maker shall not be affected by any notice to the contrary.
SECTION 8. Events of Default and Remedies.
8.1. The entire unpaid principal amount of this
Note, together with all accrued interest thereon, shall, at the option of the
holder hereof exercised by written notice to the Maker at its principal
executive offices, forthwith become and be due and payable if any one or more of
the following events (herein called "Events of Default") shall have occurred
(for any reason whatsoever and whether such happening shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or
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governmental body) and be continuing at the time of such notice, that is to say:
(a) if default shall be made in the due and punctual payment
of the principal of this Note when and as the same shall become due and
payable, whether at maturity, by acceleration or otherwise;
(b) if default shall be made in the due and punctual payment
of any interest on this Note when and as such interest shall become due
and payable, and such default shall have continued for a period of 10
days;
(c) if default shall be made in the performance or observance
of any covenant, agreement or condition contained in Section 6 hereof;
(d) if default shall be made in the performance or observance
of any of the other covenants, agreements or conditions of the Maker
contained in this Note, and such default shall have continued for a
period of 30 days;
(e) if the Maker or any Subsidiary shall default beyond any
period of grace provided with respect thereto in the payment of
principal of or interest on any obligation in respect of borrowed money
when due, whether by acceleration or otherwise; or if the Maker or any
Subsidiary shall default in the performance or observance of any other
agreement, term or condition contained in such obligation or in any
agreement under
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which any such obligation is created, if the effect of any such default
is to cause or permit the holder or holders of such obligations (or a
trustee on behalf of such holder or holders) to cause such obligation
to become due prior to the date of its stated maturity, unless such
holder or holders or trustee shall have waived such default after its
occurrence or unless such holder or holders or trustee shall have
failed to give any notice required to create a default thereunder;
(f) if the Maker or any Subsidiary shall:
(i) admit in writing its inability to pay its debts
generally as they become due;
(ii) file a petition in bankruptcy or a petition to
take advantage of any insolvency act;
(iii) make an assignment for the benefit of
creditors;
(iv) consent to the appointment of a receiver of
itself or of the whole or any substantial part of its
property;
(v) on a petition in bankruptcy filed against it, be
adjudicated a bankrupt; or
(vi) file a petition or answer seeking reorganization
or arrangement under the federal bankruptcy laws or any other
applicable law or statute of the United States of America or
any State, district or territory thereof;
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(g) if a court of competent jurisdiction shall enter an order,
judgment, or decree appointing, without the consent of the Maker or any
Subsidiary, a receiver of the Maker or any Subsidiary or of the whole
or any substantial part of its property, or approving a petition filed
against it seeking reorganization or arrangement of the Maker or any
Subsidiary under the federal bankruptcy laws or any other applicable
law or statute of the United States of America or any State, district
or territory thereof, and such order, judgment or decree shall not be
vacated or set aside or stayed within 60 days from the date of entry
thereof;
(h) if, under the provisions of any other law for the relief
or aid of debtors, any court of competent jurisdiction shall assume
custody or control of the Maker or any Subsidiary or of the whole or
any substantial part of its property and such custody or control shall
not be terminated or stayed within 60 days from the date of assumption
of such custody or control; or
(i) if final judgment for the payment of money in excess of
$50,000 shall be rendered by a court of record against the Maker or any
Subsidiary and the Maker or such Subsidiary shall not discharge the
same or provide for its discharge in accordance with its terms, or
shall not procure a stay of execution thereon within 60 days
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from the date of entry thereof and within the period during which
execution of such judgment shall have been stayed, appeal therefrom,
and cause the execution thereof to be stayed during such appeal.
8.2. In case any one or more of the Events of Default specified
in Section 8.1 hereof shall have occurred and be continuing, the holder of this
Note may proceed to protect and enforce its rights either by suit in equity
and/or by action at law, whether for the specific performance of any covenant or
agreement contained in this Note or in aid of the exercise of any power granted
in this Note, or the holder of this Note may proceed to enforce the payment of
all sums due upon this Note or to enforce any other legal or equitable right of
the holder of this Note.
8.3. No remedy herein conferred upon the holder hereof is
intended to be exclusive of any other remedy and each and every such remedy
shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or
otherwise.
8.4. No course of dealing between the Maker and the holder
hereof or any delay on the part of the holder hereof in exercising any rights
hereunder shall operate as a waiver of any rights of any holder hereof.
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SECTION 9. Exchange or Replacement of Notes.
(a) The holder of any Note or Notes, at its option, may in
person or by duly authorized attorney surrender one or more thereof for
exchange, at the principal executive offices of the Maker, and at the expense of
the Maker receive in exchange therefor a new Note or Notes in the same aggregate
principal amount as the aggregate unpaid principal amount of the Note or Notes
so surrendered and bearing interest at the same annual rate as the Note or Notes
so surrendered, each such new Note to be dated as of the date to which interest
has been paid on the Note or Notes so surrendered and to be in such principal
amount and payable to such person or persons, or order, as such holder may
designate in writing; provided, however, that the Maker shall not be required to
pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any new Note in the name other than that of the holder
of the Note or Notes surrendered in exchange therefor. Five days' prior written
notice of the holder's intention to make such exchange shall be given to the
Maker.
(b) Upon receipt by the Maker of evidence satisfactory to it
of the loss, theft, destruction or mutilation of this Note, and (in case of
loss, theft or destruction) of indemnity reasonably satisfactory to it (it being
understood that in the case of BDC-III an unsecured written indemnification
agreement shall be satisfactory to
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the Maker), and upon surrender and cancellation of this Note, if mutilated, the
Maker, upon reimbursement to it of all reasonable expenses incidental thereto,
will make and deliver a new Note, of like tenor in lieu of this Note. Any Note
made and delivered in accordance with the provisions of this paragraph (b) shall
be dated as of the date to which interest has been paid on this Note.
SECTION 10. Immunity of Stockholders, Officers and Directors.
No recourse shall be had for the payment of the principal of or interest on this
Note or for any claim based hereon or otherwise in respect hereof against any
incorporator, stockholder, officer or director, as such, past, present or
future, of the Maker or of any predecessor or successor corporation, either
directly or through the Maker or otherwise, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty, or otherwise, all such liability being by the acceptance hereof and as
part of the consideration for the issue hereof expressly waived and released;
provided, however, that nothing herein contained shall be taken to prevent
recourse to and the enforcement of the liability, if any, of any stockholder or
subscriber to capital stock upon or in respect of shares of capital stock not
fully paid.
SECTION 11. Section Headings. The Section headings contained
herein are for the purpose of convenience
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of reference only and are not intended to define or limit the contents of any
such Section.
SECTION 12. Severability. In the event that one or more of the
provisions of this Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Note, but this Note shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
SECTION 13. Governing Law. This Note shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed entirely within such
Commonwealth, except to the extent of the mandatory rules of the State of
Delaware with respect to the formal requisites for authorization of a security
and rights and duties with respect to register of transfer.
VALLEY FORGE DENTAL ASSOCIATES, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
President
RIVERHEARST, INC.,
a Delaware corporation
By /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Vice President
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SCHEDULE OF LOANS AND PAYMENTS
Name of
Amount Amount of Unpaid Person
of Principal Principal Making
Date Loan Paid Balance Notation
---- ------ --------- --------- ---------
