Exhibit 10.6
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "Agreement") is
entered into as of July 19, 2002, by and among XXXXXX FINANCIAL, INC., a
Delaware corporation ("Xxxxxx"), MIDWEST MEZZANINE FUND II, L.P., a Delaware
limited partnership ("Midwest"), XXXXX X. XXXXX, an individual ("Xxxxx"; Xxxxx,
Xxxxxx and Midwest, are sometimes referred to individually as a "Junior
Creditor" and collectively as the "Junior Creditors"), CASTLE DENTAL CENTERS,
INC., a Delaware corporation (the "Company"), CASTLE DENTAL CENTERS OF
CALIFORNIA, L.L.C., a Delaware limited liability company ("Castle West"), CASTLE
DENTAL CENTERS OF FLORIDA, INC., a Florida corporation ("Castle Florida"),
CASTLE DENTAL CENTERS OF TENNESSEE, INC., a Tennessee corporation ("Castle
Tennessee"), CASTLE DENTAL CENTERS OF TEXAS, INC., a Texas corporation and
successor by merger to Dental World, Inc., a Texas corporation, and Castle
Dental Centers of Austin, Inc., a Texas corporation ("Castle Texas"), DENTCOR,
INC., a Florida corporation ("Dentcor"), CDC OF CALIFORNIA, INC., a Delaware
corporation ("CDC"), CASTLE TEXAS HOLDINGS, INC., a Delaware corporation
("Holdings"), and ACADEMY FOR DENTAL ASSISTANTS, INC., a Florida corporation
("Academy"), in favor of BANK OF AMERICA, N.A., a national banking association
formerly known as NationsBank, N.A., as agent ("Agent") for all Lenders party to
the Credit Agreement described below.
R E C I T A L S
A. The Company, Agent and Lenders have entered into the Credit Agreement,
pursuant to which, among other things, Agent and the Lenders have agreed,
subject to the terms and conditions set forth in the Credit Agreement, to
restructure certain loans and other financial accommodations to the Company.
B. The Company and the Junior Creditors have entered into the Note Purchase
Agreement, pursuant to which, among other things, each Junior Creditor is
extending credit to the Company as evidenced by the Junior Notes.
C. As an inducement to and as one of the conditions precedent to the
agreement of Lenders to consent to the transactions contemplated by the Note
Purchase Agreement, Lenders have required the execution and delivery of this
Agreement by the Junior Creditors, the Company and the Subsidiaries.
NOW, THEREFORE, in order to induce Agent and Lenders to consent to the
transactions contemplated by the Note Purchase Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto hereby agree as follows:
1. Definitions. All capitalized terms used in this Agreement without
definition shall have the meanings ascribed to such terms in the Credit
Agreement. In addition, the following terms shall have the following meanings in
this Agreement:
Credit Agreement shall mean that certain Second Amended and Restated Credit
Agreement of even date herewith by and among the Company, Agent and the
financial institutions party thereto as Lenders, as the same may hereafter be
amended, restated, supplemented or otherwise modified from time to time as
permitted hereunder.
Enforcement Action means any action to enforce or attempt to enforce any right
or remedy available to any of the Junior Creditors to collect the Junior Debt,
including any action or proceeding (a) to accelerate the maturity of, or demand
as immediately due and payable, all or any part of the Junior Debt, or (b) to
commence, continue or participate in any judicial, arbitral or other proceeding,
or any collection, foreclosure or enforcement action of any kind, against the
Company or any Subsidiary or any of the Company's or any Subsidiary's assets
seeking, directly or indirectly, to enforce any rights or remedies, or to
enforce any of the obligations incurred by the Company or any Subsidiary, under
or in connection with the Junior Debt.
Junior Debt shall mean all of the obligations of the Company to the Junior
Creditors evidenced by the Junior Notes and all other amounts now or hereafter
owed by the Company to any Junior Creditor under any of the Junior Debt
Documents.
Junior Debt Documents shall mean the Junior Notes, the Note Purchase Agreement
and any other loan document pertaining to Junior Debt; provided, however, the
term "Junior Debt Documents" shall not include any "Warrants" (as such term is
defined in the Note Purchase Agreement).
Junior Notes shall mean, collectively: (i) that certain Convertible Promissory
Note of even date herewith in the principal amount of $500,000.00 made by
Company to the order of Xxxxxx, (ii) that certain Convertible Promissory Note of
even date herewith in the principal amount of $500,000.00 made by Company to the
order of Midwest and (iii) that certain Convertible Promissory Note of even date
herewith in the principal amount of $700,000.00 made by Company to the order of
Xxxxx, in each instance as the same may be amended, substituted, supplemented or
otherwise modified from time to time as permitted hereunder.
Loan Documents shall have the meaning specified in the Credit Agreement.
Note Purchase Agreement shall mean that certain Senior Subordinated Note and
Warrant Purchase Agreement of even date herewith by and among the Company and
each of the Junior Creditors, as the same may hereafter be amended, restated,
supplemented or otherwise modified from time to time as permitted hereunder.
Proceeding shall mean any voluntary or involuntary insolvency, bankruptcy,
receivership, custodianship, liquidation, dissolution, reorganization,
assignment for the benefit of creditors, appointment of a custodian, receiver,
trustee or other officer with similar powers or any other proceeding for the
liquidation, dissolution or other winding up of a Person.
Reorganization Subordinated Securities shall mean (a) any equity securities
issued in
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substitution of all or any portion of the Junior Debt that are subordinated in
right of payment to the Senior Debt (or any notes or other securities issued in
substitution of all or any portion of the Senior Debt), and (b) any notes or
other debt securities issued in substitution of all or any portion of the Junior
Debt that are subordinated to the Senior Debt (or any notes or other securities
issued in substitution of all or any portion of the Senior Debt) to the same
extent that the Junior Debt is subordinated to the Senior Debt pursuant to the
terms of this Agreement.
Senior Creditor shall mean the Agent and any party to the Credit Agreement as a
Lender.
Senior Debt shall mean: (a) all principal, interest, fees, reimbursements,
indemnifications and other amounts now or hereafter owed by the Company to
Senior Creditors under the Credit Agreement and other Loan Documents and (b) any
increases, extensions and rearrangements of the foregoing obligations under any
amendments, supplements and other modifications of the documents and agreements
creating the foregoing obligations to the extent permitted under Section 3
hereof; provided, however, that in no event shall the principal amount of the
Senior Debt exceed the sum of the aggregate principal amount of Senior Debt
outstanding on the date hereof plus $2,000,000, reduced by the amount of any
repayments and prepayments thereof (it being understood that no amounts expended
by any Senior Creditor to preserve the value of, or otherwise protect, the
Collateral, shall be subject to, or included within, the foregoing limitations).
Subsidiaries shall mean, collectively, Academy, Castle West, Castle Florida,
Castle Tennessee, Castle Texas, Dentcor, CDC, Holdings and any other Person now
or hereafter guaranteeing payment or performance of the Junior Debt. Each of the
Subsidiaries may be referred to individually as a Subsidiary.
2. Subordination.
2.1 Subordination of Junior Debt to Senior Debt. The Company and each
Subsidiary covenants and agrees, and each Junior Creditor by its acceptance of a
Junior Note (whether upon original issue or upon transfer or assignment)
likewise covenants and agrees, that unless and until the Senior Debt shall have
been irrevocably paid in full, the payment and performance of the Junior Debt is
hereby made expressly subordinate and junior in right of payment and performance
to the prior payment and performance of all obligations and liabilities under
the Senior Debt to the extent and in the manner set forth in this Section 2.
Each holder of Senior Debt, whether now outstanding or hereafter created,
incurred, assumed or guaranteed, and whether such holder holds any Senior Debt
as of the date hereof or later becomes a holder by means of assignment or
otherwise, shall be deemed to have acquired Senior Debt in reliance upon the
provisions contained in this Agreement.
2.2 Proceedings. In the event of any Proceeding involving the Company, (a)
all Senior Debt first shall be paid in full before any payment of or with
respect to the Junior Debt shall be made (other than a distribution of
Reorganization Subordinated Securities); and (b) any payment or distribution,
whether in cash, property or securities which, but for
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the terms hereof, otherwise would be payable or deliverable in respect of the
Junior Debt (other than a distribution of Reorganization Subordinated
Securities), shall be paid or delivered directly to Agent (to be held and/or
applied by Agent in accordance with the terms of the Credit Agreement) until all
Senior Debt is irrevocably paid in full, and each Junior Creditor irrevocably
authorizes, empowers and directs all receivers, trustees, liquidators,
custodians, conservators and others having authority in the premises to effect
all such payments and distributions.
In the event of any Proceeding involving any Subsidiary, (a) all payments
or distributions in such Proceeding shall be applied to Senior Debt before any
payment of or with respect to the Junior Debt shall be made (other than a
distribution of Reorganization Subordinated Securities); and (b) any payment or
distribution, whether in cash, property or securities which, but for the terms
hereof, otherwise would be payable or deliverable in respect of the Junior Debt
(other than a distribution of Reorganization Subordinated Securities) in such
Proceeding, shall be paid or delivered directly to Agent (to be held and/or
applied by Agent in accordance with the terms of the Credit Agreement) until all
Senior Debt is irrevocably paid in full, and each Junior Creditor irrevocably
authorizes, empowers and directs all receivers, trustees, liquidators,
custodians, conservators and others having authority in the premises to effect
all such payments and distributions.
2.3 Limitation on Payments.
(a) Neither the Company nor any Subsidiary may make, and no Junior Creditor
may receive, any payment or prepayment of any sum with respect to the Junior
Debt (other than reimbursement of actual and reasonable out-of-pocket costs and
expenses not to exceed, with respect to periods prior to the Closing Date,
$50,000) until all of the Senior Debt shall have been irrevocably paid in full.
(b) The provisions of this subsection 2.3 shall not apply to any payment
with respect to which subsection 2.2 would be applicable.
2.4 Subordination of Liens and Guarantees. The Junior Creditors will not
create, assume, or suffer to exist any lien, security interest, guaranty, or
assignment of collateral securing or guaranteeing the repayment of the Junior
Debt. Any judgment lien, and any other lien, security interest, guaranty or
assignment existing in violation of the foregoing shall be fully subordinate to
any lien, security interest, guaranty or assignment in favor of the Senior
Creditors which secures any of the Senior Debt, and the Junior Creditors, the
Company and the Subsidiaries shall immediately take any and all steps necessary
to effect the release of any such lien, security interest, assignment or
collateral or the termination of any such guaranty.
2.5 Restriction on Action by the Junior Creditors.
(a) Until the Senior Debt is paid in full, no Junior Creditor shall,
without the prior written consent of the Senior Lenders, take any Enforcement
Action with respect to the Junior Debt, except as permitted in the following
sentence. Upon the earlier to occur of:
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(i) acceleration of the Senior Debt; or
(ii) commencement of a Proceeding with respect to the Company;
the Junior Creditors may accelerate the Junior Debt or take any other
Enforcement Action; provided, however, that if following the acceleration of the
Senior Debt, such acceleration is rescinded, then all Enforcement Actions taken
by the Junior Creditors shall likewise be rescinded if such Enforcement Action
is based solely on such acceleration.
(b) Until the Senior Debt is irrevocably paid in full and notwithstanding
anything contained in the Junior Debt Documents, the Credit Agreement or any of
the other Loan Documents to the contrary, no Junior Creditor shall, without the
prior written consent of Agent (which consent may be withheld in the Agent's
sole discretion), agree to any amendment, modification or supplement to the
Junior Debt Documents, or make any increases, extensions, rearrangements,
amendments, supplements, or other modifications to the Junior Debt, the effect
of which is to (i) increase the maximum principal amount of the Junior Debt or
rate of interest on any of the Junior Debt, (ii) accelerate or shorten the dates
upon which payments of principal or interest on the Junior Debt are due, (iii)
change in a manner adverse to Company or any Subsidiary, or add, any event of
default or any covenant with respect to the Junior Debt, (iv) change any put,
redemption or prepayment provisions of the Junior Debt, or (v) alter the
subordination provisions with respect to the Junior Debt, including, without
limitation, subordinating the Junior Debt to any other debt.
(c) Notwithstanding anything herein to the contrary, (i) the Junior
Creditors may file proofs of claim against the Company in any Proceeding
involving the Company, (ii) the Junior Creditors may at any time and from time
to time convert all or any portion of the Junior Notes into common stock of the
Company in accordance with the terms thereof and (iii) the Junior Creditors may
accrue interest at the default rate specified in the Note Purchase Agreement, or
otherwise give notices or file suits, actions or proceedings, and the Company
may agree to tolling agreements, to prevent the running of the relevant statute
of limitations, but no Junior Creditor may receive any property or payment on
account of any such suit, action or proceeding until the Senior Debt has been
irrevocably paid in full.
2.6 Incorrect Payments. If any payment or distribution on account of
the Junior Debt not permitted to be made by the Company or any Subsidiary or
received by a Junior Creditor under this Agreement is received by such Junior
Creditor before all outstanding Senior Debt has been irrevocably paid in full,
such payment or distribution shall not be commingled with any asset of such
Junior Creditor, shall be held in trust by such Junior Creditor for the benefit
of Lenders and shall be immediately paid over to Agent, or its designated
representative, in the form received (together with any necessary endorsements)
for application (in accordance with the Credit Agreement) to the Senior Debt
until all outstanding Senior Debt has been irrevocably paid in full.
2.7 Sale, Transfer, etc. No Junior Creditor shall sell, assign or otherwise
transfer all
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or any portion of the Junior Debt or any Junior Debt Document unless prior to
the consummation of any such action, the transferee thereof shall execute and
deliver to Agent an agreement substantially identical to this Agreement,
providing for the continued subordination and forbearance of the Junior Debt to
the Senior Debt as provided herein and for the continued effectiveness of all of
the rights of the Senior Creditors arising under this Agreement. Any failure to
execute or deliver any such agreement shall make any attempted sale, assignment
or other transfer of any portion of the Junior Debt or any Junior Debt Document
void ab initio. The subordination effected hereby shall survive any sale,
assignment, pledge, disposition or other transfer of all or any portion of the
Junior Debt, and the terms of this Agreement shall be binding upon the
successors and assigns of such Junior Creditor, as provided in Section 10 below.
2.8 Legends. The Junior Creditors shall cause all Junior Debt to be
evidenced by a note, debenture, instrument, or other writing evidencing the
Junior Debt and will inscribe a statement or legend thereon to the effect that
such note, debenture, instrument, or other writing is subordinated to the Senior
Debt in favor of the Senior Creditors in the manner and to the extent set forth
in this Agreement.
3. Modifications to Senior Debt. This is an irrevocable agreement of
subordination and the Senior Creditors may, without notice to any of the parties
hereto and without impairing or releasing the obligations of the Company, any
Subsidiary and the Junior Creditors hereunder, (a) create Senior Debt by
extending credit under the Credit Agreement; (b) change the terms of or increase
the amount of the Senior Debt by increasing, extending, rearranging, amending,
supplementing, or otherwise modifying any of the Loan Documents or other
instruments or agreements creating Senior Debt; (c) sell, exchange, release, or
otherwise deal with any collateral securing any Senior Debt; (d) release anyone,
including the Company, any Subsidiary or any guarantor, liable in any manner for
the payment or collection of any Senior Debt; (e) exercise or refrain from
exercising any rights against the Company or any Subsidiary or any other Person;
and (f) apply any sums received by any of the Senior Creditors, from whatever
source, to the payment of the Senior Debt; provided, however, that neither Agent
nor any of the Lenders shall (a) increase the Senior Debt to an amount greater
than the sum of the aggregate principal amount of Senior Debt outstanding on the
date hereof plus $2,000,000, reduced by the amount of any repayments and
prepayments thereof (it being understood that no amounts expended by any Senior
Creditor to preserve the value of, or otherwise protect, the Collateral, shall
be subject to, or included within, the foregoing limitations), (b) increase the
interest rate with respect to the Senior Debt by more than three hundred (300)
basis points from any interest rate specified in the Credit Agreement as in
effect on the date hereof, or (c) extend the final maturity of the Senior Debt
to a date later than June 30, 2007.
4. Continued Effectiveness of this Agreement. The terms of this Agreement,
the subordination effected hereby, and the rights and the obligations of the
Junior Creditors, the Company, the Subsidiaries, Agent and Lenders arising
hereunder shall not be affected, modified or impaired in any manner or to any
extent by: (a) any amendment or modification of or supplement to the Credit
Agreement, any of the other Loan Documents or any of the Junior Debt Documents,
in each instance, to the extent permitted herein; (b) the validity or
enforceability of any of such documents; or (c) any exercise or non-exercise of
any right, power or remedy under or in respect of the Senior Debt or the Junior
Debt or any of the instruments or documents referred to in clause (a) above. The
Junior Creditors and each other holder of Junior Debt hereby
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acknowledge that the provisions of this Agreement are intended to be enforceable
at all times, whether before the commencement of, after the commencement of, in
connection with or premised on the occurrence of a Proceeding.
5. Cumulative Rights, No Waivers. Each and every right, remedy and power
granted to Agent or Lenders hereunder shall be cumulative and in addition to any
other right, remedy or power specifically granted herein, in the Credit
Agreement or the other Loan Documents or now or hereafter existing in equity, at
law, by virtue of statute or otherwise, and may be exercised by Agent or
Lenders, from time to time, concurrently or independently and as often and in
such order as Agent or Lenders may deem expedient. Any failure or delay on the
part of Agent or Lenders in exercising any such right, remedy or power, or
abandonment or discontinuance of steps to enforce the same, shall not operate as
a waiver thereof or affect the rights of Agent or Lenders thereafter to exercise
the same, and any single or partial exercise of any such right, remedy or power
shall not preclude any other or further exercise thereof or the exercise of any
other right, remedy or power, and no such failure, delay, abandonment or single
or partial exercise of the rights of Agent or Lenders hereunder shall be deemed
to establish a custom or course of dealing or performance among the parties
hereto.
6. Modification. Any amendment, modification or waiver of any provision of
this Agreement shall not be effective in any event unless the same is in writing
and signed by Agent, Company, the Subsidiaries and each Junior Creditor and then
such amendment, modification or waiver shall be effective only in the specific
instance and for the specific purpose given.
7. Additional Documents and Actions. The Company, each Subsidiary and the
Junior Creditors at any time, and from time to time, after the execution and
delivery of this Agreement, will execute and deliver such further documents as
Agent reasonably may request that may be necessary in order to confirm the
subordination effected herein.
8. Notices. Unless otherwise specifically provided herein, any notice or
other communication required or permitted to be given shall be in writing
addressed to the respective party as set forth below and may be personally
served, telecopied or sent by overnight courier service or certified or
registered United States mail and shall be deemed to have been given (a) if
delivered in person, when delivered; (b) if delivered by telecopy, on the date
of transmission if transmitted on a Business Day before 1:00 p.m. (Central time)
or, if not, on the next succeeding Business Day; (c) if delivered by overnight
courier, two (2) Business Days after delivery to such courier properly
addressed; or (d) if by United States mail, four (4) Business Days after deposit
in the United States mail, postage prepaid and properly addressed.
Notices shall be addressed as follows:
(a) If to Agent:
Bank of America, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx Xxxxx
Telecopy: 214.209.3444
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(b) If to Xxxxxx:
XXXXXX FINANCIAL, INC.
c/x Xxxxxx Healthcare Financial Services
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx
Telecopy: 312.441.7598
With a copy to:
XXXXXX FINANCIAL, INC.
c/x Xxxxxx Healthcare Financial Services
0 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxx, Esq.
Telecopy: 301.664.9866
(c) If to Midwest:
Midwest Mezzanine Fund II, L.P.
000 Xxxxx XxXxxxx Xxxxxx, 00xx xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: J. Xxxxx Xxxxxx
Telecopy: 312.553.6647
and
Xxxxx & Xxxxxxx
Three First National Plaza, Suite 4100
Xxxxxxx, Xxxxxxxx 00000
Attention: Van X. Xxxxxxxxx, Esq.
Telecopy: 312.558.3310
(d) If to Xxxxx:
Xxxxx X. Xxxxx
c/o Castle Dental Centers, Inc.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Telecopy: 713.490.8420
and
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Xxxxxx & Xxxxxx, LLP
000 Xxxxxxxxx, 00xx xxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Telecopy: 713.226.0274
(e) If to the Company or any Subsidiary:
c/o Castle Dental Centers, Inc.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Telecopy: 713.490.8420
or in any case, to such other address as the party addressed shall have
previously designated by written notice to the serving party, given in
accordance with this Section 8. A notice not given as provided above shall, if
it is in writing, be deemed given if and when actually received by the party to
whom given.
9. Severability. In the event that any provision of this Agreement is
deemed to be invalid, illegal or unenforceable by reason of the operation of any
law or by reason of the interpretation placed thereon by any court or
governmental authority, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Agreement.
10. Successors and Assigns. This Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their successors and assigns.
11. Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall be one and the same instrument.
12. Defines Rights of Creditors. The provisions of this Agreement are
solely for the purpose of defining the relative rights of the Junior Creditors,
Agent and Lenders and shall not be deemed to create any rights or priorities in
favor of any other Person, including, without limitation, the Company or the
Subsidiaries.
13. Subrogation. Subject to the irrevocable payment in full of all Senior
Debt, in the event and to the extent cash, property or securities otherwise
payable or deliverable to the holders of the Junior Debt shall have been applied
pursuant to this Agreement to the payment of Senior Debt, then and in each such
event, the holders of the Junior Debt shall be subrogated to the rights of each
holder of Senior Debt to receive any further payment or distribution in respect
of or applicable to the Senior Debt; and, for the purposes of such subrogation,
no payment or distribution to the holders of Senior Debt of any cash, property
or securities to which any holder of Junior Debt would be entitled except for
the provisions of this Agreement shall, and no payment over pursuant to the
provisions of this Agreement to the holders of Senior Debt by the holders of the
Junior Debt shall, as between Company and the Subsidiaries, their creditors
other
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than the holders of the Senior Debt and the holders of Junior Debt, be deemed to
be a payment by the Company or the Subsidiaries to or on account of Senior Debt.
14. Headings. The paragraph headings used in this Agreement are for
convenience only and shall not affect the interpretation of any of the
provisions hereof.
15. Termination. Except for Sections 17, 18 and 19 hereof, this Agreement
shall terminate upon the irrevocable payment in full of all of the Senior Debt.
16. Applicable Law. This Agreement shall be governed by and shall be
construed and enforced in accordance with the internal laws of the State of
Texas, without regard to conflicts of law principles.
17. WAIVER OF JURY TRIAL. THE JUNIOR CREDITORS, THE COMPANY, THE
SUBSIDARIES AND AGENT EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OF THE JUNIOR DEBT DOCUMENTS. THE JUNIOR CREDITORS, THE COMPANY, THE
SUBSIDIARIES AND AGENT ACKNOWLEDGE THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER
INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT AND THE LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY
ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF THE JUNIOR CREDITORS,
THE COMPANY, THE SUBSIDIARIES AND AGENT WARRANTS AND REPRESENTS THAT EACH HAS
HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
18. Enforcement. The Senior Creditors are hereby authorized to setoff and
apply any obligations owed by the Senior Creditors to the Company or a
Subsidiary against any obligations of the Company or a Subsidiary under this
Agreement. The provisions of this paragraph shall survive termination of this
Agreement.
19. Reinstatement. The obligations of Junior Creditors under this Agreement
shall continue to be effective, or be reinstated after irrevocable payment in
full of the Senior Debt, as the case may be, if at any time any payment (an
"Invalidated Senior Payment") in respect of the Senior Debt is rescinded or
otherwise restored or returned by a Senior Creditor to the Company or any
Subsidiary by reason of any Proceedings, all as though such Invalidated Senior
Payment had not been made. To the extent the Junior Creditors have received any
payments with respect to the Junior Debt on or subsequent to the date of the
receipt by the Senior Creditors of such Invalidated Senior Payment and such
payments received by the Junior Creditors have not been rescinded or otherwise
restored or returned by the Senior Creditors to the Company or any Subsidiary or
paid over to the Senior Creditors, the Junior Creditors hereby agree to pay over
to the Senior Creditors the amount of such payments so received by the Junior
Creditors on or subsequent to such date to the extent necessary to restore to
the Senior Creditors the amount of the Invalidated Senior Payment.
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20. Termination of Prior Subordination Agreement. The parties hereto
acknowledge and agree that, upon the execution, delivery and effectiveness of
this Agreement, that certain Subordination and Intercreditor Agreement dated as
of January 31, 2000 by and among the Company, Agent, Xxxxxx, Midwest and the
Persons party thereto as "Guarantors" is terminated and shall be of no further
force or effect.
THIS WRITTEN AGREEMENT AND THE RELATED LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
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IN WITNESS WHEREOF, each Junior Creditor, the Company and the
Subsidiaries have caused this Agreement to be executed in favor of the Agent for
all the Lenders as of the date first above written.
COMPANY: AGENT:
------- -----
CASTLE DENTAL CENTERS, INC., BANK OF AMERICA, N.A.,
a Delaware corporation a national banking association
/s/ Xxxx X. Xxxxx /s/ Xxxx Xxxxx
By: _____________________________ By: _____________________________
Xxxx X. Xxxxx Xxxx Xxxxx
Name: _____________________________ Name: _____________________________
Senior Vice President Senior Vice President
Title: _____________________________ Title: _____________________________
SUBSIDIARIES:
JUNIOR CREDITORS:
Academy for Dental Assistants, Inc., a
MIDWEST MEZZANINE FUND II, L.P., Florida corporation;
a Delaware limited partnership Castle Dental Centers Of California,
L.L.C., a Delawarelimited liability
company;
By: ABN AMRO Mezzanine Management Castle Texas Holdings, Inc., a
Management II, L.P., its general Delaware corporation;
partner Castle Dental Centers Of Texas, Inc.,
a Texas corporation and successor by
merger to Dental World, Inc., a Texas
corporation, and Castle Dental centers
By: ABN AMRO Mezzanine Management II, of Austin, Inc., a Texas corporation;
Inc., its general partner CDC Of California, Inc., a Delaware
/s/ Xxxx Xxxxx corporation;
By: _______________________________ Castle Dental Centers Of Florida,
Name: Xxxx Xxxxx Inc., a Florida corporation;
Title: Vice President Castle Dental Centers Of Tennessee,
Inc., a Tennessee corporation; and
Dentcor, Inc., a Florida corporation
XXXXXX FINANCIAL, INC., a Delaware /s/ Xxxx X. Xxxxx
corporation By: _____________________________
Xxxx X. Xxxxx
Name: _____________________________
Senior Vice President
Title: _____________________________
/s/ Xxxxxxx Xxxxxxxx
By: _____________________________
Xxxxxxx Xxxxxxxx
Name: _____________________________
Senior Vice President
Title: _____________________________
XXXXX X. XXXXX, an individual
/s/ Xxxxx X. Xxxxx
By: _____________________________
Name: Xxxxx X. Xxxxx
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