Exhibit 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
Among
CASTLE DENTAL CENTERS, INC.
as Borrower,
BANK OF AMERICA, N.A.,
as Agent,
and
THE LENDERS SIGNATORY HERETO
Dated as of July 19, 2002
$47,428,478.76 Term Loan
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions and Accounting Matters ............................. 2
Section 1.01 Terms Defined Above .................................... 2
Section 1.02 Certain Defined Terms .................................. 2
Section 1.03 Accounting Terms and Determinations .................... 15
ARTICLE II Loans ......................................................... 15
Section 2.01 Restructure, Modification and Continuation of
Prior Debt ........................................... 15
Section 2.02 Fees ................................................... 15
Section 2.03 Notes .................................................. 16
ARTICLE III Payments of Principal and Interest ........................... 16
Section 3.01 Optional Prepayments of Loans .......................... 16
Section 3.02 Scheduled Principal Payments; Mandatory Prepayments
of Loans. ............................................ 17
Section 3.03 Interest. .............................................. 18
ARTICLE IV Payments; Pro Rata Treatment; Computations; Etc. .............. 19
Section 4.01 Payments ............................................... 19
Section 4.02 Pro Rata Treatment ..................................... 19
Section 4.03 Computations ........................................... 19
Section 4.04 Non-receipt of Funds by the Agent ...................... 20
Section 4.05 Set-off, Sharing of Payments, Etc. ..................... 20
Section 4.06 Taxes. ................................................. 21
ARTICLE V Capital Adequacy ............................................... 23
Section 5.01 Capital Adequacy; Additional Costs. .................... 23
ARTICLE VI Conditions Precedent .......................................... 24
Section 6.01 Conditions to Restructure .............................. 24
Section 6.02 Conditions Precedent for the Benefit of Lenders ........ 28
ARTICLE VII Representations and Warranties ............................... 28
Section 7.01 Corporate Existence .................................... 28
Section 7.02 Financial Condition .................................... 28
Section 7.03 Litigation ............................................. 29
Section 7.04 No Breach .............................................. 29
Section 7.05 Authority .............................................. 29
Section 7.06 Approvals .............................................. 29
Section 7.07 Use of Loans ........................................... 29
Section 7.08 ERISA. ................................................. 29
Section 7.09 Taxes .................................................. 30
Section 7.10 Titles, etc. ........................................... 30
Section 7.11 No Material Misstatements .............................. 31
Section 7.12 Investment Company Act ................................. 31
Section 7.13 Public Utility Holding Company Act ..................... 31
I
Section 7.14 Subsidiaries ........................................... 31
Section 7.15 Location of Business and Offices ....................... 31
Section 7.16 Defaults ............................................... 31
Section 7.17 Environmental Matters .................................. 32
Section 7.18 Compliance with the Law ................................ 32
Section 7.19 Insurance .............................................. 32
Section 7.20 Management Services Agreements and Accounts Receivable
Purchase Agreements .................................. 32
Section 7.21 Restriction on Liens ................................... 33
Section 7.22 Material Agreements .................................... 33
Section 7.23 Hedging Agreements ..................................... 33
Section 7.24 Security Instruments. .................................. 33
Section 7.25 Labor Relations ........................................ 33
ARTICLE VIII Affirmative Covenants ....................................... 34
Section 8.01 Reporting Requirements ................................. 34
Section 8.02 Litigation ............................................. 37
Section 8.03 Maintenance, Etc. ...................................... 37
Section 8.04 Environmental Matters .................................. 38
Section 8.05 Further Assurances ..................................... 38
Section 8.06 Performance of Obligations ............................. 39
Section 8.07 ERISA Information and Compliance ....................... 39
Section 8.08 Management Services Agreements and Accounts Receivable
Purchase Agreements .................................. 40
Section 8.09 Inspection of Property and Books and Records ........... 40
Section 8.10 Best Efforts to Prepay ................................. 40
Section 8.11 Authorized Shares. ..................................... 40
ARTICLE IX Negative Covenants ............................................ 41
Section 9.01 Debt ................................................... 41
Section 9.02 Liens .................................................. 41
Section 9.03 Investments, Loans and Advances ........................ 42
Section 9.04 Dividends, Distributions and Redemptions ............... 43
Section 9.05 Sales and Leasebacks ................................... 43
Section 9.06 Nature of Business ..................................... 43
Section 9.07 Mergers, Etc ........................................... 43
Section 9.08 ERISA Compliance ....................................... 43
Section 9.09 Asset Dispositions ..................................... 44
Section 9.10 Ratio of Total Funded Debt to EBITDA ................... 45
Section 9.11 Capital Expenditures ................................... 46
Section 9.12 Minimum EBITDA ......................................... 46
Section 9.13 Debt Service Coverage Ratio ............................ 47
Section 9.14 Environmental Matters .................................. 48
Section 9.15 Transactions with Affiliates ........................... 48
Section 9.16 Subsidiaries ........................................... 48
Section 9.17 Negative Pledge Agreements ............................. 49
Section 9.18 Other Agreements ....................................... 49
II
Section 9.19 Limitation on Certain Payments and Modifications of
Indebtedness; Cash Management. ....................... 49
Section 9.20 Accounting Changes ..................................... 49
ARTICLE X Events of Default; Remedies .................................... 49
Section 10.01 Events of Default ...................................... 49
Section 10.02 Remedies. .............................................. 52
ARTICLE XI The Agent ..................................................... 52
Section 11.01 Appointment, Powers and Immunities ..................... 52
Section 11.02 Reliance by Agent ...................................... 53
Section 11.03 Defaults ............................................... 53
Section 11.04 Rights as a Lender ..................................... 53
Section 11.05 Indemnification ........................................ 53
Section 11.06 Non-Reliance on Agent and other Lenders ................ 54
Section 11.07 Action by Agent ........................................ 54
Section 11.08 Resignation or Removal of Agent ........................ 55
ARTICLE XII Miscellaneous ................................................ 55
Section 12.01 Waiver ................................................. 55
Section 12.02 Notices ................................................ 55
Section 12.03 Payment of Expenses, Indemnities, etc. ................. 55
Section 12.04 Amendments, Etc ........................................ 58
Section 12.05 Successors and Assigns ................................. 58
Section 12.06 Assignments and Participations. ........................ 58
Section 12.07 Invalidity ............................................. 59
Section 12.08 Counterparts ........................................... 59
Section 12.09 References ............................................. 59
Section 12.10 Survival ............................................... 60
Section 12.11 Captions ............................................... 60
Section 12.12 No Oral Agreements ..................................... 60
Section 12.13 Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial. .......................................... 60
Section 12.14 Interest ............................................... 61
Section 12.15 Confidentiality ........................................ 62
Section 12.16 Effectiveness .......................................... 62
Section 12.17 Binding Arbitration. ................................... 63
Section 12.18 Exculpation Provisions ................................. 64
Section 12.19 Reaffirmation of Guaranty Agreement and Security
Agreement ............................................ 64
Section 12.20 RELEASE AND COVENANT NOT TO XXX. ....................... 65
Section 12.21 Tolling of Statute of Limitations ...................... 66
III
ANNEXES, EXHIBITS AND SCHEDULES
Annex I - List of Maximum Credit Amounts
Exhibit A - Form of Note
Exhibit B - Form of Compliance Certificate
Exhibit C - List of Security Instruments
Exhibit D - Form of Subordination and Intercreditor Agreement
Exhibit E - Form of Assignment and Acceptance
Exhibit F - Form of Excess Cash Flow Certificate
Exhibit G - Form of Cash Flow Differential Certificate
Exhibit H - Form of Warrant
Exhibit I - Form of Xxxxxxx Forbearance Agreement
Exhibit J - Form of Castle Settlement Agreement
Exhibit K - Form of Castle Severance Agreement
Schedule 1.1 - Acquired Entities and Existing PC's
Schedule 2.02(c) - Financing Fee Discount
Schedule 6.01(g) - Additional Collateral
Schedule 6.01(q) - Terms for Conversion of Subordinated Debt into Equity
Schedule 7.02 - Liabilities
Schedule 7.03 - Certain Litigation
Schedule 7.14 - Subsidiaries
Schedule 7.19 - Insurance
Schedule 7.20 - Management Services Agreements and Accounts
Receivable Purchase Agreements
Schedule 7.22 - Material Agreements
Schedule 7.23 - Hedging Agreements
Schedule 8.01(e) - Reporting Regions
Schedule 8.05(b) - Unperfected Assets
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
IV
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 19,
2002 (the "Effective Date"), is among CASTLE DENTAL CENTERS, INC., a corporation
formed under the laws of the State of Delaware (the "Borrower"); each of the
lenders that is a signatory hereto or which becomes a signatory hereto as
provided in Section 12.06 (individually, together with its successors and
assigns, a "Lender" and, collectively, the "Lenders"); and BANK OF AMERICA, N.A.
(formerly known as NationsBank, N.A.), a national banking association (in its
individual capacity, "Bank of America"), as agent for the Lenders (in such
capacity, together with its successors in such capacity, the "Agent").
R E C I T A L S
A. The Borrower, the Agent and the Lenders are parties to that certain
Amended and Restated Credit Agreement dated as of December 18, 1998, which
amended and restated the Prior Agreement (as defined in Section 1.02), said
Amended and Restated Credit Agreement being amended by First Amendment to
Amended and Restated Credit Agreement dated as of July 20, 1999, by Second
Amendment to Amended and Restated Credit Agreement dated as of September 30,
1999, by Third Amendment to Amended and Restated Credit Agreement dated as of
January 31, 2000 and by Fourth Amendment to Amended and Restated Credit
Agreement dated as of December 31, 1999 (such Amended and Restated Credit
Agreement as amended, the "Existing Agreement"), pursuant to which the Lenders
agreed to make loans to and extensions of credit on behalf of the Borrower.
B. The indebtedness arising under the Existing Agreement is evidenced
by those certain promissory notes, one dated July 20, 1999 in the amount of
$22,500,000 payable to Bank of America, one dated July 20, 1999 in the amount of
$15,000,000 payable to BankBoston, N.A., one in the amount of $10,000,000 dated
March 31, 1999 payable to Xxxxxx Financial, Inc., and one dated December 18,
1998 in the amount of $7,500,000 payable to AmSouth Bank (individually, an
"Existing Note" and collectively, the "Existing Notes"), such indebtedness being
(i) secured by liens and security interests granted in favor of Agent (for the
ratable benefit of the Lenders) pursuant to certain Security Instruments more
fully described in the Existing Agreement executed by Borrower and certain of
its Subsidiaries and (ii) guaranteed by certain Subsidiaries of Borrower
pursuant to certain guaranty agreements each executed by such Subsidiaries as of
December 18, 1998 (collectively, the "Guaranty Agreements") in favor of Agent
and the Lenders.
C. Borrower hereby acknowledges that as of December 18, 2000 (being the
Revolving Credit Termination Date as defined in the Existing Agreement), the
aggregate outstanding principal amount of the Existing Notes was converted into
term loans payable in eight consecutive quarterly installments, each equal to
1/20th of the outstanding principal amount of the Existing Notes as of such
date, with final payment of the remaining principal balance on the Existing
Notes due on November 7, 2002.
D. The Borrower hereby further acknowledges that certain Defaults and
Events of Default under the Existing Agreement have occurred and are continuing,
including, without
limitation, Borrower's failure to make scheduled principal payments due on the
Existing Notes in the aggregate amount of $13,569,000.
E. In consideration of, among other things, the Borrower (i) arranging
for the conversion of certain existing subordinate indebtedness into equity (ii)
obtaining new subordinated loans of $1,700,000 and (iii) paying certain fees and
expenses required under this Agreement, the Lenders are willing to restructure,
modify and continue, but not extinguish, the indebtedness outstanding under the
Existing Agreement pursuant to the terms and conditions set forth herein and in
the documents delivered pursuant hereto.
F. The parties hereto desire to amend the Existing Agreement as
hereinafter provided and have agreed, for purposes of clarity and ease of
administration, to amend the Existing Agreement and then restate the Existing
Agreement in its entirety by means of this Agreement.
G. In consideration of the mutual covenants and agreements and
provisions and covenants contained herein, the Borrower, the Lenders and the
Agent hereby agree to amend and restate the Existing Credit Agreement in its
entirety as follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement, the
terms "Agent," "Borrower," "Lender," "Lenders" and "Bank of America" shall have
the meanings indicated above.
Section 1.02 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):
"Academy" shall mean Academy for Dental Assistants, Inc., a Florida
corporation and a Wholly-Owned Subsidiary of Borrower.
"Accounts Receivable Purchase Agreements" shall mean the Accounts
Receivable Purchase Agreements either previously or hereafter entered into
between an Acquired Entity, as seller, and Borrower or any Subsidiary, as buyer,
in form and substance satisfactory to Agent.
"Acquired Entity" shall mean the entities identified on Schedule 1.1
hereto and all entities (of whatever form) whose assets are acquired by the
Borrower or any Subsidiary with the approval of Majority Lenders, and all new
professional corporations, professional associations or other Persons which
become a party to future Management Services Agreements and Accounts Receivable
Purchase Agreements with Borrower or any Subsidiary permitted hereunder.
"Additional Collateral" shall have the meaning set forth in Section
6.01(g).
"Administrative Fee" shall have the meaning set forth in Section
2.02(a).
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"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 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 10% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 10% or more of the 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 Second Amended and Restated Credit
Agreement, as the same may from time to time be amended or supplemented.
"Aggregate Maximum Credit Amounts" at any time shall equal the sum of
the Maximum Credit Amounts of the Lenders ($47,428,478.76), as the same may be
reduced pursuant to this Agreement.
"Annual Cash Flow Payment" shall have the meaning set forth in Section
3.02(b)(ii).
"Applicable Lending Office" shall mean, for each Lender, the lending
office of such Lender (or an Affiliate of such Lender) designated on the
signature pages hereof or such other offices of such Lender (or of an Affiliate
of such Lender) as such Lender may from time to time specify to the Agent and
the Borrower as the office by which its Loans are to be made and maintained.
"Assignment" shall mean an Assignment and Acceptance in substantially
the form of Exhibit E.
"Bank Products" means any one or more of the following types of
services or facilities extended to the Borrower or any Subsidiary by the Agent
or any Affiliate of the Agent in reliance on the Agent's agreement to indemnify
such Affiliate: (a) credit cards; (b) cash management or related services
including the automated clearinghouse transfer of funds for the account of the
Borrower or any Subsidiary pursuant to agreement or overdrafts; (c) Hedging
Agreements; and (d) foreign exchange contracts.
"Base Rate" shall mean, with respect to any Loan hereunder, for any
day, the Prime Rate for such day plus 2%. Each change in any interest rate
provided for herein based upon the Base Rate resulting from a change in the Base
Rate shall take effect at the time of such change in the Base Rate.
"Business Day" shall mean any day excluding Saturday, Sunday and any
other day on which commercial banks are authorized or required to close in
Houston, Texas.
"Capital Expenditures" shall mean, for any period and with respect to
any Person, the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a
3
liability and including that portion of capital leases that is capitalized on
the balance sheet of such Person including in connection with a sale-leaseback
transaction) by such Person and its Subsidiaries for the acquisition or leasing
of fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which are required to
be capitalized under GAAP on a consolidated balance sheet of such Person and its
Subsidiaries.
"Capitalization" shall mean shareholder's equity plus Total Funded
Debt.
"Capital Stock" shall mean any and all shares, interests,
participations or other equivalents (however designated) of capital stock,
membership interest, partnership interest or other equity participation in or of
a Person and any and all warrants or options to purchase any of the foregoing.
"Cash Flow Differential Certificate" shall have the meaning set forth
in Section 8.01(g).
"Cash Floor Limit" shall have the meaning set forth in Section
3.02(b)(ii).
"Cash on Hand" shall mean, at any time, (i) all cash and cash
equivalents as reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries and (ii) all investments by the Borrower and its Subsidiaries of
the types permitted by Section 9.03(c), (d), (e) and (f).
"Castle Florida" shall mean Castle Dental Centers of Florida, Inc., a
Florida corporation and a Wholly-Owned Subsidiary of the Borrower.
"Castle Tennessee" shall mean Castle Dental Centers of Tennessee, Inc.,
a Tennessee corporation and a Wholly-Owned Subsidiary of the Borrower.
"Castle Texas" shall mean Castle Dental Centers of Texas, Inc., a Texas
corporation and a Wholly-Owned Subsidiary of the Borrower.
"Castle Texas Holdings" shall mean Castle Texas Holdings, Inc., a
Delaware corporation and a Wholly-Owned Subsidiary of Borrower.
"Castle West" shall mean Castle Dental Centers of California, L.L.C., a
Delaware limited liability company and Wholly-Owned Subsidiary of the Borrower.
"CDC California" shall mean CDC of California, Inc., a Delaware
corporation and a Wholly-Owned Subsidiary of the Borrower.
"Certificate of Designations" shall mean that certain Certificate of
Designations, Preferences and Rights of Series A-1 Convertible Preferred Stock
and Series A-2 Convertible Preferred Stock adopted by the Board of Directors of
the Borrower on July 18, 2002 and filed with the Secretary of State of Delaware
on July 19, 2002 (as amended or restated from time to time).
"Change of Control" shall mean at any time, as a result of one or more
transactions after the date of this Agreement, any Person or "group" of Persons
acting in concert (other than the
4
Subordinated Lenders) shall have "beneficial ownership" of more than 51% of the
outstanding voting securities of the Borrower (within the meaning of Section
13(d) or 14 (d) of the Securities Exchange Act of 1934, as amended, and the
applicable rules and regulations thereunder), provided that the relationships
among the respective shareholders of the Borrower on the date of this Agreement
shall not be deemed to constitute all or any combination of them as a "group".
"Closing Date" shall mean July 19, 2002, provided that all conditions
precedent set forth in Article VI have been satisfied or waived by the Majority
Lenders by such date.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and any successor statute.
"Collateral" shall have the meaning set forth in Section 6.01(g).
"Common Stock" the common stock, $.001 par value, of the Borrower.
"Consolidated Net Income" shall mean with respect to the Borrower and
its Consolidated Subsidiaries, for any period, the aggregate of the net income
(or loss) of the Borrower and its Consolidated Subsidiaries after allowances for
taxes for such period, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded from such net income (to the extent
otherwise included therein) the following: (i) the net income of any Person in
which the Borrower or any Consolidated Subsidiary has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of the Borrower and its Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in such period by such other Person to the Borrower
or to a Consolidated Subsidiary, as the case may be; (ii) the net income (but
not loss) of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or similar distributions or transfers or loans by that
Consolidated Subsidiary is not at the time permitted by operation of the terms
of its charter or any agreement, instrument or Governmental Requirement
applicable to such Consolidated Subsidiary, or is otherwise restricted or
prohibited in each case determined in accordance with GAAP; (iii) the net income
(or loss) of any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction; (iv) any nonrecurring gains or
losses acceptable to the Majority Lenders and any extraordinary gains or losses,
including gains or losses attributable to Property sales not in the ordinary
course of business; and (v) the cumulative effect of a change in accounting
principles and any gains or losses attributable to writeups or write downs of
assets.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Borrower
(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 Borrower in accordance with GAAP.
"Consolidated Working Capital" shall mean with respect to Borrower and
its Consolidated Subsidiaries, the Current Assets of Borrower and its
Consolidated Subsidiaries minus the Current Liabilities of Borrower and its
Consolidated Subsidiaries all determined on a consolidated basis.
5
"Current Assets" shall mean, with respect to any Person, all assets of
such Person which, in accordance with GAAP, are required to be classified as
current assets on a balance sheet of such Person.
"Current Liabilities" shall mean, with respect to any Person, all
liabilities which, in accordance with GAAP, are required to be classified as
current liabilities on a balance sheet of such Person.
"Debt" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person (whether
contingent or otherwise) in respect of bankers' acceptances, letters of credit,
surety or other bonds and similar instruments; (iii) all obligations of such
Person to pay the deferred purchase price of Property or services (other than
for borrowed money); (iv) all obligations under leases which shall have been, or
should have been, in accordance with GAAP, recorded as capital leases in respect
of which such Person is liable (whether contingent or otherwise); (v) all
obligations under leases which require such Person or its Affiliate to make
payments over the term of such lease, including payments at termination, which
are substantially equal to at least eighty percent (80%) of the purchase price
of the Property subject to such lease plus interest as an imputed rate of
interest; (vi) all Debt (as described in the other clauses of this definition)
and other obligations of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person; (vii) all Debt (as described
in the other clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures a creditor
against loss of the debtor or obligations of others; (viii) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial
position or covenants of others or to purchase the Debt (as described in the
other clauses of this definition) or Property of others; (ix) obligations to
deliver goods or services in consideration of advance payments; and (x) all
obligations of such Person under Hedging Agreements.
"Default" shall mean an Event of Default or an event which with notice
or lapse of time or both would become an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section
3.03(c).
"Deferred Interest Rate" shall have the meaning set forth in Section
3.03(c).
"Dentcor" shall mean Dentcor, Inc., a Florida corporation and a
Wholly-Owned Subsidiary of Borrower.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBIT" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent deducted
from Consolidated Net Income in such period: interest and taxes.
6
"EBITDA" shall mean, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent deducted
from Consolidated Net Income in such period: interest, taxes, depreciation and
amortization.
"Eligible Assignee" shall have the meaning set forth in Section
12.06(b).
"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 Borrower or any Subsidiary is conducting or at any time has
conducted business, or where any Property of the Borrower or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"), as
amended, 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 Borrower 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 Borrower 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.
"ERISA Event" shall mean (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder, (ii) the withdrawal of the
Borrower, any Subsidiary or any ERISA Affiliate from a Plan during a plan year
in which it was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA, (iii) the filing of a notice of intent to terminate a Plan or the
treatment of a Plan amendment as a termination under Section 4041 of ERISA, (iv)
the institution of proceedings to terminate a Plan by the PBGC or (v) any other
event or condition which might constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any Plan.
"Event of Default" shall have the meaning assigned such term in Section
10.01.
7
"Event of Loss" means, with respect to any capital asset of the
Borrower or any of its Subsidiaries, any of the following: (a) any loss,
destruction or damage of such property, or (b) any actual condemnation, seizure
or taking, by exercise of the power of eminent domain or otherwise, of such
property, or confiscation of such property or the requisition of the use of such
property by any Governmental Authority.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been
maintained; (ii) Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or
statutory landlord's liens, each of which is in respect of obligations that have
not been outstanding more than 90 days or which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
maintained in accordance with GAAP; (iv) any Liens reserved in leases for rent
and for compliance with the terms of leases in the case of leasehold estates, to
the extent that any such Lien referred to in this clause does not materially
impair the use of the Property covered by such Lien for the purposes for which
such Property is held by the Borrower or any Subsidiary or materially impair the
value of such Property subject thereto; (v) encumbrances (other than to secure
the payment of borrowed money or the deferred purchase price of Property or
services), easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations in any rights of way or other Property of the
Borrower or any Subsidiary for the purpose of roads, pipelines, transmission
lines, transportation lines, distribution lines for the removal of gas, oil,
coal or other minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment, and defects,
irregularities, zoning restrictions and deficiencies in title of any rights of
way or other Property which in the aggregate do not materially impair the use of
such rights of way or other Property for the purposes of which such rights of
way and other Property are held by the Borrower or any Subsidiary or materially
impair the value of such Property subject thereto; (vi) deposits of cash or
securities to secure the performance of bids, trade contracts, leases, statutory
obligations and other obligations of a like nature incurred in the ordinary
course of business; and (vii) Liens permitted by the Security Instruments.
"Excess Cash Flow" means, for each 12 month period ending March 31, (i)
EBITDA for such period, less (ii) the sum of, without duplication, (A) Capital
Expenditures during such period by the Borrower and its Subsidiaries (net of any
proceeds relating to any financing with respect to such Capital Expenditures),
plus (B) cash tax payments on or measured by income or capital (or changes
therein) of the Borrower and its Subsidiaries during such period, plus (C) cash
interest for such period, plus (D) scheduled principal payments on account of
any Debt during such period, plus (E) any net increase in Consolidated Working
Capital (excluding cash) from the prior 12 month period ending March 31, plus
(iii) any net decrease in Consolidated Working Capital (excluding cash) from the
prior 12 month period ending March 31.
"Excess Cash Flow Certificate" shall have the meaning set forth in
Section 8.01(g).
8
"Excess Cash Flow Percentage" means 55%.
"Existing PCs" means the affiliated dental practices identified on
Schedule 7.14 hereto.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions with a
member of the Federal Reserve System arranged by federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day, provided that (i) if the date for which such rate is
to be determined is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Agent on such day on such transactions as determined by the
Agent.
"Final Maturity Date" shall mean the earlier to occur of (i) July 19,
2005 and (ii) the date that the Notes are accelerated pursuant to Section 10.02.
"Financial Statements" shall mean the financial statement or statements
of the Borrower and its Consolidated Subsidiaries described or referred to in
Section 7.02.
"Financing Fee" shall have the meaning as set forth in Section 2.02(c).
"Forbearance Agreement" shall have the meaning as set forth in Section
6.01(r).
"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
Borrower, its Subsidiaries or any of their Property or the Agent or any Lender
or any Applicable Lending Office.
"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.
"Guarantors" shall mean each Subsidiary which may execute a Guaranty
Agreement pursuant to Section 9.16.
9
"Guaranty Agreement" shall mean an agreement executed by one or more
Guarantors in form and substance satisfactory to the Agent guarantying,
unconditionally, payment of the Indebtedness, as the same may be amended,
modified or supplemented from time to time.
"Hedging Agreements" shall mean any interest rate swap, cap, floor,
collar, forward agreement or other protection agreements or any option with
respect to any such transaction.
"Highest Lawful Rate" shall mean, with respect to each Lender, the
maximum nonusurious interest rate, if any, that at any time or from time to time
may be contracted for, taken, reserved, charged or received on the Notes or on
other Indebtedness under laws applicable to such Lender which are presently in
effect or, to the extent allowed by law, under such applicable laws which may
hereafter be in effect and which allow a higher maximum nonusurious interest
rate than applicable laws now allow.
"Indebtedness" shall mean any and all amounts owing or to be owing by
the Borrower or any Subsidiary to the Agent, any of the Lenders or any Affiliate
of a Lender in connection with any Bank Products or the Loan Documents, now or
hereafter entered into between the Borrower and the Lenders or any Affiliate of
a Lender, and all renewals, extensions and/or rearrangements of any of the
above.
"Indemnified Parties" shall have the meaning assigned such term in
Section 12.03(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.
"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 Borrower 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.
"Loans" shall mean the Prior Debt of all the Lenders as restructured,
modified and continued hereunder, and a "Loan" shall mean such Prior Debt of a
single Lender.
"Loan Documents" shall mean this Agreement, the Notes, the Security
Instruments and the Warrants.
10
"Majority Lenders" shall mean Lenders holding at least sixty-six and
two-thirds percent (66-2/3%) of the outstanding aggregate principal amount of
the Loans (without regard to any sale by a Lender of a participation in any Loan
under Section 12.06(c)).
"Management Services Agreements" shall mean Management Services
Agreements (i) previously entered into between an Acquired Entity and Borrower
or any Subsidiary and (ii) such agreements which are hereafter entered into
between any Acquired Entity and Borrower or any Subsidiary which are in form and
substance reasonably satisfactory to Lenders.
"Material Adverse Effect" shall mean any material and adverse effect on
(i) the assets, liabilities, financial condition, business, operations or
affairs of the Borrower and its Subsidiaries taken as a whole different from
those reflected in the Financial Statements or from the facts represented or
warranted in any Loan Document, or (ii) the ability of the Borrower 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 Loan Documents on a timely basis, or (iii) the rights and remedies of
the Agent or Lenders under the Loan Documents taken as a whole.
"Maximum Credit Amount" shall mean, as to each Lender, the amount set
forth opposite such Lender's name on Annex I under the caption "Maximum Credit
Amounts" (as the same may be reduced pursuant to this Agreement pro rata to each
Lender based on its Percentage Share), as modified from time to time to reflect
any assignments permitted by Section 12.06(b).
"Monthly Date" shall mean the first day of each calendar month in each
calendar year; provided if any such date is not a Business Day such Monthly Date
shall be the next succeeding Business Day.
"Multiemployer Plan" shall mean a Plan defined as such in Section 3(37)
or 4001(a)(3) of ERISA.
"Net Proceeds" shall mean, in respect of any disposition or Event of
Loss, the proceeds in cash received by the Borrower or any of its Subsidiaries
with respect to or on account of such disposition or Event of Loss, net of: (a)
in the case of a disposition, the reasonable direct costs (including, without
limitation, broker's fees and commissions) of such disposition then payable by
the recipient of such proceeds or, in the case of an Event of Loss, the
reasonable direct costs of collecting insurance or other proceeds, in each case
excluding amounts payable to the Borrower or any Affiliate of the Borrower, (b)
sales, use and other taxes paid or payable by such recipient as a result
thereof, (c) amounts required to be applied to repay principal, interest and
prepayment premiums and penalties on Debt secured by an Excepted Lien on the
properties subject to such disposition, and (d) reasonable amounts required to
be paid to non-Affiliates in order to obtain required consents to such
disposition.
"Notes" shall mean the Notes provided for by Section 2.03, together
with any and all renewals, extensions for any period, increases, rearrangements,
substitutions or modifications thereof.
"Other Taxes" shall have the meaning assigned such term in Section
4.06(b).
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"Payment Default" means the Borrower's default in the payment or
prepayment when due of any principal of or interest on any Loan, or any fees or
other amount payable by it hereunder; provided, however, if such default is a
default only on a payment of fees or expenses (other than fees under Section
2.02), no Payment Default shall occur unless such default continues unremedied
for a period of 30 days.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions.
"Percentage Share" shall mean the percentage of the Aggregate Maximum
Credit Amounts of a Lender under this Agreement as indicated on Annex I hereto,
as modified from time to time to reflect any assignments permitted by Section
12.06(b).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, 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 Borrower, 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 Borrower, any Subsidiary or an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of any Loan
or any other amount payable by the Borrower under this Agreement or any other
Loan Document, a rate per annum accruing during the period commencing on the
date of occurrence of an Event of Default and ending when such Event of Default
and all other Events of Default are cured or waived, equal to 3% per annum above
the Base Rate as in effect from time to time, but in no event shall such rate
exceed the Highest Lawful Rate.
"Prime Rate" shall mean the rate of interest from time to time
announced publicly by the Agent at the Principal Office as its prime commercial
lending rate. Such rate is set by the Agent as a general reference rate of
interest, taking into account such factors as the Agent may deem appropriate, it
being understood that many of the Agent's commercial or other loans are priced
in relation to such rate, that it is not necessarily the lowest or best rate
actually charged to any customer and that the Agent may make various commercial
or other loans at rates of interest having no relationship to such rate.
"Principal Office" shall mean the principal office of the Agent,
presently located at 000 Xxxx Xxxxxx, Xxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000.
"Prior Credit Agreement" shall mean that certain Credit Agreement dated
as of November 7, 1997 among the Borrower, the Agent, and the lenders party
thereto, as amended and supplemented prior to the Existing Agreement.
"Prior Debt" shall mean the outstanding Debt under the Prior Credit
Agreement and the Existing Agreement.
12
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Quarterly Dates" shall mean the fifteenth day of each March, June,
September, and December, in each year, the first of which shall be September 15,
2002; provided, however, that if any such day is not a Business Day, such
Quarterly Date shall be the next succeeding Business Day.
"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.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the Closing Date in any Governmental Requirement (including Regulation D)
or the adoption or making after such date of any interpretations, directives or
requests applying to a class of lenders (including such Lender or its Applicable
Lending Office) of or under any Governmental Requirement (whether or not having
the force of law) by any Governmental Authority charged with the interpretation
or administration thereof.
"Reporting Region" shall have the meaning as set forth in Section
8.01(e).
"Required Payment" shall have the meaning assigned such term in Section
4.04.
"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 Borrower.
"Restricted Payments" shall have the meaning set forth in Section 9.04.
"Restructuring Fee" shall have the meaning ascribed to such term in
Section 2.02(b).
"Restructured Amount" shall have the meaning ascribed to such term in
Section 2.01.
"Xxxxxxx" shall collectively refer to Xxxx X. Xxxxxxx, D.M.D., Xxxx X.
Xxxxxxx, D.M.D., Inc. and Xxxxxxx Acquisition Company.
"Sale Date" shall mean the first date on which all of the original
Lenders signing this Agreement (other than Xxxxxx Financial, Inc.) shall have
assigned, or granted a participation, in all of their rights and obligations
under this Agreement and the Warrants issued to them.
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"Security Instruments" shall mean the agreements or instruments
described or referred to in Exhibit C, and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower or any other
Person (other than participation or similar agreements
13
between any Lender and any other lender or creditor with respect to any
Indebtedness pursuant to this Agreement) in connection with, or as security for
the payment or performance of the Notes or this Agreement, as such agreements
may be amended, supplemented or restated from time to time.
"Senior Funded Debt" shall mean, at any date and with respect to the
Borrower and its Subsidiaries, all Debt for borrowed money (excluding Debt
expressly subordinated to the Indebtedness in form and substance satisfactory to
the Lenders), any capital lease obligations and any guaranty with respect to
Senior Funded Debt of another Person.
"Series A-2 Preferred Stock" shall mean the Borrower's Series A-2
Convertible Preferred Stock, par value $.001 per share, having the designations,
preferences and rights described in the Certificate of Designations.
"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 Borrower 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
executed by and among the Borrower, each Lender and the Subordinate Lenders
dated as of July 19, 2002.
"Subordinated Debt" shall mean Debt of the Borrower or any Subsidiary
described on Schedule 9.01 that is subordinated to the Indebtedness pursuant to
a subordination agreement in the form of Exhibit D.
"Subordinate Lenders" shall have the meaning set forth in Section
6.01(p).
"Subordination Agreement" shall have the meaning set forth in Section
6.01(p).
"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 Borrower or one or more of its Subsidiaries or by the Borrower
and one 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 Borrower.
"Taxes" shall have the meaning assigned such term in Section 4.06(a).
"Total Funded Debt" shall mean Senior Funded Debt plus all debt
expressly subordinated to the Indebtedness.
14
"Unperfected Assets" shall have the meaning set forth in Section
8.05(b).
"Warrants" shall have the meaning set forth in Section 6.01(n)(i).
"Wholly-Owned Subsidiary" shall mean, as to the Borrower, any
Subsidiary of which all of the outstanding shares of capital stock or other
equity interests, on a fully-diluted basis, are owned by the Borrower or one or
more of the Wholly-Owned Subsidiaries or by the Borrower and one or more of the
Wholly-Owned Subsidiaries.
Section 1.03 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 the Agent or the Lenders hereunder shall be
prepared, in accordance with GAAP, applied on a basis consistent with the
audited financial statements of the Borrower referred to in Section 7.02 (except
for changes concurred with by the Borrower's independent public accountants).
ARTICLE II
Loans
Section 2.01 Restructure, Modification and Continuation of Prior Debt.
The aggregate unpaid principal balance of the Prior Debt as of the Effective
Date is $45,230,000. As of the Effective Date, accrued and unpaid interest on
the Prior Debt equals $2,162,838.13, of which $1,860,465.05 is accrued interest
in excess of the pre-default rate (the "Default Interest"), the amount of unpaid
obligations with respect to the Hedging Agreements is $347,678.89 (the "Hedge
Obligations") and the aggregate amount all other obligations owing to the Agent
and Lenders with respect to the Prior Debt is $1,490,334.82 (the "Other
Obligations"). On or prior to the Effective Date, Borrower shall pay to Agent
and Lenders (i) all accrued and unpaid interest owing on the Prior Debt, other
than the Default Interest, in the amount of $302,373.08 plus (ii) the sum of
$1,500,000 (inclusive of a $500,000 expense reimbursement previously paid to the
Agent) which shall be applied to the repayment in part of the Other Obligations.
Subject to the terms and conditions of this Agreement, the Lenders hereby agree
to restructure, modify and continue the principal balance of the Prior Debt, the
Default Interest, the Hedge Obligations and any remaining Other Obligations as
single tranche term Loans in the original aggregate principal amount of
$47,428,478.76 (the "Restructured Amount"), which Loans shall be repayable in
accordance with the terms of this Agreement and the Notes.
Section 2.02 Fees.
(a) Administrative Fee. Until the Loans are repaid in full,
the Borrower shall pay an annual administrative fee to the Agent for the Agent's
own account in the amount of $25,000 ("Administrative Fee") with the first
payment of such fee due on the Closing Date and a like amount to be due and
payable on each anniversary of the Closing Date.
(b) Restructuring Fee. Effective as of the Closing Date, the
Agent and Lenders hereby waive all defaults and events of default which have
occurred and are continuing under the Existing Agreement. In partial
consideration of the waiver of such defaults and events of defaults and in order
to induce the Lenders to agree to the restructuring, modification and
15
continuation of the Prior Debt as contemplated hereby, the Borrower shall pay to
the Agent for the account of the Lenders a restructuring fee in the amount of
$474,284.79, being 1% of the Restructured Amount (the "Restructuring Fee"),
which Restructuring Fee shall be payable in four equal quarterly installments of
$118,571.20 each plus accrued interest thereon at the Base Rate or Post-Default
Rate (as applicable), with the first such installment plus interest at the Base
Rate being due on September 19, 2002, and the second, third and fourth
installments being due on December 19, 2002, March 19, 2003, and June 19, 2003
respectively. The Restructuring Fee shall be fully earned by the Lenders as of
the Closing Date.
(c) Financing Fee. In partial consideration of the waiver of
defaults under the Existing Agreement granted under Section 2.02(b) above and in
order to induce Lenders to agree to the restructuring, modification and
continuation of the Prior Debt as contemplated hereby, the Borrower shall pay to
the Agent for the account of each Lender a Financing Fee in the amount of
$1,897,139.15 being 4% of the Restructured Amount (the "Financing Fee"), which
Financing Fee shall be payable in full without interest on the Final Maturity
Date. The Financing Fee shall be fully earned by the Lenders as of the Closing
Date. The Financing Fee shall be discounted as provided in Schedule 2.02(c) to
this Agreement if the aggregate principal amount of the Loans is reduced to the
amounts, and by the dates, specified therein.
Section 2.03 Notes. The Loan of each Lender shall be evidenced by a
single replacement promissory note of the Borrower in substantially the form of
Exhibit A, dated (i) the Closing Date or (ii) the effective date of an
Assignment pursuant to Section 12.06(b), payable to the order of such Lender in
a principal amount equal to its Maximum Credit Amount as originally in effect
and otherwise duly completed and such substitute Notes as required by Section
12.06(b). The date and amount of each Lender's Loan and all payments made on
account of the principal thereof, shall be recorded by such Lender on its books,
and, prior to any transfer, may be endorsed by such Lender on the schedule
attached to such Notes or any continuation thereof or on any separate record
maintained by such Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender's or the Borrower's rights or obligations
in respect of such Loan or affect the validity of such transfer by any Lender of
its Note.
ARTICLE III
Payments of Principal and Interest
Section 3.01 Optional Prepayments of Loans. 1. The Borrower may prepay
the Loans in whole or in part upon not less than one (1) Business Day's prior
notice to the Agent (which shall promptly notify the Lenders), which notice
shall specify the prepayment date (which shall be a Business Day) and the amount
of the prepayment (which shall be at least $10,000 or the remaining aggregate
principal balance outstanding on the Notes) and shall be irrevocable and
effective only upon receipt by the Agent. As a condition to any optional
prepayment, interest on the principal prepaid, accrued to the prepayment date,
shall be paid on the prepayment date.
(b) Notwithstanding the foregoing, if the Borrower should
voluntarily prepay the Loans in their entirety, Borrower shall pay to the Agent,
for the benefit of the Lenders the then unpaid amount of the Restructuring Fee
plus accrued and unpaid interest thereon and the Financing Fee as discounted in
accordance with Schedule 2.02(c).
16
Section 3.02 Scheduled Principal Payments; Mandatory Prepayments of
Loans.
(a) Scheduled Principal Payments. The Notes shall be payable
in quarterly principal installments on the dates and in the amounts set forth
below:
2003 2004 2005
---- ---- ----
March 31 $ 500,000 $1,000,000 $1,625,000
June 30 $ 500,000 $1,000,000
September 30 $ 500,000 $1,000,000
December 31 $ 500,000 $1,000,000
The final payment of the remaining principal balance of the Notes and any other
amounts owing on the Loans and not previously paid shall be due on the Final
Maturity Date.
(b) Mandatory Prepayments.
(i) Upon receipt by the Borrower or any of its
Subsidiaries, the Borrower shall prepay the Loans in an amount equal to
50% of the cash proceeds (net of underwriting discounts and commissions
or underwriting or placement fees, investment banking fees, legal fees,
accounting fees, and other customary fees, commissions, expenses and
costs associated therewith and net of taxes paid or payable as a result
thereof) of any sale of equity securities by the Borrower or any of its
Subsidiaries; provided, however, that no such prepayment shall be
required with respect to any equity securities issued by any Subsidiary
of the Borrower to the Borrower or another Subsidiary of the Borrower.
(ii) Commencing with the 12 month period ended March
31, 2003, the Borrower shall prepay the Loans in an amount equal to the
Excess Cash Flow Percentage of the Excess Cash Flow (the "Annual Cash
Flow Payment") as follows:
(A) On or prior to April 30 of each year, the Borrower
shall pay the Annual Cash Flow Payment in full, except that if,
after giving effect to such payment, Borrower's Cash on Hand on
the date of such payment would be less than $3,000,000 (such
amount being referred to herein as the "Cash Floor Limit"), the
Borrower may defer payment of such portion of the Annual Cash
Flow Payment as is necessary to maintain the Cash Floor Limit
as provided below; and
(B) For so long as any portion of the Annual Cash Flow
Payment remains unpaid as provided above, then on the last
Business Day of each successive month the Borrower shall pay
the deferred portion (if any) of the Annual Cash Flow Payment
in full, except that if, after giving effect to such payment,
Borrower's Cash on Hand on the date of such payment would be
less than the Cash Floor Limit, then the Borrower may further
defer to the next month payment of such portion of the Annual
Cash Flow Payment as is necessary to maintain the Cash Floor
Limit.
17
(iii) Upon any (A) Event of Loss resulting in Net Proceeds
of $25,000 or more with respect to which Borrower (or its Subsidiaries)
have determined not to repair or replace the Property which is the
subject of the Event of Loss, or (B) sale or series of related sales of
assets by the Borrower or any of its Subsidiaries undertaken pursuant
to Section 9.09(b) or as otherwise permitted by a waiver by the Lenders
to this Agreement, the Borrower shall prepay the Loans in an amount
equal to 100% of the Net Proceeds of (y) each such Event of Loss, or
(z) each such sale, in each case, if and to the extent that Net
Proceeds received by the Borrower or its Subsidiaries from such sale or
series of related sales of assets exceeds $100,000 in the aggregate for
all such sales in any fiscal year.
(iv) Prepayments of the Loans pursuant to this Section
3.02(b) shall be applied to the principal amounts outstanding on the
Loans in inverse order of maturity.
Section 3.03 Interest.
(a) Interest Rates. The Borrower will pay to the Agent, for
the account of each Lender, interest on the unpaid principal amount of each Loan
for the period commencing on the Closing Date, but excluding the date such Loan
shall be paid in full, at a rate per annum equal to the Base Rate (as in effect
from time to time), but in no event to exceed the Highest Lawful Rate.
(b) Post-Default Rate. Notwithstanding the foregoing, the
Borrower will pay to the Agent, for the account of each Lender, interest at the
Post-Default Rate on any principal of any Loan, and (to the fullest extent
permitted by law) on any other amount payable by the Borrower hereunder, under
any Loan Document or under any Note held by such Lender to or for account of
such Lender, for the period commencing on the date of an Event of Default and
ending when such Event of Default and all other Events of Default are cured or
waived.
(c) Deferred Interest Rate. In addition to the Base Rate and
(if applicable) the Post-Default Rate and subject at all times to Section 12.14
hereof , the outstanding principal balance of each Loan shall accrue additional
interest from the Closing Date until paid at the rate of 4 1/2% per annum
("Deferred Interest Rate"). All accrued interest at the Deferred Interest Rate
("Deferred Interest") shall be immediately due and payable only upon the
occurrence of a Payment Default and shall continue to accrue and will be payable
as it accrues for all periods following any Payment Default until paid in full.
If a Payment Default has not occurred prior to July 19, 2005, and the
Indebtedness is paid in full on or prior to July 19, 2005, then (i) no Deferred
Interest shall ever become due or payable and (ii) all accrued and unpaid
Deferred Interest shall be deemed extinguished and forgiven. If the Loans are
accelerated in accordance with Section 10.02(a), but no Payment Default has
occurred concurrently therewith or prior thereto, so long as Borrower continues
to make the regularly scheduled payments required under this Agreement with
respect to the Loans as though no such acceleration had occurred, then Deferred
Interest shall not become due and payable. Notwithstanding any provision herein
to the contrary, the total amounts due to all Lenders for Deferred Interest
shall not exceed $4,500,000.
(d) Due Dates. Accrued interest on the Loans at the Base Rate
shall be payable monthly in arrears commencing on August 1, 2002, and on each
Monthly Date
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thereafter. All interest hereunder at the Post-Default Rate shall be payable
from time to time on demand. Deferred Interest shall be payable as provided in
Section 3.03(c).
(e) Determination of Rates. Promptly after the determination
of any interest rate provided for herein or any change therein, the Agent shall
notify the Lenders to which such interest is payable and the Borrower thereof.
Each determination by the Agent of an interest rate or fee hereunder shall,
except in cases of manifest error, be final, conclusive and binding on the
parties. Anything herein to the contrary notwithstanding, the obligations of the
Borrower to any Lender hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder to the extent (but only to the extent) that contracting for,
charging, reserving, collecting or receiving such payment by such Lender would
be contrary to the provisions of any law applicable to such Lender limiting the
Highest Lawful Rate of interest that may be contracted for, charged, reserved,
collected or received by such Lender, and in such event the Borrower shall pay
such Lender interest at the Highest Lawful Rate.
ARTICLE IV
Payments; Pro Rata Treatment; Computations; Etc.
Section 4.01 Payments. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the Borrower
under this Agreement, the Notes shall be made in Dollars, in immediately
available funds, to the Agent at such account as the Agent shall specify by
notice to the Borrower from time to time, not later than 11:00 a.m. Dallas time
on the date on which such payments shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without (to the fullest
extent permitted by applicable law) defense, set-off or counterclaim. Each
payment received by the Agent under this Agreement or any Note for account of a
Lender shall be paid promptly to such Lender in immediately available funds. If
the due date of any payment under this Agreement or any Note would otherwise
fall on a day which is not a Business Day such date shall be extended to the
next succeeding Business Day and interest shall be payable for any principal so
extended for the period of such extension.
Section 4.02 Pro Rata Treatment. Except to the extent otherwise
provided herein each Lender agrees that: (i) each payment of the Restructuring
Fee, the Financing Fee or other fees under Section 2.02 shall be made for
account of the Lenders pro rata in accordance with their Percentage Share; (ii)
each payment of principal of Loans by the Borrower shall be made for account of
the Lenders pro rata in accordance with the respective unpaid principal amount
of the Loans held by the Lenders; and (iii) each payment of interest on Loans by
the Borrower shall be made for account of the Lenders pro rata in accordance
with the amounts of interest due and payable to the respective Lenders.
Section 4.03 Computations. All computations of interest for the Loans
and fees hereunder shall be made on the basis of a year of 365 or 366 days, as
the case may be, and actual days elapsed. Each determination of an interest rate
by the Agent shall be conclusive and binding on the Borrower and the Lenders in
the absence of manifest error.
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Section 4.04 Non-receipt of Funds by the Agent. Unless the Agent
shall have been notified by a Lender or the Borrower prior to the date on which
such notifying party is scheduled to make payment to the Agent (in the case of a
Lender) of the proceeds of a Loan or (in the case of the Borrower) a payment to
the Agent for account of one or more of the Lenders hereunder (such payment
being herein called the "Required Payment"), which notice shall be effective
upon receipt, that it does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient(s) on such date and, if such Lender
or the Borrower (as the case may be) has not in fact made the Required Payment
to the Agent, the recipient(s) of such payment shall, on demand, repay to the
Agent the amount so made available together with interest thereon in respect of
each day during the period commencing on the date such amount was so made
available by the Agent until, but excluding, the date the Agent recovers such
amount at a rate per annum which, for any Lender as recipient, will be equal to
the Federal Funds Rate, and for the Borrower as recipient, will be equal to the
Base Rate.
Section 4.05 Set-off, Sharing of Payments, Etc.
(a) Upon the occurrence and during the continuance of an
Event of Default, the Borrower agrees that, in addition to (and without
limitation of) any right of set-off, bankers' lien or counterclaim a Lender may
otherwise have, each Lender shall have the right and be entitled (after
consultation with the Agent), at its option, to offset balances held by it or by
any of its Affiliates for account of the Borrower or any Subsidiary at any of
its offices, in Dollars or in any other currency, against any principal of or
interest on any of such Lender's Loans, or any other amount payable to such
Lender hereunder, which is not paid when due (regardless of whether such
balances are then due to the Borrower), in which case it shall promptly notify
the Borrower and the Agent thereof, provided that such Lender's failure to give
such notice shall not affect the validity thereof.
(b) If any Lender shall obtain payment of any principal of
or interest on any Loan made by it to the Borrower under this Agreement through
the exercise of any right of set-off, banker's lien or counterclaim or similar
right or otherwise, and, as a result of such payment, such Lender shall have
received a greater percentage of the principal or interest (or reimbursement)
then due hereunder by the Borrower to such Lender than the percentage received
by any other Lenders, it shall promptly (i) notify the Agent and each other
Lender thereof and (ii) purchase from such other Lenders participations in (or,
if and to the extent specified by such Lender, direct interests in) the Loans
made by such other Lenders (or in interest due thereon, as the case may be) in
such amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess payment) pro rata in accordance with the
unpaid principal and/or interest on the Loans held by each of the Lenders. To
such end all the Lenders shall make appropriate adjustments among themselves (by
the resale of participations sold or otherwise) if such payment is rescinded or
must otherwise be restored. The Borrower agrees that any Lender so purchasing a
participation (or direct interest) in the Loans made by other Lenders (or in
interest due thereon, as the case may be) may exercise all rights of set-off,
banker's lien, counterclaim or similar rights with respect to such participation
as fully as if such Lender were a direct holder of Loans in the
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amount of such participation. Nothing contained herein shall require any Lender
to exercise any such right or shall affect the right of any Lender to exercise,
and retain the benefits of exercising, any such right with respect to any other
indebtedness or obligation of the Borrower. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a set-off to which this Section 4.05 applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section 4.05 to
share the benefits of any recovery on such secured claim.
Section 4.06 Taxes.
(a) Payments Free and Clear. Any and all payments by the
Borrower hereunder shall be made, in accordance with Section 4.01, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of each Lender, and the Agent, taxes imposed on
its income, and franchise or similar taxes imposed on it, by (i) any
jurisdiction (or political subdivision thereof) of which the Agent, or such
Lender, as the case may be, is a citizen or resident or in which such Lender has
an Applicable Lending Office, (ii) the jurisdiction (or any political
subdivision thereof) in which the Agent, or such Lender is organized, or (iii)
any jurisdiction (or political subdivision thereof) in which such Lender, or the
Agent is presently doing business which taxes are imposed solely as a result of
doing business in such jurisdiction (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder to the Lenders, or the
Agent (i) the sum payable shall be increased by the amount necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.06) such Lender, or the Agent (as
the case may be) shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with applicable law and
provide the relevant Lender with a receipt thereof.
(b) Other Taxes. In addition, to the fullest extent
permitted by applicable law, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, any
Assignment or any Security Instrument (hereinafter referred to as "Other
Taxes").
(c) Indemnification. To The Fullest Extent Permitted By
Applicable Law, The Borrower Will INDEMNIFY Each Lender And The Agent For The
Full Amount Of Taxes And Other Taxes (Including, But Not Limited To, Any Taxes
or Other Taxes Imposed by any Governmental Authority on amounts payable under
This Section 4.06) paid by such Lender or the Agent (on their behalf or on
behalf of any Lender), as the case may be, and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
unless the payment of such Taxes was not correctly or legally asserted and such
Lender's
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Payment of such Taxes or Other Taxes was the result of its gross negligence or
wilfull misconduct. Any Payment pursuant to such indemnification shall be made
within thirty (30) Days after the date any Lender or the Agent, as the case may
be, makes written demand therefor. If any lender or the Agent receives a refund
or credit in respect of any taxes or Other Taxes for which such Lender or the
Agent has received payment form the Borrower it shall promptly notify the
Borrower of such refund or credit and shall, if no default has occurred and is
continuing, within thirty (30) days after receipt of a request by the Borrower
(or promptly upon receipt, if the Borrower has requested application for such
refung or credit pursuant hereto), pay an amount equal to such refund or credit
to the Borrower without interest (but with any interest so refunded or
credited), provided that the Borrower, upon the request of such Lender or the
Agent, agrees to return such refund or credit (plus penalties, interest or other
charges) to such lender or the Agent in the event such Lender or the Agent is
required to repay such refund or credit.
(d) Lender Representations.
(i) EachLender represents that it is either (1) a
banking association or corporation organized under the laws of the
United States of America or any state thereof or (2) entitled to
complete exemption from United States withholding tax imposed on or
with respect to any payments, including fees, to be made to it pursuant
to this Agreement (A) under an applicable provision of a tax convention
to which the United States of America is a party or (B) because it is
acting through a branch, agency or office in the United States of
America and any payment to be received by it hereunder is effectively
connected with a trade or business in the United States of America.
Each Lender that is not a banking association or corporation organized
under the laws of the United States of America or any state thereof
agrees to provide to the Borrower and the Agent on the Closing Date, or
on the date of its delivery of the Assignment pursuant to which it
becomes a Lender, and at such other times as required by United States
law or as the Borrower or the Agent shall reasonably request, two
accurate and complete original signed copies of U.S. Internal Revenue
Service Form W-8ECI or W-8BEN or, in the case of a Lender claiming
exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code, a form W-8BEN, or other equivalent successor form,
as appropriate, certifying in each case that such Lender is entitled to
receive payments under this Agreement and the Note payable to it,
without deduction or withholding of any U.S. federal income taxes and
(ii) any other governmental forms which are necessary or required under
an applicable tax treaty or otherwise by law to reduce or eliminate any
withholding tax, which have been reasonably requested by the Borrower
and the Agent. In addition, each Lender agrees that if it previously
filed a Form W-8ECI or W-8BEN, it will deliver to the Borrower and the
Agent a new Form W-8ECI or W-8BEN, as applicable, prior to the first
payment date occurring in each of its subsequent taxable years. Each
Lender which delivers to the Borrower and the Agent a Form W-8ECI or
W-8BEN, or other equivalent successor form, as appropriate, further
undertakes to deliver to the Borrower and the Agent two further copies
of such form, or successor applicable forms, or other manner of
certification, as the case may be, on or before the date that any such
form expires or becomes obsolete or after the occurrence of any event
requiring a
22
change in the most recent form previously delivered by it to the
Borrower and the Agent, and such extensions or renewals thereof as may
reasonably be requested by the Borrower and the Agent certifying in the
case of a Form W-8ECI or W-8BEN that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any
U.S. federal income taxes. If a Lender determines, as a result of any
change in either (i) a Governmental Requirement or (ii) its
circumstances, that it is unable to submit any form or certificate that
it is obligated to submit pursuant to this Section 4.06, or that it is
required to withdraw or cancel any such form or certificate previously
submitted, it shall promptly notify the Borrower and the Agent of such
fact. If a Lender is organized under the laws of a jurisdiction outside
the United States of America, unless the Borrower and the Agent have
received a Form W-8ECI or W-8BEN satisfactory to them indicating that
all payments to be made to such Lender hereunder are not subject to
United States withholding tax, the Borrower shall withhold taxes from
such payments at the applicable statutory rate. Each Lender agrees to
indemnify and hold harmless the Borrower or Agent, as applicable, from
any United States taxes, penalties, interest and other expenses, costs
and losses incurred or payable by (i) the Agent as a result of such
Lender's failure to submit any form or certificate that it is required
to provide pursuant to this Section 4.06 or (ii) the Borrower or the
Agent as a result of their reliance on any such form or certificate
which such Lender has provided to them pursuant to this Section 4.06.
(ii) For any period with respect to which a Lender has failed
to provide the Borrower with the form required pursuant to this Section
4.06, if any, (other than if such failure is due to a change in a
Governmental Requirement occurring subsequent to the date on which a
form originally was required to be provided), such Lender shall not be
entitled to indemnification under Section 4.06 with respect to Taxes
imposed by the United States which Taxes would not have been imposed
but for such failure to provide such forms; provided, however, that if
a Lender, which is otherwise exempt from or subject to a reduced rate
of withholding tax, becomes subject to Taxes because of its failure to
deliver a form required hereunder, the Borrower shall take such steps
as such Lender shall reasonably request to assist such Lender to
recover such taxes.
(iii) Any Lender claiming any additional amounts payable
pursuant to this Section 4.06 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or
document requested by the Borrower or the Agent or to change the
jurisdiction of its Applicable Lending Office or to contest any tax
imposed if the making of such a filing or change or contesting such tax
would avoid the need for or reduce the amount of any such additional
amounts that may thereafter accrue and would not, in the sole
determination of such Lender, be otherwise disadvantageous to such
Lender.
ARTICLE V
Capital Adequacy
Section 5.01 Capital Adequacy; Additional Costs.
(a) Capital Adequacy. The Borrower shall pay directly to any
Lender pursuant to the procedure set forth in Section 5.01(b) such amounts as
such Lender may
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reasonably determine to be necessary to compensate such Lender or its parent or
holding company for any costs which it determines are attributable to the
maintenance by such Lender or its parent or holding company (or any Applicable
Lending Office), pursuant to any Governmental Requirement following any
Regulatory Change, of capital in respect of its Note or its Loan, such
compensation to include, without limitation, an amount equal to any reduction of
the rate of return on assets or equity of such Lender or its parent or holding
company (or any Applicable Lending Office) to a level below that which such
Lender or its parent or holding company (or any Applicable Lending Office) could
have achieved but for such Governmental Requirement. Such Lender will notify the
Borrower that it is entitled to compensation pursuant to this Section 5.01(a) as
promptly as practicable after it determines to request such compensation.
(b) Compensation Procedure. Any Lender notifying the Borrower of
the incurrence of additional costs under this Section 5.01 shall in such notice
to the Borrower and the Agent set forth in reasonable detail the basis and
amount of its request for compensation. Determinations and allocations by each
Lender for purposes of this Section 5.01 of the effect of any Regulatory Changes
or of the effect of capital maintained, on its costs or rate of return of
maintaining its Loan or on amounts receivable by it in respect of its Loan, and
of the amounts required to compensate such Lender under this Section 5.01, shall
be conclusive and binding for all purposes, provided that such determinations
and allocations are made on a reasonable basis. Any request for additional
compensation under this Section 5.01 shall be paid by the Borrower within thirty
(30) days of the receipt by the Borrower of the notice described in this Section
5.01(b).
ARTICLE VI
Conditions Precedent
Section 6.01 Conditions to Restructure. Notwithstanding any other provision
of this Agreement or any of the other Loan Documents, and without affecting in
any manner the rights of the Agent and the Lenders prior to the Closing Date
under the Existing Agreement, the Lenders shall not be required to restructure,
modify and continue the Prior Debt as Loans under this Agreement unless and
until each of the following conditions has been satisfied or waived and, in the
case of documents to be delivered, the Agent has received all of the following,
in form and substance reasonably satisfactory to the Agent and each Lender, with
sufficient copies for each Lender:
(a) This Agreement and the Loan Documents contemplated hereby have
been executed by each party thereto.
(b) A certificate of the Secretary or an Assistant Secretary of
the Borrower setting forth (i) resolutions of its board of directors with
respect to the authorization of the Borrower to execute and deliver the Loan
Documents to which it is a party and to enter into the transactions contemplated
in those documents, (ii) the officers of the Borrower (y) who are authorized to
sign the Loan Documents to which Borrower is a party and (z) who will, until
replaced by another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen
24
signatures of the authorized officers, and (iv) the articles or certificate of
incorporation and bylaws of the Borrower, certified as being true and complete.
The Agent and the Lenders may conclusively rely on such certificate until the
Agent receives notice in writing from the Borrower to the contrary.
(c) A certificate of the Secretary or an Assistant Secretary of each
Guarantor setting forth (i) resolutions of its board of directors with respect
to the authorization of such Guarantor to execute and deliver the Loan Documents
to which it is a party and to enter into the transactions contemplated in those
documents, (ii) the officers of such Guarantor (y) who are authorized to sign
the Loan Documents to which such Guarantor is a party and (z) who will, until
replaced by another officer or officers duly authorized for that purpose, act as
its representative for the purposes of signing documents and giving notices and
other communications in connection with this Agreement and the transactions
contemplated hereby, (iii) specimen signatures of the authorized officers, and
(iv) the articles or certificate of incorporation and bylaws of such Guarantor,
certified as being true and complete. The Agent and the Lenders may conclusively
rely on such certificate until they receive notice in writing from such
Guarantor to the contrary.
(d) Certificates of the appropriate state agencies with respect to the
organizational existence, qualification and good standing of the Borrower and
Subsidiaries.
(e) A compliance certificate which shall be substantially in the form
of Exhibit B, duly and properly executed by a Responsible Officer and dated as
of the Closing Date.
(f) The Notes, duly completed and executed.
(g) The Security Instruments as necessary to preserve in favor of the
Agent a legal, valid and enforceable first (except for Excepted Liens entitled
to priority under applicable law) security interest in and lien upon the
collateral described in the existing Security Instruments and the additional
collateral described in Schedule 6.01(g) ("Additional Collateral"), such
collateral described in the existing Security Instruments and the Additional
Collateral being collectively referred to as "Collateral"), together with:
(i) written advice relating to such Lien and judgment searches as
the Agent shall have reasonably requested with respect to any of the
Collateral, and such termination statements or other documents, including
payoff letters, as may be necessary to release any Lien in favor of any
Person not otherwise permitted by Section 9.02;
(ii) evidence that all other actions necessary or, in the
reasonable opinion of the Agent, desirable to perfect and protect the first
priority security interest created by the Security Instruments have been
taken; and
(iii) evidence that the Agent is named as loss payee under all
policies of casualty insurance, and as additional insured under all policies
of liability insurance (excluding directors and officers insurance and
malpractice insurance), required by the Security Instruments and hereunder.
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(h) An opinion of Xxxxxx and Xxxxx, L.L.P., counsel to the
Borrower, in form and substance satisfactory to the Agent, as to such matters
incident to the transactions herein contemplated as the Agent may reasonably
request.
(i) A certificate of insurance coverage of the Borrower evidencing
that the Borrower is carrying insurance in accordance with Section 7.19.
(j) Payment by the Borrower (out of its Cash on Hand) of the
following interest, fees, costs and expenses to the extent then due and payable
on the Closing Date:
(i) $1,500,000 (inclusive of a $500,000 expense reimbursement
payment previously paid to the Agent) to be applied first to unpaid
professional fees and expenses, including reasonable attorneys' fees
and expenses incurred by the Agent and Lenders in connection with the
transactions contemplated hereby, and second to principal due on the
Prior Debt prior to the Closing Date;
(ii) the first Administrative Fee due to Agent in the amount
of $25,000; and
(iii) all accrued and unpaid interest due on the Prior Debt as
of the Closing Date other than the Default Interest.
(k) A certificate signed by a Responsible Officer of the Borrower,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article
VII are true and correct on and as of such date, as though made on and
as of such date (except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall
be true and correct as of such earlier date); and
(ii) no Default or Event of Default exists under this
Agreement.
(l) A copy of the Financial Statements and detailed projections of
the Borrower and its Subsidiaries for the period ending December 31, 2005;
(m) Such other documents as the Agent or any Lender or special
counsel to the Agent may reasonably request.
(n) The following actions and documentation shall have been
completed:
(i) Borrower shall have issued to each Lender or its designee
a Warrant in the form attached as Exhibit H hereto (each, a "Warrant,"
and collectively, the "Warrants"), providing the Lenders or their
designees with warrants to purchase an aggregate of 60,859 shares of
Series A-2 Preferred Stock on such terms as are specified therein;
26
(ii) Borrower, each Lender and the Subordinate Lenders shall
have entered into the Stockholders Agreement and a Registration Rights
Agreement, each on such terms and conditions satisfactory to Lenders;
(iii) Borrower shall have filed with the Secretary of State
of Delaware the Certificate of Designations, which will contain terms
and conditions satisfactory to Lenders;
(iv) Borrower shall have obtained from its stockholders
having the voting power to amend the Borrower's Certificate of
Incorporation and, if necessary, Bylaws, a voting agreement to
accomplish the actions set forth in Section 8.11(a); and Borrower shall
have taken all appropriate corporate action necessary to authorize each
of the documents and instruments referenced in this Section 6.01(n).
(o) The Borrower and its Subsidiaries shall have established lock
box accounts with the Agent providing for the deposit of all collections of
receivables;
(p) Borrower shall have obtained from Xxxxxx Financial, Inc.,
Midwest Mezzanine Fund II, L.P. and Xxxxx Xxxxx ("Subordinate Lenders")
$1,700,000 of unsecured subordinated loans on terms and conditions acceptable to
Agent, and the Agent, the Subordinate Lenders, the Borrower and the Guarantors
shall have entered into a subordination agreement in the form attached as
Exhibit D hereto (the "Subordination Agreement");
(q) The current holders of all Subordinated Debt existing prior
to the Closing Date, shall have as of the Closing Date, converted all such
existing Subordinated Debt into equity of the Borrower in accordance with the
terms set forth in Schedule 6.01(q) hereto and otherwise on terms and conditions
satisfactory to Agent and the Lenders;
(r) Borrower, CDC California and Castle West, and Xxxxxxx shall
have entered into a Forbearance Agreement in the form attached as Exhibit I
hereto (the "Forbearance Agreement") providing Xxxxxxx with a series of monthly
payments in exchange for Xxxxxxx'x agreement to forbear from exercising any
rights, remedies and recourse against CDC California and Castle West in
connection with that certain judgment against CDC California and Castle West.
(s) Borrower, Castle Texas and Castle Dental Associates of Texas,
P.C., and Xxxx X. Xxxxxx, D.D.S. and the Estate of Xxxx X. Xxxxxx, D.D.S.
(collectively, "Estate of Castle") shall have entered into a Settlement
Agreement in the form attached as Exhibit J hereto providing for the Estate of
Castle to release all claims against Borrower, Castle Texas, Castle Dental
Associates of Texas, P.C. and Lenders under that certain deferred compensation
agreement dated December 18, 1995.
(t) Borrower, Xxxx X. Xxxxxx, Xx. ("Castle, Jr.") and Xxxxxxx,
Inc. ("Xxxxxxx") shall have entered into the Severance Agreement in the form
attached as Exhibit K hereto providing for (i) a severance package to Castle,
Jr. and (ii) the payment of back rent, current rent and other amounts owing to
Xxxxxxx under a certain lease agreement in exchange for (1) Castle,
27
Jr. terminating any employment or other relations with Borrower or any
Subsidiary of Borrower and (2) Xxxxxxx releasing claims arising out of such
lease agreement.
Section 6.02 Conditions Precedent for the Benefit of Lenders. All
conditions precedent to the obligations of the Lenders to restructure, modify
and/or continue the Prior Debt are imposed hereby solely for the benefit of the
Lenders, and no other Person may require satisfaction of any such condition
precedent or be entitled to assume that the Lenders will refuse to restructure,
modify and/or continue any Loan in the absence of strict compliance with such
conditions precedent.
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Agent and the Lenders as
follows:
Section 7.01 Corporate Existence. Each of the Borrower 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
organization; (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 7.02 Financial Condition. The audited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as at December 31, 2001
and the related consolidated statement of income, stockholders' equity and cash
flow of the Borrower and its Consolidated Subsidiaries for the fiscal year ended
on said date, with the opinion thereon of Price Waterhouse Coopers, L.L.P.
heretofore furnished to the Agent and the unaudited consolidated balance sheet
of the Borrower and its Consolidated Subsidiaries as at May 31, 2002 and their
related consolidated statements of income and cash flow of the Borrower and its
Consolidated Subsidiaries for the 5 month period ended on such date heretofore
furnished to the Agent, are complete and correct and fairly present the
consolidated financial condition of the Borrower and its Consolidated
Subsidiaries as at said dates and the results of its operations for the fiscal
year and the 5 month period on said dates, all in accordance with GAAP, as
applied on a consistent basis (subject, in the case of the interim financial
statements, to normal year-end adjustments). Neither the Borrower nor any
Subsidiary has on the Closing Date any material Debt, contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as referred to or
reflected or provided for in the Financial Statements or in Schedule 7.02. Since
May 31, 2002, there has been no change or event having a Material Adverse
Effect. Since the latest date of the Financial Statements, neither the business
nor the Properties of the Borrower or any Subsidiary have been materially and
adversely affected as a result of any fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contracts, permits or
concessions by any Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy.
28
Section 7.03 Litigation. There is no litigation, legal, administrative
or arbitral proceeding, investigation or other action of any nature pending or,
to the knowledge of the Borrower, threatened against or affecting the Borrower
or any Subsidiary which could reasonably be expected to have a Material Adverse
Effect or purport to affect or pertain to this Agreement or any other Loan
Document or any of the transactions contemplated hereby or thereby, except as
disclosed in Schedule 7.03.
Section 7.04 No Breach. After giving effect to Section 2.02(b), no
Default or Event of Default exists or would result from the restructuring of the
Prior Debt as contemplated thereby. Neither the execution and delivery of the
Loan Documents, nor compliance with the terms and provisions hereof 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 Borrower or any Subsidiary, or any Governmental Requirement or any material
agreement or instrument to which the Borrower 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
Borrower or any Subsidiary pursuant to the terms of any such material agreement
or instrument other than the Liens created by the Loan Documents.
Section 7.05 Authority. The Borrower and each Subsidiary have all
necessary corporate or limited liability company power and authority to execute,
deliver and perform its obligations under the Loan Documents to which it is a
party; and the execution, delivery and performance by the Borrower and each
Subsidiary of the Loan Documents to which it is a party, have been duly
authorized by all necessary action on its part; and the Loan Documents
constitute the legal, valid and binding obligations of the Borrower and each
Subsidiary, enforceable in accordance with their terms.
Section 7.06 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 Borrower or any Subsidiary of
the Loan Documents to which it is a party or for the validity or enforceability
thereof, except for the recording and filing of the Security Instruments as
required by this Agreement.
Section 7.07 Use of Loans. The Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System) and no part of the proceeds of the Prior Debt has
been used to buy or carry any margin stock.
Section 7.08 ERISA.
(a) The Borrower, each Subsidiary and each ERISA Affiliate
have complied in all material respects with ERISA and, where applicable, the
Code regarding each Plan.
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
29
(c) No act, omission or transaction has occurred which could result
in imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether
directly or indirectly) of (i) either a civil penalty assessed pursuant to
section 502(c), (i) or (l) of ERISA or a tax imposed pursuant to Chapter 43 of
Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.
(d) No liability to the PBGC (other than for the payment of current
premiums which are not past due) by the Borrower, any Subsidiary or any ERISA
Affiliate has been or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with respect
to any Plan has occurred.
(e) Full payment when due has been made of all amounts which the
Borrower, any Subsidiary or any ERISA Affiliate is required under the terms of
each Plan or applicable law to have paid as contributions to such Plan, and no
accumulated funding deficiency (as defined in section 302 of ERISA and section
412 of the Code), whether or not waived, exists with respect to any Plan.
(f) The actuarial present value of the benefit liabilities under
each Plan which is subject to Title IV of ERISA does not, as of the end of the
Borrower's most recently ended fiscal year, exceed the current value of the
assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities. The term "actuarial
present value of the benefit liabilities" shall have the meaning specified in
section 4041 of ERISA.
(g) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains, or contributes to an employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its
sole discretion at any time without any material liability.
(h) None of the Borrower, any Subsidiary or any ERISA Affiliate
sponsors, maintains or contributes to, or has at any time in the preceding six
calendar years, sponsored, maintained or contributed to, any Multiemployer Plan.
(i) None of the Borrower, any Subsidiary or any ERISA Affiliate is
required to provide security under section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liability for the Plan.
Section 7.09 Taxes. Each of the Borrower and its Subsidiaries has filed all
United States Federal income tax returns and all other tax returns which are
required to be filed by them and have paid all material taxes due pursuant to
such returns or pursuant to any assessment received by the Borrower or any
Subsidiary. The charges, accruals and reserves on the books of the Borrower and
its Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of the Borrower, adequate. No tax lien has been filed and, to the
knowledge of the Borrower, no claim is being asserted with respect to any such
tax, fee or other charge.
Section 7.10 Titles, etc.
30
(a) Each of the Borrower and its Subsidiaries has good and
defensible title to its material (individually or in the aggregate) Properties,
free and clear of all Liens, except Liens permitted by Section 9.02.
(b) All leases and agreements necessary for the conduct of the
business of the Borrower and its Subsidiaries are valid and subsisting, in full
force and effect and there exists no default or event or circumstance which with
the giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which would affect in any material respect the
conduct of the business of the Borrower and its Subsidiaries.
(c) The licenses, rights, Properties and other assets
presently owned, leased or licensed by the Borrower and its Subsidiaries,
include all rights, Properties and other assets necessary to permit the Borrower
and its Subsidiaries to conduct their business in all material respects in the
same manner as its business has been conducted prior to the Closing Date.
(d) All of the assets and Properties of the Borrower and its
Subsidiaries which are reasonably necessary for the operation of its business
are in good working condition and are maintained in accordance with prudent
business standards.
Section 7.11 No Material Misstatements. No written information,
statement, exhibit, certificate, document or report furnished to the Agent and
the Lenders (or any of them) by the Borrower 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 Borrower and its
Subsidiaries taken as a whole.
Section 7.12 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section 7.14 Subsidiaries. Except as set forth on Schedule 7.14, the
Borrower has no Subsidiaries and has no equity investments in any other Person.
Section 7.15 Location of Business and Offices. The Borrower's principal
place of business and chief executive offices are located at the address stated
on the signature page of this Agreement. The principal place of business and
chief executive office of each Subsidiary are located at the addresses stated on
Schedule 7.14.
Section 7.16 Defaults. Neither the Borrower nor any Subsidiary is in
default nor has any event or circumstance occurred which, but for the expiration
of any applicable grace period or the giving of notice, or both, would
constitute a default under any material agreement or
31
instrument to which the Borrower or any Subsidiary is a party or by which the
Borrower or any Subsidiary is bound which default would have a Material Adverse
Effect.
Section 7.17 Environmental Matters. Except as would not have a Material
Adverse Effect, neither any Property of the Borrower nor any Subsidiary nor the
operations conducted thereon violate any law, order or requirement of any court
or Governmental Authority or any Environmental Laws.
Section 7.18 Compliance with the Law. Neither the Borrower nor any
Subsidiary has violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of any of its Properties or the conduct of its business, which
violation or failure would have (in the event such violation or failure were
asserted by any Person through appropriate action) a Material Adverse Effect.
Section 7.19 Insurance. Schedule 7.19 attached hereto contains an
accurate and complete description of all material policies of fire, liability,
workmen's compensation and other forms of insurance owned or held by the
Borrower and each Subsidiary. Except as disclosed in Schedule 7.19, all such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date of the closing have been paid,
and no notice of cancellation or termination has been received with respect to
any such policy. Such policies are sufficient for compliance with all
requirements of law and of all agreements to which the Borrower or any
Subsidiary is a party; are valid, outstanding and enforceable policies; provide
adequate insurance coverage in at least such amounts and against at least such
risks (but including in any event public liability) as are usually insured
against in the same general area by companies engaged in the same or a similar
business for the assets and operations of the Borrower and each Subsidiary; will
remain in full force and effect through the respective dates set forth in
Schedule 7.19 without the payment of additional premiums; and will not in any
way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Schedule 7.19 identifies all material risks, if
any, which the Borrower and its Subsidiaries and their respective Board of
Directors or officers have designated as being self insured. Neither the
Borrower nor any Subsidiary has been refused any insurance with respect to its
assets or operations, nor has its coverage been limited below usual and
customary policy limits, by an insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last three
years. In the event that a new Subsidiary is formed and an advance is requested
under the Loans, and the Lenders approve such advance, Borrower will provide the
Agent with a new, updated Schedule 7.19.
Section 7.20 Management Services Agreements and Accounts Receivable
Purchase Agreements. The Management Services Agreements and Account Receivable
Purchase Agreements listed on Schedule 7.20 hereto are valid, binding and
enforceable against the parties thereto. The Borrower has the right to grant,
and has granted, an enforceable Lien on the Borrower's right to receive proceeds
under the Management Services Agreements and the receivables purchased under the
Accounts Receivable Purchase Agreements pursuant to the Security Instruments.
The Borrower has obtained all consents from Governmental Authorities necessary
to perform under the Management Services Agreements, the failure of which to
obtain could have a Material Adverse Effect. Schedule 7.20 lists any security
agreements which have
32
been executed by Existing PCs in favor of the Borrower or any Subsidiary and are
currently in effect.
Section 7.21 Restriction on Liens. Neither the Borrower nor any of its
Subsidiaries is a party to any agreement or arrangement (other than this
Agreement and the Security Instruments), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to other Persons on or in respect of their respective assets or
Properties, except for Property subject to Liens permitted under Section 9.02.
Section 7.22 Material Agreements. Set forth on Schedule 7.22 hereto is
a complete and correct list of all material credit agreements, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
joint venture agreements, and other instruments in effect or to be in effect as
of the Closing Date (other than Hedging Agreements) providing for, evidencing,
securing or otherwise relating to any Debt of the Borrower or any of its
Subsidiaries in excess of $250,000, and all obligations of the Borrower or any
of its Subsidiaries to issuers of surety or appeal bonds issued for account of
the Borrower or any such Subsidiary in excess of $250,000, and such list
correctly sets forth the names of the debtor or lessee and creditor or lessor
with respect to the Debt or lease obligations outstanding or to be outstanding
and the Property subject to any Lien securing such Debt or lease obligation.
Section 7.23 Hedging Agreements. Schedule 7.23 sets forth, as of the
Closing Date, a true and complete list of all Hedging Agreements of the
Borrower, the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net xxxx to market value
thereof, all credit support agreements relating thereto (including any margin
required or supplied), and the counterparty to each such agreement.
Section 7.24 Security Instruments.
(a) The provisions of each of the Security Instruments (other
than the Guaranties and similar non-Lien creating instruments) are effective to
create in favor of the Agent for the benefit of the Lenders a legal, valid and
enforceable security interest in all right, title, and interest of the Borrower
and its Subsidiaries, as applicable, in the collateral described therein and to
the extent permitted or provided for by applicable law; and the Agent for the
benefit of the Lenders has a perfected first priority security interest or
otherwise enforceable Lien in all right, title, and interest of the Borrower and
its Subsidiaries, as applicable, in the Collateral, as provided for by
applicable law and subject only to Excepted Liens or as otherwise specified in
the Security Instruments.
(b) All representations and warranties of the Borrower and its
Subsidiaries contained in the Security Instruments are true and correct.
Section 7.25 Labor Relations. There are no strikes, lockouts or other
material labor disputes against the Borrower or any of its Subsidiaries or, to
the Borrower's knowledge, threatened against or affecting the Borrower or any of
its Subsidiaries, and no significant unfair labor practice complaint is pending
against the Borrower or any of its Subsidiaries or, to the Borrower's knowledge,
threatened against any of them before any Governmental Authority. The Borrower
is not a party to any collective bargaining agreements or contracts and no union
33
representation exists and, to the Borrower's knowledge, no union organizing
activities are taking place.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that until payment in full of the
Loans, all interest thereon and all other amounts payable by the Borrower
hereunder and unless prior written consent is obtained from the Majority
Lenders:
Section 8.01 Reporting Requirements. The Borrower shall deliver, or
shall cause to be delivered, to the Agent with sufficient copies of each for the
Lenders:
(a) Annual Financial Statements. As soon as available and in
any event within 105 days after the end of each fiscal year of the Borrower, the
audited consolidated and unaudited consolidating statements of income,
stockholders' equity, changes in financial position and cash flow of the
Borrower and its Consolidated Subsidiaries for such fiscal year, and the related
consolidated and consolidating balance sheets of the Borrower 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 standing acceptable to the Agent which
opinion shall state that said financial statements fairly present in all
material respects the consolidated and consolidating financial condition and
results of operations of the Borrower 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 50 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of the Borrower, consolidated and
consolidating statements of income, stockholders' equity, changes in financial
position and cash flow of the Borrower 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 in
all material respects the consolidated and consolidating financial condition and
results of operations of the Borrower 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 30 days after the end of each calendar month, the
Borrower-prepared consolidated and consolidating statements of income and cash
flow of the Borrower and its Consolidated Subsidiaries for such period and for
the period from the beginning of the respective fiscal year to
34
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 Borrower 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) Accounts Receivable. As soon as available and in any event
within 30 days after the end of each calendar month, (i) a report in form
reasonably satisfactory to the Agent reflecting the aging and collection of the
receivables of the Borrower and its Subsidiaries and (ii) such other reports
with respect to receivables as deemed reasonably necessary by the Agent.
(e) Quarterly Regional Reports. As soon as available and in
any event within 45 days after the end of each of quarterly period of each
fiscal year of the Borrower, statements of EBIT and EBITDA for each Reporting
Region for such period and for the period from the beginning of the fiscal year
to the end of such period. As used herein the term "Reporting Region" shall mean
the dental centers and other business operations for each of Houston, Xxxxxx,
Xxxxxx/Fort Worth, San Antonio, Tennessee, Florida and California, all as more
fully set forth in Schedule 8.01(e). Such statements shall be accompanied by a
certificate of a Responsible Officer as to the good faith preparation of such
report.
(f) Monthly Regional Statements. As soon as available and in
any event within 30 days after the end of each calendar month of each fiscal
year of the Borrower, statements of EBIT and EBITDA for each Reporting Region
for such period and for the period from the beginning of the
respective fiscal year to the end of such period. Such statements shall be
accompanied by a certificate of a Responsible Officer as to the good faith
preparation of such report.
(g) Excess Cash Flow. As soon as available but no later than
April 30 of each year, commencing April 30, 2003, a certificate substantially in
the form of Exhibit F ("Excess Cash Flow Certificate") of a Responsible Officer
of the Borrower setting forth in reasonable detail the Borrower's calculation of
Excess Cash Flow and for each month after April 30 of each year for which an
Annual Cash Flow Payment remains unpaid and is outstanding; and, on the last day
of each month thereafter until the Annual Cash Flow Payment is made, a
certificate substantially in the form of Exhibit G ("Cash Flow Differential
Certificate") of a Responsible Officer of the Borrower setting forth in
reasonable detail the Borrower's calculation of current Cash on Hand and the
amount of the unpaid Annual Cash Flow Payment due for such month.
(h) Cash Flow Forecast. Monthly, a rolling 13 week cash flow
forecast.
(i) Budget. As soon as available and in any event within
thirty (30) days after the end of each fiscal year of the Borrower, a budget for
the Borrower and its Consolidated Subsidiaries, as approved by the board of
directors of the Borrower, for the following fiscal year setting forth in
comparative form corresponding figures from the preceding fiscal year, in
reasonable detail.
35
(j) Notice of Default, Etc. Promptly after the Borrower knows
that any Default or any Material Adverse Effect has occurred, a notice of such
Default or Material Adverse Effect, describing the same in reasonable detail and
the action the Borrower proposes to take with respect thereto.
(k) Other Accounting Reports. Promptly upon receipt thereof,
(i) a copy of each other report or letter submitted to the Borrower or any
Subsidiary by independent accountants in connection with any annual, interim or
special audit made by them of the books of the Borrower and its Subsidiaries,
(ii) a copy of any response by the Borrower or any Subsidiary of the Borrower,
or the Board of Directors of the Borrower or any Subsidiary of the Borrower, to
such letter or report and (iii) any other reports which the Agent or Lenders may
reasonably request.
(l) SEC Filings, Etc. Promptly upon its becoming available
(and no later than 10 Business Days after a filing by Borrower), each financial
statement, report, notice or proxy statement sent by the Borrower 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 Borrower with or received by the Borrower in
connection therewith from any securities exchange or the SEC (including forms
10K, 10Q and 8K) or any successor agency.
(m) Notices Under Other Loan Agreements. Promptly after the
furnishing thereof, copies of any material statement, report or notice furnished
to or any Person pursuant to the terms of any indenture, loan or credit or other
similar agreement, other than this Agreement and not otherwise required to be
furnished to the Agent pursuant to any other provision of this Section 8.01.
(n) Annual Revenue Reports. As soon as available and in any
event within 90 days after the end of each fiscal year of the Borrower, a report
prepared by the Borrower for each dental center setting forth the revenues,
expenses and contributions to profit of such dental center in form and substance
acceptable to the Agent.
(o) Quarterly Revenue Reports. As soon as available and in any
event within 45 days after each of the first three fiscal quarterly periods of
each fiscal year of the Borrower, a report by the Borrower for each dental
center setting for the revenues, expenses and contributions to profit of such
dental center generally in the form previously provided by the Borrower and
otherwise in form and substance reasonably acceptable to the Agent.
(p) Plan Report. From time to time such other information
regarding the business, affairs or financial condition of the Borrower or any
Subsidiary (including, without limitation, any Plan or Multiemployer Plan and
any reports or other information required to be filed under ERISA) as the Agent
may reasonably request.
(q) Capital Expenditures Budget. Promptly upon becoming
available and in any event within 30 days after the end of each fiscal year of
the Borrower, a capital expenditure budget for the next fiscal year setting
forth all proposed Capital Expenditures to be incurred during such fiscal year.
36
(r) Modifications of Management Services Agreements, etc. Promptly
upon the execution thereof, executed copies of any modification or amendment of
any Management Services Agreement or Accounts Receivable Purchase Agreement.
The Borrower shall furnish to the Lenders, at the time it furnishes each set of
financial statements pursuant to paragraph (a) or (b) above, a certificate
substantially in the form of Exhibit B hereto executed by a Responsible Officer
(i) certifying as to the matters set forth therein and stating that no Default
has occurred and is continuing (or, if any Default has occurred and is
continuing, describing the same in reasonable detail), and (ii) setting forth in
reasonable detail the computations necessary to determine the Borrower's Total
Funded Debt, Senior Funded Debt, EBIT and EBITDA and whether the Borrower is in
compliance with Sections 9.12, 9.13, 9.14 and 9.15 as of the end of the
respective fiscal quarter or fiscal year. Upon Agent's request Borrower further
agrees to conduct a quarterly conference call with representatives of the
Lenders on or about the Quarterly Dates and to furnish to the Lenders at least 3
Business Days prior to such quarterly conference call a written report prepared
by a Responsible Officer which report shall include a discussion of the current
operating results, conditions of and prospects of the business of the Borrower
and its Subsidiaries.
Section 8.02 Litigation. The Borrower shall promptly give to the Agent
notice of: (i) all legal or arbitral proceedings, and of all proceedings before
any Governmental Authority affecting the Borrower, any Acquired Entity 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 Borrower, any Acquired Entity 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 Borrower will, and will
cause each of its Subsidiaries to, promptly notify the Agent and each of the
Lenders of any claim, judgment, Lien or other encumbrance affecting any Property
of the Borrower, any Acquired Entity or any Subsidiary if the value of the
claim, judgment, Lien, or other encumbrance affecting such Property shall exceed
$250,000.
Section 8.03 Maintenance, Etc.
(a) Generally. The Borrower shall and shall cause each Subsidiary
to: preserve and maintain its corporate or limited liability company existence
and all of its material rights, privileges and franchises; in accordance with
Section 8.09, keep books of record and account in which full, true and correct
entries will be made of all dealings or transactions in relation to its business
and activities; comply with all Governmental Requirements if failure to comply
with such requirements will have a Material Adverse Effect; pay and discharge
all taxes, assessments and governmental charges or levies imposed on it or on
its income or profits or on any of its Property prior to the date on which
penalties attach thereto, except for any such tax, assessment, charge or levy
the payment of which is being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained; in accordance with
Section 8.09, upon reasonable notice, permit representatives of the Agent or any
Lender, during normal business hours, to examine, copy and make extracts from
its books and records, to inspect its Properties, and to discuss its business
and affairs with its officers, all to the extent reasonably requested by such
Lender or the Agent (as the case may be); and keep, or cause to be kept, insured
by financially sound and reputable insurers all Property of a character usually
37
insured by Persons engaged in the same or similar business similarly situated
against loss or damage of the kinds and in the amounts customarily insured
against by such Persons and carry such other insurance as is usually carried by
such Persons including, without limitation, environmental risk insurance to the
extent reasonably available.
(b) Proof of Insurance. Contemporaneously with the delivery of the
financial statements required by Section 8.01(a) to be delivered for each year,
the Borrower will furnish or cause to be furnished to the Agent a certificate of
insurance coverage from the insurer in form and substance satisfactory to the
Agent and, if requested, will furnish the Agent copies of the applicable
policies.
(c) Operation of Properties. The Borrower will and will cause each
Subsidiary to operate its Properties or cause such Properties to be operated in
a careful and efficient manner in accordance with the practices of the industry
and in compliance with all applicable contracts and agreements and in compliance
in all material respects with all Governmental Requirements.
Section 8.04 Environmental Matters.
(a) Establishment of Procedures. The Borrower will and will cause
each Subsidiary to establish and implement such procedures as may be reasonably
necessary to continuously determine and assure that (i) all Property of the
Borrower and its Subsidiaries and the operations conducted thereon and other
activities of the Borrower and its Subsidiaries are, in all material respects,
in compliance with and do not violate the requirements of any Environmental
Laws, and (ii) no oil, hazardous substances or solid wastes are disposed of or
otherwise released on or to any Property owned by any such party except in
compliance with Environmental Laws.
(b) Notice of Action. The Borrower will promptly notify the Agent
in writing of any threatened action, investigation or inquiry by any
Governmental Authority of which the Borrower has knowledge in connection with
any Environmental Laws, excluding routine testing and corrective action.
Section 8.05 Further Assurances.
(a) General. The Borrower will and will cause each Subsidiary to
cure promptly any defects in the creation and issuance of the Notes and the
execution and delivery of the Security Instruments and this Agreement. The
Borrower at its expense will and will cause each Subsidiary to promptly execute
and deliver to the Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and agreements of the
Borrower or any Subsidiary, as the case may be, in the Security Instruments and
this Agreement, or to further evidence and more fully describe the collateral
intended as security for the Notes, or to correct any omissions in the Security
Instruments, or to state more fully the security obligations set out herein or
in any of the Security Instruments, or to perfect, protect or preserve any Liens
created pursuant to any of the Security Instruments, or to make any recordings,
to file any notices or obtain any consents, all as may be necessary or
appropriate in connection therewith.
38
(b) Certain Unperfected Interests. As of the Closing Date,
Borrower and Lenders recognize that Borrower and its Subsidiaries may not have
obtained complete legal title to certain of their assets or assets of their
respective Existing PC's consistent with the Management Services Agreements and
other contracts between Borrower and its Subsidiaries and their Existing PC's,
including, without limitation, those certain assets set forth on Schedule
8.05(b) (herein referred to as the "Unperfected Assets"). Borrower will and will
cause each Subsidiary to do all things reasonably necessary to perfect liens and
security interests in favor of Agent on behalf of the Lenders or otherwise
obtain legal title to all such Unperfected Assets within 30 days after the
Closing Date; provided if Borrower reasonably determines that undertaking such
actions will undermine or otherwise act to the detriment of the business
relationship between Borrower and its Subsidiaries and their respective Existing
PC's, Borrower will provide written notice to Agent setting forth a written
explanation thereof in lieu of such perfection or obtaining legal title prior to
the end of said 30-day period. If, after receipt of such written explanation,
Agent requests the Borrower to nevertheless pursue such perfection and/or obtain
legal title to the Unperfected Assets, Borrower shall or shall cause its
Subsidiaries to immediately commence such pursuit of such perfection or legal
control. Notwithstanding any provision herein to the contrary, Borrower shall
and shall cause its Subsidiaries to use best efforts to cause each of the
Existing PC's to grant Agent on behalf of Lenders a security interest in all of
their respective assets, including, without limitation, the Unperfected Assets
and any after-acquired property obtained by such Existing PC's.
Section 8.06 Performance of Obligations. The Borrower will pay the Notes
according to the reading, tenor and effect thereof; and the Borrower will and
will cause each Subsidiary to do and perform every act and discharge all of the
obligations to be performed and discharged by them under the Security
Instruments and this Agreement, at the time or times and in the manner
specified. In furtherance of the foregoing, Borrower will, and will cause each
Subsidiary to, establish, maintain and comply at all times with the accounts
receivable collection procedures and cash management systems as set forth in the
Security Instruments and any agreements related thereto.
Section 8.07 ERISA Information and Compliance. The Borrower will promptly
furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly
furnish to the Agent with sufficient copies to the Lenders (i) promptly after
the filing thereof with the United States Secretary of Labor, the Internal
Revenue Service or the PBGC, copies of each annual and other report with respect
to each Plan or any trust created thereunder, (ii) immediately upon becoming
aware of the occurrence of any ERISA Event or of any "prohibited transaction,"
as described in section 406 of ERISA or in section 4975 of the Code, in
connection with any Plan or any trust created thereunder, a written notice
signed by a Responsible Officer specifying the nature thereof, what action the
Borrower, the Subsidiary or the ERISA Affiliate is taking or proposes to take
with respect thereto, and, when known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (iii) immediately upon receipt thereof, copies of any notice of the
PBGC's intention to terminate or to have a trustee appointed to administer any
Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower
will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full
and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the contribution
and funding requirements of section 412 of the Code (determined without regard
to subsections (d), (e), (f)
39
and (k) thereof) and of section 302 of ERISA (determined without regard to
sections 303, 304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the
PBGC in a timely manner, without incurring any late payment or underpayment
charge or penalty, all premiums required pursuant to sections 4006 and 4007 of
ERISA.
Section 8.08 Management Services Agreements and Accounts Receivable
Purchase Agreements. The Borrower will and will cause each Subsidiary to do all
things necessary to maintain and keep in full force and effect and to enforce
compliance with the Management Services Agreements and the Accounts Receivable
Purchase Agreements. In the event that a new Subsidiary is formed, any
Management Services Agreements and Accounts Receivable Purchase Agreements
binding such Subsidiary shall be included within the terms of this affirmative
covenant.
Section 8.09 Inspection of Property and Books and Records. The Borrower
shall maintain, and shall cause each of its Subsidiaries to maintain, proper
books of record and account, in which full, true and correct entries in
conformity with GAAP consistently applied shall be made of all financial
transactions and matters involving the assets and business of the Borrower and
such Subsidiary and consistent with Borrower's 10K and 10Q filings. The Borrower
shall permit, and shall cause each Subsidiary to permit, non-legal
representatives and independent consultants and contractors of the Agent and the
Lenders to visit and inspect any of their respective properties and Collateral,
to examine the Borrower's and each of its Subsidiaries' corporate, financial and
operating records, and to make copies thereof or abstracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the reasonable
expense of the Borrower at such reasonable times during normal business hours
and as often as may be reasonably required for the reasonable administration of
this Agreement, upon three (3) Business Days' prior written notice to the
Borrower. The Lenders will have the specific right to conduct the first such on
site inspections of Borrower and its Subsidiaries within 60 days of the Closing
Date and annually thereafter within 12 months of the first such site
inspections.
Section 8.10 Best Efforts to Prepay. Notwithstanding the Final Maturity
Date, Borrower will use best efforts, commencing on January 1, 2005, to prepay
the Loans in full.
Section 8.11 Authorized Shares.
(a) Within 75 days after the Closing Date, the Borrower shall
amend its Certificate of Incorporation and, if necessary, its Bylaws, to (i)
increase the authorized shares of preferred stock or cause a reverse stock
split, in either case, so that 100% of the number of shares of Series A-2
Preferred Stock are authorized and reserved to provide for the exercise of the
rights represented by the Warrants, (ii) increase the authorized shares of
Common Stock or cause a reverse stock split, in either case, so that 100% of the
number of shares of Common Stock are authorized and reserved to provide for the
exercise of the rights then represented by the Preferred Stock and (iii) reduce
the par value of the Common Stock so that such par value is below the price
required by Section 153(a) of the Delaware General Corporation Law, or any
successor statute, to provide for the exercise of the Warrants and subsequent
conversion of the Series A-2 Preferred Stock. Without limiting the generality of
the foregoing sentence, as soon as practicable after the Closing Date, but in no
event later than 75 days after the Closing Date, the Borrower
40
shall hold a meeting of its stockholders for the authorization of either a
reverse stock split or an increase in the number of authorized shares of
Preferred Stock and Common Stock, and a decrease in the par value of the Common
Stock to meet the requirements of clause (iii) above.
(b) At all times subsequent to the 75/th/ day after the Closing
Date and during the period within which the rights represented by the Warrants
and the Series A-2 Preferred Stock may be exercised, (i) the Borrower will at
all times have authorized and reserved at least (A) 100% of the number of shares
of Series A-2 Preferred Stock needed to provide for the exercise of the rights
then represented by the Warrants and (B) 100% of the number of shares of Common
Stock needed to provide for the exercise of the rights then represented by the
Series A-2 Preferred Stock and (ii) the par value of said shares will at all
times be less than or equal to the price required by Section 153(a) of the
Delaware General Corporation Law, or any successor statute, to provide for the
exercise of the Warrants and subsequent conversion of the Series A-2 Preferred
Stock.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that until payment in full of the Loans,
all interest thereon and all other amounts payable by the Borrower hereunder,
without the prior written consent of the Majority Lenders:
Section 9.01 Debt. Neither the Borrower nor any Subsidiary will incur,
create, assume or permit to exist or otherwise become or remain directly or
indirectly liable with respect to, any Debt, except:
(a) the Notes or other Indebtedness or any guaranty of or
suretyship arrangement for the Notes or other Indebtedness;
(b) accounts payable (for the deferred purchase price of Property
or services) from time to time incurred in the ordinary course of business
which, if greater than 90 days past the invoice or billing date, are being
contested in good faith by appropriate proceedings and reserves adequate under
GAAP shall have been established therefor;
(c) purchase money Debt and Debt under capital leases (as required
to be reported on the financial statements of the Borrower pursuant to GAAP) not
to exceed $2,000,000 in the aggregate;
(d) Debt described on Schedule 9.01;
(e) Subordinated Debt set forth in Schedule 9.01 or otherwise
approved by the Majority Lenders; and
(f) Inter-company Debt permitted under Section 9.03(g).
Section 9.02 Liens. Neither the Borrower nor any Subsidiary will create,
incur, assume or permit to exist any Lien on any of its Properties (now owned or
hereafter acquired), except:
41
(a) Liens securing the payment of any Indebtedness.
(b) Excepted Liens.
(c) Liens disclosed on Schedule 9.02.
(d) Liens securing capital leases allowed under Section 9.01(c), but
only on the Property leased with such capital leases.
(e) Liens originally created to secure purchase money Debt permitted
under Section 9.01(c), which in each case shall not exceed 100% of the lesser of
the total purchase price and the fair market value of the Property acquired as
determined at the time of acquisition; provided, that, (i) the Property to be
purchased with the proceeds of such Debt shall be purchased not more than sixty
(60) days prior to the date of the creation of such Lien and (ii) such Lien
encumbers only the Property so acquired.
Section 9.03 Investments, Loans and Advances. Neither the Borrower nor any
Subsidiary will make or permit to remain outstanding any loans or advances to or
investments in any Person, or acquire, or make any commitment therefor,
including the purchase or acquisition of any Capital Stock in, or any material
portion of the assets of, any Person, or make or commit to make any advance or
extension of credit or capital contribution to any Person including any
Affiliate of Borrower, except that the foregoing restriction shall not apply to:
(a) investments, loans or advances which are disclosed to the Agent in
Schedule 9.03;
(b) accounts receivable arising in the ordinary course of business;
(c) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, in each case
maturing within one year from the date of creation thereof;
(d) commercial paper maturing within one year from the date of creation
thereof rated in the highest grade by Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc.;
(e) deposits maturing within one year from the date of creation thereof
with, including certificates of deposit issued by, any Lender or any office
located in the United States of any other bank or trust company which is
organized under the laws of the United States or any state thereof, has capital,
surplus and undivided profits aggregating at least $100,000,000.00 (as of the
date of such Lender's or bank or trust company's most recent financial reports)
and has a short term deposit rating of no lower than A2 or P2, as such rating is
set forth from time to time, by Standard & Poor's Corporation or Xxxxx'x
Investors Service, Inc., respectively;
(f) deposits in money market funds investing exclusively in investments
described in Section 9.03(c), 9.03(d) or 9.03(e);
42
(g) loans or advances by any Subsidiary to the Borrower or a Wholly
Owned Subsidiary of Borrower, or by the Borrower to any Wholly Owned Subsidiary;
and
(h) advances to employees in the ordinary course of business which
shall not at any time exceed $250,000 in the aggregate.
Section. 9.04 Dividends, Distributions and Redemptions. Neither the
Borrower nor any Subsidiary will declare or pay any dividend, purchase, redeem
or otherwise acquire for value any of their respective Capital Stock now or
hereafter outstanding, return any capital to its stockholders or make any
distribution of its assets to its stockholders ("Restricted Payments"); except
that any Subsidiary of the Borrower may make Restricted Payments to the Borrower
or a Wholly-Owned Subsidiary of Borrower.
Section. 9.05 Sales and Leasebacks. Neither the Borrower nor any Subsidiary
will enter into any arrangement, directly or indirectly, with any Person whereby
the Borrower or any Subsidiary shall sell or transfer any of its Property,
whether now owned or hereafter acquired, and whereby the Borrower or any
Subsidiary shall then or thereafter rent or lease as lessee such Property or any
part thereof or other Property which the Borrower or any Subsidiary intends to
use for substantially the same purpose or purposes as the Property sold or
transferred.
Section. 9.06 Nature of Business. Neither the Borrower nor any Subsidiary
will allow any material change to be made in the character of its business as
conducted by any of them as of the Closing Date.
Section. 9.07 Mergers, Etc. Neither the Borrower nor any Subsidiary will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its Property or assets to any other Person, or
another Subsidiary except that any Subsidiary may merge into the Borrower or
into any Wholly-Owned Subsidiary so long as the surviving entity is Borrower or
a Wholly-Owned Subsidiary that is a Guarantor.
Section. 9.08 ERISA Compliance. The Borrower will not at any time:
(a) Engage in, or permit any Subsidiary or ERISA Affiliate to engage
in, any transaction in connection with which the Borrower, any Subsidiary or any
ERISA Affiliate could be subjected to either a civil penalty assessed pursuant
to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of
Subtitle D of the Code;
(b) Terminate, or permit any Subsidiary or ERISA Affiliate to
terminate, any Plan in a manner, or take any other action with respect to any
Plan, which could result in any liability to the Borrower, any Subsidiary or any
ERISA Affiliate to the PBGC;
(c) Fail to make, or permit any Subsidiary or ERISA Affiliate to fail
to make, full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, the Borrower, a Subsidiary
or any ERISA Affiliate is required to pay as contributions thereto;
43
(d) Permit to exist, or allow any Subsidiary or ERISA Affiliate to
permit to exist, any accumulated funding deficiency within the meaning of
Section 302 of ERISA or section 412 of the Code, whether or not waived, with
respect to any Plan;
(e) Permit, or allow any Subsidiary or ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any Plan maintained by
the Borrower, any Subsidiary or any ERISA Affiliate which is regulated under
Title IV of ERISA to exceed the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any Multiemployer Plan;
(g) Acquire, or permit any Subsidiary or ERISA Affiliate to acquire,
an interest in any Person that causes such Person to become an ERISA Affiliate
with respect to the Borrower, any Subsidiary or any ERISA Affiliate if such
Person sponsors, maintains or contributes to, or at any time in the six-year
period preceding such acquisition has sponsored, maintained, or contributed to,
(1) any Multiemployer Plan, or (2) any other Plan that is subject to Title IV of
ERISA under which the actuarial present value of the benefit liabilities under
such Plan exceeds the current value of the assets (computed on a plan
termination basis in accordance with Title IV of ERISA) of such Plan allocable
to such benefit liabilities;
(h) Incur, or permit any Subsidiary or ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201
or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to, or permit
any Subsidiary or ERISA Affiliate to contribute to or assume an obligation to
contribute to, any employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by
such entities in their sole discretion at any time without any material
liability; or
(j) Amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Borrower, any
Subsidiary or any ERISA Affiliate is required to provide security to such Plan
under section 401(a)(29) of the Code.
Section. 9.09 Asset Dispositions. Neither Borrower nor any Subsidiary will
sell, transfer, lease, contribute or otherwise convey (including in connection
with a sale and leaseback transaction), or grant options, warrants or other
rights with respect to, all or any part of its assets (including a discount or
sale of accounts receivable and Capital Stock of Subsidiaries) to any Person,
other than:
(a) sales or other dispositions of equipment which is worn-out,
obsolete, or no longer needed in the ordinary course of business;
44
(b) dispositions of assets for cash in an amount not less than the
fair market value thereof and which are not otherwise permitted hereunder if:
(i) at the time of such disposition no Default or Event of
Default exists or shall result from such disposition; and
(ii) the aggregate value of all assets so sold by the Borrower
and its Subsidiaries together with the sales or other dispositions
permitted under Section 9.09(a) does not exceed $100,000 in any
fiscal year and the net proceeds thereof are applied as a mandatory
prepayment on the Loans as provided in Section 3.02(b)(iii);
(c) transfers, advances, loans, extensions of credit, capital
contributions and other investments permitted by Section 9.03; and
(d) operating leases and subleases by Borrower and its
Subsidiaries of assets in the ordinary course of business to unaffiliated third
parties.
Section 9.10 Ratio of Total Funded Debt to EBITDA. The Borrower will not
permit its ratio of Total Funded Debt as of the end of any fiscal quarter to
EBITDA for the four fiscal quarters ending on such date (except for the quarter
ending September 30, 2002 which will be calculated on the basis of the prior
three fiscal quarters ending on such date) to be greater than the applicable
ratio as set forth in table (a) below prior to the Sale Date or table (b) below
after the Sale Date:
(a) Prior to the Sale Date.
--------------------------------------------------------------------------------
Ratio Quarter Ending
----- --------------
--------------------------------------------------------------------------------
11 to 1 September 30, 2002
--------------------------------------------------------------------------------
8 to 1 December 31, 2002
--------------------------------------------------------------------------------
7.2 to 1 March 31, 2003
--------------------------------------------------------------------------------
6.8 to 1 June 30, 2003
--------------------------------------------------------------------------------
6.5 to 1 September 30, 2003
--------------------------------------------------------------------------------
6.1 to 1 December 31, 2003
--------------------------------------------------------------------------------
5.8 to 1 March 31, 2004
--------------------------------------------------------------------------------
5.5 to 1 June 30, 2004
--------------------------------------------------------------------------------
5.2 to 1 September 30, 2004
--------------------------------------------------------------------------------
5 to 1 December 31, 2004
--------------------------------------------------------------------------------
4.8 to 1 March 31, 2005
--------------------------------------------------------------------------------
4.6 to 1 June 30, 2005
--------------------------------------------------------------------------------
(b) After the Sale Date,
45
--------------------------------------------------------------------------------
Ratio Quarter Ending
--------------------------------------------------------------------------------
11.7 to 1 September 30, 2002
--------------------------------------------------------------------------------
8.5 to 1 December 31, 2002
--------------------------------------------------------------------------------
7.6 to 1 March 31, 2003
--------------------------------------------------------------------------------
7.2 to 1 June 30, 2003
--------------------------------------------------------------------------------
6.9 to 1 September 30, 2003
--------------------------------------------------------------------------------
6.5 to 1 December 31, 2003
--------------------------------------------------------------------------------
6.1 to 1 March 31, 2004
--------------------------------------------------------------------------------
5.8 to 1 June 30, 2004
--------------------------------------------------------------------------------
5.5 to 1 September 30, 2004
--------------------------------------------------------------------------------
5.3 to 1 December 31, 2004
--------------------------------------------------------------------------------
5.2 to 1 March 31, 2005
--------------------------------------------------------------------------------
4.9 to 1 June 30, 2005
--------------------------------------------------------------------------------
Section 9.11 Capital Expenditures. The Borrower and its Subsidiaries
will not make any Capital Expenditures if, after giving effect thereto, the
aggregate of all such expenditures would exceed the applicable amount as set
forth in table (a) below prior to the Sale Date or table (b) below after the
Sale Date:
(a) Prior to the Sale Date.
--------------------------------------------------------------------------------
Amount Period
--------------------------------------------------------------------------------
$1,700,000 Fiscal year ending December 31, 2002
--------------------------------------------------------------------------------
$1,800,000 Fiscal year ending December 31, 2003
--------------------------------------------------------------------------------
$1,800,000 Fiscal year ending December 31, 2004
--------------------------------------------------------------------------------
$2,400,000 Fiscal year ending December 31, 2005
--------------------------------------------------------------------------------
(b) After the Sale Date.
--------------------------------------------------------------------------------
Amount Period
--------------------------------------------------------------------------------
$1,700,000 Fiscal year ending December 31, 2002
--------------------------------------------------------------------------------
$1,800,000 Fiscal year ending December 31, 2003
--------------------------------------------------------------------------------
$1,800,000 Fiscal year ending December 31, 2004
--------------------------------------------------------------------------------
$2,400,000 Fiscal year ending December 31, 2005
--------------------------------------------------------------------------------
Section 9.12 Minimum EBITDA. The Borrower will not permit EBITDA, as of
the end of any fiscal quarter, calculated on a rolling four quarter basis,
ending closest to the date listed below (except for the quarter ending September
30, 2002 which will be calculated on the basis of the prior three fiscal
quarters ending on such date), to be less than the applicable amount as set
forth in table (a) below prior to the Sale Date or table (b) below after the
Sale Date:
46
(a) Prior to the Sale Date.
--------------------------------------------------------------------------------
Amount Quarter Ending
--------------------------------------------------------------------------------
$4,500,000 September 30, 2002
--------------------------------------------------------------------------------
$6,300,000 December 31, 2002
--------------------------------------------------------------------------------
$7,000,000 March 31, 2003
--------------------------------------------------------------------------------
$7,300,000 June 30, 2003
--------------------------------------------------------------------------------
$7,600,000 September 30, 2003
--------------------------------------------------------------------------------
$8,000,000 December 31, 2003
--------------------------------------------------------------------------------
$8,200,000 March 31, 2004
--------------------------------------------------------------------------------
$8,500,000 June 30, 2004
--------------------------------------------------------------------------------
$8,800,000 September 30, 2004
--------------------------------------------------------------------------------
$9,000,000 December 31, 2004
--------------------------------------------------------------------------------
$9,300,000 March 31, 2005
--------------------------------------------------------------------------------
$9,600,000 June 30, 2005
--------------------------------------------------------------------------------
(b) After the Sale Date.
--------------------------------------------------------------------------------
Amount Quarter Ending
--------------------------------------------------------------------------------
$4,300,000 September 30, 2002
--------------------------------------------------------------------------------
$5,900,000 December 31, 2002
--------------------------------------------------------------------------------
$6,600,000 March 31, 2003
--------------------------------------------------------------------------------
$6,900,000 June 30, 2003
--------------------------------------------------------------------------------
$7,200,000 September 30, 2003
--------------------------------------------------------------------------------
$7,500,000 December 31, 2003
--------------------------------------------------------------------------------
$7,800,000 March 31, 2004
--------------------------------------------------------------------------------
$8,000,000 June 30, 2004
--------------------------------------------------------------------------------
$8,300,000 September 30, 2004
--------------------------------------------------------------------------------
$8,500,000 December 31, 2004
--------------------------------------------------------------------------------
$8,800,000 March 31, 2005
--------------------------------------------------------------------------------
$9,000,000 June 30, 2005
--------------------------------------------------------------------------------
Section 9.13 Debt Service Coverage Ratio. The Borrower will not permit
its Debt Service Coverage Ratio as of the end of any fiscal quarter, calculated
on a rolling four quarter basis (except for the quarter ending September 30,
2002 which will be calculated on the basis of the prior three fiscal quarters
ending on such date), to be less than the ratio for the relevant periods set
forth in table (a) below prior to the Sale Date or table (b) below after the
Sale Date:
(a) Prior to the Sale Date.
--------------------------------------------------------------------------------
Ratio Quarter Ending
--------------------------------------------------------------------------------
1.05 to 1 September 30, 2002
--------------------------------------------------------------------------------
47
--------------------------------------------------------------------------------
1.1 to 1 December 31, 2002 through June 30, 2003
--------------------------------------------------------------------------------
1 to 1 September 30, 2003 through March 31, 2004
--------------------------------------------------------------------------------
..9 to 1 June 30, 2004 and September 30, 2004
--------------------------------------------------------------------------------
..85 to 1 December 31, 2004
--------------------------------------------------------------------------------
..8 to 1 March 31, 2005
--------------------------------------------------------------------------------
..95 to 1 June 30, 2005
--------------------------------------------------------------------------------
(b) After the Sale Date.
--------------------------------------------------------------------------------
Ratio Quarter Ending
--------------------------------------------------------------------------------
1 to 1 September 30, 2002
--------------------------------------------------------------------------------
1.05 to 1 December 31, 2002 and March 31, 2003
--------------------------------------------------------------------------------
1 to 1 June 30, 2003 and September 30, 2003
--------------------------------------------------------------------------------
..9 to 1 December 31, 2003 through June 30, 2004
--------------------------------------------------------------------------------
..8 to 1 September 30, 2004 and December 31, 2004
--------------------------------------------------------------------------------
..75 to 1 March 31, 2005
--------------------------------------------------------------------------------
..9 to 1 June 30, 2005
--------------------------------------------------------------------------------
For purposes of this Section 9.13, "Debt Service Coverage Ratio" shall mean the
ratio for the relevant period of (i) EBITDA less taxes payable in cash and less
any non-financed Capital Expenditures to (ii) cash interest, plus principal
payments scheduled during the period.
Section 9.14 Environmental Matters. Neither the Borrower nor any Subsidiary
will cause or permit any of its Property to be in violation of, or do anything
or permit anything to be done which will subject any such Property to any
remedial obligations under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations would have a Material Adverse Effect.
Section 9.15 Transactions with Affiliates. Except pursuant to Management
Services Agreements and the Accounts Receivable Purchase Agreements, neither the
Borrower nor any Subsidiary will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the rendering
of any service, with any Affiliate unless such transactions are otherwise
permitted under this Agreement, are in the ordinary course of its business and
are upon fair and reasonable terms no less favorable to it than it would obtain
in a comparable arm's length transaction with a Person not an Affiliate.
Section 9.16 Subsidiaries. The Borrower shall not create any additional
Subsidiaries or permit any Subsidiary to do so. In every such case, each new
Subsidiary shall forthwith execute and deliver a Guaranty Agreement and Security
Instruments in favor of the Agent. The Borrower shall not and shall not permit
any Subsidiary to sell or to issue any stock of a Subsidiary or any interest in
a Special Entity. The Borrower shall not permit any Subsidiary to issue any
stock except to the Borrower or any Guarantors and except in compliance with
Section
48
9.03 and all of the stock of such Subsidiary shall have been pledged to
the Agent for the benefit of the Lenders in form satisfactory to the Agent.
Section 9.17 Negative Pledge Agreements. Neither the Borrower nor any
Subsidiary will create, incur, assume or suffer to exist any contract, agreement
or understanding (other than this Agreement and the Security Instruments) which
in any way prohibits or restricts the granting, conveying, creation or
imposition of any Lien on any of its Property or restricts any Subsidiary from
paying dividends to the Borrower, or which requires the consent of or notice to
other Persons in connection therewith.
Section 9.18 Other Agreements. Neither the Borrower nor any Subsidiary
shall make or permit any material amendment or modification of the Management
Services Agreements or the Accounts Receivables Purchase Agreements, except for
those modifications required to comply with Government Requirements.
Section 9.19 Limitation on Certain Payments and Modifications of
Indebtedness; Cash Management.
(a) Neither the Borrower nor any Subsidiary shall (i) make any payment
whether directly, indirectly, voluntarily, mandatorily or through any redemption
or otherwise on account of the Subordinated Debt, (ii) make any voluntary or
optional payment or prepayment on account of, or voluntary or optional
redemption or acquisition for value of any portion of, any Debt other than the
Indebtedness, (iii) otherwise agree to amend or modify the payment terms thereof
or any provision other than the payment terms of any such Debt or of any
agreement relating to any of the foregoing or (iv) make any payment of the
Fozoonmehr Amount (as defined in the Forbearance Agreement) to Xxxxxxx.
(b) Neither Borrower nor any Subsidiary shall make any usage of cash or
changes in Consolidated Working Capital that is not in accordance with ordinary
course of business practices for the reasonable and ordinary operation of
Borrower's and such Subsidiary's business, nor shall make any prepayments or
take any other action that would impair the ability of Borrower to make the
Annual Cash Flow Payment required under Section 3.02(b)(ii) hereof.
Section 9.20 Accounting Changes. Neither the Borrower nor any Subsidiary
shall make any significant change in accounting treatment or reporting practices
from those currently employed by the Borrower and its Subsidiaries, except as
required by GAAP, or change the fiscal year of the Borrower or any of its
Subsidiaries from the current fiscal year ending in December of each year.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of the following events shall
constitute an "Event of Default":
(a) the Borrower shall default in the payment or prepayment when due of
any principal of or interest on any Loan, or any fees or other amount payable by
it hereunder or under any Security Instrument; provided, however, if such
default is a default on a payment of fees or
49
expenses (other than fees under Section 2.02), then no Event of Default shall
occur unless such default shall continue unremedied for a period of 30 days; or
(b) the Borrower or any Subsidiary shall default in the payment when
due of any principal of or interest on any of its other Debt aggregating
$250,000 or more, or any event specified in any note, agreement, indenture or
other document evidencing or relating to any such Debt shall occur if the effect
of such event is to cause, or (with the giving of any notice or the lapse of
time or both) to permit the holder or holders of such Debt (or a trustee or
agent on behalf of such holder or holders) to cause, such Debt to become due
prior to its stated maturity; or
(c) any representation, warranty or certification made or deemed made
herein or in any Security Instrument by the Borrower or any Subsidiary, or any
certificate furnished to any Lender pursuant to the provisions hereof or any
Security Instrument, shall prove to have been materially false or misleading as
of the time made or furnished in any material respect; or
(d) the Borrower shall default in the performance of any of its
obligations under Section 8.01 or Section 8.11, Article IX or any other Article
of this Agreement other than under Article VIII (excluding Section 8.01 and
Section 8.11); or the Borrower or any Subsidiary shall default in the
performance of any of its obligations under Article VIII, the Stockholders
Agreement, any Warrant or any Security Instrument (other than Section 8.01 or
Section 8.11 or the payment of amounts due which shall be governed by Section
10.01(a)) and such default shall continue unremedied for a period of 30 days
after the earlier to occur of (i) notice thereof to the Borrower or such
Subsidiary by any Lender or (ii) the Borrower or such Subsidiary otherwise
becoming aware of such default; or
(e) the Borrower shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due; or
(f) the Borrower shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a voluntary case
under the Federal Bankruptcy Code (as now or hereafter in effect), (iv) file a
petition seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, winding-up, liquidation or composition or
readjustment of debts, (v) fail to controvert in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Federal Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the application
or consent of the Borrower, in any court of competent jurisdiction, seeking (i)
its liquidation, reorganization, dissolution or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Borrower of all or any substantial part
of its assets, or (iii) similar relief in respect of the Borrower under any law
relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, and such proceeding or case shall continue undismissed,
or an order, judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect,
50
for a period of 60 days; or (iv) an order for relief against the Borrower shall
be entered in an involuntary case under the Federal Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in excess of
$250,000 in the aggregate shall be rendered by a court against the Borrower or
any Subsidiary and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be (i) fully
covered by insurance owned or held by the Borrower or such Subsidiary, as
applicable, under a policy or policies which are in full force and effect, or
(ii) procured, within 30 days from the date of entry thereof and the Borrower or
such Subsidiary shall not, within said period of 30 days, or such longer period
during which execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal; or
(i) a non-monetary judgment, order or decree is entered against the
Borrower or any of its Subsidiaries which has, or would reasonably be expected
to have, a Material Adverse Effect, and there shall be any period of 30 days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or
(j) the Security Instruments after delivery thereof shall for any
reason, except to the extent permitted by the terms thereof, cease to be in full
force and effect and valid, binding and enforceable in accordance with their
terms, or cease to create a valid and perfected Lien of the priority required
thereby on any of the collateral purported to be covered thereby, except to the
extent permitted by the terms of this Agreement; or
(k) the Borrower discontinues its usual business; or
(l) any of the Guarantors takes, suffers or permits to exist any of
the events or conditions referred to in paragraphs (e), (f), (g) or (h) hereof
or if any provision of any guaranty agreement related thereto shall for any
reason cease to be valid and binding on any Guarantor or if Guarantor shall so
state in writing; or
(m) the subordination provisions of the Subordinated Debt or the
Subordination Agreement or any other instrument governing any other subordinated
debt is for any reason revoked or invalidated, or otherwise cease to be in full
force and effect or any Person who is a party thereto contests in any manner the
validity or enforceability thereof or denies that it has any further liability
or obligation thereunder, or the Indebtedness hereunder is for any reason
subordinated or does not have the priority contemplated by this Agreement, the
Subordination Agreement or the documents evidencing the Subordinated Debt; or
(n) any Management Services Agreement or any Accounts Receivable
Purchase Agreement terminates or a default by the Borrower occurs thereunder; or
(o) any modification or amendment of any Management Services
Agreement or any Accounts Receivable Purchase Agreement is made that could
result in an adverse monetary impact to the Borrower without the prior written
consent of the Agent; or
(p) any default or event of default occurs under the Forbearance
Agreement which permits Xxxxxxx to terminate the Forbearance Period (as defined
therein); or
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(q) a Change of Control occurs.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one referred to
in clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the Agent, upon request of the Majority
Lenders, shall, by notice to the Borrower, declare the principal amount then
outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Borrower hereunder and under the Notes to be forthwith due and
payable, whereupon such amounts shall be immediately due and payable without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which are hereby expressly
waived by the Borrower.
(b) In the case of the occurrence of an Event of Default referred
to in clauses (e), (f) or (g) of Section 10.01 or in clause (l) to the extent it
relates to clauses (e), (f) or (g), the principal amount then outstanding of,
and the accrued interest on, the Loans and all other amounts payable by the
Borrower hereunder and under the Notes shall become automatically immediately
due and payable without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Notes, whether by
acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in this Agreement and the Security Instruments;
second to accrued interest on the Notes; third to fees; fourth pro rata to
principal outstanding on the Notes and other Indebtedness; and any excess shall
be paid to the Borrower or as otherwise required by any Governmental
Requirement.
(d) The rights and remedies of Agent and Lenders provided for in
this Agreement and the other Loan Documents are cumulative and not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE XI
The Agent
Section 11.01 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the Security Instruments with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the Security Instruments, together
with such other powers as are reasonably incidental thereto. The Agent (which
term as used in this sentence and in Section 11.05 and the first sentence of
Section 11.06 shall include reference to its Affiliates and its and its
Affiliates' officers, directors, employees, attorneys, accountants, experts and
agents): (i) shall have no duties or responsibilities except those expressly set
forth in the Loan Documents, and shall not by reason of the Loan Documents be a
trustee or fiduciary for any Lender; (ii) makes no representation or warranty to
any Lender and shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or in any
certificate or other document referred to or provided for in, or received by any
of them under,
52
this Agreement, or for the value, validity, effectiveness, genuineness,
execution, effectiveness, legality, enforceability or sufficiency of this
Agreement, any Note or any other document referred to or provided for herein or
for any failure by the Borrower or any other Person (other than the Agent) to
perform any of its obligations hereunder or thereunder or for the existence,
value, perfection or priority of any collateral security or the financial or
other condition of the Borrower, its Subsidiaries or any other obligor or
guarantor; (iii) except pursuant to Section 11.07 shall not be required to
initiate or conduct any litigation or collection proceedings hereunder; and (iv)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to or provided for
herein or in connection herewith including its own ordinary negligence, except
for its own gross negligence or willful misconduct. The Agent may employ agents,
accountants, attorneys and experts and shall not be responsible for the
negligence or misconduct of any such agents, accountants, attorneys or experts
selected by it in good faith or any action taken or omitted to be taken in good
faith by it in accordance with the advice of such agents, accountants, attorneys
or experts. The Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until a written notice of the
assignment or transfer thereof permitted hereunder shall have been filed with
the Agent. The Agent is authorized to release any collateral that is permitted
to be sold or released pursuant to the terms of the Loan Documents.
Section 11.02 Reliance by Agent. The Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telephone, telex, telecopier, telegram or cable) reasonably believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by the Agent.
Section 11.03 Defaults. The Agent shall not be deemed to have knowledge of
the occurrence of a Default (other than the non-payment of principal of or
interest on Loans unless the Agent has received notice from a Lender or the
Borrower specifying such Default and stating that such notice is a "Notice of
Default"). In the event that the Agent receives such a notice of the occurrence
of a Default, the Agent shall give prompt notice thereof to the Lenders. In the
event of a payment Default, the Agent shall give each Lender prompt notice of
each such payment Default.
Section 11.04 Rights as a Lender. With respect to any Loan made by it, Bank
of America (and any successor acting as Agent) in its capacity as a Lender
hereunder shall have the same rights and powers hereunder as any other Lender
and may exercise the same as though it were not acting as the Agent, and the
term "Lender" or "Lenders" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. Bank of America (and any successor
acting as Agent) and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to and generally engage in any kind
of banking, trust or other business with the Borrower (and any of its
Affiliates) as if it were not acting as the Agent, and Bank of America and its
Affiliates may accept fees and other consideration from the Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to the Lenders.
Section 11.05 Indemnification. The Lenders agree to indemnify the Agent
ratably in accordance with their Percentage Shares for the Indemnity Matters as
described in
53
Section 12.03 to the extent not indemnified or reimbursed by the Borrower under
Section 12.03, but without limiting the obligations of the Borrower under said
Section 12.03 and for any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of: (i) this
Agreement, the Security Instruments or any other documents contemplated by or
referred to herein or the transactions contemplated hereby, but excluding,
unless a Default has occurred and is continuing, normal administrative costs and
expenses incident to the performance of its agency duties hereunder or (ii) the
enforcement of any of the terms of this Agreement, any Security Instrument or of
any such other documents; whether or not any of the foregoing specified in this
Section 11.05 arises from the sole or concurrent negligence of the Agent,
provided that no Lender shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the Agent.
Section 11.06 Non-Reliance on Agent and other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Borrower and its
decision to enter into this Agreement, and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decisions in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, the Notes, the Security
Instruments or any other document referred to or provided for herein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder and copies of the documents required to be
provided to the Agent under Article VI, the Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of the Agent or any of its
Affiliates. In this regard, each Lender acknowledges that Xxxxxx & Xxxxxx L.L.P.
is acting in this transaction as special counsel to the Agent only, except to
the extent otherwise expressly stated in any legal opinion or any Loan Document.
Each Lender will consult with its own legal counsel to the extent that it deems
necessary in connection with the Loan Documents and the matters contemplated
therein.
Section 11.07 Action by Agent. Except for action or other matters expressly
required of the Agent hereunder, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder unless it shall (i) receive written
instructions from the Majority Lenders (or all of the Lenders as expressly
required by Section 12.04) specifying the action to be taken, and (ii) be
indemnified to its satisfaction by the Lenders against any and all liability and
expenses which may be incurred by it by reason of taking or continuing to take
any such action. The instructions of the Majority Lenders (or all of the Lenders
as expressly required by Section 12.04) and any action taken or failure to act
pursuant thereto by the Agent shall be binding on all of the Lenders. If a
Default has occurred and is continuing, the Agent shall take such action with
respect to such Default as shall be directed by the Majority Lenders (or all of
the Lenders as required by Section 12.04) in the written instructions (with
indemnities) described in this Section 11.07,
54
provided that, unless and until the Agent shall have received such directions,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interests of the Lenders. In no event, however, shall the Agent be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement and the Security Instruments or applicable
law.
Section 11.08 Resignation or Removal of Agent. Subject to the appointment
and acceptance of a successor Agent as provided below, the Agent may resign at
any time by giving notice thereof to the Lenders and the Borrower, and the Agent
may be removed at any time with or without cause by the Majority Lenders. Upon
any such resignation or removal, the Majority Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so appointed by
the Majority Lenders and shall have accepted such appointment within thirty (30)
days after the retiring Agent's giving of notice of resignation or the Majority
Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent. Upon the acceptance of such
appointment hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's resignation or
removal hereunder as Agent, the provisions of this Article XI and Section 12.03
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent.
ARTICLE XII
Miscellaneous
Section 12.01 Waiver. No failure on the part of the Agent or any Lender to
exercise and no delay in exercising, and no course of dealing with respect to,
any right, power or privilege under any of the Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under any of the Loan 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 12.02 Notices. All notices and other communications provided for
herein and in the other Loan Documents (including, without limitation, any
modifications of, or waivers or consents under, this Agreement or the other Loan
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 Loan Documents; to each other party. Except as otherwise
provided in this Agreement or in the other Loan 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 12.03 Payment of Expenses, Indemnities, etc.
(a) The Borrower agrees:
55
(i) whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of the Agent in the
administration (both before and after the execution hereof and
including advice of counsel as to the rights and duties of the Agent
and the Lenders with respect thereto) of, and in connection with the
negotiation, syndication, investigation, preparation, execution and
delivery of, recording or filing of, preservation of rights under,
enforcement of, and refinancing, renegotiation or restructuring of, the
Loan Documents and any amendment, waiver or consent relating thereto
(including, without limitation, travel, photocopy, mailing, courier,
telephone and other similar expenses of the Agent, the cost of
environmental audits, surveys and appraisals at reasonable intervals,
the reasonable fees and disbursements of counsel and other outside
consultants for the Agent and, in the case of enforcement (including,
without limitation, bankruptcy and workout matters), the reasonable
fees and disbursements of counsel for the Agent and any of the
Lenders); and promptly reimburse the Agent for all amounts expended,
advanced or incurred by the Agent or the Lenders to satisfy any
obligation of the Borrower under this Agreement or any Security
Instrument, including without limitation, all costs and expenses of
foreclosure;
(ii) to indemnify the Agent and each Lender and each of their
Affiliates and each of their 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) any actual or
proposed use by the Borrower of the proceeds of any of the Prior Debt,
(ii) the execution, delivery and performance of the Loan Documents,
(iii) the operations of the business of the Borrower and its
Subsidiaries, (iv) the failure of the Borrower or any Subsidiary to
comply with the terms of any Security Instrument or this Agreement, or
with any Governmental Requirement, (v) any inaccuracy of any
representation or any breach of any warranty of the Borrower or any
Guarantor set forth in any of the Loan Documents, (vi) any assertion
that the Lenders were not entitled to receive the proceeds received
pursuant to the Security Instruments or (vii) any other aspect of the
Loan 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 claims
between the Lenders or any Lender and the Agent or a Lender's
shareholders against the Agent or Lender or 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 Borrower 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
56
a result of the breach or non-compliance by the Borrower or any
Subsidiary with any Environmental Law applicable to the Borrower or any
Subsidiary, (iii) due to past ownership by the Borrower 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 Borrower or any Subsidiary, or
(v) any other environmental, health or safety condition in connection
with the Loan Documents; provided, however, no indemnity shall be
afforded under this Section 12.03(a)(iii) in respect of any Property
for any occurrence arising from the acts or omissions of the Agent or
any Lender during the period after which such Person, its successors or
assigns shall have obtained possession of such Property (whether by
foreclosure or deed in lieu of foreclosure, as mortgagee-in-possession
or otherwise).
(b) No Indemnified Party may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent to
any settlement that an Indemnified Party proposes, if the indemnitor does not
have the financial ability to pay all its obligations outstanding and asserted
against the indemnitor at that time, including the maximum potential claims
against the Indemnified Party to be indemnified pursuant to this Section 12.03.
(c) In the case of any indemnification hereunder, the Agent or
Lender, as appropriate, shall give notice to the Borrower of any such claim or
demand being made against the Indemnified Party and the Borrower shall have the
non-exclusive right to join in the defense against any such claim or demand
provided that if the Borrower provides a defense, the Indemnified Party shall
bear its own cost of defense unless there is a conflict between the Borrower and
such Indemnified Party.
(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 Borrower's obligations under this Section 12.03 shall
survive any termination of this Agreement and the payment of the Notes and shall
continue thereafter in full force and effect.
(f) The Borrower shall pay any amounts due under this Section
12.03 within thirty (30) days of the receipt by the Borrower of notice of the
amount due.
57
Section 12.04 Amendments, Etc. Any provision of this Agreement or any
Security Instrument may be amended, modified or waived with the Borrower's and
the Majority Lenders' prior written consent; provided that (i) no amendment,
modification or waiver which extends the final maturity of the Loans, postpones
the scheduled payment date of any amount owing under any Loan Document,
increases the Aggregate Maximum Credit Amounts, forgives the principal amount of
any Indebtedness outstanding under this Agreement, releases any guarantor of the
Indebtedness or releases all or substantially all of the collateral, reduces the
interest rate applicable to the Loans or the fees payable to the Lenders
generally, affects Section 2.01, this Section 12.04 or Section 12.06(a) or
modifies the definition of "Majority Lenders" shall be effective without consent
of all Lenders; (ii) no amendment, modification or waiver which increases the
Maximum Credit Amount of any Lender shall be effective without the consent of
such Lender; (iii) no amendment, modification or waiver which modifies the
rights, duties or obligations of the Agent shall be effective without the
consent of the Agent, and (iv) no amendment, modification or waiver of the
Subordination Agreement shall be effective without the consent of all Lenders.
Section 12.05 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, and no third party shall be deemed a third party
beneficiary hereof.
Section 12.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations
hereunder or under the Notes without the prior consent of all of the Lenders and
the Agent.
(b) Any Lender may assign only to one or more Eligible Assignees
all or a portion of its rights and obligations under this Agreement; provided,
however, that (i) any such assignment shall be in the amount of at least
$1,000,000 or such lesser amount to which the Majority Lenders have consented
and (ii) the assignee or assignor shall pay to the Agent a processing and
recordation fee of $3,000 for each assignment. As used herein, the term
"Eligible Assignee" shall mean (a) a Lender or Affiliate thereof, (b) a
commercial bank, or other finance, insurance or other financial entity or fund
which, with its Affiliates, has total assets (including assets under management
or pledge) of not less than $50,000,000, or (c) such other Person to which the
Majority Lenders have consented and, if no Event of Default has occurred and is
continuing, the Borrower has consented, such consents not to be unreasonably
withheld or delayed. Any such assignment will become effective upon the
execution and delivery to the Agent of the Assignment and the consent of the
Agent and the Borrower, if applicable. Promptly after receipt of an executed
Assignment, the Agent shall send to the Borrower a copy of such executed
Assignment. Upon receipt of such executed Assignment, the Borrower, will, at its
own expense, execute and deliver new Notes to the assignor and/or assignee, as
appropriate, in accordance with their respective interests as they appear. Upon
the effectiveness of any assignment pursuant to this Section 12.06(b), the
assignee will become a "Lender," if not already a "Lender," for all purposes of
this Agreement and the Security Instruments. The assignor shall be relieved of
its obligations hereunder to the extent of such assignment (and if the assigning
Lender no longer holds any rights or obligations under this Agreement, such
assigning Lender shall cease to be a "Lender" hereunder except that its rights
under Sections 4.06, 5.01 and 12.03 shall not be affected). The Agent will
prepare on the last Business Day of each month during
58
which an assignment has become effective pursuant to this Section 12.06(b), a
new Annex I giving effect to all such assignments effected during such month,
and will promptly provide the same to the Borrower and each of the Lenders.
(c) Each Lender may transfer, grant or assign participations in
all or any part of such Lender's interests hereunder pursuant to this Section
12.06(c) to any Person, provided that: (i) such Lender shall remain a "Lender"
for all purposes of this Agreement and the transferee of such participation
shall not constitute a "Lender" hereunder; and (ii) no participant under any
such participation shall have rights to approve any amendment to or waiver of
any of the Loan Documents except to the extent such amendment or waiver would
(x) forgive any principal owing on any Indebtedness or extend the final maturity
of the Loans, (y) reduce the interest rate (other than as a result of waiving
the applicability of any post-default increases in interest rates) or fees
applicable to any of the Loans in which such participant is participating, or
postpone the payment of any thereof, or (z) release any guarantor of the
Indebtedness or release all or substantially all of the collateral (except as
provided in the Loan Documents) supporting any of the Loans in which such
participant is participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any of the
Security Instruments (the participant's rights against the granting Lender in
respect of such participation to be those set forth in the agreement with such
Lender creating such participation), and all amounts payable by the Borrower
hereunder shall be determined as if such Lender had not sold such participation,
provided that such participant shall be entitled to receive additional amounts
under Article V on the same basis as if it were a Lender and be indemnified
under Section 12.03 as if it were a Lender. In addition, each agreement creating
any participation must include an agreement by the participant to be bound by
the provisions of Section 12.15.
(d) The Lenders may furnish any information concerning the
Borrower in the possession of the Lenders from time to time to assignees and
participants (including prospective assignees and participants); provided that,
such Persons agree to be bound by the provisions of Section 12.15.
(e) Notwithstanding anything in this Section 12.06 to the
contrary, any Lender may assign and pledge its Notes to any Federal Reserve
Bank. No such assignment and/or pledge shall release the assigning and/or
pledging Lender from its obligations hereunder.
Section 12.07 Invalidity. In the event that any one or more of the
provisions contained in any of the Loan 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 the Notes, this
Agreement or any Security Instrument.
Section 12.08 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 12.09 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
59
herein to an exhibit or schedule shall be deemed to refer to the applicable
exhibit or schedule attached hereto unless otherwise stated herein.
Section 12.10 Survival. The obligations of the parties under Section 4.06,
Article V, and Sections 11.05 and 12.03 shall survive the repayment of the Loans
and the termination of the Commitments. To the extent that any payments on the
Indebtedness or proceeds of any collateral are subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
a trustee, debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the Indebtedness so
satisfied shall be revived and continue as if such payment or proceeds had not
been received and the Agent's and the Lenders' Liens, security interests,
rights, powers and remedies under this Agreement and each Security Instrument
shall continue in full force and effect. In such event, each Security Instrument
shall be automatically reinstated and the Borrower shall take such action as may
be reasonably requested by the Agent and the Lenders to effect such
reinstatement.
Section 12.11 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 12.12 No Oral Agreements. The Loan 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 Loan 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 12.13 Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.
(a) This Agreement and the Notes shall be governed by, and
construed in accordance with, the laws of the State of Texas except to the
extent that United States federal law permits any Lender to charge interest at
the rate allowed by the laws of the state where such Lender is located. Chapter
346 of the Texas Finance Code (which regulates certain revolving credit loan
accounts and revolving tri-party accounts) shall not apply to this Agreement or
the Notes.
(b) Subject to Section 12.17, any legal action or proceeding with
respect to the Loan Documents shall be brought in the courts of the State of
Texas or of the United States of America for the Southern District of Texas,
and, by execution and delivery of this Agreement, each of the Borrower, the
Agent and the Lenders 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 Borrower, the Agent and the Lenders 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.
60
(c) Nothing herein shall affect the right of the Agent or any
Lender or any holder of a Note to serve process in any other manner permitted by
law.
(d) The Borrower, the Agent and each Lender 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, any
Security Instrument or any other Loan Document and with respect to any
counterclaim asserted 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 or other legal proceeding 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, the Security Instruments and the transactions contemplated hereby and
thereby by, among other things, the mutual waivers and certifications contained
in this Section 12.13.
Section 12.14 Interest. It is the intention of the parties hereto that each
Lender shall conform strictly to usury laws applicable to it. Accordingly, if
the transactions contemplated hereby would be usurious as to any Lender under
laws applicable to it (including the laws of the United States of America and
the State of Texas or any other jurisdiction whose laws may be mandatorily
applicable to such Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents or any agreement entered into in connection with or as
security for the Notes, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to any Lender that
is contracted for, taken, reserved, charged or received by such Lender under any
of the Loan Documents or agreements or otherwise in connection with the Notes
shall under no circumstances exceed the Highest Lawful Rate, and any excess
shall be canceled automatically and if theretofore paid shall be credited by
such Lender on the principal amount of the Indebtedness (or, to the extent that
the principal amount of the Indebtedness shall have been or would thereby be
paid in full, refunded by such Lender to the Borrower); and (ii) in the event
that the maturity of the Notes is accelerated by reason of an election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). All sums paid or agreed to be paid to
any Lender for the use, forbearance or detention of sums due hereunder shall, to
the extent permitted by law applicable to such Lender, be amortized, prorated,
allocated and spread throughout the full term of the Loans evidenced by the
Notes until payment in full so that the rate or amount of interest on account of
any Loans hereunder does not exceed the maximum amount allowed by such
applicable law. If at any time and from time to time (i) the amount of interest
payable to any Lender on any date shall be computed at the Highest Lawful Rate
applicable to such Lender pursuant to this Section 12.14 and (ii) in respect of
any subsequent interest
61
computation period the amount of interest otherwise payable to such Lender would
be less than the amount of interest payable to such Lender computed at the
Highest Lawful Rate applicable to such Lender, then the amount of interest
payable to such Lender in respect of such subsequent interest computation period
shall continue to be computed at the Highest Lawful Rate applicable to such
Lender until the total amount of interest payable to such Lender shall equal the
total amount of interest which would have been payable to such Lender if the
total amount of interest had been computed without giving effect to this Section
12.14. To the extent that Chapter 303 of the Texas Finance Code is relevant for
the purpose of determining the Highest Lawful Rate, such Lender elects to
determine the applicable rate ceiling under such Chapter by the indicated weekly
rate ceiling from time to time in effect.
Section 12.15 Confidentiality. In the event that the Borrower provides to
the Agent or the Lenders written confidential information belonging to the
Borrower, if the Borrower shall denominate such information in writing as
"confidential", the Agent and the Lenders 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 (but not until they) become
part of the public domain without the Agent or the Lenders breaching their
obligation of confidence to the Borrower, (iii) are previously known by the
Agent or the Lenders from some source other than the Borrower, (iv) are
hereafter developed by the Agent or the Lenders without using the Borrower's
information, (v) are hereafter obtained by or available to the Agent or the
Lenders from a third party who owes no obligation of confidence to the Borrower
with respect to such information or through any other means other than through
disclosure by the Borrower, (vi) are disclosed with the Borrower's consent,
(vii) must be disclosed either pursuant to any Governmental Requirement or to
Persons regulating the activities of the Agent or the Lenders, (viii) as may be
required by law or regulation or order of any Governmental Authority in any
judicial, arbitration or governmental proceeding, or (ix) are disclosed in
connection with the enforcement or exercise of the Agent's or any Lender's
rights and remedies under any Loan Document and not otherwise prohibited by law.
Further, the Agent or a Lender may disclose any such information to any other
Lender, any independent consultants, any independent certified public
accountants, any legal counsel employed by such Person in connection with this
Agreement, any Security Instrument or any other Loan Document, including without
limitation, the enforcement or exercise of all rights and remedies thereunder,
or any assignee or participant (including prospective assignees and
participants) in the Loans; provided, however, that the Agent or the Lenders
shall receive a confidentiality agreement from the Person (excluding legal
counsel) 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 the Agent or the Lenders 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 Borrower 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 Borrower waives any and all other rights it may have to
confidentiality as against the Agent and the Lenders arising by contract,
agreement, statute or law except as expressly stated in this Section 12.15.
Section 12.16 Effectiveness. This Agreement shall be effective on the
Closing Date.
62
Section 12.17 Binding Arbitration.
(a) Any controversy or claim between or among the parties hereto,
including but not limited to, those arising out of or relating to this
Agreement, the Notes, the Security Instruments or any other Loan Document,
including any claim or controversy of any kind based on or arising in tort,
shall be determined by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, applicable state law), the Rules of
Practice and Procedure for the Arbitration of Commercial Disputes or Judicial
Arbitration and Mediation Services, Inc. ("J.A.M.S."), and the rules set forth
in Section 12.17(b) below. In the event of any inconsistency, the rules set
forth in Section 12.17(b) below shall control. Judgment upon any arbitration
award may be entered in any court having jurisdiction. Any party to the Notes or
any other Security Instrument may bring an action, including a summary or
expedited proceeding, to compel arbitration or any controversy or claim to which
either the Notes, this Agreement or any other Security Instrument applies in any
court having jurisdiction over such action.
(b) The arbitration shall be conducted in the City of Houston, Texas
and administered by J.A.M.S. who will appoint an arbitrator. If J.A.M.S. is
unable or legally precluded from administering the arbitration, then the
American Arbitration Association will serve. All arbitration hearings will be
commenced within 90 days of the demand for arbitration, and the arbitrator
shall, only upon a showing of cause, be permitted to extend the commencement of
such hearings for an additional 60 days.
(c) Nothing in this Agreement shall be deemed to (i) limit the
applicability of any otherwise applicable statutes of limitation or repose or
any waivers contained in this Agreement, the Notes, the Guaranty Agreement or
the other Security Instruments; (ii) be a waiver by any Lender of the protection
afforded to it by 12 U.S.C. ss.91 or any substantially equivalent state law; or
(iii) limit the right of any Lender to (a) exercise self help remedies such as,
but not limited to, setoff, (b) foreclose against any collateral, whether real
or personal property, or (c) obtain from a court provisional or ancillary
remedies such as, but not limited, injunctive relief, writ of possession or the
appointment of a receiver. Any Lender may exercise such self help rights,
foreclose upon collateral, or obtain such provisional or ancillary remedies
before, during or after the pendency of any arbitration proceeding brought
pursuant to the Notes, this Agreement or the other Security Instruments. Neither
the exercise of self help remedies nor the institution or maintenance of an
action for foreclosure or provisional or ancillary remedies shall constitute a
waiver of the right of any party, including the claimant in such action, to
arbitrate the merits of the controversy or claim occasioning the resort to such
remedies.
(d) The provisions of this Section 12.17 shall survive any termination,
amendment, or expiration of the Security Instruments. Each party agrees to keep
all disputes and arbitration proceedings strictly confidential, except for
disclosures of information required in the ordinary course of its business or by
applicable law or regulation.
(e) Nothing in this Agreement shall be deemed to limit the right of the
Borrower to obtain injunctive relief against any Lender prior to or during the
pendency of
63
any arbitration proceeding based on violations by any Lender of any Lender's
agreements with the Borrower, so long as the injunctive relief is limited to
restraining any Lender from exercising its rights and remedies until the
arbitration proceeding (in process or initiated by the Borrower or any Lender in
conjunction with the request for such injunctive relief) has been completed and
arbitration award has been made.
Section 12.18 Exculpation Provisions. Each of the parties hereto
specifically agrees that it has a duty to read this Agreement, the Security
Instruments and the other Loan Documents and agrees that it is charged with
notice and knowledge of all of their terms; 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, the Security Instruments and the other Loan
Documents; and has received the advice of its attorney in entering into this
Agreement, the Security Instruments and the other Loan Documents; and that it
recognizes that certain of the terms of this Agreement and the Security
Instruments 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, the
Security Instruments and the other Loan Documents on the basis that the party
had no notice or knowledge of such provision or that the provision is not
"conspicuous."
Section 12.19 Reaffirmation of Guaranty Agreement and Security Agreement.
Each Guarantor hereby consents to this Agreement and agrees that the execution
and the performance of such Agreement shall not in any way affect, impair,
discharge, relieve or release such Guarantor from its obligations under its
respective Guaranty Agreement or under any Security Instrument executed by it.
Each Guarantor reaffirms its respective Guaranty Agreement and any Security
Instruments executed by it and agrees that: (i) such Guaranty Agreement and
Security Instruments are in full force and effect to guarantee payment and
performance of the "Liabilities" as defined therein; and (ii) its respective
obligations under such agreements shall continue to be in full force and effect
until its respective obligations thereunder or hereunder are fully paid and
performed. In furtherance of the foregoing, each Guarantor affirms that each
reference in its respective Guaranty Agreement to the "Credit Agreement", the
"Loan Documents", the "Notes" and the "Security Instruments" are, respectively,
references to this Agreement, Loan Documents, the Notes and Security Instruments
as defined in this Agreement, together with all renewals, restatements,
rearrangements, amendments, extensions, or supplements in whole or in part of
any of the foregoing. In addition to the foregoing, each Guarantor affirms,
acknowledges and agrees that (a) the "Liabilities" as defined and described in
its respective Guaranty Agreement shall be deemed to cover and include not only
those items set forth in the definition of Liabilities in its respective
Guaranty Agreement, but also the Indebtedness and Loans as defined and described
in this Agreement, together with all renewals, restatements, rearrangements,
increases, extensions for any period, amendments or supplements in whole or in
part of such Indebtedness or Loans; (b) each of the Lenders named in this
Agreement, together with their respective successors and assigns, and the Agent
shall be entitled to the benefits of such Guarantor's respective Guaranty
Agreement and all obligations of such Guarantor thereunder; and (c) Bank of
America, N.A., f/k/a NationsBank, N.A., is the successor in interest by reason
of merger to NationsBank of Texas, N.A.
64
Section 12.20 RELEASE AND COVENANT NOT TO XXX. THE BORROWER (IN ITS OWN
RIGHT AND ON BEHALF OF ITS DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS AND AGENTS)
AND EACH GUARANTOR (IN ITS OWN RIGHT AND ON BEHALF OF THEIR RESPECTIVE
DIRECTORS, OFFICERS, PARTNERS, MEMBERS, EMPLOYEES, ATTORNEYS AND AGENTS) (THE
"RELEASING PARTIES") JOINTLY AND SEVERALLY RELEASE, ACQUIT, AND FOREVER
DISCHARGE THE AGENT, EACH LENDER AND THEIR RESPECTIVE AFFILIATES AND EACH OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, INDEPENDENT CONTRACTORS,
ATTORNEYS AND AGENTS (COLLECTIVELY, THE "RELEASED PARTIES"), TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE STATE AND FEDERAL LAW, FROM ANY AND ALL ACTS AND
OMISSIONS OF THE RELEASED PARTIES, AND FROM ANY AND ALL CLAIMS, CAUSES OF
ACTION, COUNTERCLAIMS, DEMANDS, CONTROVERSIES, COSTS, DEBTS, SUMS OF MONEY,
ACCOUNTS, RECKONINGS, BONDS, BILLS, DAMAGES, OBLIGATIONS, LIABILITIES,
OBJECTIONS, AND EXECUTIONS OF ANY NATURE, TYPE, OR DESCRIPTION WHICH THE
RELEASING PARTIES MAY HAVE ON THE DATE HEREOF AGAINST THE RELEASED PARTIES, IN
CONNECTION WITH OR RELATED TO THE PRIOR CREDIT AGREEMENT, THE LOAN DOCUMENTS AND
THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, GROSS NEGLIGENCE,
USURY, FRAUD, DECEIT, MISREPRESENTATION, CONSPIRACY, UNCONSCIONABILITY, DURESS,
ECONOMIC DURESS, DEFAMATION, CONTROL, INTERFERENCE WITH CONTRACTUAL AND BUSINESS
RELATIONSHIPS, CONFLICTS OF INTEREST, MISUSE OF INSIDER INFORMATION,
CONCEALMENT, DISCLOSURE, SECRECY, MISUSE OF COLLATERAL, WRONGFUL RELEASE OF
COLLATERAL, FAILURE TO INSPECT, ENVIRONMENTAL DUE DILIGENCE, NEGLIGENT LOAN
PROCESSING AND ADMINISTRATION, WRONGFUL SETOFF, VIOLATIONS OF STATUTES AND
REGULATIONS OF GOVERNMENTAL ENTITIES, INSTRUMENTALITIES AND AGENCIES (BOTH CIVIL
AND CRIMINAL), RACKETEERING ACTIVITIES, SECURITIES AND ANTITRUST LAWS
VIOLATIONS, TYING ARRANGEMENTS, DECEPTIVE TRADE PRACTICES, BREACH OR ABUSE OF
ANY ALLEGED FIDUCIARY DUTY, BREACH OF ANY ALLEGED SPECIAL RELATIONSHIP, COURSE
OF CONDUCT OR DEALING, ALLEGED OBLIGATION OF FAIR DEALING, ALLEGED OBLIGATION OF
GOOD FAITH, AND ALLEGED OBLIGATION OF GOOD FAITH AND FAIR DEALING, AT LAW OR IN
EQUITY, IN CONTRACT, IN TORT, OR OTHERWISE, KNOWN OR UNKNOWN, SUSPECTED OR
UNSUSPECTED (COLLECTIVELY, THE "RELEASED CLAIMS"). THE RELEASING PARTIES FURTHER
JOINTLY AND SEVERALLY AGREE TO LIMIT ANY DAMAGES THEY MAY SEEK IN CONNECTION
WITH ANY CLAIM OR CAUSE OF ACTION, IF ANY, TO EXCLUDE ALL PUNITIVE AND EXEMPLARY
DAMAGES, DAMAGES ATTRIBUTABLE TO LOST PROFITS OR OPPORTUNITY, DAMAGES
ATTRIBUTABLE TO MENTAL ANGUISH, AND DAMAGES ATTRIBUTABLE TO PAIN AND SUFFERING,
AND THE RELEASING PARTIES DO HEREBY JOINTLY AND SEVERALLY WAIVE AND RELEASE ALL
SUCH DAMAGES WITH RESPECT TO ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH MAY
ARISE AT ANY TIME AGAINST ANY OF THE RELEASED PARTIES. THE RELEASING PARTIES
REPRESENT AND WARRANT THAT NO FACTS EXIST WHICH COULD PRESENTLY SUPPORT THE
ASSERTION OF ANY OF THE RELEASED CLAIMS
65
AGAINST THE RELEASED PARTIES. THE RELEASING PARTIES FURTHER COVENANT NOT TO XXX
THE RELEASED PARTIES ON ACCOUNT OF ANY OF THE RELEASED CLAIMS, AND EXPRESSLY
WAIVE ANY AND ALL DEFENSES THEY MAY HAVE IN CONNECTION WITH THEIR DEBTS AND
OBLIGATIONS UNDER THE LOAN DOCUMENTS AND THIS AGREEMENT. THIS SECTION 12.20 IS
IN ADDITION TO AND SHALL NOT IN ANY WAY LIMIT ANY OTHER RELEASE, COVENANT NOT TO
XXX, OR WAIVER BY THE RELEASING PARTIES IN FAVOR OF THE RELEASED PARTIES.
NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, THIS
SECTION 12.20 SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL SURVIVE THE
PAYMENT OF THE OBLIGATIONS AND TERMINATION OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
Section 12.21 Tolling of Statute of Limitations. In consideration of the
waiver of defaults under the Existing Agreement and in order to induce the
Lenders to agree to the restructuring, modification and continuation of the
Prior Debt as contemplated hereby, Borrower agrees that all applicable statutes
of limitations that have not expired as of the Closing Date shall be, and hereby
are, tolled for the period commencing on the Closing Date and continuing for the
duration of this Agreement to and including the Final Maturity Date and such
periods thereafter as may apply to any terms or conditions of this Agreement
that specifically survive the Final Maturity Date.
[SIGNATURES BEGIN ON NEXT PAGE]
66
The parties hereto have caused this Agreement to be duly executed as of
the day and year first above written.
BORROWER: CASTLE DENTAL CENTERS, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
----------------------------------------
Title: Chief Executive Officer and President
---------------------------------------
Address for Notices:
0000 Xxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Signature Page
AGENT: BANK OF AMERICA, N.A.
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
-----------------------------------
Title: Senior Vice President
----------------------------------
Address for Notices:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Signature Page
LENDERS: BANC OF AMERICA STRATEGIC SOLUTIONS, INC.
By: /s/ Xxxx Xxxxx
-------------------------------------
Name: Xxxx Xxxxx
-----------------------------------
Title: Senior Vice President
----------------------------------
Address for Notices:
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx Xxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Signature Page
FLEET NATIONAL BANK
By: /s/ Xxxx Xxxxxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxxxxx
-----------------------------------
Title: Vice President
----------------------------------
Address for Notices:
000 Xxxxxxx Xxxxxx
Mail Stop: MADE10006A
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxxxxx
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
Signature Page
AMSOUTH BANK
By: /s/ Xxx XxXxxxxx
-------------------------------------
Name: Xxx XxXxxxxx
-----------------------------------
Title: Vice President
----------------------------------
Address for Notices:
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxx XxXxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Signature Page
XXXXXX FINANCIAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------------
Title: Senior Vice President
----------------------------------
Address for Notices:
c/o Heller Healthcare Financial Services
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Signature Page
The undersigned Guarantors join in this Agreement solely for the purpose of
agreeing to Sections 12.19 and 12.20 hereof.
CDC OF CALIFORNIA, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title: Chief Executive Officer
and President
----------------------------------
CASTLE DENTAL CENTERS OF CALIFORNIA, L.L.C.,
a California limited liability company
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title:
----------------------------------
CASTLE TEXAS HOLDINGS, INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title:
----------------------------------
CASTLE DENTAL CENTERS OF TEXAS, INC.,
a Texas corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title:
----------------------------------
CASTLE DENTAL CENTERS OF TENNESSEE, INC.,
a Tennessee corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title:
----------------------------------
Signature Page
CASTLE DENTAL CENTERS OF FLORIDA, INC.,
a Florida corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title:
----------------------------------
ACADEMY FOR DENTAL ASSISTANTS, INC.,
a Florida corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title:
----------------------------------
DENTCOR, INC., a Florida corporation
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
-----------------------------------
Title:
----------------------------------
Signature Page
ANNEX I
PERCENTAGE SHARES AND MAXIMUM CREDIT AMOUNTS
----------------------------------------------- --------------------- -------------------
Maximum
Name of Lender Percentage Share Credit Amount
----------------------------------------------- --------------------- -------------------
Banc of America Strategic Solutions, Inc. 41.3422634% $19,608,006.11
----------------------------------------------- --------------------- -------------------
Xxxxxx Financial, Inc. 18.04853466% $8,560,145.43
----------------------------------------------- --------------------- -------------------
Fleet National Bank 27.07280201% $12,840,218.15
----------------------------------------------- --------------------- -------------------
AmSouth Bank 13.53640099% $6,420,109.07
----------------------------------------------- --------------------- -------------------
TOTAL 100.00% $47,428,478.76
----------------------------------------------- --------------------- -------------------
Annex I-1
EXHIBIT A
FORM OF NOTE
$_____________________________ ___________________, 2002
FOR VALUE RECEIVED, CASTLE DENTAL CENTERS, INC., a Delaware corporation
(the "Borrower"), hereby promises to pay to the order of
______________________________ (the "Lender"), at the Principal Office of Bank
of America, N.A., as Agent (the "Agent"), at 000 Xxxx Xxxxxx, 00xx Xxxxx,
Xxxxxx, Xxxxx 00000-0000, the principal sum of _____________ Dollars
($____________), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal amounts provided
in the Credit Agreement (as hereinafter defined), together with interest thereon
at the rate per annum provided in the Credit Agreement.
All outstanding principal and accrued interest thereon is and shall be
payable in accordance with the Credit Agreement.
This Note is one of the Notes referred to in the Second Amended and
Restated Credit Agreement dated as of ________________, 2002, among the
Borrower, the Lenders which are or become parties thereto (including the Lender)
and the Agent, and evidences the Loan of the Lender thereunder (such Second
Amended and Restated Credit Agreement as the same may be amended or supplemented
from time to time, the "Credit Agreement"). Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit Agreement.
All amounts paid hereunder shall be applied first to all interest then
accrued and unpaid hereunder, and the balance to principal. All past due
principal and interest on this Note shall bear interest until paid at the
applicable Post-Default Rate as specified in the Credit Agreement.
This Note is issued pursuant to the Credit Agreement and is entitled to the
benefits provided for in the Credit Agreement and the Security Instruments. The
Credit Agreement provides for the acceleration of the maturity of this Note upon
the occurrence of certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this Note.
This Note is given to restructure, modify and continue, but not extinguish,
the indebtedness evidenced by the Existing Note executed by the Borrower and
payable to the order of the Lender.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF TEXAS.
CASTLE DENTAL CENTERS, INC.
By:
-------------------------------------
Name:
Title:
Exhibit A-1
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the ________________ of CASTLE
DENTAL CENTERS, INC., a Delaware corporation (the "Borrower"), and that as such
he is authorized to execute this certificate on behalf of the Borrower. With
reference to the Second Amended and Restated Credit Agreement dated as of
_________________, 2002 (together with all amendments or supplements thereto
being the "Agreement") among the Borrower, each of the lenders that is a
signatory thereto or which becomes a signatory thereto as provided in Section
12.06 (individually, together with its successors and assigns, a "Lender" and,
collectively, the "Lenders"), and Bank of America, N.A., as Agent (in such
capacity, the "Agent") for itself and each of the Lenders, the undersigned
represents and warrants as follows (each capitalized term used herein having the
same meaning given to it in the Agreement unless otherwise specified):
(a) The Borrower has performed and complied with all agreements and
conditions contained in Articles VIII and IX of the Agreement and in the
Security Instruments to which it is a party required to be performed or
complied with by it prior to or at the time of delivery hereof, except for
the deviations, if any, described on a schedule to this certificate.
(b) Neither the Borrower nor any Subsidiary has incurred any material
liabilities, direct or contingent, since the date of the Financial
Statements accompanying this certificate, except those allowed by the terms
of the Agreement or consented to by the Agent in writing.
(c) Since the date of the Financial Statements accompanying this
certificate, no Material Adverse Effect has occurred.
(d) There exists no Default or Event of Default under the Agreement.
(f) The following computations reflect compliance with the following
Sections of the Agreement:
Section 9.10 Total Funded Debt to EBITDA
Section 9.11 Capital Expenditures
Section 9.12 Minimum EBITDA
Section 9.13 Debt Service Coverage Ratio
Exhibit B-1
EXECUTED AND DELIVERED this ____ day of ______________.
CASTLE DENTAL CENTERS, INC.
By:
------------------------------------
Name:
Title:
Exhibit B-2
EXHIBIT C
LIST OF SECURITY INSTRUMENTS
1. Borrower:
(a) Second Amended and Restated Security Agreement from Borrower (Accounts,
Inventory, Equipment, Chattel Paper, Documents, Instruments, General
Intangibles, and Other Property);
(b) Financing Statements related to Document No. 1(a);
(c) Second Amended and Restated Security Agreement from Borrower (Stocks,
Bonds and Other Securities); and
(d) Financing Statements related to Document No. 1(c).
2. Castle Tennessee:
(a) Second Amended and Restated Security Agreement from Castle Tennessee
(Accounts, Inventory, Equipment, Chattel Paper, Documents, Instruments,
General Intangibles, and Other Property);
(b) Financing Statements related to Document No. 2(a);
(c) Amended and Restated Guaranty Agreement; and
(d) Financing Statements in favor of Agent related to Management Services
Agreement dated May 31, 0000 xxxxxxx Xxxxxx Xxxxxxxxx and Castle Mid-South
Dental Center, P.C.
3. Castle Florida:
(a) Second Amended and Restated Security Agreement from Castle Florida
(Accounts, Inventory, Equipment, Chattel Paper, Documents, Instruments,
General Intangibles, and Other Property);
(b) Financing Statements related to Document No. 3(a);
(c) Second Amended and Restated Security Agreement from Castle Florida
(Stocks, Bonds and Other Securities);
(d) Financing Statements related to Document No. 3(c);
(e) Amended and Restated Guaranty Agreement; and
(f) Financing Statements in favor of Agent related to Amended and Restated
Management Services Agreement dated January 1, 2000 between Castle Florida
and Castle 1st Dental Care, P.A.
Exhibit C-1
4. CDC California:
(a) Second Amended and Restated Security Agreement from CDC California
(Accounts, Inventory, Equipment, Chattel Paper, Documents, Instruments,
General Intangibles, and Other Property);
(b) Financing Statements related to Document No. 4(a);
(c) Second Amended and Restated Security Agreement from CDC California
(Stocks, Bonds and Other Securities); and
(d) Financing Statements related to Document No. 4(c); and
(e) Amended and Restated Guaranty Agreement.
5. Castle Texas:
(a) Second Amended and Restated Security Agreement from Castle Texas
(Accounts, Inventory, Equipment, Chattel Paper, Documents, Instruments,
General Intangibles, and Other Property);
(b) Financing Statements related to Document No. 5(a);
(c) Amended and Restated Guaranty Agreement; and
(d) Financing Statements in favor of Agent related to Amended and Restated
Management Services Agreement dated May 15, 0000 xxxxxxx Xxxxxx Xxxxx
(formerly Borrower under the original Management Services Agreement) and
Castle Dental Associates of Texas, P.C. (f/k/a Xxxx X. Xxxxxx, D.D.S.,
P.C.).
6. Castle West:
(a) Second Amended and Restated Security Agreement from Castle West
(Accounts, Inventory, Equipment, Chattel Paper, Documents, Instruments,
General Intangibles, and Other Property);
(b) Financing Statements related to Document No. 6(a);
(c) Amended and Restated Guaranty Agreement;
(d) Security Agreement between Xxxxxxx Dental Corporation, Xxxxxx X.
Xxxxxxx and Castle West arising under the Management Services Agreement
dated February 27, 2001 between such persons; and
(e) Financing Statements in favor of Agent related to Document No. 6(d).
7. Dentcor:
Exhibit C-2
(a) Amended and Restated Security Agreement from Dentcor (Accounts,
Inventory, Equipment, Chattel Paper, Documents, Instruments, General
Intangibles, and Other Property); and
(b) Financing Statements related to Document No. 7(a); and
(c) Guaranty Agreement.
8. Academy:
(a) Amended and Restated Security Agreement from Academy (Accounts,
Inventory, Equipment, Chattel Paper, Documents, Instruments, General
Intangibles, and Other Property);
(b) Financing Statements related to Document No. 8(a); and
(c) Guaranty Agreement.
9. Castle Texas Holdings:
(a) Amended and Restated Security Agreement from Castle Texas Holdings
(Accounts, Inventory, Equipment, Chattel Paper, Documents, Instruments,
General Intangibles, and Other Property);
(b) Financing Statements related to Document No. 9(a);
(c) Security Agreement from Castle Texas Holdings (Stocks, Bonds and Other
Securities); and
(d) Financing Statements related to Document No. 9(c); and
(e) Guaranty Agreement.
10. Miscellaneous Security Instruments:
(a) Subordination and Intercreditor Agreement between Xxxxxx Financial,
Inc., Midwest Mezzanine Fund II, L.P., Xxxxx X. Xxxxx, Borrower, Castle
West, Castle Florida, Castle Tennessee, Castle Texas, Dentcor, CDC
California, Castle Texas Holdings, Academy and Agent.
Exhibit C-3
EXHIBIT D
FORM OF
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
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up of a Person.
Reorganization Subordinated Securities shall mean (a) any equity securities
issued in 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.
D-3
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 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.
D-4
(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:
(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
D-5
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 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
D-6
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 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:
D-7
(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
(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
D-8
c/o Castle Dental Centers, Inc.
0000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
Telecopy: 713.490.8420
and
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.
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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 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
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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.
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]
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
By: _______________________________ By: _______________________________
Name: _______________________________ Name: _______________________________
Title: _______________________________ Title: _______________________________
SUBSIDIARIES:
JUNIOR CREDITORS:
Academy for Dental Assistants, Inc.,
MIDWEST MEZZANINE FUND II, L.P., a Florida corporation;
a Delaware limited partnership Castle Dental Centers Of California,
L.L.C., a Delaware limited liability
By: ABN AMRO Mezzanine Management II, company;
L.P., its general partner Castle Texas Holdings, Inc.,
a Delaware corporation;
By: ABN AMRO Mezzanine Management II, Castle Dental Centers Of Texas, Inc.,
Inc., its general partner a Texas corporation and successor by
merger to Dental World, Inc., a Texas
By: _______________________________ corporation, and Castle Dental centers
Name: J. Xxxxx Xxxxxx of Austin, Inc., a Texas corporation;
Title: Senior Vice President CDC Of California, Inc.,
corporation; and a Delaware corporation;
Castle Dental Centers Of Florida, Inc.,
XXXXXX FINANCIAL, INC., a Florida corporation;
a Delaware corporation Castle Dental Centers Of Tennessee, Inc.,
a Tennessee corporation; and
Dentcor, Inc.,
By: _______________________________ a Florida corporation
Name: _______________________________
Title: _______________________________ By: ____________________________________
Name: __________________________________
Title: _________________________________
XXXXX X. XXXXX, an individual
By: _______________________________
Name: Xxxxx X. Xxxxx
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