Exhibit 1
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SENIOR SUBORDINATED NOTE AND SUBORDINATED CONVERTIBLE NOTE
EXCHANGE AGREEMENT
DATED AS OF JULY 19, 2002
AMONG
CASTLE DENTAL CENTERS, INC.,
XXXXXX FINANCIAL, INC.,
AND
MIDWEST MEZZANINE FUND II, L.P.
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TABLE OF CONTENTS
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Page
ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS ................................... 1
Section 1.01 Certain Defined Terms. ................................... 1
Section 1.02 Accounting Terms and Determinations. ..................... 9
ARTICLE II TENDER AND EXCHANGE OF SENIOR NOTES ................................. 9
Section 2.01 Tender and Exchange of Senior Notes. ..................... 9
Section 2.02 Release. ................................................. 9
ARTICLE III CONDITIONS PRECEDENT ............................................... 10
Section 3.01 Conditions to Purchase. .................................. 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES ...................................... 11
Section 4.01 Corporate Existence. ..................................... 12
Section 4.02 No Breach. ............................................... 12
Section 4.03 Authority. ............................................... 12
Section 4.04 Approvals. ............................................... 12
Section 4.05 No Material Misstatements. ............................... 13
Section 4.06 Capitalization. .......................................... 13
Section 4.07 Offering. ................................................ 14
Section 4.08 Registration Rights. ..................................... 14
Section 4.09 Restructuring Documents. ................................. 14
ARTICLE V AFFIRMATIVE COVENANTS ................................................ 14
Section 5.01 Reporting Requirements. .................................. 14
Section 5.02 Litigation. .............................................. 16
Section 5.03 Other Covenants. ......................................... 16
ARTICLE VI NEGATIVE COVENANTS .................................................. 17
Section 6.01 Non-Disclosure. .......................................... 17
ARTICLE VII HOLDER REPRESENTATIONS AND WARRANTIES .............................. 17
Section 7.01 Investment Representations. .............................. 17
ARTICLE VIII MISCELLANEOUS ..................................................... 18
Section 8.01 Waiver. .................................................. 18
Section 8.02 Notices. ................................................. 18
Section 8.03 Payment of Expenses, Indemnities, etc. ................... 18
Section 8.04 Amendments, Etc. ......................................... 20
Section 8.05 Successors and Assigns. .................................. 20
Section 8.06 Assignments. ............................................. 20
Section 8.07 Invalidity. .............................................. 21
Section 8.08 Counterparts. ............................................ 21
Section 8.09 References. .............................................. 21
Section 8.10 Captions. ................................................ 21
Section 8.11 No Oral Agreements. ...................................... 21
Section 8.12 Governing Law; Submission to Jurisdiction. ............... 22
Section 8.13 Confidentiality. ......................................... 22
Section 8.14 Effectiveness. ........................................... 23
Section 8.15 Exculpation Provisions. .................................. 23
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EXHIBITS AND SCHEDULES
Exhibit A Form of Certificate of Designations
Exhibit B Form of Investors Agreement
Exhibit C Form of Registration Rights Agreement
Exhibit D Form of Release
Exhibit E Form of Stockholders Agreement
Exhibit F Form of Amended and Restated Bylaws
Exhibit G Form of Compliance Certificate
Schedule 4.06 Capitalization
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THIS SENIOR SUBORDINATED NOTE AND SUBORDINATED CONVERTIBLE NOTE
EXCHANGE AGREEMENT, dated as of July 19, 2002, is by and among CASTLE DENTAL
CENTERS, INC., a Delaware corporation (the "Company"), XXXXXX FINANCIAL, INC., a
Delaware corporation ("Xxxxxx"), and MIDWEST MEZZANINE FUND II, L.P., a Delaware
limited partnership ("Midwest"; Xxxxxx and Midwest are sometimes referred to
individually as a "Holder" and collectively, as the "Holders").
R E C I T A L S
WHEREAS, $17,928,000 in aggregate principal and interest (including
default interest) as of the date hereof (the "Indebtedness") is outstanding
under the Senior Subordinated Notes and Subordinated Convertible Notes
(collectively, the "Senior Notes") issued to the Holders pursuant to the Senior
Subordinated Note Purchase Agreement between the Company and the Holders dated
January 31, 2000;
WHEREAS, Xxxxxx is the holder of Senior Notes representing $11,952,000
of the Indebtedness and desires to exchange the Indebtedness held by Xxxxxx for
shares of Series A-1 Preferred Stock;
WHEREAS, Midwest is the holder of Senior Notes representing $5,976,000
of the Indebtedness and desires to exchange the Indebtedness held by Midwest for
shares of Series A-1 Preferred Stock;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Certain Defined Terms. As used herein, the following terms
shall have the following meanings (all terms defined in this Article I or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):
"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such first
Person, (ii) any director or officer of such first Person or of any Person
referred to in clause (i) above and (iii) if any Person in clause (i) above is
an individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one (1) or more members of such immediate family and any Person
who is controlled by any such member or trust. For purposes of this definition,
any Person which owns directly or indirectly ten percent (10%) or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or ten percent (10%) or more of the
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partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to "control" (including,
with its correlative meanings, "controlled by" and "under common control with")
such corporation or other Person.
"Agreement" shall mean this Agreement, as the same may from time to
time be amended, restated, supplemented or otherwise modified from time to time.
"Authorized Share Amendment" shall have the meaning assigned such term
in Section 4.02.
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in Chicago, Illinois.
"Certificate of Designations" means the Certificate of Designations,
Preferences and Rights of Series A-1 Convertible Preferred Stock and Series A-2
Convertible Preferred Stock of the Company, in the form attached hereto as
Exhibit A.
"Closing Date" shall mean July 19, 2002.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and any successor statute.
"Common Stock" shall mean the common stock, $.001 par value, of the
Company.
"Company" has the meaning set forth in the preamble of this Agreement.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Company
(whether now existing or hereafter created or acquired), the financial
statements of which shall be (or should have been) consolidated with the
financial statements of the Company in accordance with GAAP.
"Corpus Transactions" shall mean, collectively: (a) the Severance
Agreement between the Company, Xxxx X. Xxxxxx, Xx. ("Castle"), Xxxxxxx, Inc., a
Texas corporation ("Xxxxxxx"), and Castle 1995 Gift Trust F/b/o Xxxx X. Xxxxxx,
Xx. (the "Trust"); (b) the Settlement Agreement between the Company, Xxxx X.
Xxxxxx, D.D.S. and the Estate of Xxxx X. Xxxxxx, D.D.S. (collectively, the
"Seller"), Castle Dental Centers of Texas, Inc., a Texas corporation ("Castle
Texas"), Castle Dental Associates of Texas, P.C. (formerly Xxxx X. Xxxxxx,
D.D.S., P.C.), a Texas professional corporation (the "PC"), Castle Interests,
Ltd. ("Castle Interests"), and Xxxxxxx X. Xxxxxx ("Xxx. Xxxxxx"); and (c) the
sale by the Company of two (2) locations in Corpus Christi, Texas and one (1)
location in Beaumont Texas pursuant to the Asset Purchase Agreement ("Asset
Purchase Agreement") among Dentists Choice 1 L.P., a Texas limited partnership
("Purchaser"), Castle, Texas Dental Associates, P.A., a Texas professional
association ("Purchaser PC"), Castle Texas, and the PC.
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"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all jurisdictions
in which the Company or any Subsidiary is conducting or at any time has
conducted business, or where any Property of the Company or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. The term "oil" shall
have the meaning specified in OPA, the terms "hazardous substance" and "release"
(or "threatened release") have the meanings specified in CERCLA, and the terms
"solid waste" and "disposal" (or "disposed") have the meanings specified in
RCRA; provided, however, that (i) in the event either OPA, CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (ii)
to the extent the laws of the state in which any Property of the Company or any
Subsidiary is located establish a meaning for "oil," "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company or any Subsidiary would be deemed
to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or
subsections (b), (c), (m) or (o) of section 414 of the Code.
"Exchange" shall have the meaning assigned such term in Section 2.01.
"Exchange Agreement Documents" shall mean this Agreement, the
Stockholders Agreement, the Registration Rights Agreement, the Investors
Agreement, the Certificate of Designations, and any agreement, certificate or
instrument delivered pursuant to or entered into in connection with any such
agreement or instrument.
"Existing Seller Notes" shall mean, collectively, each of those certain
subordinated promissory notes issued by the Company prior to the Closing Date
to: Xxxxxx X. Xxxxxxxxx, D.D.S.; Xxxx X. Xxxxxxx, D.D.S.; Xxxxxxxxx Xxxxxxxxx,
D.M.D.; Xxxxxx Xxxxxxx, D.D.S.; Xxxxxx Xxxxxxxxx, D.D.S.; Xxxxxxx X. Xxxxxxxxx,
D.D.S.; Dental Advisory Group, LLC; DCA Limited Partnership, L.L.P.; and Dental
Administrators of Texas Limited Partnership, L.L.P., in an aggregate amount
outstanding of $3,650,000 at June 30, 2002 (including principal and interest
that has accrued thereunder, but excluding default interest).
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"Florida Transaction" shall mean the sale of substantially all of the
property, assets and business relating to the Company's dental centers located
in Sarasota and Venice, Florida pursuant to the Asset Purchase Agreement dated
as of June 14, 2002, by and among Xxxxx Dentistry, P.A., a Florida professional
association, Castle Dental Centers of Florida, Inc., a Florida corporation, and
Castle 1st Dental Care, P.A., a Florida professional association, in exchange
for a release of the 9% Subordinated Note of the Company issued to Xxxxx
Dentistry, P.A. on July 9, 1998, in the original principal amount of $370,000.
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Company, its Subsidiaries or any of their Property or any Holder.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (whether or not having the force of law), including, without
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
"Xxxxxx" has the meaning set forth in the preamble of this Agreement.
"Holder" has the meaning set forth in the preamble of this Agreement.
"Indebtedness" has the meaning set forth in the recitals of this
Agreement.
"Indemnified Parties" shall have the meaning assigned such term in
Section 8.03(a)(ii).
"Indemnity Matters" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands and
causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent
negligence of such Person seeking indemnification.
"Information Statement" shall have the meaning assigned such term in
Section 5.04.
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"Information Statement Period" shall have the meaning assigned such
term in Section 5.04.
"Investors Agreement" shall mean that certain Investors Agreement,
dated as of even date herewith, by and among the Company, Xxxxxx and Midwest, in
the form attached hereto as Exhibit B.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purposes of this Agreement, the Company or any Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.
"Material Adverse Effect" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Company and its Subsidiaries taken as a whole different from
those reflected in the financial statements of the Company and its Consolidated
Subsidiaries contained in the Company Documents or from the facts represented or
warranted in any of the Exchange Agreement Documents or Subordinated Note and
Warrant Documents, or (ii) the ability of the Company and its Subsidiaries taken
as a whole to carry out their business as at the Closing Date or as proposed as
of the Closing Date to be conducted or meet their obligations under the Exchange
Agreement Documents or the Restructuring Documents on a timely basis.
"Midwest" has the meaning set forth in the preamble of this Agreement.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37)
or 4001(a)(3) of ERISA.
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization,
Governmental Authority or any other form of entity.
"Plan" shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained
or contributed to by the Company, any Subsidiary or an ERISA Affiliate or (ii)
was at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Company, any Subsidiary or an ERISA Affiliate.
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"Prior Registration Rights Agreement" shall mean that certain
Registration Rights Agreement, dated as of January 31, 2000, by and among the
Company, Xxxxxx Financial, Inc., and Midwest Mezzanine Fund II, L.P..
"Prior Stockholders Agreement" shall mean that certain Stockholders
Agreement, dated as of January 31, 2000, by and among the Company, Xxxx X.
Xxxxxx, Xx., Xxxxxx Financial, Inc., Midwest Mezzanine Fund II, L.P., Delaware
State Employees' Retirement Fund, Declaration of Trust For Defined Benefit Plan
of ICI American Holdings Inc., Declaration of Trust for Defined Benefit Plan of
Zeneca Holdings Inc., Xxxx X. Xxxxxx, Xx., as Trustee of the Castle 1995 Gift
Trust F/B/O Xxxx X. Xxxxxx, Xx., Castle Interests, Ltd., Xxxx X. Xxxxxx, D.D.S.,
Xxxxxxx X. Xxxxxx, and Gulfstar Investments, Ltd.
"Prior Subordination Agreement" shall mean that certain Subordination
and Intercreditor Agreement, dated as of January 31, 2000, by and among Xxxxxx,
Midwest, the Company, Castle Dental Centers of California, L.L.C., a Delaware
limited liability company, Dental World, Inc., a Texas corporation, Castle
Dental Centers of Austin, Inc., Castle dental Centers of Florida, Inc., a
Florida corporation, Castle Dental Centers of Tennessee, Inc., a Tennessee
corporation, Castle Dental Centers of Texas, Inc., a Texas corporation, Dentcor,
Inc., a Florida corporation, CDC of California, Inc., a Delaware corporation,
Castle Texas Holdings, Inc., a Delaware corporation, Academy for Dental
Assistants, Inc., a Florida corporation, and Bank of America, N.A., a national
banking association formerly known as NationsBank, N.A.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Registration Rights Agreement" shall mean that certain Registration
Rights Agreement, dated as of even date herewith, by and among the Company,
Xxxxx X. Usdan, Heller, Midwest and the Senior Lenders and certain other
stockholders of the Company, in the form attached hereto as Exhibit C.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as the same may be amended or
supplemented from time to time.
"Release" shall mean a letter agreement, in the form attached hereto as
Exhibit D, dated as of the Closing Date and executed by the Company and each of
its Subsidiaries in favor of Xxxxxx and Midwest.
"Responsible Officer" shall mean, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and, with respect to
financial matters, the term "Responsible Officer" shall include the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Company.
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"Restructuring Transactions" shall mean, collectively, the transactions
contemplated by the Exchange Agreement Documents, the Senior Credit Documents
and the Subordinated Note and Warrant Documents, the Xxxxxxx Settlement, the
Seller Debt Exchange, the Corpus Transactions, the San Antonio Transaction and
the Florida Transaction.
"Restructuring Documents" shall mean the Senior Credit Documents, the
Subordinated Note and Warrant Documents, the Exchange Agreement Documents and
each other document executed or delivered in connection with any of the
Restructuring Transactions.
"Xxxxxxx" shall mean, collectively, Xxxx X. Xxxxxxx, D.M.D., Xxxx X.
Xxxxxxx, D.M.D., Inc., a California corporation and Xxxxxxx Acquisition Company,
a California corporation.
"Xxxxxxx Judgment" shall mean that certain judgment in favor of Xxxxxxx
rendered against CDC of California, Inc. and Castle Dental Centers of
California, L.L.C., in LACSC Case # BS058068 dated as of October 23, 2000, in
the initial amount of $1,108,210.62 plus interest at 10% (ten percent) per annum
from the date of the judgment.
"Xxxxxxx Settlement" shall mean the execution and delivery of that
certain Forbearance Agreement dated as of July 3, 2002 by and among, CDC of
California, Inc., a Delaware corporation, Castle Dental Centers of California,
LLC, a Delaware limited liability company, and Xxxxxxx, with respect to the
Xxxxxxx Judgment.
"San Antonio Transaction" means the issuance of Series A-1 Preferred
Stock pursuant to the Settlement Agreement among the Company, Castle Texas,
Castle PC, Xxxxx X. Xxxxxxx, Xxxx X. Xxxxxxx, Hebron X. Xxxxxx, Xxxx X. Xxxx,
Xxxxxx X. Xxxx, Dental Centers of America, Inc., Dental Administrators, Inc.,
the Senior Agent, the Senior Lenders and the Holders.
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"Seller Debt Exchange" shall mean the exchange by the holders of
Existing Seller Notes of all liabilities and obligations owed to them by the
Company pursuant to the Existing Seller Notes and all documents related thereto
for an aggregate of 32,002 shares of Series A-1 Preferred Stock pursuant to the
Seller Note Exchange Agreement.
"Seller Note Exchange Agreement" means, collectively, those certain
Exchange Agreements, each dated July 19, 2002, between the Company and each of
the holders of the Existing Seller Notes.
"Senior Agent" shall mean Bank of America, N.A., a national banking
association formerly known as NationsBank of Texas, N.A. (together with any duly
appointed successor) for the Senior Lenders.
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"Senior Credit Agreement" shall mean that certain Second Amended and
Restated Credit Agreement, dated as of even date herewith, between the Company,
the Senior Agent and the Senior Lenders.
"Senior Credit Documents" shall mean the Senior Credit Agreement and
the "Loan Documents" (as defined in the Senior Credit Agreement).
"Senior Lenders" shall mean each Person that is or shall become a
lender under the Senior Credit Agreement for so long as such Person shall be a
party to that Agreement.
"Senior Notes" has the meaning set forth in the recitals to this
Agreement.
"Senior Subordinated Note and Warrant Purchase Agreement" means the
Senior Subordinated Note and Warrant Purchase Agreement, dated as of the date of
this Agreement, by and among the Company, Xxxxxx, Midwest and Xxxxx X. Xxxxx.
"Series A-1 Preferred Stock" shall mean the Company's Convertible
Preferred Stock, Series A-1, par value $.001 per share, of the Company.
"Special Entity" shall mean any joint venture, limited liability
company or partnership, general or limited partnership or any other type of
partnership or company other than a corporation in which the Company or one or
more of its other Subsidiaries is a member, owner, partner or joint venturer and
owns, directly or indirectly, at least a majority of the equity of such entity
or controls such entity, but excluding any tax partnerships that are not
classified as partnerships under state law. For purposes of this definition, any
Person which owns directly or indirectly an equity investment in another Person
which allows the first Person to manage or elect managers who manage the normal
activities of such second Person will be deemed to "control" such second Person
(e.g. a sole general partner controls a limited partnership).
"Stockholders Agreement" shall mean that certain Stockholders
Agreement, dated as of even date herewith, by and among the Company, the Senior
Lenders, Xxxxx X. Xxxxx, Xxxxxx and Midwest, in the form attached hereto as
Exhibit E.
"Subordinated Note and Warrant Documents" shall mean the Senior
Subordinated Note and Warrant Purchase Agreement, the senior subordinated
convertible promissory notes and the warrants to be issued pursuant thereto, the
Stockholders Agreement, the Registration Rights Agreement and any other
agreements, certificates or instruments executed or delivered pursuant to or
entered into in connection with any of the foregoing.
"Subsidiary" shall mean (i) any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by the
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Company or one (1) or more of its Subsidiaries or by the Company and one (1) or
more of its Subsidiaries and (ii) any Special Entity. Unless otherwise indicated
herein, each reference to the term "Subsidiary" shall mean a Subsidiary of the
Company.
Section 1.02 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to Holders hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent with the audited financial statements
of the Company contained in the Company Documents (except for changes concurred
with by the Company's independent public accountants).
ARTICLE II
TENDER AND EXCHANGE OF SENIOR NOTES
Section 2.01 Tender and Exchange of Senior Notes. Upon the terms and
subject to the conditions specified in this Agreement, each Holder hereby agrees
to sell, transfer and assign to the Company, and the Company agrees to purchase
from each such Holder, on the Closing Date, all of, and not a partial interest
in, such Holder's Indebtedness represented by the Senior Notes held by such
Holder in exchange for shares of Series A-1 Preferred Stock, with 119,520 shares
to be issued to Xxxxxx and 59,760 shares to be issued to Midwest (collectively,
the "Exchange"). No additional payment will be made for default interest or
interest accrued after June 30, 2002 on the Senior Notes, which is hereby
irrevocably waived. On the Closing Date, the Company will deliver to the each
Holder certificates issued in such Holder's name representing the number of
shares of Series A-1 Preferred Stock for which such Holder's Indebtedness is
being exchanged against delivery of the original executed copies of the Senior
Notes representing the Indebtedness.
Section 2.02 Release.
(a) Effective upon the consummation of the Exchange, each Holder, on
behalf of itself, its Affiliates, its successors and assigns, irrevocably and
unconditionally releases, relinquishes, waives, and forever discharges the
Company and each of the Senior Lenders, and each of their respective
subsidiaries, Affiliates, and present and former agents, employees, officers,
directors, attorneys, advisors, stockholders, plan fiduciaries, successors and
assigns (the "Released Parties") forever, from and against any and all claims,
debts, obligations, demands, actions, suits, causes of action, costs, fees, and
all liability whatsoever, whether known or unknown, fixed or contingent, in
contract or in tort, or based on any statute or other law, state or federal
(collectively "Claims"), which the Exchanging Holder has, had, or may have in
the future against the Released Parties, relating to or arising out of the
Senior Notes, the previous failure to pay interest and principal thereon, and
the issuance thereof.
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(b) Each Holder hereby declares and agrees that, on the Closing Date
following the consummation of the Exchange, the Senior Notes will be deemed paid
in full and in all respects terminated and of no further force or effect.
(c) Each Holder hereby agrees not to bring any claim of any kind
against any Released Party concerning any matter released by this Section 2.02.
Each Holder agrees that this Agreement constitutes a bar to any such future
claim.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01 Conditions to Purchase. The obligation of Holders to
exchange their Senior Notes for Series A-1 Preferred Stock pursuant to this
Agreement is subject to the receipt by Holders of all of the following documents
and satisfaction of the other conditions provided in this Section 3.01, each of
which shall be reasonably satisfactory to Holders in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary of the
Company, dated the Closing Date, setting forth (i) resolutions of its board of
directors with respect to the authorization of the Company to execute and
deliver certificates representing the Series A-1 Preferred Stock, the Exchange
Agreement Documents and the Restructuring Documents to which it is a party and
to enter into the transactions contemplated in those documents (including,
without limitation, the filing of the Certificate of Designations and the
issuance of the Series A-1 Preferred Stock in connection with the Exchange),
(ii) the officers of the Company who are authorized to sign the Exchange
Agreement Documents and the Restructuring Documents to which Company is a party
and, (iii) specimen signatures of the authorized officers, (iv) the certificate
of incorporation of the Company (which shall include the Certificate of
Designations) and the bylaws of the Company (which shall be the Amended and
Restated Bylaws in the form attached hereto as Exhibit F), certified as being
the true and complete certificate of incorporation and bylaws of the Company,
respectively, and (v) the members of the board of directors of the Subsidiaries
of the Company which shall be Xxxxx X. Xxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxxx
Xxxx.
(b) Certificates of the appropriate state agencies with respect to the
existence, qualification and good standing of the Company and its Subsidiaries.
(c) Certificates representing the Series A-1 Preferred Stock, duly
completed, executed and delivered to each Holder, as applicable.
(d) A compliance certificate which shall be substantially in the form
attached hereto as Exhibit G, duly and properly executed by a Responsible
Officer and dated as of the Closing Date.
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(e) Opinions of Xxxxxx and Xxxxx, LLP, counsel to the Company, in form
and substance satisfactory to Holders, as to such matters incident to the
transactions herein contemplated as Holders may reasonably request.
(g) Unaudited pro forma projected consolidated balance sheet of the
Company and its Consolidated Subsidiaries at the Closing Date (which pro forma
shall be based on the consolidated balance sheet of the Company and its
Consolidated Subsidiaries as of March 31, 2002).
(h) Certified copies of the Senior Debt Documents.
(i) The Stockholders Agreement, the Registration Rights Agreement and
the Investors Agreement duly completed, executed by the Company and the other
signatories thereto and delivered to Holders.
(j) The Release, duly executed by the Company and each of its
Subsidiaries.
(k) Consummation of the Restructuring Transactions, including without
limitation, the exchange of each of the Existing Seller Notes for an aggregate
of 32,002 shares of Series A-1 Preferred Stock, on terms and conditions, and
pursuant to the Restructuring Documents, acceptable in form and substance to the
Holders.
(l) Termination of the Prior Subordination Agreement, the Prior
Registration Rights Agreement and the Prior Stockholders Agreement.
(m) With respect to Midwest, duly executed and completed (i) SBA Form
480 (Size Status Declaration) and SBA Form 652 (Assurance of Compliance), (ii)
SBA Form 1031 (Portfolio Finance Report), Part A and B, and (iii) letter
regarding SBA matters in form and substance acceptable to Midwest.
(n) Certified copies of the Employment Agreements between the Company
and each of Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and Xxxx X. Xxxxx.
(o) Payment of all legal fees and other reasonable expensed incurred by
Xxxxxx and Midwest in connection with the preparation, execution and delivery of
this Agreement and the other Exchange Agreement Documents and the transaction
contemplated hereby.
(o) such other documents as Holders or special counsel to Holders may
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Holder:
11
Section 4.01 Corporate Existence. Each of the Company and each
Subsidiary: (i) is a corporation or limited liability company duly organized,
legally existing and in good standing under the laws of the jurisdiction of its
incorporation or formation; (ii) has all requisite corporate or limited
liability company power, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and (iii) is qualified
to do business in all jurisdictions in which the nature of the business
conducted by it makes such qualification necessary and where failure so to
qualify would have a Material Adverse Effect.
Section 4.02 No Breach. Neither the execution and delivery of the
Exchange Agreement Documents or the Restructuring Documents, nor compliance with
the terms and provisions hereof or thereof (including, without limitation, the
filing of the Certificate of Designations and the issuance of the Series A-1
Preferred Stock pursuant to the Exchange, and, subject to the filing with the
Delaware Secretary of State of a certificate of amendment to the Company's
certificate of incorporation increasing the number of authorized shares of the
Company's common stock or effecting a reverse stock split with respect to the
Company's common stock (the "Authorized Share Amendment"), the issuance of the
Common Stock upon the conversion of the Series A-1 Preferred Stock) will
conflict with or result in a breach of, or require any consent which has not
been obtained as of the Closing Date under, the respective charter or by-laws of
the Company or any Subsidiary, or any Governmental Requirement or any material
agreement or instrument to which the Company or any Subsidiary is a party or by
which it is bound or to which it or its Properties are subject, or constitute a
default under any such material agreement or instrument, or result in the
creation or imposition of any Lien upon any of the revenues or assets of the
Company or any Subsidiary pursuant to the terms of any such material agreement
or instrument other than the Liens created by the Senior Credit Documents.
Section 4.03 Authority. The Company and each Subsidiary have all
necessary corporate power and authority to execute, deliver and perform its
respective obligations under the Exchange Agreement Documents and the
Restructuring Documents to which it is a party (including, without limitation,
the filing of the Certificate of Designations and the issuance of the Series A-1
Preferred Stock pursuant to the Exchange and Common Stock upon conversion of the
Series A-1 Preferred Stock). The execution, delivery and performance by the
Company and each Subsidiary of the Exchange Agreement Documents and the
Restructuring Documents to which it is a party, have been duly authorized by all
necessary corporate action on its part. The Exchange Agreement Documents and the
Restructuring Documents constitute the legal, valid and binding obligations of
the Company and each Subsidiary, enforceable in accordance with their terms.
Section 4.04 Approvals. No authorizations, approvals or consents of,
and no filings or registrations with, any Governmental Authority are necessary
for the execution, delivery or performance by the Company or any Subsidiary of
the Exchange Agreement Documents or the Restructuring Documents to which it is a
party (including, without limitation, the filing of the Certificate of
Designations and the issuance of the Series A-1 Preferred Stock pursuant to the
Exchange and the issuance of the Common Stock upon the conversion of the Series
A-1
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Preferred Stock) or for the validity or enforceability thereof, other than the
filing of the Authorized Share Amendment, which will not be filed until it is
approved at the Company's next meeting of stockholders, which meeting shall take
place no later than 75 days following the date of this Agreement.
Section 4.05 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to Holders by the
Company or any Subsidiary in connection with the negotiation of this Agreement
contained any material misstatement of fact or omitted to state a material fact
or any fact necessary to make the statement contained therein not materially
misleading in the light of the circumstances in which made and with respect to
the Company and its Subsidiaries taken as a whole. The information contained in
the following documents (the "Company Documents") was true and correct in all
material respects as of the respective filing date of the applicable Company
Document:
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001;
(b) the Company's Quarterly Reports on Form 10-Q for the fiscal quarter
ended March 31, 2002; and
(c) all other documents, if any, filed by the Company with the Commission
since June 30, 2001 pursuant to Section 13, 14 or 15 of the Exchange
Act.
As of their respective filing dates, the Company Documents (i) complied
in all material respects with the requirements of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act") and (ii) did not contain any untrue
statement of material fact or omit a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The Company has timely filed with the SEC
all documents required to be filed by the Company under the Exchange Act.
Section 4.06 Capitalization. The authorized capital stock and other
equity securities of each of the Company and each of its Subsidiaries is as set
forth on Schedule 4.06. All issued and outstanding shares of capital stock and
other equity securities of each of the Company and each of its Subsidiaries are
duly authorized and validly issued, fully paid, non-assessable, free and clear
of all Liens other than those in favor of Senior Agent, and such shares were
issued in compliance with all applicable state and federal laws concerning the
issuance of securities. No shares of the capital stock of Company or any of its
Subsidiaries, other than those described above, are issued and outstanding.
Except as set forth on Schedule 4.06, all of the issued and outstanding capital
stock and other equity securities of Subsidiaries of the Company are owned by
the Company. Upon issuance, the Series A-1 Preferred Stock will be duly
authorized and validly issued, fully paid, non-assessable, free and clear of all
Liens. Following the filing of the Authorized Share Amendment, the Common Stock
issuable upon conversion of the Series A-1 Preferred Stock will, when issued, be
duly authorized, validly issued, fully paid and non-assessable. Except as
provided in the Stockholders Agreement and as set forth on Schedule 4.06,
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there are no preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings for the purchase or
acquisition from the Company or any of its Subsidiaries, of any shares of
capital stock or other securities of any such entity.
Section 4.07 Offering. Subject in part to the truth and accuracy of the
representations of the Holders set forth in this Agreement, the offer, sale and
issuance of the Series A-1 Preferred Stock, and the shares of Common Stock
issuable upon conversion of the Series A-1 Preferred Stock as contemplated by
this Agreement, are exempt from the registration requirements of the Securities
Act of 1933, as amended (the "Securities Act") and applicable state securities
laws.
Section 4.08 Registration Rights. Except as set forth on Schedule 4.08
and as provided for in the Registration Rights Agreement, as of the Closing
Date, the Company is not under any obligation to register under the Securities
Act any of its currently outstanding securities or any of its securities which
may hereinafter be issued.
Section 4.09 Restructuring Documents. Each of the representations and
warranties of the Company and each of its Subsidiaries contained in each of the
Restructuring Documents, including, without limitation, the Senior Subordinated
Note and Warrant Purchase Agreement, is true, correct and complete and is hereby
incorporated herein by this reference thereto. For purposes hereof, if a
representation contained in a Restructuring Document is qualified by the term
"Material Adverse Effect", then, in making the representation in this Section
4.09 the term "Material Adverse Effect" will mean a "Material Adverse Effect" as
defined herein.
ARTICLE V
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any of the Holders or
an Affiliate thereof (including, for such purpose, partners of any Holder which
is a partnership) hold SeriesA-1 Preferred Stock or Common Stock issued upon
conversion of all or any portion of the Series A-1 Preferred Stock:
Section 5.01 Reporting Requirements. The Company shall deliver, or
shall cause to be delivered, to each Holder:
(a) Annual Financial Statements. As soon as available and in any event
within one hundred twenty (120) days after the end of each fiscal year of the
Company, the audited consolidated and unaudited consolidating statements of
operations, changes in stockholders' equity, changes in financial position and
cash flow of the Company and its Consolidated Subsidiaries for such fiscal year,
and the related consolidated and consolidating balance sheets of the Company and
its Consolidated Subsidiaries as at the end of such fiscal year, and setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal year, and accompanied by the related opinion of independent
public accountants of recognized national
14
standing acceptable to Holders which opinion shall state that said financial
statements fairly present the consolidated financial condition and results of
operations of the Company and its Consolidated Subsidiaries as at the end of,
and for, such fiscal year and that such financial statements have been prepared
in accordance with GAAP, except for such changes in such principles with which
the independent public accountants shall have concurred and such opinion shall
not contain a "going concern" or like qualification or exception, and a
certificate of such accountants stating that, in making the examination
necessary for their opinion, they obtained no knowledge, except as specifically
stated, of any default.
(b) Quarterly Financial Statements. As soon as available and in any
event within forty five (45) days after the end of each of the first three (3)
fiscal quarterly periods of each fiscal year of the Company, consolidated and
consolidating statements of income, stockholders' equity, changes in financial
position and cash flow of the Company and its Consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated and consolidating balance
sheets as at the end of such period, and setting forth in each case in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of operations of
the Company and its Consolidated Subsidiaries in accordance with GAAP, as at the
end of, and for, such period (subject to normal year-end audit adjustments).
(c) Monthly Financial Statements. As soon as available and in any event
within thirty (30) days after the end of each of the first eleven (11) months of
each fiscal year of the Company, consolidated and consolidating statements of
income, stockholders' equity, changes in financial position and cash flow of the
Company and its Consolidated Subsidiaries for such period and for the period
from the beginning of the respective fiscal year to the end of such period, and
the related consolidated and consolidating balance sheets as at the end of such
period, and setting forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year, accompanied
by the certificate of a Responsible Officer, which certificate shall state that
said financial statements fairly present the consolidated and consolidating
financial condition and results of operations of the Company and its
Consolidated Subsidiaries in accordance with GAAP, as at the end of, and for,
such period (subject to normal year-end audit adjustments).
(d) Budget. As soon as available and in any event within thirty (30)
days after the end of each fiscal year of the Company, a budget for the Company
and its Consolidated Subsidiaries, as approved by the Board of Directors of the
Company, for the following fiscal year setting forth in comparative form
corresponding figures from the preceding fiscal year, in reasonable detail and
certified as to its good-faith preparation by a Responsible Officer.
(e) Other Accounting Reports. Promptly upon receipt thereof, a copy of
each other report or letter submitted to the Company or any Subsidiary by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Company
15
or any of its Subsidiaries, and a copy of any response by the Company or any
Subsidiary of the Company, or the Board of Directors of the Company or any
Subsidiary of the Company, to such letter or report.
(f) SEC Filings, Etc. Promptly upon its becoming available, each
financial statement, report, notice or proxy statement sent by the Company to
stockholders generally and each regular or periodic report and any registration
statement, prospectus or written communication (other than transmittal letters)
in respect thereof filed by the Company with or received by the Company in
connection therewith from any securities exchange or the SEC or any successor
agency.
(g) Annual Revenue Reports. As soon as available and in any event
within one hundred twenty (120) days after the end of each fiscal year of the
Company, a report prepared by the Company for each dental center setting forth
the revenues, expenses and contributions to profit of such dental center, in
form and substance acceptable to Holders.
(h) Quarterly Revenue Reports. As soon as available and in any event
within forty five (45) days after the end of each of the first three (3) fiscal
quarterly periods of each fiscal year of the Company, a report by the Company
for each dental center setting forth the revenues, expenses and contributions to
profit of such dental center, in form and substance acceptable to Holders.
(i) Other Information. From time to time, such other information
regarding the business, affairs or financial condition of the Company or any
Subsidiary (including, without limitation, any Plan or Multiemployer Plan and
any reports or other information required to be filed under ERISA), as any
Holder may reasonably request.
Section 5.02 Litigation. The Company shall promptly give to each Holder
notice of: (i) all legal or arbitral proceedings, and of all proceedings before
any Governmental Authority affecting the Company or any Subsidiary, except
proceedings which, if adversely determined, would not have a Material Adverse
Effect, and (ii) of any litigation or proceeding against or adversely affecting
the Company or any Subsidiary in which the amount involved is not covered in
full by insurance (subject to normal and customary deductibles and for which the
insurer has not assumed the defense), or in which injunctive or similar relief
is sought. The Company will, and will cause each of its Subsidiaries to,
promptly notify each Holder of any claim, judgment, Lien or other encumbrance
affecting any Property of the Company or any Subsidiary if the value of the
claim, judgment, Lien, or other encumbrance affecting such Property shall exceed
$250,000.
Section 5.03 Other Covenants. The Company shall comply with all
covenants contained in Sections 8.03, 8.04, and 8.07 of the Senior Subordinated
Note and Warrant Purchase Agreement.
16
Section 5.04 Schedule 14f-1. The Company has duly appointed Xxxx Xxxxx,
Xxx Xxxxxx and Xxxxx Xxxxx to the Company's Board of Directors subject to the
expiration of the ten-day period (the "Information Statement Period") following
the later of (a) the filing of an Information Statement on Schedule 14f-1 (the
"Information Statement") with the SEC disclosing the appointment of new
directors to the Company's Board of Directors, and (b) the mailing of the
Information Statement to the stockholders of the Company. Immediately following
the Information Statement Period, the Company's Board of Directors shall consist
solely of Xxxxx X. Xxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxx Xxxx. On the Closing
Date, the Board of Directors of each Subsidiary of the Company shall consist
solely of Xxxxx X. Xxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxx Xxxx. The Company
shall file the Information Statement with the SEC and mail the Information
Statement to stockholders of the Company by _______________. The Company's Board
of Directors will not take any action at a meeting of the Board of Directors or
pursuant to a written consent, prior to the expiration of the Information
Statement Period.
ARTICLE VI
NEGATIVE COVENANTS
The Company covenants and agrees that, so long as any of the Holders or
an Affiliate thereof (including, for such purpose, partners of any Holder which
is a partnership) hold Series A-1 Preferred Stock or Common Stock issued upon
conversion of all or any part of the Series A-1 Preferred Stock:
Section 6.01 Non-Disclosure. The Company will not and will not permit
any of its Affiliates to, in the future, issue any press release or other public
disclosure using the name of Xxxxxx, Midwest or any of their respective
Affiliates or referring to this Agreement or referring to the other Exchange
Agreement Documents without at least two (2) Business Days prior written notice
to Xxxxxx or Midwest, as applicable, and without the prior written consent of
Xxxxxx or Midwest, as applicable, unless (and only to the extent that) the
Company or such Affiliate of the Company is required to so disclose under law
and then, in any event, the Company or such Affiliate will consult with Xxxxxx
or Midwest, as applicable, before issuing such press release or other public
disclosure. The Company consents to the publication by Xxxxxx and/or Midwest of
a tombstone or similar advertising material relating to the financing
transactions contemplated by this Agreement, the other Exchange Agreement
Documents and/or the Restructuring Documents.
ARTICLE VII
HOLDER REPRESENTATIONS AND WARRANTIES
Section 7.01 Investment Representations. Each Holder represents and
warrants to the Company that it is an "accredited investor" within the meaning
of Regulation D promulgated under the Securities Act.
17
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Waiver. No failure on the part of a Holder to exercise and
no delay in exercising, and no course of dealing with respect to, any right,
power or privilege under any of the Exchange Agreement Documents shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege under any of the Exchange Agreement Documents preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
Section 8.02 Notices. All notices and other communications provided for
herein and in the other Exchange Agreement Documents (including, without
limitation, any modifications of, or waivers or consents under, this Agreement
or the other Exchange Agreement Documents) shall be given or made by telex,
telecopy, courier or U.S. Mail or in writing and telexed, telecopied, mailed or
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof or in the Exchange Agreement Documents;
or, as to any party, at such other address as shall be designated by such party
in a notice to each other party. Except as otherwise provided in this Agreement
or in the other Exchange Agreement Documents, all such communications shall be
deemed to have been duly given when transmitted, if transmitted before 1:00 p.m.
local time on a Business Day (otherwise on the next succeeding Business Day) by
telex or telecopier and evidence or confirmation of receipt is obtained, or
personally delivered or, in the case of a mailed notice, three (3) Business Days
after the date deposited in the mails, postage prepaid, in each case given or
addressed as aforesaid.
Section 8.03 Payment of Expenses, Indemnities, etc.
(a) The Company agrees:
(i) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of Holders in the
administration (both before and after the execution hereof and including
advice of counsel as to the rights and duties of a Holder with respect
thereto) of, and in connection with the negotiation, investigation,
preparation, execution and delivery of, preservation of rights under,
enforcement of, and renegotiation or restructuring of, the Exchange
Agreement Documents and any amendment, waiver or consent relating thereto
(including, without limitation, travel, photocopy, mailing, courier,
telephone and other similar expenses of Holders, the cost of
environmental audits, surveys and appraisals at reasonable intervals, the
reasonable fees and disbursements of counsel and other outside
consultants for Holders and, in the case of enforcement (including,
without limitation, bankruptcy and workout matters); and promptly
reimburse a Holder for all amounts expended, advanced or incurred by such
Holder to satisfy any obligation of the Company under this Agreement;
18
(ii) to indemnify each holder and each of its Affiliates and each
of its officers, directors, employees, representatives, agents,
attorneys, accountants and experts ("Indemnified Parties") from, hold
each of them harmless against and promptly upon demand pay or reimburse
each of them for, the Indemnity Matters which may be incurred by or
asserted against or involve any of them (whether or not any of them is
designated a party thereto) as a result of, arising out of or in any way
related to (i) the execution, delivery and performance of the Exchange
Agreement Documents, (ii) the operations of the business of the Company
and its Subsidiaries, (iii) the failure of the Company or any Subsidiary
to comply with the terms of this Agreement, or with any Governmental
Requirement, (iv) any inaccuracy of any representation or any breach of
any warranty of the Company set forth in this Agreement or any of the
Exchange Agreement Documents, or (v) any other aspect of the this
Agreement or any of the Exchange Agreement Documents, including, without
limitation, the reasonable fees and disbursements of counsel and all
other expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any
investigations, litigation or inquiries) or claim and including all
Indemnity Matters arising by reason of the ordinary negligence of any
Indemnified Party, but excluding all Indemnity Matters arising solely by
reason of the gross negligence or willful misconduct on the part of the
Indemnified Party; and
(iii) to indemnify and hold harmless from time to time the
Indemnified Parties from and against any and all losses, claims, cost
recovery actions, administrative orders or proceedings, damages and
liabilities to which any such Person may become subject (i) under any
Environmental Law applicable to the Company or any Subsidiary or any of
their Properties, including without limitation, the treatment or disposal
of hazardous substances on any of their Properties, (ii) as a result of
the breach or non-compliance by the Company or any Subsidiary with any
Environmental Law applicable to the Company or any Subsidiary, (iii) due
to past ownership by the Company or any Subsidiary of any of their
Properties or past activity on any of their Properties which, though
lawful and fully permissible at the time, could result in present
liability, (iv) the presence, use, release, storage, treatment or
disposal of hazardous substances on or at any of the Properties owned or
operated by the Company or any Subsidiary, or (v) any other
environmental, health or safety condition in connection with the Exchange
Agreement Documents.
(b) No Indemnified Party may settle any claim to be indemnified without
the consent of the indemnitor, such consent not to be unreasonably withheld.
(c) In the case of any indemnification hereunder, the Indemnified Party
shall give notice to the Company of any such claim or demand being made against
the Indemnified Party and the Company shall have the non-exclusive right to join
in the defense against any such claim or demand provided that if the Company
provides a defense, the Indemnified Party shall bear its own cost of defense
unless there is a conflict between the Company and such Indemnified Party.
19
(d) The foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or character
whatsoever, whether active or passive, whether an affirmative act or an
omission, including without limitation, all types of negligent conduct
identified in the restatement (second) of torts of one or more of the
Indemnified Parties or by reason of strict liability imposed without fault on
any one or more of the Indemnified Parties. to the extent that an Indemnified
Party is found to have committed an act of gross negligence or willful
misconduct, this contractual obligation of indemnification shall continue but
shall only extend to the portion of the claim that is deemed to have occurred by
reason of events other than the gross negligence or willful misconduct of the
Indemnified Party.
(e) The Company's obligations under this Section 8.03 shall survive any
termination of this Agreement, and shall continue thereafter in full force and
effect.
(f) The Company shall pay any amounts due under this Section 8.03 within
thirty (30) days of the receipt by the Company of notice of the amount due.
Section 8.04 Amendments, Etc. Any provision of this Agreement may be
amended, modified or waived with the prior written consent of the Company and
the holders of sixty-six and two-thirds percent (66 2/3%) of voting power
represented by the Series A-1 Preferred Stock and Common Stock issued upon
conversion of all or any portion of the Series A-1 Preferred Stock held by the
Holders at the time of any such amendment, modification or waiver; provided,
however, no amendment, modification or waiver can be effected without the prior
written consent of all Holders if, by its terms, such amendment, modification or
waiver adversely affects one (1) Holder without having the same adverse effect
on all other Holders.
Section 8.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 8.06 Assignments.
(a) The Company may not assign its rights or obligations hereunder
without the prior consent of Holders.
(b) Prior to the Closing Date, each Holder covenants not to transfer,
pledge, hypothecate, assign or grant an option to otherwise acquire any interest
in the Senior Notes unless the transferee of such Senior Notes agrees, in
writing, to be bound by the terms of this Agreement. Subject to the preceding
sentence, applicable securities laws and to the terms and conditions of the
Stockholders Agreement, Holders (and its permitted assigns) may assign to one
(1) or more assignees all or a portion of its rights and obligations under this
Agreement and the other Exchange Agreement Documents to any Person, and any such
assignee may further assign such rights and obligations to any Person. Any such
assignment will become effective upon the execution and delivery to the
assigning Holder of the assignment. Upon the assigning Holder's request, the
Company, will, at its own expense, execute and deliver new certificates
representing Series A-1 Preferred Stock and/or Common Stock, as applicable, to
the assignor and/or assignee,
20
as appropriate, in accordance with their respective interests as they appear.
Upon the effectiveness of any assignment pursuant to this Section 8.06(b), all
references to "Holders" or a "Holder" in this Agreement, and the other Exchange
Agreement Documents shall mean and include each such assignee, each such
assignee shall be deemed a party to this Agreement and bound by all the
agreements and covenants of Holders contained herein and all actions which are
to be taken, and all consents or waivers to be granted or consents, amendments,
waivers and other writings required to be signed by Holders or a party (other
than the Company) to this Agreement thereafter shall be, in each case, effective
only if taken or executed or delivered by Holders and all such assignees.
(c) A Holder may furnish any information concerning the Company in its
possession from time to time to assignees (including prospective assignees);
provided that, such Persons agree to be bound by the provisions of Section 8.13.
(d) Notwithstanding any other provisions of this Section 8.06, no
transfer or assignment of the interests or obligations of a Holder or any grant
of participations therein shall be permitted if such transfer, assignment or
grant would require the Company to file a registration statement with the SEC or
to qualify the Series A-1 Preferred Stock or Common Stock issued or issuable
upon conversion of all or any portion of the Series A-1 Preferred Stock under
the "Blue Sky" laws of any state.
Section 8.07 Invalidity. In the event that any one (1) or more of the
provisions contained in any of the Exchange Agreement Documents shall, for any
reason, be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement.
Section 8.08 Counterparts. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all of such counterparts shall together constitute but one and the same
instrument.
Section 8.09 References. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
Section 8.10 Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 8.11 No Oral Agreements. The Exchange Agreement Documents embody
the entire agreement and understanding between the parties and supersede all
other agreements and understandings between such parties relating to the subject
matter hereof and thereof. The
21
Exchange Agreement Documents represent the final agreement between 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.
Section 8.12 Governing Law; Submission to Jurisdiction.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Illinois.
(b) Subject to Section 8.15, Any legal action or proceeding with respect
to the Exchange Agreement Documents shall be brought in the courts of the State
of Illinois or of the United States of America for the Northern District of
Illinois, and, by execution and delivery of this Agreement, each of the Company
and each holder hereby accepts for itself and (to the extent permitted by law)
in respect of its Property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Each of the Company and each holder hereby irrevocably
waives any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(c) Nothing herein shall affect the right of any holder to serve process
in any other manner permitted by law.
(d) The Company and each holder hereby (i) irrevocably and
unconditionally waive, to the fullest extent permitted by law, trial by jury in
any legal action or proceeding relating to this Agreement and for any
counterclaim therein; (ii) irrevocably waive, to the maximum extent not
prohibited by law, any right it may have to claim or recover in any such
litigation any special, exemplary, punitive or consequential damages, or damages
other than, or in addition to, actual damages; (iii) certify that no party
hereto nor any representative or agent of counsel for any party hereto has
represented, expressly or otherwise, or implied that such party would not, in
the event of litigation, seek to enforce the foregoing waivers, and (iv)
acknowledge that it has been induced to enter into this Agreement, and the
transactions contemplated hereby, among other things, the mutual waivers and
certifications contained in this Section 8.12.
Section 8.13 Confidentiality. In the event that the Company provides to
a Holder written confidential information belonging to the Company, if the
Company shall denominate such information in writing as "confidential", such
Holder shall thereafter maintain such information in confidence in accordance
with the standards of care and diligence that each utilizes in maintaining its
own confidential information. This obligation of confidence shall not apply to
such portions of the information which (i) are in the public domain, (ii)
hereafter become part of the public domain without a Holder breaching its
obligation of confidence to the Company, (iii) are previously known by a Holder
from some source other than the Company, (iv) are hereafter developed by a
Holder without using the Company's information, (v) are hereafter obtained by or
available to a Holder from a third party who owes no obligation of confidence to
the Company with respect to such information or through any other means other
22
than through disclosure by the Company, (vi) are disclosed with the Company's
consent, (vii) must be disclosed either pursuant to any Governmental Requirement
or to Persons regulating the activities of a Holder, or (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding. Further, a Holder may disclose
any such information to any independent consultants, any independent certified
public accountants, any legal counsel employed by such Person in connection with
this Agreement, including without limitation, the enforcement or exercise of all
rights and remedies thereunder, or any assignee (including prospective
assignees) in the Series A-1 Preferred Stock; provided, however, that such
Holder shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation to
maintain the confidentiality of such information as is imposed upon such Holder
hereunder. Notwithstanding anything to the contrary provided herein, this
obligation of confidence shall cease three (3) years from the date the
information was furnished, unless the Company requests in writing at least
thirty (30) days prior to the expiration of such three year period, to maintain
the confidentiality of such information for an additional three year period. The
Company waives any and all other rights it may have to confidentiality as
against a Holder arising by contract, agreement, statute or law except as
expressly stated in this Section 8.13.
Section 8.14 Effectiveness. This Agreement shall be effective on the
Closing Date.
Section 8.15 Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement and agrees that it
is charged with notice and knowledge of the terms of this Agreement; that it has
in fact read this Agreement and is fully informed and has full notice and
knowledge of the terms, conditions and effects of this Agreement; that it has
been represented by independent legal counsel of its choice throughout the
negotiations preceding its execution of this Agreement; and has received the
advice of its attorney in entering into this Agreement; and that it recognizes
that certain of the terms of this Agreement result in one party assuming the
liability inherent in some aspects of the transaction and relieving the other
party of its responsibility for such liability. Each party hereto agrees and
covenants that it will not contest the validity or enforceability of any
exculpatory provision of this Agreement on the basis that the party had no
notice or knowledge of such provision or that the provision is not
"conspicuous."
- Remainder of Page Intentionally Left Blank -
[Signature Page Follows]
23
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
COMPANY:
CASTLE DENTAL CENTERS, INC., a
Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------
Title: Chief Financial Officer
-------------------------------
Address for Notices:
0000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopier No.: 713.490.8420
Telephone No.: 000.000.0000
Attention: Xxxxx Xxxxx
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
XXXXXX:
XXXXXX FINANCIAL, INC., a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------
Title: Senior Vice President
----------------------------
Address for Notices:
XXXXXX FINANCIAL, INC.
c/o GE Capital Healthcare Financial Services
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
ATTN: Xxxxxxx Xxxxxxxx
Telecopy: 312.441.7598
With a copy to:
XXXXXX FINANCIAL, INC.
c/o GE Capital Healthcare Financial Services
0 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
ATTN: Xxxxxxxxx X. Xxxxx, Esq.
Telecopy: 301.664.9866
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
MIDWEST:
MIDWEST MEZZANINE FUND II, L.P., a
Delaware limited partnership
By: ABN AMRO Mezzanine Management
II, L.P., its general partner
By: ABN AMRO Mezzanine
Management II, Inc., its
general partner
By: /s/ Xxxx Xxxxx
-----------------------
Name: Xxxx Xxxxx
Title: Vice President
Address for Notices:
Midwest Mezzanine Fund II, L.P.
000 Xxxxx XxXxxxx Xxxxxx, 00xx xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
ATTN: J. Xxxxx Xxxxxx
Telecopy: 312.553.6647
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
EXHIBIT A to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Certificate of Designations
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
EXHIBIT B to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Investors Agreement
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
EXHIBIT C to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Registration Rights Agreement
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
EXHIBIT D to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Release
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
EXHIBIT E to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Stockholders Agreement
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
EXHIBIT F to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Amended and Restated Bylaws
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
EXHIBIT G to Senior Subordinated Note and
Subordinated Convertible Note Exchange Agreement
Form of Compliance Certificate
Senior Subordinated Note and Subordinated Convertible Note Exchange Agreement
