EXHIBIT 10.12
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT dated as of May 14, 2003, between Banc
of America Strategic Solutions, Inc., a Delaware corporation ("BofA"), FSC
Corp., a Massachusetts corporation ("FSC"), and Amsouth Bank, an Alabama state
bank ("Amsouth", and collectively with BofA and FSC, the "Sellers"), and Castle
Dental Centers, Inc., a Delaware corporation (the "Company").
Whereas, the Sellers collectively own warrants ("Warrants") to purchase
49,875 shares of Series A-2 Convertible Preferred Stock, $.000001 par value per
share ("Series A-2 Stock") of the Company; and
Whereas, BofA, FSC, and Amsouth own 25,161, 16,476 and 8,238 Warrants,
respectively;
The Sellers and Company hereby agree as follows:
1. Purchase and Sale of Warrants. Each Seller hereby agrees to sell
its Warrants to the Company, and the Company hereby agrees to purchase the
Warrants, free and clear of all liens, security interests and other
encumbrances, in consideration for the payment by the Company to the Sellers of
an aggregate of $625,000.
2. Closing. The purchase and sale of the Warrants shall take place
as follows.
(a) Initial Payment. On the date (not later than May 16,
2003) the Company satisfies in full all of the indebtedness
outstanding under the Second Amended and Restated Credit Agreement
dated as of July 19, 2002, entered into by and among the Company, Bank
of America, N.A., as agent (in such capacity, "Agent") for the lenders
named therein, BofA, Fleet National Bank ("Fleet"), AmSouth and Xxxxxx
Financial, Inc., there shall be released to the Sellers an aggregate
of $450,000 in cash (the "Initial Payment Date") being held in escrow
by the Agent on the Company's behalf for that purpose.
(b) Second Payment. On the 30th day following the Initial
Payment Date, the Company shall make an additional payment of $100,000
in cash to the Sellers.
(c) Closing. On the 60th day following the Initial Payment
Date (the "Closing Date"), the Company shall pay to the Sellers an
aggregate of $75,000 in cash and, in exchange therefor (the
"Closing"), each Seller shall deliver to the
Company the Warrants owned by such Seller, accompanied by duly
executed stock powers or assignments.
(d) Acceleration. Notwithstanding anything herein to the
contrary, at any time upon five days written notice to the Sellers,
the Company shall have the right to accelerate the Closing Date by
paying the remaining portion of the purchase price. On such date, the
Company shall pay to the Sellers the remaining portion of the purchase
price in cash and, in exchange therefor, each Seller shall deliver to
the Company all of the Warrants being sold by such Seller hereunder,
accompanied by duly executed stock powers or assignments.
3. Obligations Prior to Closing.
(a) Breach by the Company. In the event the Company fails to
timely make any of the payments required herein or otherwise perform
its obligations hereunder, any Seller may: (i) bring an action to
enforce the provisions of this Agreement as written; or (ii) terminate
this Agreement in all respects.
(b) Obligations of the Sellers. Prior to the Closing Date,
and so long as the Company has timely performed its obligations
hereunder, each Seller agrees that: (i) in the event it exercises any
of the Warrants and/or converts the shares of Series A-2 Stock it
receives upon such exercise into Common Stock, $.000001 par value
("Common Stock") (with the Warrants, the Series A-2 Stock issuable
upon exercise of the Warrants, and Common Stock being issued upon
conversion of the Series A-2 Stock being collectively referred to as
the "Securities"), it shall transfer the Securities to the Company
upon the Closing Date and (ii) it shall not sell, transfer, assign,
pledge, hypothecate or otherwise grant an interest in or lien on any
of the Securities to any party other than the Company.
4. Representations and Warranties of the Sellers. Each Seller,
severally and not jointly, represents and warrants to and agrees with the
Company that:
(a) Title to Warrants. Such Seller has valid and marketable
title to the number of Warrants described above as owned by such
Seller, free and clear of any security interests, liens, pledges,
encumbrances or other adverse claims, and has full right, power, and
authority to sell, transfer and deliver such Warrants to the Company.
(b) Authority of the Seller. The execution and delivery by
such Seller of this Agreement have been duly authorized by such
Seller, and this
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Agreement, upon execution and delivery in accordance with its terms,
will represent the valid, binding and enforceable obligations of such
Seller in accordance with its terms.
(c) No Conflict. The consummation of the transactions
contemplated by this Agreement will not result in the breach of or
constitute a default under any agreement, instrument, law or court
decree to which such Seller is a party or by which such Seller is
bound.
5. Representations and Warranties of the Company. The Company
represents and warrants to each Seller that:
(a) Corporate Authority. The execution, delivery and
performance by the Company of this Agreement has been duly authorized
by the Board of Directors of the Company, no further corporate action
is necessary on the part of the Company to make this Agreement valid
and binding upon the Company and enforceable in accordance with its
terms, and this Agreement is valid and binding upon the Company,
enforceable in accordance with its terms.
(b) No Conflict. The consummation of the transactions
contemplated by this Agreement will not result in the breach of or
constitute a default under the certificate of incorporation or by-laws
of the Company or any agreement, instrument or court decree to which
the Company is a party or by which it is bound.
6. Consent. The Sellers hereby agree and consent to the following
actions to be taken by the Company, such action to be made effective upon or as
soon as practicable following the execution of this Agreement:
(a) Termination of Stockholders Agreement. Termination of
the Stockholders Agreement dated as of July 19, 2002, by and among the
Company, the Sellers, Xxxxxx Financial, Inc., a Delaware corporation,
Midwest Mezzanine Fund II, L.P., a Delaware limited partnership, and
Xxxxx X. Xxxxx.
(b) Termination of Registration Rights Agreement.
Termination of the rights of the Sellers, Xxxxxx Financial, Inc.,
Midwest Mezzanine Fund II, L.P., Xxxxx X. Xxxxx under the Registration
Rights Agreement dated as of July 19, 2002 ("Registration Rights
Agreement"), by and among the Company, the Sellers, Xxxxxx Financial,
Inc., Midwest Mezzanine Fund II, L.P., Xxxxx X. Xxxxx and the
stockholders listed on Exhibit A of such Agreement. Capitalized terms
used in this subparagraph (b) which are not otherwise defined herein
shall have the meanings ascribed to them in the Registration Rights
Agreement. Article II of the Registration Rights Agreement, providing
for
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demand registration rights that are not applicable to holders of
Piggyback Stock, and any other references to such provisions in the
Registration Rights Agreement are terminated in their entirety. All
provisions of the Registration Rights Agreement applicable to Bank
Warrants, Initiating Holders, New Money Notes, New Money Warrants,
Series A-1 Stock, and Series A-2 Stock are terminated in their
entirety. All provisions of the Registration Rights Agreement
applicable to holders of Piggyback Stock shall remain in full force
and effect solely with respect to the holders of Piggyback Stock.
(c) Amendment to Certificate of Designation. The filing with
the Delaware Secretary of State of an amendment to the Certificate of
Designations, Preferences and Rights of Series A-1 Convertible
Preferred Stock and Series A-2 Convertible Preferred Stock of the
Company (the "Certificate of Designations") amending such terms as
provided on Exhibit A hereto. Each Seller hereby agrees to execute the
consent attached hereto as Exhibit A authorizing the filing of the
amendment to the Certificate of Designations and an amendment to the
Certificate of Incorporation of the Company to increase the number of
shares of Common Stock authorized to be issued by the Company from
100,000,000 to 250,000,000.
(d) Establishment of New Preferred Stock. The filing by the
Company with the Delaware Secretary of State of a Certificate of
Designations, Preferences and Rights establishing a series of
preferred stock, designated Series B Convertible Preferred Stock, par
value $.000001 (the "Series B Certificate of Designations") which
series of preferred stock will rank senior as to dividends and
payments upon liquidation to the Series A-2 Stock and the Series A-1
Convertible Preferred Stock, $.000001 par value per share (which will
make such shares of preferred stock "Senior Securities", as defined in
the Certificate of Designations). Each Seller hereby agrees to execute
the consent attached hereto as Exhibit B authorizing the filing of the
Series B Certificate of Designations.
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7. Treatment of Warrants following Conversion Date. Each Seller
hereby agrees that following the Conversion Date, as described in the
Certificate of Designations, the Warrants shall thereafter be exercisable for
Common Stock in accordance with the provisions of Section 8(b) of each Warrant
and no Series A-2 Convertible Preferred Stock will be issued upon such exercise.
8. Miscellaneous.
(a) Successors Bound. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns.
(b) Amendment. This Agreement may be amended only by an
instrument in writing executed by the parties hereto.
(c) Governing Law. This Agreement shall be construed and
enforced under and in accordance with and governed by the law of the
State of Texas.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
COMPANY
Castle Dental Centers, Inc.
By:
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Name:
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Title:
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SELLERS:
Banc of America Strategic Solutions, Inc.
By:
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Name:
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Title:
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FSC Corp.
By:
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Name:
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Title:
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Amsouth Bank
By:
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Name:
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Title:
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Exhibit A
Consent Authorizing Amendment to Certificate of Designations
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Exhibit B
Consent Authorizing Filing of Series B Certificate of Designations
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