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EXHIBIT 10(ff)
DISCRETIONARY LINE OF CREDIT LETTER AGREEMENT
October 21, 1997
Valley Forge Dental Associates, Inc.
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxx
Chairman and CEO
Re: $10,000,000 Discretionary Line of Credit Letter Agreement
Dear Xxxxx:
I am pleased to confirm that PNC Bank, National Association (the
"Bank") has approved a $10,000,000 discretionary line of credit to Valley Forge
Dental Associates, Inc., a Delaware corporation (the "Borrower"). Loans made
under the line of credit, if any, shall be due and payable on demand. All loans
will bear interest and will be subject to the terms and conditions set forth in
this Agreement and in the enclosed Note. Assuming that (i) the Borrower is in
compliance with the terms and conditions herein and under the Loan Documents,
(ii) no event specified in clauses (i) - (x) on pages 2 through 3 hereof has
occurred and (iii) no demand has been made hereunder, the Bank agrees only to
review Loan requests by the Borrower until the earlier of (i) April 21, 1998, or
(ii) the date of the closing of the initial public offering of capital stock of
the Borrower (the "Review Date").
In addition to the words and terms defined elsewhere in this
Agreement, capitalized terms shall have the meanings given to them as set forth
on Exhibit A hereto.
This is not a committed line of credit. The Borrower acknowledges
and agrees that Loans under this line of credit, if any, shall be made at the
sole discretion of the Bank. The Bank may decline to make Loans under the line,
terminate the line or demand repayment of all outstanding obligations
thereunder, at any time and for any reason without prior notice to the Borrower.
Subject to the sole discretion of the Bank to make Loans under this line of
credit, the Borrower may request Loans, repay and request additional Loans
hereunder, subject to the terms and conditions of this Agreement and the other
Loan Documents. In no event shall the aggregate unpaid principal amount of Loans
under this Agreement exceed the face amount of the Note. This Agreement sets
forth certain terms and conditions solely to assure that the parties understand
each other's expectations and to assist the Bank in evaluating the status, on an
ongoing basis, of the discretionary line of credit.
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Valley Forge Dental Associates, Inc.
October 21, 1997
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The Borrower may irrevocably request the Bank to make a Loan three
(3) Business Days prior to the date for making the Loan ("Borrowing Date"), and
request that such Loan shall bear interest at the Base Rate Option or Euro-Rate
Option, which shall be acceptable to the Bank in its sole discretion. The
parties acknowledge that (i) the foregoing provision that Lender may, in its
sole discretion, accept a Euro-Rate Option with respect to any Loan does not
alter the discretionary nature of the line of credit and the agreement that all
Loans made pursuant to this Agreement are payable upon demand of the Bank for
any or no reason whatsoever and (ii) if demand is made during a Euro-Rate
Interest Period, the Bank may incur losses or expenses for which the Borrower is
obligated to indemnify the Bank as set forth more fully herein. Interest shall
be payable at the applicable rate on the dates as provided in the Note.
A request for a Loan made by telephone must be promptly confirmed in
writing by letter, facsimile or telex in such form as the Bank may require. The
Borrower authorizes the Bank to accept telephonic requests for Loans, and the
Bank shall be entitled to rely upon the authority of any person providing such
instructions without the necessity of receipt of such written confirmation. The
Borrower hereby indemnifies and holds the Bank harmless from and against any and
all damages, losses, liabilities, costs and expenses (including reasonable
attorneys' fees and expenses) which may arise or be created by the acceptance of
such telephone requests or making such Loans pursuant to such telephonic
requests. The Bank will enter on its books and records, which entry when made
will be presumed correct, the date and amount of each Loan, the option, rate and
interest period applicable thereto, as well as the date and amount of each
payment made by the Borrower.
The Bank's willingness to consider making Loans under this facility
is subject to (i) the truth and accuracy at all times of the Representations and
Warranties of the Loan Parties contained on Exhibit B attached hereto and made a
part hereof; (ii) the compliance by the Loan Parties with the Affirmative
Covenants contained on Exhibit C attached hereto and made a part hereof; and
(iii) the compliance by the Loan Parties with the Negative Covenants contained
on Exhibit D attached hereto and made a part hereof. However, the Loan Parties'
compliance with such representations, warranties and covenants shall not alter
the discretionary nature of the line of credit and shall not in any way obligate
the Bank to make any Loans under the line of credit.
Upon the happening of any of the following:
(i) failure of any Loan Party to pay any principal or interest of
any Loan, fees or any other amount owing hereunder or under the other Loan
Documents upon request of the Bank;
(ii) failure of any Loan Party to perform any obligation, covenant
or liability (other than those contained in clause (i) above) contained or
referred to herein or in the Note or any other Loan Document and such failure to
perform shall continue unremedied for a period of ten (10) days after any
officer of such Loan Party becomes aware of the occurrence thereof;
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Valley Forge Dental Associates, Inc.
October 21, 1997
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(iii) any warranty, representation or statement made or furnished to
the Bank by or on behalf of the Borrower or any other Loan Party proves to have
been false or misleading at any time in any material respect;
(iv) any event occurs which constitutes a default under or permits
or causes any holder (including the Bank) of any Indebtedness owing by any Loan
Party in excess of $250,000 to accelerate such Indebtedness of any Loan Party
including, without limitation, under any note, indenture, agreement or
undertaking to which any Loan Party is a party or by which any Loan Party is
bound;
(v) the occurrence of any Material Adverse Change;
(vi) a final judgment for the payment of money in excess of $250,000
is entered against any Loan Party or its assets in excess of $250,000 in value
are attached in a legal proceeding which judgment or attachment is not
discharged, vacated, bonded or stayed pending appeal within a period of thirty
(30) days from the date of entry;
(vii) dissolution or termination of existence of the Borrower,
Abbingdon Partners-II or Abbingdon Partners-III or insolvency, appointment of a
receiver of any part of the property of, assignment for the benefit of creditors
by or the commencement of proceedings under any bankruptcy or insolvency laws by
or against any Loan Party which appointment, assignment or proceeding remains
unstayed, undismissed and in effect for a period of thirty (30) days;
(viii) the revocation or attempted revocation, in whole or in part,
of any Guaranty Agreement;
(ix) the withdrawal of Abbingdon-II Partners as general partner of
Abbingdon Partners-II or the withdrawal of Abbingdon-II Partners as general
partner of Abbingdon Partners-III; or
(x) with respect to Abbingdon Partners - II and Abbingdon Partners -
III, the occurrence of any of the events set forth in (a) clauses (i) - (iii) on
page 3 of the Discretionary Line of Credit Letter Agreement dated July 27, 1995
among the Bank, XYAN, Inc. (formerly Quik Print, Inc.) and the Subsidiaries and
Guarantors set forth therein, as amended or modified from time to time (the
"XYAN Letter Agreement") or (b) clauses (i) - (iii) on pages 2-3 of the
Discretionary Line of Credit Letter Agreement dated January 14, 1995 among the
Bank, TLM Holdings Corp. and the Subsidiaries and Guarantors set forth therein,
as amended or modified from time to time (the "TLM Letter Agreement");
the Bank shall not be obligated to review or respond to any request for Loans
under this Agreement. The foregoing provision is in addition to the agreement of
the parties hereto that all Loans made pursuant to this Agreement are subject to
the Bank's sole and absolute discretion, as provided herein.
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Valley Forge Dental Associates, Inc.
October 21, 1997
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The Note is a demand note and the liability thereunder and any other
liability of the Borrower under this Agreement for payment of money are payable
forthwith, upon demand of the Bank, for any or no reason whatsoever, and without
any showing of insecurity on the part of the Bank, with the result that the Note
and any such other liability are by their very nature due and payable commencing
on the date of the execution and delivery thereof and hereof without regard as
to whether the Bank has made any request for payment or presentment whatsoever.
The representations, warranties and covenants contained in this Agreement, the
Note and all other Loan Documents have been relied upon by the Bank in entering
into this Agreement and in making the Loans, if any, hereunder, but are not to
be construed as altering the demand character of the Note evidencing the Loans
made pursuant to this Agreement or the Borrower's liability hereunder or under
the Note.
To compensate the Bank for its approval of this discretionary line
of credit and its periodic review and analysis of the Borrower's financial
condition, the Borrower shall pay to the Bank a non-refundable fee in the amount
of $30,000 to be received by the Bank prior to the date hereof. This fee shall
in no way obligate the Bank to make any Loans hereunder or alter the
discretionary nature of the line of credit.
If any Law, guideline or interpretation or any change in any Law,
guideline or interpretation or application thereof by any Official Body charged
with the interpretation or administration thereof or compliance with any request
or directive (whether or not having the force of Law) of any central bank or
other Official Body:
(i) subjects the Bank to any tax or changes the basis of taxation
with respect to this Agreement, the Note, the Loans or payments by the Borrower
of principal, interest, or other amounts due from the Borrower hereunder or
under the Note (except for taxes on the net income of the Bank),
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement against credits or commitments to extend credit
extended by, or assets (funded or contingent) of, deposits with or for the
account of, or other acquisitions of funds by, the Bank, or
(iii) imposes, modifies or deems applicable any capital adequacy or
similar requirement (A) against assets (funded or contingent) of, or letters of
credit, other credits or commitments to extend credit extended by, the Bank, or
(B) otherwise applicable to the obligations of the Bank under this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, or impose any expense (including loss of margin) upon the
Bank or its parent with respect to this Agreement, the Note or the making,
maintenance or funding of any part of the Loans (or, in the case of any capital
adequacy or similar requirement, to have the effect of reducing the rate of
return on the capital of the Bank or its parent, taking into consideration the
Bank's customary
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Valley Forge Dental Associates, Inc.
October 21, 1997
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policies with respect to capital adequacy) by an amount which the Bank in its
sole discretion deems to be material, the Bank shall from time to time notify
the Borrower of the amount determined in good faith (using any averaging and
attribution methods employed in good faith) by the Bank (which determination
shall be conclusive absent manifest error) to be necessary to compensate the
Bank for such increase in cost, reduction of income or additional expense. Such
notice shall set forth in reasonable detail the basis for such determination.
Such amount shall be due and payable by the Borrower to the Bank ten (10)
Business Days after such notice is given. For purposes of this paragraph, in
calculating the amount necessary to compensate the Bank for any such increase in
cost, reduction of income or additional expense, the Bank shall calculate the
amount payable to it in a manner consistent with the manner in which it shall
calculate similar compensation payable to it by other borrowers having
provisions in their credit agreements comparable to this paragraph.
In addition to the compensation required in the preceding paragraph,
the Borrower shall indemnify the Bank against all liabilities, losses or
expenses (including loss of margin, any loss or expense incurred in liquidating
or employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by the Bank to fund or maintain Loans subject to
the Euro-Rate Option) which the Bank sustains or incurs as a consequence of any
(i) payment, prepayment, conversion or renewal of any Loan to which
the Euro-Rate Option applies on a day other than the last day of the
corresponding Euro-Rate Interest Period (whether or not such payment or
prepayment is mandatory, voluntary or automatic and whether or not such payment
or prepayment is then due),
(ii) attempt by the Borrower to revoke (expressly, by later
inconsistent notices or otherwise) in whole or part any notice relating to Loan
requests or prepayments, or
(iii) failure by any Loan Party in the performance or observance of
any covenant contained in this Agreement or any other Loan Document, including
without limitation any failure of any Loan Party to pay when due (by
acceleration or otherwise) any principal, interest, or any other amount due
hereunder.
If the Bank sustains or incurs any such loss or expense it shall
from time to time notify the Borrower of the amount determined in good faith by
the Bank (which determination shall be conclusive absent manifest error and may
include such assumptions, allocations of costs and expenses and averaging or
attribution methods as the Bank shall deem reasonable) to be necessary to
indemnify the Bank for such loss or expense. Such notice shall set forth in
reasonable detail the basis for such determination. Such amount shall be due and
payable by the Borrower to the Bank ten (10) Business Days after such notice is
given.
This Agreement shall be deemed to be a contract under the laws of
the Commonwealth of Pennsylvania and for all purposes shall be governed by and
construed and
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Valley Forge Dental Associates, Inc.
October 21, 1997
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enforced in accordance with the laws of the Commonwealth of Pennsylvania without
regard to its conflict of laws principles.
This Agreement shall be binding upon and shall inure to the benefit
of the Bank, the Loan Parties and their respective successors and assigns,
except that the Loan Parties may not assign or transfer any of their rights and
obligations hereunder or any interest herein.
This Agreement and the other Loan Documents constitute the entire
agreement among the Bank and the Loan Parties and supersede all prior
communications, oral and written, as well as all contemporaneous oral
communications among the parties with respect hereto. No amendment to or
modification of this Agreement or the other Loan Documents shall be effective
unless set forth in writing and signed by each of the parties to this Agreement.
Enclosed for execution is the Note evidencing this facility. Please
indicate each Loan Party's agreement to the terms and conditions of this
Agreement by having the enclosed copy of this Agreement executed where indicated
and returning it to me. Prior to the making of any Loans hereunder, the Loan
Parties must deliver to the Bank a duly executed original of the Loan Documents
and a certified copy of resolutions authorizing the transactions contemplated by
the Loan Documents, an incumbency certificate and an opinion of counsel, each in
form and substance satisfactory to the Bank.
[INTENTIONALLY LEFT BLANK]
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Valley Forge Dental Associates, Inc.
October 21, 1997
Page 7
I am pleased to offer support for your banking needs and look
forward to working with you.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Title: Relationship Manager
Address for Notices:
000 Xxxxx Xxxxxx
One PNC Plaza, 6th Floor
Pittsburgh, Pennsylvania 15222-2707
Attention: Xx. Xxxxxx X. Xxxxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
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Valley Forge Dental Associates, Inc.
October 21, 1997
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Agreed, accepted and intending to be legally bound hereby this 21st day of
October, 1997
Valley Forge Dental Associates, Inc. and
the Subsidiaries listed on
Schedule 1 hereto (other than Riverhearst, Inc.)
By: /s/ W. Xxxx Xxxxxxx
__________________________________________
W. Xxxx Xxxxxxx,
Vice President & Chief Financial Officer
Riverhearst, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx
__________________________________________
Xxxxxx X. Xxxxxxxx,
President
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Mr. W. Xxxx Xxxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
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Valley Forge Dental Associates, Inc.
October 21, 1997
Page 9
ABBINGDON VENTURE PARTNERS
LIMITED PARTNERSHIP - II
By: Abbingdon-II Partners,
as general partner
By: /s/ Xxxxxxx X. Xxxx
--------------------
Xxxxxxx X. Xxxx,
general partner
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
ABBINGDON VENTURE PARTNERS
LIMITED PARTNERSHIP - III
By: Abbingdon-II Partners,
as general partner
By: /s/ Xxxxxxx X. Xxxx
--------------------
Xxxxxxx X. Xxxx,
general partner
Address for Notices:
0000 Xxxx Xxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xx. Xxxx X. Xxxxxx
Telephone No. (000) 000-0000
Telecopier No. (000) 000-0000
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SCHEDULE 1
SUBSIDIARIES OF VALLEY FORGE DENTAL ASSOCIATES, INC.
1. VFD of Pennsylvania, Inc., a Delaware corporation and a wholly-owned
subsidiary of Valley Forge Dental Associates, Inc.
2. Horizon Group International, Inc., an Ohio corporation and a
wholly-owned subsidiary of Valley Forge Dental Associates, Inc.
3. Precise Dental Lab., Inc., an Ohio corporation and a wholly-owned
subsidiary of Horizon Group International, Inc.
4. Riverhearst, Inc., a Delaware corporation and a wholly-owned subsidiary
of Valley Forge Dental Associates, Inc.
5. VFD of Georgia, Inc., a Delaware corporation and a majority-owned
subsidiary of Valley Forge Dental Associates, Inc.
6. VFD of Pittsburgh, Inc., a Pennsylvania corporation and a wholly-owned
subsidiary of VFD of Pennsylvania, Inc.
7. ProDent, Inc., a Pennsylvania corporation and a majority-owned
subsidiary of Valley Forge Dental Associates, Inc.
8. VFD Realty, Inc., a Delaware corporation and a wholly-owned subsidiary
of VFD of Pennsylvania, Inc.
-------------------------------
Penn Dental Associates, Inc., a Pennsylvania corporation and a wholly-owned
subsidiary of VFD of Pennsylvania, Inc., is in the process of being dissolved;
it conducts no business and owns no assets.
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EXHIBIT A
DEFINITIONS
Abbingdon Partners-II means Abbingdon Venture Partners Limited
Partnership - II, a Delaware limited partnership.
Abbingdon Partners-III means Abbingdon Venture Partners Limited
Partnership - III, a Delaware limited partnership.
Account Debtor shall mean any Person who is or who may become
obligated to the Borrower or any Subsidiary of the Borrower under, with respect
to, or on account of, an Account (as defined in the Security Agreement).
Affiliate as to any Loan Party shall mean any other person (i) which
directly or indirectly controls, is controlled by, or is under common control
with such Loan Party, (ii) which beneficially owns or holds 50% or more of any
class of the voting stock of any Loan Party, or (iii) 50% or more of the voting
stock (or in the case of a person which is not a corporation, 50% or more of the
equity interest) of which is beneficially owned or held, directly or indirectly,
by any Loan Party. Control, as used herein, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a person, whether through the ownership of voting securities, by
contract or otherwise, including the power to elect a majority of the directors
or trustees of a corporation or trust, as the case may be.
Agreement shall mean this Discretionary Line of Credit Letter
Agreement as the same may be supplemented or amended from time to time including
all schedules and exhibits hereto.
Base Rate shall mean the greater of (i) the Federal Funds Effective
Rate plus one-half percent (0.5%) per annum, or (ii) the interest rate per annum
announced from time to time by the Bank at its office at 000 Xxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxx, as its then prime rate, which rate may not necessarily
be the lowest rate then being charged commercial borrowers by the Bank.
Base Rate Option shall mean a fluctuating rate per annum (computed
on the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed) equal to the Base Rate, such interest rate to change automatically from
time to time effective as of the effective date of each change in the Base Rate.
Base Rate Portion shall mean the portion of the Loans bearing
interest at any time under the Base Rate Option.
Borrowing Tranche shall mean (i) with respect to the Euro-Rate
Portion, Loans to which a Euro-Rate Option applies by reason of the selection
of, conversion to or renewal of such Interest Rate Option on the same day and
having the same Euro-Rate Interest Period, and (ii) with respect to the Base
Rate Portion, Loans to which the Base Rate Option applies by reason of the
selection of or conversion to such Interest Rate Option.
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Business Day shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to be closed
for business in Pittsburgh, Pennsylvania.
Euro-Rate shall mean with respect to the Loans comprising any
Borrowing Tranche to which the Euro-Rate Option applies for any Euro-Rate
Interest Period, the interest rate per annum determined by the Bank by dividing
(the resulting quotient rounded upward to the nearest 1/16 of 1% per annum) (i)
the rate of interest determined by the Bank in accordance with its usual
procedures (which determination shall be conclusive absent manifest error) to be
the eurodollar rate two (2) Business Days prior to the first day of such
Euro-Rate Interest Period in amounts comparable to such Borrowing Tranche and
having maturities comparable to such Euro-Rate Interest Period by (ii) a number
equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be
expressed by the following formula:
[Telerate page 314 as Quoted by Xxxxxx,
Euro-Rate = Astley & Xxxxxx or appropriate successor]
1.00 - Euro-Rate Reserve Percentage
The Euro-Rate shall be adjusted with respect to any Euro-Rate Option outstanding
on the effective date of any change in the Euro-Rate Reserve Percentage as of
such effective date. The Bank shall give prompt notice to the Borrower of the
Euro-Rate as determined or adjusted in accordance herewith, which determination
shall be conclusive absent manifest error.
Euro-Rate Interest Period shall mean one month.
Euro-Rate Option shall mean a rate per annum (computed on the basis
of a year of 360 days and actual days elapsed) equal to the Euro-Rate plus two
percent (2%).
Euro-Rate Portion shall mean the portion of the Loans bearing
interest at any time under the Euro-Rate Option.
Euro-Rate Reserve Percentage shall mean the maximum percentage
(expressed as a decimal rounded upward to the nearest 1/100 of 1%) as determined
by the Bank (which determination shall be conclusive absent manifest error)
which is in effect during any relevant period, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
reserve requirements (including, without limitation, supplemental, marginal and
emergency reserve requirements) with respect to eurocurrency funding (currently
referred to as "Eurocurrency Liability") of a member bank in such System.
Federal Funds Effective Rate for any day shall mean the rate per
annum (based on a year of 360 days and actual days elapsed and rounded upward to
the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New York (or
any successor) on such day as being the weighted average of the rates on
overnight Federal funds transactions arranged by Federal funds brokers on the
previous trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve Bank
computes and announces the weighted average it refers to as the "Federal Funds
Effective Rate"
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as of the date of this Agreement; provided, if such Federal Reserve Bank (or its
successor) does not announce such rate on any day, the "Federal Funds Effective
Rate" for such day shall be the Federal Funds Effective Rate for the last day on
which such rate was announced.
GAAP shall mean generally accepted accounting principles as are in
effect from time to time and applied on a consistent basis (except for changes
in application in which the Borrower's independent certified public accountants
concur) both as to classification of items and amounts.
Guaranty of any person shall mean any obligation of such person
guaranteeing or in effect guaranteeing any liability or obligation of any other
person in any manner, whether directly or indirectly, including, without
limiting the generality of the foregoing, any agreement to indemnify or hold
harmless any other person, any performance bond or other suretyship arrangement
and any other form of assurance against loss, except endorsement of negotiable
or other instruments for deposit or collection in the ordinary course of
business.
Guaranty Agreements shall mean collectively the Guaranty and
Suretyship Agreement (Partnership Guaranty) executed and delivered by Abbingdon
Partners-II and Abbingdon Partners-III to the Bank and the Guaranty and
Suretyship Agreement (Subsidiaries) executed and delivered by each of the
Subsidiaries of the Borrower identified on Schedule 1 hereto to the Bank and
Guaranty Agreement shall mean separately any Guaranty Agreement, as any of the
foregoing is supplemented or amended from time to time in accordance with the
terms hereof and thereof.
Indebtedness shall mean as to any person at any time, any and all
indebtedness, obligations or liabilities (whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute or contingent, or joint
or several) of such person for or in respect of: (i) borrowed money, (ii)
amounts raised under or liabilities in respect of any note purchase or
acceptance credit facility, (iii) reimbursement obligations under any letter of
credit, currency swap agreement, interest rate swap, cap, collar or floor
agreement or other interest rate management device, (iv) any other transaction
(including without limitation forward sale or purchase agreements, capitalized
leases and conditional sales agreements) having the commercial effect of a
borrowing of money entered into by such person to finance its operations or
capital requirements (but not including trade payables and accrued expenses
incurred in the ordinary course of business which are not represented by a
promissory note), or (v) any Guaranty of Indebtedness for borrowed money.
Interest Rate Option shall mean the Euro-Rate Option or Base Rate
Option.
Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Official Body.
Lien shall mean any mortgage, deed of trust, pledge, lien, security
interest, charge or other encumbrance or security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including but not
limited to any conditional sale or title retention
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arrangement, and any assignment, deposit arrangement or lease intended as, or
having the effect of, security and any filed financing statement or other notice
of any of the foregoing (whether or not a lien or other encumbrance is created
or exists at the time of the filing).
Loan Documents shall mean this Agreement, the Note and the Guaranty
Agreements, the Pledge Agreement, the Security Agreement and any other financing
statements, stock powers, proxies, instruments, certificates or documents
delivered or contemplated to be delivered hereunder or thereunder or in
connection herewith or therewith, as the same may be supplemented or amended
from time to time in accordance herewith or therewith, and Loan Document shall
mean any of the Loan Documents.
Loan Parties shall mean collectively the Borrower, Abbingdon
Partners-II, Abbingdon Partners-III and each Subsidiary of the Borrower whether
now existing or hereafter formed or acquired, and Loan Party shall mean any of
the Loan Parties.
Loans shall mean collectively and Loan shall mean separately all
demand loans or any demand loan made by the Bank to the Borrower pursuant to
this Agreement.
Management Agreement shall mean any one or more legally binding
contracts together which are now or hereafter existing and pursuant to which a
Loan Party receives a management fee from an Unaffiliated Managed Company in
exchange for administrative and miscellaneous services provided by such Loan
Party.
Material Adverse Change shall mean any set of circumstances or
events which (a) has or could reasonably be expected to have any material
adverse effect whatsoever upon the validity or enforceability of this Agreement
or any other Loan Document, (b) is or could reasonably be expected to be
material and adverse to the business, properties, assets, financial condition,
results of operations or prospects of the Borrower and its Subsidiaries taken as
a whole, (c) is or could reasonably be expected to be material and adverse to
the business, properties, assets, financial condition, results of operations or
prospects of Abbingdon Partners-II or Abbingdon Partners-III, (d) impairs
materially or could reasonably be expected to impair materially the ability of
any one or more Loan Parties to duly and punctually pay or perform Indebtedness
in principal amount in excess of $250,000 in the aggregate, or (e) impairs
materially or could reasonably be expected to impair materially the ability of
the Bank, to the extent permitted, to enforce its legal remedies pursuant to
this Agreement or any other Loan Document.
Note shall mean the Demand Note executed and delivered by the
Borrower to the Bank in connection herewith in the face amount of $10,000,000,
as supplemented or amended from time to time in accordance with the terms hereof
and thereof.
Official Body shall mean any national, federal, state, local or
other government or political subdivision thereof, or any agency, authority,
bureau, central bank, commission, department or instrumentality of any
government or political subdivision thereof, or any court, tribunal, grand jury
or arbitrator, in each case whether foreign or domestic.
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Permitted Acquisition shall have the meaning given to such term in
paragraph (c) of Exhibit D to this Agreement.
person shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, government or political subdivision or agency thereof, or any other
entity.
Pledge Agreement shall mean the Pledge Agreement executed and
delivered by the Pledgors to the Bank, together with the stock powers and
proxies executed and delivered in connection therewith, as the foregoing are
supplemented or amended from time to time in accordance with the terms hereof
and thereof, pursuant to which (i) all of the Pledgors' outstanding capital
stock in the Borrower and (ii) all of the outstanding capital stock of each
Subsidiary of the Borrower (other than Unaffiliated Managed Companies) shall be
pledged to the Bank.
Pledgors shall mean Abbingdon Partners - II, Abbingdon Partners -
III, Abbingdon Venture Partners Limited Partnership, Business Development
Limited Partnership - III and certain Subsidiaries of the Borrower set forth in
the Pledge Agreement.
Purchase Money Security Interest shall mean Liens upon tangible
personal property securing loans to the Borrower or deferred payments by the
Borrower for the purchase of such tangible personal property.
Security Agreement shall mean the Security Agreement executed and
delivered by the Borrower and each Subsidiary of the Borrower to the Bank,
together with the financing statements executed and delivered in connection
therewith, as any of the foregoing are supplemented or amended from time to time
in accordance with the terms hereof and thereof.
Subsidiary of any person at any time shall mean (i) any corporation
or trust of which more than 50% (by number of shares or number of votes) of the
outstanding capital stock or shares of beneficial interest normally entitled to
vote for the election of one or more directors or trustees (regardless of any
contingency which does or may suspend or dilute the voting rights) is at such
time owned directly or indirectly by such person or one or more of such person's
Subsidiaries, or any limited partnership of which such person is a general
partner or any partnership of which more than 50% of the partnership interests
is at the time directly or indirectly owned by such person or one or more of
such person's Subsidiaries or (ii) any other entity of which such person owns
more than 50% of the ownership interests, directly or indirectly, and (iii) any
corporation, trust, partnership or other entity, other than an Unaffiliated
Managed Company, which is controlled or capable of being controlled by such
person or one or more of such person's Subsidiaries.
Unaffiliated Managed Company shall mean a business corporation or a
professional corporation which (i) is not a Subsidiary or a Loan Party, (ii)
does business in a state prohibiting the practice of dentistry by any business
corporation or by a business corporation not owned by an individual or licensed
individual or the licensing of a corporation not owned by an individual or
licensed individual to provide dental services; and (iii) is party with a Loan
Party to
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a Management Agreement, and Unaffiliated Managed Companies shall mean such
corporations collectively.
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17
EXHIBIT B
Representations and Warranties. Each Loan Party represents and
warrants to the Bank as follows:
(a) Organization and Qualification. Each of the Loan Parties is a
corporation or partnership, duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization; each
Loan Party has the corporate or partnership (as the case may be) power to own or
lease its respective properties and to engage in the business it presently
conducts or proposes to conduct; and each Loan Party is duly qualified and in
good standing in each jurisdiction where the property owned or leased by it or
the nature of the business transacted by it or both makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not constitute a Material Adverse Change.
(b) Ownership of Borrower. At least fifty-one percent (51%) of the
issued and outstanding common stock of the Borrower is owned by Abbingdon
Partners-II and Abbingdon Partners-III. Each of Abbingdon Partners - II,
Abbingdon Partners - III, Abbingdon Venture Partners Limited Partnership and
Business Development Capital Limited Partnership - III shall pledge to the Bank
pursuant to the Pledge Agreement one hundred percent (100%) of the issued and
outstanding capital stock of the Borrower owned by it from time to time.
(c) Subsidiaries. Schedule 1 attached hereto and made a part hereof
states the name of each Subsidiary of the Borrower and its jurisdiction of
organization. The Borrower has no other Subsidiaries other than the Subsidiaries
listed on Schedule 1 attached hereto.
(d) Power and Authority. Each Loan Party has full corporate or
partnership (as the case may be) power to enter into, execute, deliver and carry
out this Agreement and the other Loan Documents to which it is a party, to incur
the Indebtedness contemplated by the Loan Documents and to perform its
obligations under the Loan Documents to which it is a party and all such actions
have been duly authorized by all necessary proceedings on its part.
(e) Validity and Binding Effect. This Agreement has been duly and
validly executed and delivered by each Loan Party, and each other Loan Document,
when duly executed and delivered by each respective Loan Party thereto, will
have been duly and validly executed and delivered by such Loan Parties. This
Agreement and each other Loan Document delivered by the Loan Parties pursuant to
the provisions hereof constitutes or will constitute (upon execution and
delivery) legal, valid and binding obligations of the Loan Parties party
thereto, enforceable against each respective Loan Party in accordance with their
respective terms, except to the extent that (i) enforceability of any of the
foregoing Loan Documents may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforceability of
creditors' rights generally or limiting the right of specific performance or by
general equitable principles, (ii) the exercise by the Bank of its right and
remedies in respect of the Collateral is contrary to applicable Law relating to
Account Debtors which are Official Bodies.
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(f) No Conflict. Neither the execution and delivery of this
Agreement or the other Loan Documents by the Loan Parties nor the consummation
of the transactions herein or therein contemplated or compliance with the terms
and provisions hereof or thereof by them will conflict with, constitute a
default under or result in any breach of (i) the terms and conditions of the
certificate of incorporation, by-laws or other organizational documents of any
Loan Party, or (ii) any Law or any material agreement or instrument or order,
writ, judgment, injunction or decree to which any Loan Party is a party or by
which it is bound or to which it is subject, or result in the creation or
enforcement of any Lien, charge or encumbrance whatsoever upon any property (now
owned or hereafter acquired) of any Loan Party (other than Liens granted under
the Loan Documents).
(g) Consents and Approvals. Except as set forth on Schedule B(g)
hereto, no consent, approval, exemption, order or authorization of, or a
registration or filing with, any governmental or administrative body or
authority or any other person is required by any Law or any agreement in
connection with the execution, delivery and carrying out of this Agreement and
the other Loan Documents by any Loan Party.
(h) Compliance with Instruments. No Loan Party is in violation of
(i) any term of its certificate of incorporation, by-laws, or other
organizational documents or (ii) any material agreement or instrument to which
it is a party or by which it or any of its properties may be subject or bound
where such violation would constitute a Material Adverse Change.
(i) Compliance with Laws. All Loan Parties are in compliance in all
material respects with all applicable Laws in all jurisdictions in which such
Loan Party is presently doing business except where the failure to do so would
not constitute a Material Adverse Change.
(j) Litigation. There are no actions, suits, proceedings or
investigations pending or, to the knowledge of any Loan Party, threatened
against any Loan Party at law or equity before any Official Body which
individually or in the aggregate would constitute a Material Adverse Change.
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EXHIBIT C
AFFIRMATIVE COVENANTS. Each Loan Party covenants and agrees that
until payment in full of the Loans and interest thereon and satisfaction of all
of the Loan Parties' other obligations hereunder, each Loan Party shall comply
at all times with the following affirmative covenants:
(a) Preservation of Existence, etc. Except as permitted by Exhibit
D, clause (c), each Loan Party shall maintain its corporate or partnership
existence, as the case may be, and its qualification and good standing in each
jurisdiction in which its ownership or lease of property or the nature of its
business makes such license or qualification necessary, except where the failure
to be so licensed or qualified would not constitute a Material Adverse Change.
(b) Payment of Liabilities, Including Taxes, etc. Each Loan Party
shall duly pay and discharge all liabilities to which it is subject or which are
asserted against it, promptly as and when the same shall become due and payable,
including all taxes, assessments and governmental charges upon it or any of its
properties, assets, income or profits, prior to the date on which penalties
attach thereto, except to the extent that such liabilities, including taxes,
assessments or charges, are being contested in good faith and by appropriate and
lawful proceedings diligently conducted and for which such reserve or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made, but only to the extent that failure to discharge any such liabilities
would not result in any Material Adverse Change.
(c) Compliance With Laws. Each Loan Party shall comply with all
applicable Laws, in all respects provided that it shall not be deemed to be a
violation of this section if any failure to comply with any law would not result
in or constitute a Material Adverse Change.
(d) Reports and Information. Each Loan Party shall furnish or cause
to be furnished to the Bank all information as the Bank may reasonably request.
Notwithstanding the foregoing, each Loan Party shall within two (2) Business
Days of obtaining knowledge thereof, give notice to the Bank of any material
event with respect to such Loan Party or any event, whether or not having
occurred, but the occurrence of which may have a material adverse effect upon
any Loan Party.
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EXHIBIT D
NEGATIVE COVENANTS. Each Loan Party covenants and agrees that until
payment in full of the Loans and interest thereon, and satisfaction of all of
the Loan Parties' other obligations hereunder, each Loan Party shall comply at
all times with the following negative covenants:
(a) Indebtedness; Liens. Each Loan Party (other than Abbingdon
Partners-II and Abbingdon Partners-III) shall not at any time create, incur,
assume or suffer to exist any Indebtedness, except:
(i) Indebtedness under the Loan Documents;
(ii) Indebtedness existing on the date hereof, including any
extensions or renewals thereof provided that there will be no increase in the
amount thereof or other significant change in the terms thereof adverse to any
Loan Party, except with seven (7) Business Days' prior written notice to the
Bank;
(iii) Indebtedness secured by Purchase Money Security
Interests entered into in the ordinary course of business consistent with past
practice provided that the Lien of such Purchase Money Security Interests
extends only to the assets purchased;
(iv) Indebtedness of a Subsidiary to the Borrower or to
another Subsidiary of the Borrower;
(v) Indebtedness assumed by Loan Parties pursuant to mergers
of persons into Loan Parties in acquisitions or Indebtedness of persons (to the
extent assumed by Loan Parties in the case of acquisitions or of such persons if
such persons become Loan Parties) whose stock or assets are acquired by Loan
Parties in acquisitions (whether by merger or otherwise);
(vi) Indebtedness incurred in connection with acquisitions
permitted by the Loan Documents, provided that such Indebtedness is subordinated
to the Indebtedness of the Borrower to the Bank under the Loan Documents in form
and substance satisfactory to the Bank and the Bank shall have received ten (10)
Business Days' prior written notice thereof; and
(vii) All other Indebtedness, including, without limitation,
Indebtedness in favor of either Abbingdon Partners - II or Abbingdon Partners -
III or any Affiliate thereof provided that such Indebtedness is subordinated to
the Indebtedness of the Borrower to the Bank under the Loan Documents in form
and substance satisfactory to the Bank and the Bank shall have received ten (10)
Business Days' prior written notice thereof.
Each Loan Party (other than Abbingdon Partners - II and Abbingdon
Partners - III) shall not at any time create, incur, assume or suffer to exist
any Liens, except Permitted Liens (as defined in the Security Agreement) and,
with respect to VFD Realty, Inc., the mortgage in favor of Xxxx X. Xxxx and Xxxx
Xxxxxxxx as in effect on the date hereof and as amended
PAGE 1 OF 4
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from time to time so long as the principal amount of Indebtedness secured
thereby is not hereafter increased, the material terms of such Indebtedness are
not changed and no additional assets, including without limitation real
property, become subject to any such Lien.
(b) Guaranties. Each Loan Party (other than Abbingdon Partners-II
and Abbingdon Partners-III) shall not at any time, directly or indirectly,
become or be liable in respect of any Guaranty, or assume, guarantee, become
surety for, endorse or otherwise agree, become or remain directly or
contingently liable upon or with respect to any obligation or liability of any
other person, except under the Loan Documents, unless seven (7) Business Days'
prior written notice is given to the Bank.
(c) Liquidations, Mergers, Consolidations, Acquisitions. Each Loan
Party shall not dissolve, liquidate or wind-up its affairs, or become a party to
any merger or consolidation unless seven (7) Business Days' prior written notice
is given to the Bank, provided that any wholly-owned Subsidiary of the Borrower
may consolidate or merge into the Borrower or any other wholly-owned Subsidiary
of the Borrower. Each Loan Party (other than Abbingdon Partners-II and Abbingdon
Partners-III) shall not acquire by purchase, lease or otherwise all or
substantially all of the assets or capital stock or partnership interests of any
person unless seven (7) Business Days' prior written notice is given to the
Bank, provided that any Loan Party may acquire by purchase, lease or otherwise,
all or substantially all the assets or all of the capital stock or partnership
interests of a person or form a new wholly-owned Subsidiary so long as (i) such
acquired business, acquired or newly formed wholly-owned Subsidiary is in the
same line of business as the Borrower's line of business on the date of this
Agreement and (ii) such acquired or newly formed wholly-owned Subsidiary,
simultaneously with the acquisition or formation thereof, executes and delivers
to the Bank, in form satisfactory to the Bank, a joinder to this Agreement and
an update to Schedule 1 hereto and a joinder to the Subsidiary Guaranty
Agreement and also delivers to the Bank such other documents and opinions of
counsel, each in form and substance satisfactory to the Bank, that the Bank may
reasonably request (each, a "Permitted Acquisition").
(d) Dispositions of Assets or Subsidiaries. No Loan Party (other
than Abbingdon Partners - II and Abbingdon Partners - III) shall sell, convey,
assign, lease, abandon or otherwise transfer or dispose of, voluntarily or
involuntarily, any of its properties or assets, tangible or intangible
(including but not limited to sale, assignment, discount or other disposition of
accounts, contract rights, chattel paper, equipment or general intangibles with
or without recourse or of capital stock, shares of beneficial interest or
partnership interests of a Subsidiary) unless seven (7) Business Days' prior
written notice is given to the Bank, except transactions involving (i) any sale,
abandonment, transfer or lease of assets in the ordinary course of business
which are no longer necessary or required in the conduct of such Loan Party's
business; (ii) any sale, transfer, abandonment or lease of assets by any Loan
Party which is a wholly-owned Subsidiary of the Borrower to the Borrower or any
other wholly-owned Subsidiary of the Borrower; or (iii) any sale, abandonment,
transfer or lease of assets in the ordinary course of business which are
replaced by substitute assets.
PAGE 2 OF 4
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(e) Joinder of Subsidiaries. The Borrower shall not and shall not
permit any other Loan Party (other than Abbingdon Partners-II and Abbingdon
Partners-III) to own, create or acquire any Subsidiary except for wholly-owned
Subsidiaries which join this Agreement and the Guaranty and Suretyship Agreement
(Subsidiaries) unless seven (7) Business Days' prior written notice is given to
the Bank.
(f) Continuation of or Change in Business. Each Loan Party (other
than Abbingdon Partners-II and Abbingdon Partners-III) shall not engage in any
business other than the Loan Parties' existing lines of business unless seven
(7) Business Days' prior written notice is given to the Bank.
(g) Loans. No Loan Party (other than Abbingdon Partners - II and
Abbingdon Partners - III) shall at any time make or suffer to remain outstanding
any loan or advance to, or make any capital contribution to, any other person,
or agree, become or remain liable to do any of the foregoing unless seven (7)
Business Days' prior written notice is given to the Bank, except loans, advances
and investments of the Borrower in wholly-owned Subsidiaries of the Borrower
which are a party to this Agreement and Guaranty and Suretyship Agreement
(Subsidiaries).
(h) Dividends and Related Distributions. The Loan Parties (other
than Abbingdon Partners-II, Abbingdon Partners-III, VFD of Georgia, Inc.
pursuant to its Stockholders/Buy-Sell Agreement dated February 19, 1997 and
ProDent, Inc. pursuant to its Stockholders/Buy-Sell Agreement dated October 1,
1997) shall not make or pay, or agree to become or remain liable to make or pay,
any dividend or other distribution of any nature (whether in cash, property,
securities or otherwise) on account of or in respect of its shares of capital
stock or on account of the purchase, redemption, retirement or acquisition of
its shares of capital stock (or warrants, options or rights therefor) unless
seven (7) Business Days' prior written notice is given to the Bank, except
dividends payable by any Subsidiary of the Borrower to the Borrower.
(i) Affiliate Transactions. The Loan Parties (other than Abbingdon
Partners-II and Abbingdon Partners-III) shall not enter into or carry out any
transaction (including, without limitation, purchasing property or services or
selling property or services) with any Affiliate or other person unless such
transaction is not otherwise prohibited by this Agreement, is entered into in
the ordinary course of business upon fair and reasonable arm's-length terms and
conditions which are fully disclosed to the Bank and is in accordance with all
applicable Law unless seven (7) Business Days' prior written notice is given to
the Bank.
(j) Restriction on Liens and Abbingdon Negative Pledge on Assets
including Stock, Partnership and Other Interests. Abbingdon Partners-II and
Abbingdon Partners-III shall not allow, except with the prior written consent of
the Bank, any property or assets owned by either Abbingdon Partners - II or
Abbingdon Partners - III including without limitation any capital stock,
partnership interests or other equity interests to be pledged as collateral or
security or to be subject to any Lien, nor shall Abbingdon Partners-II or
Abbingdon Partners-III enter into any agreement with respect to any property
described above in this paragraph (j) agreeing not to pledge as collateral or
security or to be subject to any Lien on such property, except pursuant to
PAGE 3 OF 4
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the Loan Documents. Notwithstanding the foregoing, without the prior written
consent of the Bank, Abbingdon Partners - II and Abbingdon Partners - III shall
be permitted to pledge the capital stock, partnership interests or other equity
interests of an entity owned by Abbingdon Partners - II and Abbingdon Partners -
III in connection with the financing of such entity so long as the only asset of
Abbingdon Partners - II and Abbingdon Partners - III which is pledged is the
capital stock, partnership interests or other equity interest of the entity
which is obtaining financing.
Capital Subject to Call. Abbingdon Partners-II shall not
allow its uncalled but committed capital subject to call without any right of
set off or counterclaim in accordance with the provisions of its Agreement of
Limited Partnership to be less than 60% of the face amount of the Demand Note
executed in connection herewith, the Demand Note executed in connection with the
XYAN Letter Agreement, and the Demand Note executed in connection with the TLM
Letter Agreement, in each case as amended, restated or increased from time to
time (the "Note Amounts"). Abbingdon Partners-III shall not allow its uncalled
but committed capital subject to call without any right of set off or
counterclaim in accordance with the provisions of its Agreement of Limited
Partnership to be less than 40% of the Note Amounts.
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