EXHIBIT 10.1
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CREDIT AGREEMENT
Dated as of March 31, 2000
Among
GENTLE DENTAL SERVICE CORPORATION,
GENTLE DENTAL MANAGEMENT, INC.,
and
DENTAL CARE ALLIANCE, INC.,
AS BORROWERS,
THE GUARANTORS NAMED HEREIN,
THE LENDERS NAMED HEREIN,
UNION BANK OF CALIFORNIA, N.A., AS ADMINISTRATIVE AGENT
and
THE CHASE MANHATTAN BANK, AS SYNDICATION AGENT
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TABLE OF CONTENTS
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I. DEFINITIONS .......................................................1
SECTION 1.01 Certain Defined Terms .......................1
SECTION 1.02 Accounting Terms ...........................29
II. THE LOANS ........................................................30
SECTION 2.01 Revolving Credit Commitments and Term Loan .30
SECTION 2.02 Loans ......................................30
SECTION 2.03 Notice of Loans ............................33
SECTION 2.04 Notes; Repayment of Loans ..................33
SECTION 2.05 Interest on Loans ..........................36
SECTION 2.06 Fees .......................................36
SECTION 2.07 Termination and Reduction of Revolving
Credit Commitments .........................37
SECTION 2.08 Interest on Overdue Amounts; Alternate
Rate of Interest ...........................37
SECTION 2.09 Prepayment of Loans ........................38
SECTION 2.10 Reserve Requirements; Change in
Circumstances ..............................42
SECTION 2.11 Change in Legality .........................45
SECTION 2.12 Indemnity ..................................45
SECTION 2.13 Pro Rata Treatment; Assumption by and
Delegation of Authority to the
Administrative Agent .......................46
SECTION 2.14 Sharing of Setoffs .........................49
SECTION 2.15 Payments and Computations ..................50
SECTION 2.16 Taxes ......................................51
SECTION 2.17 Issuance of Letters of Credit ..............53
SECTION 2.18 Payment of Letters of Credit;
Reimbursement ..............................54
SECTION 2.19 Administrative Agent's Actions with
respect to Letters of Credit ...............56
SECTION 2.20 Letter of Credit Fees ......................56
III. COLLATERAL SECURITY ..............................................57
SECTION 3.01 Security Documents .........................57
SECTION 3.02 Filing and Recording .......................57
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IV. REPRESENTATIONS AND WARRANTIES ...................................57
SECTION 4.01 Organization, Legal Existence ..............57
SECTION 4.02 Authorization .... .........................58
SECTION 4.03 Governmental Approvals .....................58
SECTION 4.04 Binding Effect .............................58
SECTION 4.05 Material Adverse Change ....................58
SECTION 4.06 Litigation; Compliance with Laws; etc. .....59
SECTION 4.07 Financial Statements .......................59
SECTION 4.08 Federal Reserve Regulations ................60
SECTION 4.09 Taxes ......................................60
SECTION 4.10 Employee Benefit Plans .....................60
SECTION 4.11 No Material Misstatements ..................62
SECTION 4.12 Investment Company Act; Public Utility
Holding Company Act ........................62
SECTION 4.13 Security Interest ..........................62
SECTION 4.14 Use of Proceeds ............................62
SECTION 4.15 Subsidiaries ...............................63
SECTION 4.16 Title to Properties; Possession Under
Leases; Trademarks .........................63
SECTION 4.17 Solvency ...................................63
SECTION 4.18 Permits, etc. ..............................64
SECTION 4.19 Compliance with Environmental Laws .........64
SECTION 4.20 No Change in Credit Criteria or
Collection Policies ........................65
SECTION 4.21 Employee Matters ...........................65
SECTION 4.22 Year 2000 ..................................65
SECTION 4.23 Management Agreements ......................66
SECTION 4.24 Bank Accounts ..............................66
V. CONDITIONS OF CREDIT EVENTS........................................66
SECTION 5.01 All Credit Events ..........................66
SECTION 5.02 First Borrowing ............................67
VI. AFFIRMATIVE COVENANTS ............................................70
SECTION 6.01 Legal Existence ............................70
SECTION 6.02 Businesses and Properties ..................70
SECTION 6.03 Insurance ..................................71
SECTION 6.04 Taxes ......................................71
SECTION 6.05 Financial Statements, Reports, etc .........71
SECTION 6.06 Litigation and Other Notices ...............74
SECTION 6.07 ERISA ......................................75
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SECTION 6.08 Maintaining Records; Access to
Properties and Inspections; Right to Audit .76
SECTION 6.09 Use of Proceeds ............................76
SECTION 6.10 Fiscal Year-End ............................76
SECTION 6.11 Further Assurances .........................76
SECTION 6.12 Additional Grantors and Guarantors .........76
SECTION 6.13 Environmental Laws .........................77
SECTION 6.14 Pay Obligations to Lenders and Perform
Other Covenants ............................79
SECTION 6.15 Maintain Operating Accounts ................79
SECTION 6.16 Life Insurance .............................79
SECTION 6.17 Year 2000 ..................................79
SECTION 6.18 Assignment of Contracts ....................80
SECTION 6.19 [Re-execution of Serra Park Management
Agreements .................................80
SECTION 6.20 Good Standing ..............................80
SECTION 6.21 Landlord Waivers; UCC Amendments ...........80
SECTION 6.22 Purchase Agreements ........................80
SECTION 6.23 Intentionally Omitted ......................80
SECTION 6.24 Cash Management Arrangements ...............81
SECTION 6.25 Additional Capital .........................81
VII. NEGATIVE COVENANTS ..............................................81
SECTION 7.01 Liens ......................................81
SECTION 7.02 Sale and Lease-Back Transactions ...........83
SECTION 7.03 Indebtedness ...............................83
SECTION 7.04 Dividends, Distributions and Payments ......83
SECTION 7.05 Consolidations, Mergers and Sales of
Assets .....................................84
SECTION 7.06 Investments ................................84
SECTION 7.07 Capital Expenditures .......................85
SECTION 7.08 Net Worth ..................................86
SECTION 7.09 Leverage Ratio; Interest Leverage Ratio ....86
SECTION 7.10 Interest Coverage Ratios ...................87
SECTION 7.11 Fixed Charge Ratio .........................88
SECTION 7.12 Business ...................................88
SECTION 7.13 Sales of Accounts Receivables ..............88
SECTION 7.14 Use of Proceeds ............................88
SECTION 7.15 ERISA ......................................88
SECTION 7.16 Accounting Changes .........................89
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SECTION 7.17 Prepayment or Modification of
Indebtedness; Modification of Charter
Documents, etc ..............................89
SECTION 7.18 Transactions with Affiliates ................89
SECTION 7.19 Consulting Fees .............................89
SECTION 7.20 Negative Pledges, etc . .....................90
VIII. EVENTS OF DEFAULT ..............................................90
IX. AGENTS ...........................................................93
X. COLLECTION OF RECEIVABLES .........................................98
XI. MISCELLANEOUS ....................................................99
SECTION 11.01 Notices ....................................99
SECTION 11.02 Survival of Agreement ......................100
SECTION 11.03 Successors and Assigns; Participations .....100
SECTION 11.04 Expenses; Indemnity ........................104
SECTION 11.05 Applicable Law .............................105
SECTION 11.06 Right of Setoff ............................105
SECTION 11.07 Payments on Business Days ..................105
SECTION 11.08 Waivers; Amendments ........................106
SECTION 11.09 Severability ...............................107
SECTION 11.10 Entire Agreement; Waiver of
Jury Trial, etc ............................107
SECTION 11.11 Confidentiality ............................108
SECTION 11.12 Submission to Jurisdiction .................108
SECTION 11.13 Counterparts; Facsimile Signature ..........109
SECTION 11.14 Headings ...................................109
XII. GUARANTEES ......................................................109
XIII. LENDERS' ACKNOWLEDGMENT ........................................113
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EXHIBITS
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EXHIBIT A Form of Term Note
EXHIBIT B Form of Revolving Credit Note
EXHIBIT C Form of Opinion of Counsel
EXHIBIT D Form of Amended and Restated Pledge Agreement
EXHIBIT E Form of Amended and Restated Security Agreement
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Amended and Restated Security
Agreement-Patents and Trademarks
EXHIBIT H Form of Amended and Restated Assignment of Contract
EXHIBIT I Form of Assignment of Life Insurance
EXHIBITS ▇-▇, ▇-▇, ▇-▇ Forms of Management Agreement
EXHIBIT K Form of Shares Acquisition Agreement
EXHIBIT L Form of Covenant Compliance Certificates
EXHIBIT M Form of Joinder Agreement
EXHIBIT N Form of Pricing Certificate
EXHIBIT 0 Form of Notice of Borrowing
EXHIBIT P Form of Intercompany Demand Promissory Note
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SCHEDULES
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SCHEDULE I Criteria for Management Agreements
SCHEDULE II Certain UCC Filings
SCHEDULE III Serra Park Administrative Services Agreements
SCHEDULE IV Serra Park Succession Agreements
SCHEDULE V Serra Park Affiliated Dental Practices
SCHEDULE 2.01(a) Revolving Credit Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 2.14 Percentages
SCHEDULE 2.20 Letter of Credit Fees
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.05 Material Adverse Change
SCHEDULE 4.06(a) Litigation
SCHEDULE 4.06(b) Compliance with Laws
SCHEDULE 4.07(b) Projections
SCHEDULE 4.10 ERISA Matters
SCHEDULE 4.15 Subsidiaries
SCHEDULE 4.19 Environmental Law Compliance
SCHEDULE 4.21 Employee Matters
SCHEDULE 4.24 Bank Accounts
SCHEDULE 6.13 Hazardous Materials
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.19 Consulting Fees
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CREDIT AGREEMENT dated as of March 31, 2000, among GENTLE DENTAL
SERVICE CORPORATION, a Washington corporation ("DENTAL SERVICE"),
GENTLE DENTAL MANAGEMENT, INC., a Delaware corporation ("DENTAL
MANAGEMENT") and DENTAL CARE ALLIANCE, INC., a Delaware corporation
("DCA": DCA, Dental Service and Dental Management, each a "BORROWER"
and collectively, the "BORROWERS"), the Guarantors named herein and
signatories hereto, the financial institutions from time to time party
hereto, initially consisting of those financial institutions listed on
Schedule 2.01(a) annexed hereto (collectively, the "LENDERS"), UNION
BANK OF CALIFORNIA, N.A., as administrative agent for the Lenders (in
such capacity, the "ADMINISTRATIVE AGENT") and THE CHASE MANHATTAN
BANK, as syndication agent for the Lenders (in such capacity, the
"SYNDICATION AGENT").
The Lenders (such term and all other capitalized terms used in this
paragraph having the respective meanings ascribed to such terms above or in
Article 1), subject to the terms and conditions of this Agreement, severally and
not jointly, hereby agree to make Revolving Credit Loans available to the
Borrowers in an aggregate principal amount not in excess of $11,000,000 at any
time outstanding. Proceeds from Revolving Credit Loans shall be used for working
capital purposes and not for Permitted Acquisitions and Permitted De Novo
Capital Expenditures unless and until the aggregate of the Total Revolving
Credit Commitment hereunder and the "Total Revolving Credit Commitment" under
the 1999 Credit Agreement has been increased to $120,000,000. The Grantors will
provide Collateral to secure the Obligations and the 1999 Obligations in
accordance with the provisions of this Agreement, the 1999 Credit Agreement and
the Security Documents. Holdings will guarantee the Loans and the 1999
Obligations in accordance with the provisions of the Holdings Guarantee.
Accordingly, the Borrowers, the Guarantors (other than Holdings), the Lenders
and the Agents hereby agree as follows:
1. DEFINITIONS
SECTION 1.01 CERTAIN DEFINED TERMS. For purposes hereof, the following
terms shall have the meanings specified below (the following meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"ACQUISITION CAPITAL EXPENDITURES" shall mean, with respect to any
person, all capital expenditures (other than De Novo Capital Expenditures)
incurred (or expected to be incurred) by such person within the first six months
of any dental practice becoming an Affiliated Dental Practice, including,
without limitation, expenditures related to management information system
requirements and expenditures to upgrade the image of such Affiliated Dental
Practice to the Borrowers' standards.
"ADJUSTED EBITDA" shall mean, with respect to any person as of the last
day of any fiscal quarter, the sum of (i) with respect to De Novo Dental
Practices which have been operating for more than six months prior to such date
of determination, the product of (x) EBITDA of such De Novo Dental Practice for
such fiscal quarter (or, if shorter than a full fiscal quarter, the period
commencing with the six-month anniversary of such De Novo Dental Practice and
ending on the last day of such fiscal quarter) and (y) 4 PLUS (ii) with respect
to dental practices (other than De Novo Dental Practices) that have been
Affiliated Dental Practices for at least one full fiscal quarter (inclusive of
the fiscal quarter then ended), the product of (x) EBITDA of such Affiliated
Dental Practice for the fiscal quarter then ended and (y) 4 plus (iii) with
respect to dental practices (other than De Novo Dental Practices ) that have
been Affiliated Dental Practices for less than one full fiscal quarter prior to
such date of determination, Pro Forma EBITDA for such Affiliated Dental Practice
for the four fiscal quarter period ending on the last day of fiscal quarter
immediately preceding the date such dental practice became an Affiliated Dental
Practice plus (iv) the product of (x) the aggregate amount of dividends paid by
Dedicated Dental to Dental Service during such fiscal quarter and (y) 4 PLUS (v)
with respect to any subsidiary that is in the Dental Insurance Business and is
not a Guarantor, the product of (x) the aggregate amount of dividends paid by
such person to a Borrower or Guarantor during the fiscal quarter then ended and
(y) 4; PROVIDED, HOWEVER, that for the purposes of calculating the foregoing,
the aggregate amount of such dividends shall not exceed the applicable person's
EBITDA for the applicable period plus (vi) without duplication of amounts
determined above, the product of (x) EBITDA of Holdings and its subsidiaries (on
a Consolidated basis) for the fiscal quarter then ended and (y) 4 MINUS (vii)
the product of (x) the aggregate corporate "selling, general and administrative"
expenses of Holdings and its subsidiaries (on a Consolidated basis) for the
fiscal quarter then ended and other expenses not included in the calculation of
EBITDA of Holdings and its subsidiaries and (y) 4 PLUS (viii) the product of (x)
negative EBITDA (if any) of any subsidiary that is in the Dental Insurance
Business and is not a Guarantor for the fiscal quarter then ended and (y) 4
MINUS (ix) the product of (x) net aggregate advances made by the Borrowers to
Affiliated Dental Practices which are not consolidated with Holdings during such
fiscal quarter which are attributable to losses suffered by such Affiliated
Dental Practices during such quarter and (y) 4.
"ADJUSTED LIBO RATE" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (i) the LIBO Rate in
effect for such Interest Period and (ii) Statutory Reserves. For purposes
hereof, "STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one MINUS the aggregate of the maximum reserve percentages (including, without
limitation, any marginal special, emergency, or supplemental reserves) expressed
as a decimal established by the Board with respect to Eurocurrency Liabilities
(as defined in Regulation D). Such reserve percentages shall include, without
limitation, those imposed under Regulation D. Eurodollar Loans shall be deemed
to constitute Eurocurrency Liabilities and as such shall be deemed to be subject
to such reserve
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requirements without benefit of or credit for proration, exemptions or offsets
which may be available from time to time to any Lender under Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"ADJUSTED SENIOR DEBT" shall mean, with respect to any person as of any
date of determination, the total Funded Debt of such person as of such date
minus the Subordinated Indebtedness of such person, and shall include earn-outs
which would be payable in cash based upon such person's operating performance as
at such date of determination. Earn-out liabilities with respect to the current
12-month period being measured shall be calculated by annualizing year-to-date
EBITDA (or, if not determined by reference to EBITDA, a similar performance
methodology) performance assuming EBITDA ( or similar performance methodology)
performance for the remaining months of the twelve month period being measured
will be identical to the EBITDA (or similar performance methodology) performance
of the most recently ended fiscal quarter (e.g., if there are four months
remaining in the 12-month period and the EBITDA performance was $300,000 in the
most recently ended quarter, the estimated EBITDA for the remaining four months
would be $400,000). Earn-out liabilities with respect to subsequent 12-month
periods shall be calculated by multiplying the EBITDA (or similar performance
methodology) performance of the most recently ended fiscal quarter by 4, and
discounting such payments by a factor of 8% in order to determine the present
value thereof.
"ADJUSTED TOTAL FUNDED DEBT" shall mean, with respect to any person as
of any date of determination, the total Funded Debt of such person as of such
date and shall include earn-outs which would be payable in cash in connection
with completed Permitted Acquisitions based upon such person's operating
performance as at such date of determination; PROVIDED, HOWEVER, that for
purposes of determining the Leverage Ratio, the Interest Leverage Ratio and Pro
Forma Adjusted Total Funded Debt, "Adjusted Total Funded Debt" shall not include
the Convertible Subordinated Notes. Earn-out liabilities with respect to the
current 12-month period being measured shall be calculated by annualizing
year-to-date EBITDA (or, if not determined by reference to EBITDA, a similar
performance methodology) performance assuming EBITDA (or similar performance
methodology) performance for the remaining months of the twelve month period
being measured will be identical to the EBITDA (or similar performance
methodology) performance of the most recently ended fiscal quarter (e.g., if
there are four months remaining in the 12-month period and the EBITDA
performance was $300,000 in the most recently ended quarter, the estimated
EBITDA for the remaining four months would be $400,000). Earn-out liabilities
with respect to subsequent 12-month periods shall be calculated by multiplying
the EBITDA (or similar performance methodology) performance of the most recently
ended fiscal quarter by 4, and discounting such payments by a factor of 8% in
order to determine the present value thereof.
"ADMINISTRATIVE AGENT" shall have the meaning assigned to such term in
the preamble to this Agreement.
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"AFFILIATE" of any person shall mean any other person which, directly
or indirectly, controls or is controlled by or is under common control with such
person and, without limiting the generality of the foregoing, includes (i) any
person which beneficially owns or holds 5% or more of any class of voting
securities of such person or 5% or more of the equity interest in such person,
(ii) any person of which such person beneficially owns or holds 5% or more of
any class of voting securities or in which such person beneficially owns or
holds 5% or more of the equity interest in such person and (iii) any director,
officer or employee of such person. For the purposes of this definition, the
term "control" (including, with correlative meanings, the terms "controlled by"
and "under common control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"AFFILIATED DENTAL PRACTICE" shall mean a dental practice, professional
association or professional corporation which has entered into a Management
Agreement (and a Shares Acquisition Agreement if the Management Agreement is in
the form of EXHIBIT J-1 annexed hereto) and Purchase Agreement with any of the
Borrowers or any of the Guarantors (other than Holdings).
"AGENTS" shall have the meaning assigned to such term in Article IX to
this Agreement.
"ALTERNATE BASE LOAN" shall mean a Loan based on the Alternate Base
Rate in accordance with Article II hereof.
"ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day PLUS 1%, and (c) the Federal Funds Effective Rate in effect on such
day PLUS 1/2 of 1%. "PRIME RATE" shall mean the rate of interest per annum
publicly announced from time to time by The Chase Manhattan Bank at its
principal office in New York City as its prime rate in effect at such time.
"BASE CD RATE" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) Statutory Reserves and (b) the Assessment Rate.
"THREE-MONTH SECONDARY CD RATE" shall mean, for any day, the secondary market
rate for three-month certificates of deposit reported as being in effect on such
day (or, if such day shall not be a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day), or, if such rate shall not be so reported on such day
or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 A.M., New York City time, on
such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City negotiable
certificate of deposit dealers of recognized
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standing selected by it. "STATUTORY RESERVES" shall mean a fraction (expressed
as a decimal), the numerator of which is the number one and the denominator of
which is the number one MINUS the maximum reserve percentage (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal,
established by the Board and any other banking authority to which the
Administrative Agent is subject for new negotiable nonpersonal time deposits in
dollars of over $100,000 with maturities approximately equal to three months.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage. "ASSESSMENT RATE" shall mean, for
any day, the annual assessment rate (net of refunds and rounded upwards, if
necessary, to the next 1/16 of 1%) estimated by the Administrative Agent (in
good faith, but in no event in excess of statutory or regulatory maximums) to be
payable by the Administrative Agent to the Federal Deposit Insurance Corporation
(or any successor) for insurance by such Corporation (or such successor) of time
deposits made in dollars at the Administrative Agent's domestic offices during
the current calendar year. "FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any
day, the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it. If for any reason the Administrative Agent shall have determined
(which determination shall be conclusive absent manifest error) that it is
unable to ascertain the Base CD Rate or the Federal Funds Effective Rate, or
both, for any reason, including, the inability or failure of the Administrative
Agent to obtain sufficient quotations in accordance with the terms hereof, the
Alternate Base Rate shall be determined without regard to clause (b) or (c), or
both, of the first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender,
such Lender's Domestic Lending Office in the case of an Alternate Base Loan and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and acceptance
entered into by a Lender and an assignee and accepted by the Agents, in
substantially the form of EXHIBIT F annexed hereto.
"ASSIGNMENT OF CONTRACT" shall mean, collectively, each Assignment of
Contract delivered by a Borrower pursuant to the provisions of Section 6.18
hereof, each substantially in the form of EXHIBIT H annexed hereto, each as
amended, modified or supplemented from time to time.
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"ASSIGNMENT OF LIFE INSURANCE" shall mean, collectively, (i) the
Assignments of Life Insurance dated January 4, 1999 and March 1, 1999, by Dental
Service and the insured in favor of the Administrative Agent, for its own
benefit and for the benefit of the Lenders, and (ii) the Assignment of Life
Insurance dated as of June 15, 1999, by the owner and beneficiary thereof and
the insured in favor of the Administrative Agent, for its own benefit and for
the benefit of the Lenders, each substantially in the form of EXHIBIT I annexed
hereto, as amended, modified or supplemented from time to time.
"BOARD" shall mean the Board of Governors of the Federal Reserve System
of the United States.
"BORROWERS" shall have the meaning assigned to such term in the
preamble to this Agreement.
"BUSINESS DAY" shall mean any day, other than a Saturday, Sunday or
legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City except that, if any
determination of a "Business Day" shall relate to a Eurodollar Loan, the term
"Business Day" shall in addition exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"CAPITAL EXPENDITURES" shall mean, with respect to any person, all
Acquisition Capital Expenditures incurred by such person and all other
expenditures incurred by such person with respect to any fixed assets or
improvements or replacements, substitutions or additions thereto, which have a
useful life of more than one year, including the direct or indirect acquisition
of such assets by way of increased product or service charges, offset items or
otherwise; PROVIDED, HOWEVER, that "Capital Expenditures" shall not include
expenditures to the extent that such expenditures constitute De Novo Capital
Expenditures.
"CAPITALIZED LEASE OBLIGATION" shall mean an obligation to pay rent or
other amounts under any lease of (or other arrangement conveying the right to
use) real and/or personal property which obligation is required to be classified
and accounted for as a capital lease on a balance sheet prepared in accordance
with GAAP, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with GAAP.
"CASH INTEREST EXPENSE" shall mean, with respect to any person for any
period, the Interest Expense of such person for such period LESS all non-cash
items constituting Interest Expense during such period (including, without
limitation, amortization of debt discounts and payments of interest on
Indebtedness by issuance of Indebtedness) PLUS the net aggregate advances made
by the Borrowers to Affiliated Dental Practices which are not consolidated with
Holdings which are attributable to interest expense payments of such Affiliated
Dental Practices on their Indebtedness owed to persons other than a Borrower,
Holdings or a subsidiary of any of them.
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"CELEBRATION" shall mean Celebration Dental Services, L.C., a Florida
limited liability company.
"CHANGE OF CONTROL" shall mean the occurrence of any of the following
events: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended), is or becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 of the Securities Exchange Act of
1934, as amended, provided that such person shall be deemed to have "beneficial
ownership" of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the outstanding
capital stock of Holdings or (ii) Holdings shall cease to own directly or
indirectly 100% of all outstanding shares of all classes of stock of each of the
Borrowers and each subsidiary thereof.
"CLOSING DATE" shall mean the date of the first borrowing under this
Agreement, but in no event later than April 15, 2000.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL" shall mean all collateral and security as described in the
Security Documents.
"CONSOLIDATED" shall mean, in respect of any person, as applied to any
financial or accounting term, such term determined on a consolidated basis in
accordance with GAAP (except as otherwise required herein) for the person and
all consolidated subsidiaries thereof.
"CONTAMINANT" shall mean all Hazardous Materials and all those
substances which are regulated by or form the basis of liability under Federal,
state or local environmental, health and safety statutes or regulations or any
other material or substance which constitutes a material health, safety or
environmental hazard to any person or property.
"CONVERSION DATE" shall have the meaning assigned to such term in
Section 2.01 (b) hereof.
"CONVERTIBLE PREFERRED STOCK" shall mean the convertible preferred
stock of Dental Service.
"CONVERTIBLE SUBORDINATED NOTES" shall mean Dental Service's 7%
Convertible Subordinated Notes due May 15, 2006 in the original principal amount
of $30,000,000, and all instruments or other documents related thereto, in each
case as
7
amended, modified or supplemented from time to time in accordance with their
respective terms and the limitations set forth in Section 7.17 hereof.
"CREDIT EVENT" shall mean each borrowing and each issuance of a Letter
of Credit hereunder.
"CREDITS" shall mean the Loans and the Letters of Credit.
"CURE LOANS" shall have the meaning assigned to such term in Section
2.13(d) hereof.
"CUSTOMER" shall mean and include the account debtor or obligor with
respect to any Receivable.
"DCA" shall have the meaning assigned to such term in the preamble of
this Agreement.
"DCA MERGE " shall mean the merger completed on March 12, 1999 whereby
DCA became a wholly-owned subsidiary of Holdings.
"DEBT SERVICE EXPENSE" shall mean, with respect to any person for any
period, the aggregate of regularly scheduled principal payments of all long-term
Indebtedness (including, without limitation, Subordinated Indebtedness) made or
to be made by such person during such period on a Consolidated basis in
accordance with GAAP.
"DEDICATED DENTAL" shall mean Dedicated Dental Systems, Inc., a
California corporation.
"DEFAULT" shall mean any condition, act or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"DE NOVO CAPITAL EXPENDITURES" shall mean, with respect to any person,
the sum of (i) capital expenditures incurred by such person to establish De Novo
Dental Practices in markets in which the Borrowers operate PLUS (ii) net losses
incurred by a De Novo Dental Practice within its first six months of operation.
"DE NOVO DENTAL PRACTICE" shall mean a dental practice not in existence
prior to its affiliation with any of the Borrowers.
"DENTAL INSURANCE BUSINESS" shall mean (a) the provision,
administration or arrangement of (pursuant to state licensor, certification or
other authorization, if necessary), (i) dental care services, related ancillary
products or both, directly or through a DMO, a provider, a regulated service
contractor or any other business which in the
8
ordinary course provides, administers or arranges for such services, products or
both, or (ii) dental and related insurance, (b) the provision or management of
dental care services (including dental management claims services and management
through dental information services), pursuant to state licensor, certification
or other authorization, if necessary, and (c) any business activities related
and incidental to any of the foregoing.
"DENTAL MANAGEMENT" shall have the meaning assigned to such term in the
preamble to this Agreement.
"DENTAL OREGON" shall mean Managed Dental Care of Oregon, Inc., an
Oregon corporation.
"DMO" means any person which operates as a dental maintenance
organization or a similar organization which provides, manages or arranges
dental care services, pursuant to state licensor, certification or other
authorization, if necessary, in the jurisdictions in which any Borrower or any
subsidiary of a Borrower conducts business.
"DENTAL SERVICE" shall have the meaning assigned to such term in the
preamble of this Agreement.
"DOLLARS" or the symbol "$" shall mean lawful currency of the United
States of America.
"DOMESTIC LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name in SCHEDULE 2.02 annexed hereto, or such other office of such Lender as
such Lender may from time to time specify to the Borrowers and the
Administrative Agent.
"EBITDA" shall mean, with respect to any person for any period,
without duplication, the sum of (i) Net Income, (ii) Interest Expense, (iii)
depreciation and amortization and other non-cash items properly deducted in
determining Net Income and (iv) federal, state and local income taxes, in
each case of such person for such period MINUS interest income, computed and
calculated in accordance with GAAP; PROVIDED, HOWEVER, that in determining
EBITDA for Holdings and its Consolidated subsidiaries, (w) income related to
Celebration shall not be included in such determination unless and until a
Borrower owns 51% or more of the equity interests of Celebration, (x) the
aggregate amount of dividends paid by Celebration to Dental Service shall be
included in such determination, (y) positive EBITDA of subsidiaries which are
in the Dental Insurance Business and which are not Guarantors shall not be
included in such determination and (z) the aggregate amount of dividends paid
by subsidiaries which are in the Dental Insurance Business and which are not
Guarantors to a Borrower or Guarantor during the applicable period shall be
included in such determination; PROVIDED, FURTHER, that the aggregate amount
of such dividends so included shall not exceed the applicable person's EBITDA
for such period; PROVIDED, HOWEVER, that in determining EBITDA for Holdings and
9
its Consolidated subsidiaries, merger and restructuring costs incurred in the
1999 Fiscal Year in connection with the DCA Merger shall not be included in such
determination; PROVIDED, FURTHER, that in no event shall such amount exceed
$8,816,000; PROVIDED, FURTHER, that in determining EBITDA for Holdings and its
Consolidated subsidiaries, merger and restructuring costs incurred in the 2000
Fiscal Year in connection with the DCA Merger and termination of the ▇▇▇▇▇▇▇
▇▇▇▇▇ transaction shall not be included in such determination; PROVIDED,
FURTHER, that in no event shall such amount exceed $3,000,000 in the aggregate
(of which no more than $1,000,000 shall relate to the termination of the ▇▇▇▇▇▇▇
▇▇▇▇▇ transaction).
"ENVIRONMENTAL CLAIM" shall mean any written notice of violation,
claim, demand, abatement or other order by any governmental authority or any
person for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or deed or use restrictions, resulting from or based upon (i) the
existence, or the continuation of the existence, of a Release (including,
without limitation, sudden or non-sudden, accidental or nonaccidental Releases),
of, or exposure to, any Contaminant at, in, by or from any of the properties of
the Borrowers or their subsidiaries, (ii) the environmental aspects of the
transportation, storage, treatment or disposal of Contaminants in connection
with the operation of any of the properties of the Borrowers or their
subsidiaries or (iii) the violation, or alleged violation by the Borrowers or
any of their subsidiaries, of any statutes, ordinances, orders, rules,
regulations, Permits or licenses of or from any governmental authority, agency
or court relating to environmental matters connected with any of the properties
of the Borrowers or their subsidiaries, under any applicable Environmental Law.
"ENVIRONMENTAL LAWS" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 ET SEQ.),
the Hazardous Material Transportation Act (49 U.S.C. Section 1801 ET SEQ.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251 ET SEQ.),
the Oil Pollution Act of 1990 (33 U.S.C. Section 2701 ET. SEQ.), the Safe
Drinking Water Act (42 U.S.C. Section 300f, ET SEQ.), the Clear Air Act (42
U.S.C. Section 7401 ET SEQ.), the Toxic Substances Control Act, as amended
(15 U.S.C. Section 2601 ET SEQ.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 ET SEQ.) and the Occupational Safety and
Health Act (29 U.S.C. Section 651 ET SEQ.), as such laws have been and
hereafter may be amended or supplemented, and any related or analogous
present or future Federal, state or local, statutes, rules, regulations,
ordinances, licenses, permits and interpretations and orders of regulatory
and administrative bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time.
10
"ERISA AFFILIATE" shall mean any trade or business (whether or not
incorporated) which together with any of the Borrowers or any subsidiary of any
thereof would be treated as a single employer under the provisions of Title I or
Title IV of ERISA.
"EURODOLLAR LENDING OFFICE" shall mean, with respect to any Lender, the
office of such Lender specified as its "Eurodollar Lending Office" opposite its
name in SCHEDULE 2.03 annexed hereto (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such Lender may
from time to time specify to the Borrowers and the Administrative Agent.
"EURODOLLAR LOAN" shall mean a Loan based on the Adjusted LIBO Rate in
accordance with Article II hereof.
"EVENT OF DEFAULT" shall have the meaning assigned to such term in
Article VIII hereof.
"EXCESS CASH FLOW" shall mean, with respect to any person for any
period, the amount, if any, by which Net Cash Flow of such person and its
subsidiaries on a Consolidated basis for such period exceeds the Debt Service
Expense of such person and its subsidiaries on a Consolidated basis for such
period.
"FINAL MATURITY DATE" shall mean March 31, 2005.
"FINANCIAL OFFICER" shall mean, with respect to any person, the chief
financial officer of such person.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time.
"FISCAL YEAR" shall mean the fiscal year of each of the Borrowers for
accounting purposes, which in each case ends on December 31 of each year.
"FIXED CHARGE COVERAGE RATIO" shall mean, with respect to any person
for any period, the ratio of (i) the sum of (x) Funds Flow from Operations of
such person for such period PLUS the average unused (treating Letter of Credit
Usage as usage) availability under the Total Revolving Credit Commitment and the
"Total Revolving Credit Commitment" under the 1999 Credit Agreement during such
period LESS (y) the sum of (x) Capital Expenditures of such person for such
period PLUS (y) De Novo Capital Expenditures of such person for such period to
(ii) the sum of (x) the Debt Service Expense of such person for such period PLUS
(y) all earn-out payments paid in cash by such person during such period PLUS
(z) the aggregate amount of Preferred Dividends paid in cash by such person
during such period.
11
"FUNDED DEBT" shall mean with respect to any person as of the date of
determination thereof, all Indebtedness of such person and its subsidiaries on a
Consolidated basis outstanding at such time which matures more than one year
after the date of calculation, and any such Indebtedness maturing within one
year from such date of calculation which is renewable or extendable at the
option of the obligor to a date more than one year from such date and including
in any event the Revolving Credit Loans.
"FUNDS FLOW FROM OPERATIONS" shall mean, with respect to any person
for any period, without duplication of addition or subtraction of any items, the
sum for such person for such period of (i) Net Income PLUS (ii) depreciation and
amortization PLUS (iii) other non-cash items properly deducted in arriving at
Net Income PLUS (iv) decreases in deferred tax assets PLUS (v) Increases in
deferred tax liabilities MINUS (vi) increases in deferred tax assets MINUS (vii)
decreases in deferred tax liabilities MINUS (viii) other non-cash items properly
added in arriving at Net Income MINUS (ix) the positive Net Income for the
applicable period of subsidiaries which are in the Dental Insurance Business and
which are not Guarantors PLUS (x) the aggregate amount of dividends paid by such
person to a Borrower or a Guarantor during the applicable period; PROVIDED,
HOWEVER, that the aggregate amount of such dividends so added shall not exceed
the applicable person's positive Net Income for such period.
"GAAP" shall have the meaning assigned to such term in Section 1.02
hereof.
"GRANTOR" shall mean any Grantor, Pledgor or Debtor, as such terms are
defined in any of the Security Documents.
"GUARANTEE" shall mean any obligation, contingent or otherwise, of any
person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other person in any manner, whether directly
or indirectly, and shall in any event include the Holdings Guarantee and shall
include, without limitation, any obligation of such person, direct or indirect,
to (i) purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or obligation or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such Indebtedness or
obligation, (ii) purchase property, securities or services for the purpose of
assuring the owner of such Indebtedness or obligation of the payment of such
Indebtedness or obligation, or (iii) maintain working capital, equity capital,
available cash or other financial condition of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or obligation; PROVIDED,
HOWEVER, that the term Guarantee shall not include endorsements for collection
or collections for deposit, in either case in the ordinary course of business.
"GUARANTOR" shall mean, collectively, Holdings, each subsidiary of any
of the Borrowers (other than Dedicated Dental, Dental Oregon and Capitol Dental
Care, Inc., an Oregon corporation) in existence on the Closing Date and any
subsidiary of any of the
12
Borrowers which becomes a guarantor of the Obligations after the date hereof.
Upon the execution of an Joinder Agreement by a person as a "Guarantor", such
person shall be deemed to be a party to this Agreement as a Guarantor and shall
be bound by, and subject to all terms and provisions set forth herein and in the
other Loan Documents applicable to "Guarantors", including, without limitation,
the provisions of Article XII of this Agreement.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, chemical,
or industrial or hazardous, toxic or dangerous waste, substance or material,
defined or regulated as such in (or for purposes of) any Environmental Law and
any other toxic, reactive, or flammable chemicals, including (without
limitation) any asbestos, any petroleum (including crude oil or any fraction),
any radioactive substance and any polychlorinated biphenyls; PROVIDED, in the
event that any Environmental Law 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 PROVIDED, FURTHER, to the extent that the
applicable laws of any state establish a meaning for "hazardous material,"
"hazardous substance," "hazardous waste," "solid waste" or "toxic substance"
which is broader than that specified in any Federal Environmental Law, such
broader meaning shall apply.
"HOLDINGS" shall mean InterDent, Inc., a Delaware corporation.
"HOLDINGS GUARANTEE" shall mean the Guarantee by Holdings, dated as of
March 12, 1999, as amended on the Closing Date and as amended, modified or
supplemented from time to time.
"INDEBTEDNESS" shall mean, with respect to any person, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest charges
are customarily paid, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue beyond such period as is
commercially reasonable for such person's business, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person and all Capitalized Lease Obligations, (e) all
payment obligations of such person with respect to interest rate or currency
protection agreements, (f) all obligations of such person as an account party
under any letter of credit or in respect of bankers' acceptances, (g) the lesser
of (1) all obligations of any third party secured by property or assets of such
person (regardless of whether or not such person is liable for repayment of such
obligations) and (2) the appraised value (as determined by an independent
appraiser acceptable to the Administrative Agent) (less depreciation, if
applicable) of the property and assets of such person securing such obligations,
(h) all Guarantees of such person and (i) the redemption price of all redeemable
preferred stock of such person, but only to the extent that such stock is
redeemable at the option of the holder or requires sinking fund or similar
payments at any time prior to the Final Maturity Date.
13
"INDEMNITEES" shall have the meaning assigned to such term in Section
11.04(c) hereof.
"INFORMATION" shall have the meaning assigned to such term in Section
11.11 hereof.
"INTEREST EXPENSE" shall mean, with respect to any person for any
period, the interest expense of such person during such period determined on a
Consolidated basis in accordance with GAAP, and shall in any event include,
without limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense, (iii) the portion of
any Capitalized Lease Obligation allocable to interest expense, (iv) all fixed
and all calculable dividend payments on preferred stock, and (v) payments of
interest expense in kind.
"INTEREST LEVERAGE RATIO" shall mean, with respect to any person for
any period, the ratio of (i) Adjusted Total Funded Debt as of the date of
determination to (ii) Adjusted EBITDA of such person for such period.
"INTEREST MARGIN" shall mean, with respect to any Loan, the amount as
set forth below as corresponds to the Interest Leverage Ratio set forth below,
determined on the Closing Date and adjusted thereafter, ten (10) Business Days
after the delivery of the financial statements to the Administrative Agent
required pursuant to Section 6.05(a) or, with respect to the first three (3)
fiscal quarters of each Fiscal Year, Section 6.05(b) hereof, as applicable,
together with the corresponding compliance certificates required pursuant to
Section 6.05(e) hereof and together with a pricing certificate in the form of
EXHIBIT N annexed hereto, commencing with the financial statements and
certificates for the period ending March 31, 2000 or if the Borrowers shall fail
to timely deliver such statements and certificates for any such period or during
the continuance of an Event of Default, then at the highest Interest Margin
provided for herein:
Eurodollar Loan Alternate Base
Interest Leverage Ratio Interest Margin Loan Interest Margin
----------------------- --------------- --------------------
Equal to or greater than 3.75:1.00 3.50% 1.75%
Equal to or greater than 3.00:1.00 but less than 3.75:1.00 3.25% 1.50%
Less than 3.00:1.00 3.00% 1.25%
On the Closing Date (i) the Eurodollar Loan Interest Margin shall be 3.25% and
(ii) the Alternate Base Loan Interest Margin shall be 1.50%; each shall
thereafter be adjusted in accordance with the provisions hereof.
"INTEREST PAYMENT DATE" shall mean (i) in the case of an Alternate Base
Loan, the first Business Day of each October, January, April and July,
commencing July 1,
14
2000, and (ii) with respect to any Eurodollar Loan, the last day of the Interest
Period applicable thereto, and, in addition, in respect of any Eurodollar Loan
of more than three (3) months' duration, each earlier day which is three (3)
months after the first day of such Interest Period.
"INTEREST PERIOD" shall mean, as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the last
day) in the calendar month that is one (1), three (3) or six (6) months
thereafter, as the Borrowers may elect with respect to its Eurodollar Loans;
PROVIDED, HOWEVER, that (x) if an Interest Period would end on a day that is not
a Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, with respect to Eurodollar Loans, such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day, (y) no Interest Period
shall end later than the Final Maturity Date and (z) interest shall accrue from
and including the first day of an Interest Period to but excluding the last day
of such Interest Period.
"JOINDER AGREEMENT" shall mean an agreement in substantially the form
of EXHIBIT M annexed hereto.
"LENDERS" shall have the meaning assigned to such term in the preamble
to this Agreement.
"LETTER OF CREDIT" shall have the meaning assigned to such term in
Section 2.17 hereof.
"LETTER OF CREDIT USAGE" shall mean at any time, (i) the aggregate
undrawn amount of all outstanding Letters of Credit at such time PLUS (ii) the
unreimbursed drawings at such time under all such Letters of Credit.
"LEVERAGE RATIO" shall mean, with respect to any person for any period,
the ratio of (i) Adjusted Senior Debt as at the date of determination to (ii)
Adjusted EBITDA of such person for such period.
"LIBO RATE" shall mean, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary, to
the next 1/16 of 1%) equal to the rate at which dollar deposits approximately
equal in principal amount to the Administrative Agent's portion of such
Eurodollar Loan and for a maturity equal to the applicable Interest Period are
offered in immediately available funds to the Administrative Agent in the London
interbank market at approximately 11:00 A.M., London time, two (2) Business
Days prior to the first day of such Interest Period.
"LIEN" shall mean, with respect to any asset, (i) any mortgage, lien,
pledge, encumbrance, charge or security interest in or on such asset, (ii) the
interest of a vendor or
15
a lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset, (iii) in the case of securities,
any purchase option, call or similar right of a third party with respect to
such securities or (iv) any other right of or arrangement with any creditor
to have such creditor's claim satisfied out of such assets, or the proceeds
therefrom, prior to the general creditors of the owner thereof.
"LOAN" shall mean any Revolving Credit Loan or the Term Loan.
"LOAN DOCUMENTS" shall mean this Agreement, each Security Document,
each Guarantee executed and delivered at any time with respect to the
Obligations, the Notes and each other document, instrument or agreement now or
hereafter delivered to the Administrative Agent or any Lender in connection
herewith or therewith.
"LOAN PARTY" shall mean each Borrower, each Grantor, each Guarantor,
and each subsidiary thereof.
"MAINTENANCE CAPITAL EXPENDITURES" shall mean, with respect to any
person, all Capital Expenditures incurred by such person with respect to any
Affiliated Dental Practice after the six-month anniversary of such dental
practice becoming an Affiliated Dental Practice.
"MANAGEMENT AGREEMENT" shall mean the Management Agreements (having
terms of no less than 15 years) entered into by a Borrower or a Guarantor (other
than Holdings) and a dental practice, professional corporation or professional
association, pursuant to which the Borrowers provide comprehensive management
and administrative services to such dental practice, professional corporation or
professional association, and which shall (i) be in substantially the form
attached hereto as EXHIBIT J-1, J-2 or J-3, (ii) shall meet the criteria set
forth on SCHEDULE I annexed hereto or (iii) shall otherwise be a form approved
in writing by the Required Lenders (notwithstanding the requirements of this
definition "Management Agreements" shall include those Administrative Services
Agreements listed on Schedule III).
"MANDATORY PREPAYMENT" shall mean an amount equal to fifty percent
(50%) of Excess Cash Flow, if any, of the Borrowers and their subsidiaries for
the Fiscal Year then ended.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (i)
the business, assets, prospects, operations or financial or other condition of
Holdings and its subsidiaries taken as a whole, (ii) the ability of the Loan
Parties to perform or pay the Obligations in accordance with the terms hereof or
of any other Loan Document, (iii) the rights of, or benefits available to, the
Lenders or the Administrative Agent under any Loan
16
Document or (iv) the Administrative Agent's Lien on any material portion of the
Collateral or the priority of such Lien.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"NET CASH FLOW" shall mean, with respect to any person for any period,
without duplication of addition or subtraction of items, (A) the sum for such
period of (i) Net Income, (ii) depreciation and amortization, (iii) the change
(expressed as a positive number in the event of an increase or a negative number
in the event of a decrease) in deferred tax liabilities, (iv) other noncash
items properly deducted in arriving at Net Income and (v) the change (expressed
as a negative number in the event of an increase or a positive number in the
event of a decrease), if any, in deferred tax assets MINUS (B) the sum of (i)
all Capital Expenditures paid in cash during such period (including, without
limitation, the principal component of Capitalized Lease Obligations) and (ii)
all distributions and dividends permitted to be paid pursuant to the terms of
this Agreement (and which are actually paid) during such period.
"NET INCOME" shall mean, with respect to any person for any period, the
aggregate income (or loss) of such person for such period which shall be an
amount equal to net revenues and other proper items of income for such person
LESS the aggregate for such person of any and all items that are treated as
expenses under GAAP, and LESS Federal, state and local income taxes, but
excluding any extraordinary gains or losses or any gains or losses from the sale
or disposition of assets other than in the ordinary course of business, all
computed and calculated in accordance with GAAP.
"NET WORTH" shall mean, with respect to any person at any time, (i)
the sum of such person's capital stock, capital in excess of par or stated
value of shares of its capital stock, retained earnings and any other account
which, in accordance with GAAP, constitutes stockholders' equity, less (ii)
treasury stock and any minority interest in subsidiaries, and less (iii) the
amount of any write-up subsequent to the Closing Date in the value of any
asset above the cost or depreciated cost thereof to such person; PROVIDED,
HOWEVER, that in determining Net Worth for Holdings and its subsidiaries (on
a Consolidated basis), merger and restructuring costs incurred in the 1999
Fiscal Year subsequent to March 31, 1999 in connection with the DCA Merger
shall not be included in such determination; PROVIDED, FURTHER, that in no
event shall such amount exceed $5,135,000; PROVIDED, FURTHER, that in
determining Net Worth for Holdings and its subsidiaries (on a Consolidated
basis), merger and restructuring costs incurred in the 2000 Fiscal Year in
connection with the DCA Merger and the termination of the ▇▇▇▇▇▇▇ ▇▇▇▇▇
transaction shall not be included in such determination, PROVIDED, FURTHER,
that in no event shall such amount exceed $3,000,000 in the aggregate (of
which no more than $1,000,000 shall relate to the termination of the ▇▇▇▇▇▇▇
▇▇▇▇▇ transaction).
17
"1999 CREDIT AGREEMENT" shall mean the Credit Agreement dated as of
June 15, 1999 among the Borrowers, the guarantors named therein, Holdings,
the Administrative Agent and the Syndication Agent, as amended to the Closing
Date and as thereafter amended from time to time in accordance with its terms
but not in a manner which in the opinion of the Required Lenders would be
materially adverse to the Lenders under this Agreement.
"1999 OBLIGATIONS" shall mean the "Obligations" as defined in the 1999
Credit Agreement.
"NON PRO RATA LOAN" shall have the meaning assigned to such term in
Section 2.13(d) hereof.
"NOTES" shall mean the Term Notes and the Revolving Credit Notes.
"OBLIGATIONS" shall mean all obligations, liabilities and indebtedness
of the Borrowers to the Lenders and the Administrative Agent, arising under one
or more of the Loan Documents, whether now existing or hereafter created, direct
or indirect, due or not, whether created directly or acquired by assignment,
participation or otherwise, including without limitation all obligations,
liabilities and indebtedness of the Borrowers with respect to the Security
Documents and other Loan Documents, the principal of and interest on the
Revolving Credit Loans, the Term Loans and the payment or performance of all
other obligations, liabilities, and indebtedness of the Borrowers to the Lenders
and the Administrative Agent hereunder, under the Letters of Credit or under any
one or more of the other Loan Documents (including the payment of amounts that
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, and interest that, but for the filing of a
petition in bankruptcy with respect to any Borrower, would accrue on such
obligations, whether or not a claim is allowed against such Borrower for such
interest in the related bankruptcy proceeding), including without limitation all
fees, costs, expenses and indemnity obligations hereunder and thereunder.
"OTHER TAXES" shall have the meaning assigned to such term in Section
2.16(b) hereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"PENSION PLAN" shall mean any Plan which is subject to the provisions
of Title IV of ERISA.
"PERMITS" shall have the meaning assigned to such term in Section 4.18
hereof.
18
"PERMITTED ACQUISITION" shall mean the acquisition and/or affiliations
with dental practices, dental practice management companies or persons in the
Dental Insurance Business in which:
(i) the purchase price, including the maximum earn-out
consideration (or a reasonable approximation thereof), all Indebtedness
of the acquiree which is not retired in connection with such
acquisition, all seller notes to be issued in connection with such
acquisition and expected Acquisition Capital Expenditures, is less than
or equal to $12,000,000;
(ii) the cash consideration, including the maximum cash
earn-out payments (or a reasonable approximation thereof) (including,
without limitation, earn-outs based upon current EBITDA), and including
all Indebtedness of the acquiree which is not retired in connection
with such acquisition, all seller notes to be issued in connection with
such acquisition and expected Acquisition Capital Expenditures, is less
than or equal to $7,500,000, but excluding the value of any capital
stock issued by the acquiror as consideration for such acquisition;
(iii) the business of the acquired or affiliated dental
practice is substantially related to that of the other Affiliated
Dental Practices as of the effective date of the proposed acquisition
and such dental practice is located in the United States;
(iv) no Default or Event of Default shall have occurred
and be continuing at the time of the proposed acquisition or would
occur as a result thereof;
(v) (A) both before and after giving effect to such
acquisition or affiliation and the financing therefor, the Borrowers
shall be in compliance with Sections 7.09(a), 7.09(b) and 7.10(a)
hereof on a pro forma basis for the fiscal quarter immediately
preceding the proposed effective date of such acquisition or
affiliation and (B) after giving effect to such acquisition or
affiliation and the financing therefor, the Pro Forma Interest Coverage
Ratio for the fiscal quarter immediately preceding the proposed
effective date of such acquisition or affiliation shall not be less
than 3.00:1.00, the Pro Forma Leverage Ratio for the fiscal quarter
immediately preceding the proposed effective date of such acquisition
or affiliation shall not be greater than the ratios set forth in
Section 7.09(a) for such fiscal quarter and the Pro Forma Interest
Leverage Ratio for the fiscal quarter immediately preceding the
proposed effective date of such acquisition or affiliation shall not be
greater than the ratios set forth in Section 7.09(b) for such fiscal
quarter;
19
(vi) both before and after giving effect to such
acquisition or affiliation and the financing therefor, the Borrowers
shall have adequate availability under the Total Revolving Credit
Commitment and the "Total Revolving Credit Commitment" under the 1999
Credit Agreement for the Borrowers' and their subsidiaries working
capital needs (as determined by the Administrative Agent in its
reasonable discretion at the time of the proposed acquisition);
(vii) the acquiree has positive pro forma EBITDA, on a
historical basis;
(viii) the proposed acquisition or affiliation is not
hostile;
(ix) the acquiror is a Borrower or a subsidiary of any of
the Borrowers (other than Capitol Dental Care, Inc. and Managed Dental
Care of Oregon, Inc.) which is in good standing in the state of its
incorporation and (other than Dedicated Dental) which is permitted
(under applicable laws or regulations) to have its shares pledged to
the Administrative Agent (for the benefit of the Lenders) pursuant to
the terms of the Pledge Agreement and the acquiree, in the case of an
acquisition, is permitted by applicable law and regulation to satisfy
the provisions of Section 6.12 hereof;
(x) if the proposed acquisition or affiliation is of a
dental practice, the target dental practice enters into a Management
Agreement (and a Shares Acquisition Agreement if the Management
Agreement is in the form of EXHIBIT J-1 annexed hereto), with a
Borrower or a Guarantor (other than Holdings) or, if the proposed
acquisition is of a dental practice management company or persons in
the Dental Insurance Business, the Management Agreement and Shares
Acquisition Agreements, if any, of such target are assumed by the
acquiror (and assigned pursuant to an Assignment of Contract in
accordance with the provisions of Section 6.18 hereof); and
(xi) the Borrowers have delivered to the Administrative
Agent as soon as the information is available, but (1) with respect to
acquisitions, the purchase price, including maximum earn-out
consideration (or a reasonable approximation thereof), all Indebtedness
of the acquiree which will not be retired in connection with such
acquisition, all seller notes issued in connection with such
acquisition and expected Acquisition Capital Expenditures, but
excluding the value of any capital stock issued by the acquiror as
consideration for such acquisition, of which is less than or equal to
$5,000,000, no later than concurrently with the financial statements
required to be delivered pursuant to Section 6.05(c) hereof and (2)
with respect to all other acquisitions, at least 7 days prior to the
closing of any such acquisition, (A) a compliance certificate in form
and substance
20
satisfactory to the Administrative Agent certifying the Borrowers'
compliance with the provisions of this Agreement after giving effect
on a pro forma basis to such acquisition, (B) a report of the chief
financial officer of the Borrowers, in a form satisfactory to the
Administrative Agent and providing sufficient detail and justification
for the information provided therein, including assumptions, as shall
be found to be reasonable by the Administrative Agent in its good
faith discretion after completion of reasonable due diligence,
establishing the basis for the conclusions contained therein and
establishing compliance with clauses (iv) through (vi) above, (C) a
compliance certificate in form and substance satisfactory to the
Administrative Agent certifying the Borrowers' compliance with clause
(iii) and clauses (vii) through (x) above and, to the extent not
consented to by the Required Lenders as provided below, certifying
compliance with clauses (i) and (ii) above, (D) copies of
substantially the form of all acquisition closing documents related to
a Permitted Acquisition, (E) copies of the acquiree's balance sheet
and profit and loss statement for its most recent fiscal year and
fiscal quarter, (F) one (1) year historical and three (3) years
projected financials for the acquiree and (G) a narrative description
of the proposed acquisition and a chart of organization for the
Borrowers showing the acquiree and its relationship to all Affiliates
of the Borrowers;
PROVIDED, HOWEVER, that, upon the written consent of the Required
Lenders, in the exercise of their reasonable discretion after their
review and satisfaction with all documentation, financial and other
information with respect to any proposed acquisition or affiliation,
the limitations set forth in clauses (i) and (ii) above shall not
apply and such proposed acquisition shall be deemed a Permitted
Acquisition.
With respect to Permitted Acquisitions, the Administrative Agent may
rely upon the certificates and reports of the Borrowers and the
Borrowers' officers with respect to all matters contained therein,
including, but not limited to, the Borrowers' compliance with the
terms of this Agreement, the calculation by the Borrowers of the
purchase price, the cash and non-cash portions of the purchase price,
the Indebtedness components, the Acquisition Capital Expenditures
component, and the maximum earn-out consideration (or a reasonable
approximation thereof) with respect to any proposed Permitted
Acquisition.
Prior to the consummation of any Permitted Acquisition, the Borrowers
will notify the Administrative Agent of any affiliate that is
obligated under the Credit Agreement to become a Guarantor, Pledgor or
Debtor. Concurrently with the closing of a Permitted Acquisition, the
applicable Loan Party and each such affiliate shall execute and
deliver a Joinder Agreement to the Administrative Agent. Each party
executing a Joinder Agreement as a
21
"Debtor" shall be deemed to be a party to each of the Security
Documents as of and from the date of execution, and shall be bound by
and subject to all of the terms of each of the Security Documents.
Simultaneously with the execution of each Joinder Agreement pursuant
to this paragraph, the Borrowers shall cause the (i) execution and
delivery of each document (including, without limitation, each Uniform
Commercial Code financing statement) required by law or requested by
the Administrative Agent to be filed, registered or recorded in order
to create in favor of the Administrative Agent, for its own benefit
and for the benefit of the Lenders, a first priority perfected
security interest in the Collateral acquired in connection with such
Permitted Acquisition, in each case in accordance with the provisions
of this Agreement and (ii) delivery to Administrative Agent of
certificates evidencing the capital stock of each acquiree, together
with undated stock powers executed in blank, in each case, executed by
the applicable Grantors.
Notwithstanding anything to the contrary contained in this Agreement,
when determining each component of the Pro Forma Interest Coverage
Ratio, the Pro Forma Leverage Ratio and the Pro Forma Interest
Leverage Ratio with respect to any Permitted Acquisition during any
fiscal quarter, such determinations shall include calculations with
respect to Holdings and its subsidiaries as of the last day of the
immediately preceding fiscal quarter, calculations with respect to any
other Permitted Acquisitions made during such quarter and calculations
with respect to the proposed Permitted Acquisition.
Subject to the provisions of Sections 2.03 and 4.14 of this Agreement,
the Borrowers shall not use funds other than proceeds of borrowings
under the Total Revolving Credit Commitment or under the "Total
Revolving Credit Commitment" under the 1999 Credit Agreement to make
any proposed Permitted Acquisition.
"PERMITTED DE NOVO CAPITAL EXPENDITURES" shall mean De Novo Capital
Expenditures up to a maximum of $500,000 per De Novo Dental Practice and
$2,500,000 in the aggregate for any Fiscal Year; PROVIDED, HOWEVER, that upon
the written consent of the Required Lenders, the foregoing amounts may be
increased by up to $100,000 and $500,000, respectively; PROVIDED, FURTHER, that
(i) no Default or Event of Default shall have occurred
and be continuing at the time of the proposed De Novo Capital
Expenditure or would occur as a result thereof;
(ii) (A) both before and after giving effect to such De
Novo Capital Expenditure and the financing therefor, the Borrowers
shall be in compliance
22
with Sections 7.09(a), 7.09(b) and 7.10(a) hereof on a pro forma
basis for the fiscal quarter immediately preceding the proposed date
of such De Novo Capital Expenditure and (B) after giving effect to
such proposed De Novo Capital Expenditure and the financing therefor,
the Pro Forma Interest Coverage Ratio for the period ending on the
last day of the fiscal quarter immediately preceding the proposed date
of such De Novo Capital Expenditure shall not be less than 3.00:1.00,
the Pro Forma Leverage Ratio for the fiscal quarter immediately
preceding the proposed date of such De Novo Capital Expenditure shall
not be greater than the ratios set forth in Section 7.09(a) for such
fiscal quarter and the Pro Forma Interest Leverage Ratio for the
fiscal quarter immediately preceding the proposed date of such De Novo
Capital Expenditure shall not be greater than the ratios set forth in
Section 7.09(b) for such fiscal quarter;
(iii) both before and after giving effect to such De Novo
Capital Expenditure and the financing therefor, the Borrowers shall
have adequate availability under the Total Revolving Credit Commitment
and "Total Revolving Credit Agreement" under the 1999 Credit Agreement
for the Borrowers' and their subsidiaries working capital needs (as
determined by the Administrative Agent in its reasonable discretion at
the time of the proposed De Novo Capital Expenditure); and
(iv) the Borrowers shall have delivered to the
Administrative Agent at least 30 days prior to the incurrence of any
such De Novo Capital Expenditure, (A) a compliance certificate in form
and substance satisfactory to the Administrative Agent certifying the
Borrowers' compliance with the provisions of this Agreement and (B) a
report of the chief financial officer of the Borrowers, in a form
satisfactory to the Administrative Agent and providing sufficient
detail and justification for the information provided therein,
including assumptions, as shall be found to be reasonable by the
Administrative Agent in its good faith discretion after completion of
reasonable due diligence, establishing the basis for the conclusions
contained therein and establishing compliance with clauses (i) through
(iii) above.
Subject to the provisions of Sections 2.03 and 4.14 of this Agreement,
the Borrowers shall not use funds other then proceeds of borrowings
under the Total Revolving Credit Commitment or under the "Total
Revolving Credit Commitment" under the 1999 Credit Agreement to make
any proposed Permitted De Novo Capital Expenditures.
"PERSON" shall mean any natural person, corporation, business trust,
limited liability company, association, company, joint venture, professional
corporation, limited
23
liability partnership, partnership or government or any agency or political
subdivision thereof.
"PLAN" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of the Borrowers, any subsidiary or any ERISA Affiliate.
"PLEDGE Agreement" shall mean the Amended and Restated Pledge Agreement
dated as of September 30, 1998 between the Grantor(s) and the Administrative
Agent, for its own benefit and for the benefit of the Lenders, in substantially
the form of Exhibit D annexed hereto, as amended, modified or supplemented from
time to time, including, without limitation, the amendment thereof on the
Closing Date.
"PLEDGED STOCK" shall have the meaning assigned to such term in the
Pledge Agreement.
"PREFERRED DIVIDENDS" shall mean, after the conversion of the
Convertible Subordinated Notes to preferred stock, dividends paid with respect
thereto.
"PRO FORMA ADJUSTED EBITDA" shall mean with respect to any person for
any period, the sum of (i) Adjusted EBITDA of such person for such period plus,
in the case of a Permitted Acquisition, (ii) Pro Forma EBITDA of the proposed
acquiree for such period.
"PRO FORMA ADJUSTED SENIOR FUNDED DEBT" shall mean, with respect to any
person as of the date of any proposed Permitted Acquisition or Permitted De Novo
Capital Expenditure, the sum of (i) the Adjusted Senior Debt of such person as
of such date PLUS (ii) senior Funded Debt incurred (or to be incurred) by such
person in connection with such proposed Permitted Acquisition or Permitted De
Novo Capital Expenditure.
"PRO FORMA ADJUSTED TOTAL FUNDED DEBT" shall mean, with respect to any
person as of the date of any proposed Permitted Acquisition or Permitted De Novo
Capital Expenditure, the sum of (i) the Adjusted Total Funded Debt of such
person as of such date PLUS (ii) Funded Debt incurred (or to be incurred) by
such person in connection with such proposed Permitted Acquisition or Permitted
De Novo Capital Expenditure.
"PRO FORMA CASH INTEREST EXPENSE" shall mean, with respect to any
person for any period, the sum of (i) the Interest Expense attributable to any
Indebtedness incurred (or to be incurred) during such period in connection with
any Permitted Acquisition or Permitted De Novo Capital Expenditure, treating any
such Indebtedness as having been outstanding as of the first day of such period
and computing the interest rate on such Indebtedness on a pro forma basis as if
the rate in effect on the date of determination had been the applicable rate for
the entire period PLUS (ii) the Cash Interest Expense of such person for such
period (without duplication of amounts included in clause (i) hereof).
24
"PRO FORMA EBITDA" shall mean, with respect to any person, EBITDA of
such person adjusted for non-recurring verifiable expense deductions, including,
without limitation, excess owner compensation, PROVIDED, HOWEVER, that the
calculation of Pro Forma EBITDA shall be reasonably acceptable to the
Administrative Agent.
"PRO FORMA INTEREST COVERAGE RATIO" shall mean, with respect to any
person, after giving effect to any potential Permitted Acquisition or Permitted
De Novo Capital Expenditure, the ratio for the four fiscal quarter period of(a)
the sum of (x) EBITDA of such person for such period PLUS, in the case of a
Permitted Acquisition, (y) Pro Forma EBITDA of such person for such period to
(b) the sum of (x) Pro Forma Cash Interest Expense of such person for such
period PLUS (y) Preferred Dividends paid in cash during such period.
"PRO FORMA INTEREST LEVERAGE RATIO" shall mean, with respect to any
person for any period, after giving effect to any potential Permitted
Acquisition or Permitted De Novo Capital Expenditure, the ratio of (i) Pro Forma
Adjusted Total Funded Debt of such person for such period to (ii) Pro Forma
Adjusted EBITDA for such person for such period.
"PRO FORMA LEVERAGE RATIO" shall mean, with respect to any person for
any period, after giving effect to any potential Permitted Acquisition or
Permitted De Novo Capital Expenditure, the ratio of (i) Pro Forma Adjusted
Senior Debt of such person for such period to (ii) Pro Forma Adjusted EBITDA for
such person for such period.
"PURCHASE AGREEMENT" shall mean the agreement entered into by a
Borrower or a Guarantor (other than Holdings) and a dental practice or a manager
of dental practices whereby such Borrower or Guarantor will acquire all or
substantially all of the assets or stock of such dental practice or such manager
of dental practices.
"RECEIVABLES" shall mean and include all of the Borrowers', Guarantors'
and Affiliated Dental Practices' accounts, instruments, documents, chattel paper
and general intangibles and all management fees due and owing to the Borrowers
in connection with Management Agreements, whether secured or unsecured, whether
now existing or hereafter created or arising, and whether or not specifically
assigned to the Administrative Agent for its own benefit and/or the ratable
benefit of the Lenders.
"REGISTER" shall have the meaning assigned to such term in Section
11.03(e) hereof.
"REGULATION D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"REGULATION U" shall mean Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
25
"REGULATION X" shall mean Regulation X of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"RELEASE" shall mean any releasing, spilling, leaking, seepage,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any "Threatened Release," as defined in Environmental Law.
"REMEDIAL WORK" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind
or nature with respect to any property of any Loan Party or its subsidiaries
(whether such property is owned, leased, subleased or used), including,
without limitation, with respect to Contaminants and the Release thereof.
"REPAYMENT DATE" shall have the meaning assigned to such term in
Section 2.04(c) hereof.
"REPORTABLE EVENT" shall mean a Reportable Event as defined in
Section 4043(c) of ERISA.
"REQUIRED LENDERS" shall mean, from the Closing Date until the
Conversion Date, Lenders having 66 2/3% of the Total Revolving Credit
Commitment, and thereafter, at any time, Lenders holding 66 2/3% of Term
Loans outstanding at such time.
"RESPONSIBLE OFFICER" shall mean, with respect to any person, any
vice president or president, chief executive officer, chief operating officer
or the chief financial officer or controller, of such person.
"REVOLVING CREDIT ALTERNATE BASE LOAN" shall mean a Revolving Credit
Loan that is an Alternate Base Loan.
"REVOLVING CREDIT COMMITMENT" shall mean, with respect to any
Lender, the Revolving Credit Commitment of such Lender as set forth in
SCHEDULE 2.01 (a) annexed hereto, as the same may be reduced from time to
time pursuant to this Agreement including, without limitation, Section 2.07
hereof.
"REVOLVING CREDIT COMMITMENT FEE" shall have the meaning set forth
in Section 2.06(a) hereof.
"REVOLVING CREDIT EURODOLLAR LOAN" shall mean a Revolving Credit
Loan that is a Eurodollar Loan.
"REVOLVING CREDIT LOAN" shall mean a Revolving Credit Loan made
pursuant to Sections 2.01 and 2.02 hereof.
26
"REVOLVING CREDIT NOTES" shall mean the Revolving Credit Notes of
the Borrowers, executed and delivered as provided in Section 2.04 hereof, in
substantially the form of EXHIBIT B annexed hereto, as amended, modified or
supplemented from time to time.
"REVOLVING CREDIT TERMINATION DATE" shall mean such date as the
Revolving Credit Loans shall otherwise be payable in full and the Revolving
Credit Commitment shall terminate, expire or be canceled in accordance with
the terms of this Agreement.
"SECURITY AGREEMENT" shall mean the Amended and Restated Security
Agreement dated as of September 30, 1998, between the Grantor(s) and the
Administrative Agent, for its own benefit and for the benefit of the Lenders,
substantially in the form of Exhibit E annexed hereto, as amended, modified
or supplemented from time to time, including, without limitation, the
amendment on the Closing Date.
"SECURITY AGREEMENT-PATENTS AND TRADEMARKS" shall mean the Amended
and Restated Security Agreement and Mortgage-Patents and Trademarks, dated as
of September 30, 1998, between the Debtor(s), as such term is defined
therein, and the Administrative Agent, for its own benefit and for the
benefit of the Lenders, substantially in the form of EXHIBIT G annexed
hereto, as amended, modified or supplemented from time to time, including,
without limitation, the amendment on the Closing Date.
"SECURITY DOCUMENTS" shall mean the Pledge Agreement, the Security
Agreement, each Assignment of Contract, the Security Agreement-Patents and
Trademarks, the Assignment of Life Insurance, the Confirmation of Holdings
Guaranty and each other agreement now existing or hereafter created providing
collateral security for the payment or performance of any Obligations.
"SERRA PARK" shall mean Serra Park Dental Services, Incorporated, a
Delaware corporation.
"SHARES ACQUISITION AGREEMENT" shall mean the Shares Acquisition
Agreement entered into by a Borrower or a Guarantor (other than Holdings) and
the owner(s) of a dental practice, and, in the case of Shares Acquisition
Agreements entered into after September 30, 1998, each of which shall (i)
contain a provision substantially similar to Section 3 of the form attached
hereto as EXHIBIT K and (ii) permit the assignment of the rights granted to
the Borrower or Guarantor party thereto pursuant to said provision to the
Administrative Agent (for the ratable benefit of the Lenders).
"SUBORDINATED INDEBTEDNESS" shall mean, with respect to any of the
Borrowers, Indebtedness subordinated in right of payment to such person's
monetary obligations under this Agreement upon terms satisfactory to and
approved in writing by the Administrative Agent, to the extent it does not by
its terms mature or become subject to
27
any mandatory prepayment or amortization of principal prior to the Final
Maturity Date, and shall include the Convertible Subordinated Notes.
"SUBSIDIARY" shall mean, with respect to any person, any
corporation, association or other business entity of which securities or
other ownership interests representing more than 50% of the ordinary voting
power are, at the time as of which any determination is being made, owned or
controlled, directly or indirectly, by the parent of such person or one or
more subsidiaries of the parent of such person.
"SYNDICATION AGENT" shall have the meaning assigned to such term in
the preamble to this Agreement.
"TAXES" shall have the meaning assigned to such term in Section
2.16(a) hereof.
"TERM ALTERNATE BASE LOAN" shall mean a Term Loan that is an Alternate
Base Loan.
"TERM EURODOLLAR LOAN" shall mean a Term Loan that is a Eurodollar
Loan.
"TERM LOAN" shall mean the Term Loan made on the Conversion Date
pursuant to Sections 2.01(b) and 2.02 hereof.
"TERM NOTES" shall mean the Term Notes of the Borrowers when
subsequently executed and delivered as provided in Section 2.04 hereof, in
substantially the form of Exhibit A hereto, as amended, modified or
supplemented from time to time.
"TOTAL REVOLVING CREDIT COMMITMENT" shall mean the sum of the
Lenders' Revolving Credit Commitments, as the same may be reduced from time
to time pursuant to this Agreement including, without limitation, Section
2.07 hereof.
"TRANSACTIONS" shall have the meaning assigned to such term in
Section 4.02 hereof.
SECTION 1.02 ACCOUNTING TERMS. Unless otherwise expressly
provided herein, each accounting term used herein shall have the meaning
given it under generally accepted accounting principles in effect from time
to time in the United States applied on a basis consistent with those used in
preparing the financial statements referred to in Section 6.05 hereof
("GAAP"); PROVIDED, HOWEVER, that each reference in Article VII hereof, or in
the definition of any term used in Article VII hereof, to GAAP shall mean
GAAP as in effect on the date hereof.
28
II. THE LOANS
SECTION 2.01 REVOLVING CREDIT COMMITMENTS AND TERM LOAN. (a)
Subject to the terms and conditions and relying upon the representations and
warranties herein set forth, each Lender, severally and not jointly, agrees
to make Revolving Credit Loans to the Borrowers, at any time and from time to
time from the date hereof to the earlier of (i) the Revolving Credit
Termination Date and (ii) the Conversion Date, in an aggregate principal
amount at any time outstanding not to exceed the amount of such Lender's
Revolving Credit Commitment set forth opposite its name in SCHEDULE 2.01(a)
annexed hereto, as such Revolving Credit Commitment may be reduced from time
to time in accordance with the provisions of this Agreement. Notwithstanding
the foregoing, the aggregate principal amount of Revolving Credit Loans
outstanding at any time to the Borrowers shall not exceed the Total Revolving
Credit Commitment (as such amount may be reduced pursuant to this Agreement
including, without limitation, Section 2.07 hereof) MINUS the Letter of
Credit Usage at such time (such Letter of Credit Usage not to exceed $100,000
at any time).
Subject to the foregoing and within the foregoing limits, the Borrowers
may borrow, repay (or, subject to the provisions of Section 2.09 hereof, prepay)
and reborrow Revolving Credit Loans, on and after the date hereof and prior to
the earlier of (i) the Revolving Credit Termination Date and (ii) the Conversion
Date, subject to the terms, provisions and limitations set forth herein,
including, without limitation, the requirement that no Revolving Credit Loan
shall be made hereunder if after giving effect thereto the sum of the aggregate
principal amount of the Revolving Credit Loans outstanding hereunder PLUS the
Letter of Credit Usage would exceed the Total Revolving Credit Commitment (as
such amount may be reduced pursuant to the provisions of this Agreement).
(b) Subject to the terms and conditions of this Agreement, including,
without limitation, that no Default or Event of Default shall then exist, on
September 30, 2001 (the "CONVERSION DATE"), then the unpaid principal amount of
Revolving Credit Loans shall be converted into a Term Loan (the "TERM LOAN")
from the Lenders.
SECTION 2.02 LOANS. (a) The aggregate amount of Revolving Credit Loans
made by the Lenders hereunder and of "Revolving Credit Loans" under the 1999
Credit Agreement on any date shall be in integral multiples of $100,000 (except
that the foregoing limitation shall not be applicable to the extent that the
proceeds of such Loans are requested to be disbursed to the Borrowers'
controlled disbursement account maintained with the Administrative Agent);
PROVIDED, HOWEVER, that the aggregate amount of Eurodollar Loans made hereunder
and of "Eurodollar Loans" under the 1999 Credit Agreement shall be in a minimum
aggregate principal amount of $4,000,000.
(b) Loans shall be made ratably by the Lenders in accordance with their
respective Revolving Credit Commitments; PROVIDED, HOWEVER, that the failure of
any Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend
29
hereunder. The initial Revolving Credit Loans shall be made by the Lenders
against delivery of Revolving Credit Notes, payable to the order of the Lenders,
as referred to in Section 2.04 hereof. On the Conversion Date, the Term Loans to
be made by the Lenders shall be made against delivery of Term Notes payable to
the order of the Lenders, as referred to in Section 2.04 hereof.
(c) Each Loan shall be either an Alternate Base Loan or a Eurodollar
Loan as the Borrowers may request pursuant to Section 2.03 hereof. Each Lender
may fulfill its obligations under this Agreement by causing its Applicable
Lending Office to make such Loan; PROVIDED, HOWEVER, that the exercise of such
option shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the terms of the applicable Note. Not more than three (3)
Eurodollar Loans may be outstanding at any one time.
(d) Subject to the provisions of paragraph (e) below, each Lender shall
make its Revolving Credit Loans on the proposed dates thereof by paying the
amount required to the Administrative Agent at an address or location designated
by the Administrative Agent in immediately available funds not later than 12:00
noon, Los Angeles, California time, and the Administrative Agent shall as soon
as practicable, but in no event later than 3:00 P.M., Los Angeles, California
time, credit the amounts so received to the general deposit account of the
Borrowers with the Administrative Agent in immediately available funds or, if
Loans are not to be made on such date because any condition precedent to a
borrowing herein specified is not met, return the amounts so received to the
respective Lenders.
(e) The Borrowers shall have the right at any time upon prior
irrevocable written, telex or facsimile notice (promptly confirmed in writing)
to the Administrative Agent given in the manner and at the times specified in
Section 2.03 with respect to the Loans into which conversion or continuation is
to be made, to convert all or any portion of Eurodollar Loans into Alternate
Base Loans, to convert all or any portion of Alternate Base Loans into
Eurodollar Loans (specifying the Interest Period to be applicable thereto), to
convert the Interest Period with respect to all or any portion of any Eurodollar
Loans to another permissible Interest Period, and to continue all or any portion
of any Eurodollar Loans into a subsequent Interest Period, subject to the terms
and conditions of this Agreement (including the last sentence of Section 2.02(c)
hereof) and to the following:
(i) each conversion or continuation shall be made PRO RATA
among the Lenders in accordance with the respective principal amounts
of the Loans comprising the conversion or continuation, and in the case
of a conversion or continuation of fewer than all the Loans, the
aggregate principal amount of Loans converted or continued hereunder
and of "Loans" converted or continued under the 1999 Credit Agreement
shall not be less than (x) $100,000 in the case of Alternate Base Loans
(except that the foregoing limitation shall not be applicable to the
extent that the proceeds of
30
such Loans are requested to the disbursed to the Borrowers' controlled
disbursement account maintained with the Administrative Agent) or (y)
$4,000,000 in the case of Eurodollar Loans;
(ii) accrued interest on a Eurodollar Loan (or portion
thereof) being converted shall be paid by the Borrowers at the time of
conversion;
(iii) if any Eurodollar Loan is converted at any time other
than the end of an Interest Period applicable thereto, the Borrowers
shall make such payments associated therewith as are required pursuant
to Section 2.12;
(iv) any portion of a Revolving Credit Eurodollar Loan which
is subject to an Interest Period ending on a date that is less than one
(1) month prior to the Revolving Credit Termination Date may not be
converted into, or continued as, a Eurodollar Loan and shall be
automatically converted at the end of such Interest Period into an
Alternate Base Loan;
(v) any portion of a Term Eurodollar Loan required to be paid
on any Repayment Date occurring less than one (1) month after the end
of the then current Interest Period applicable to such Loan, may not be
converted into, or continued as, a Term Eurodollar Loan and shall be
automatically converted at the end of such Interest Period into a Term
Alternate Base Loan; and
(vi) no Default or Event of Default shall have occurred and be
continuing.
The Interest Period applicable to any Eurodollar Loan resulting from a
conversion shall be specified by the Borrowers in the irrevocable notice of
conversion delivered pursuant to this Section; PROVIDED, HOWEVER, that if no
such Interest Period shall be specified, the Borrowers shall be deemed to have
selected an Interest Period of one (1) months' duration. If the Borrowers shall
not have given timely notice to continue any Eurodollar Loan into a subsequent
Interest Period (and shall not otherwise have given notice to convert such
Loan), such Loan (unless repaid or required to be repaid pursuant to the terms
hereof) shall automatically be converted into an Alternate Base Loan. The
Administrative Agent shall promptly advise the Lenders of any notice given
pursuant to this Section and of each Lender's portion of the continuation or
conversion hereunder.
SECTION 2.03 NOTICE OF LOANS. The Borrowers shall, through a
Responsible Officer of any of the Borrowers, give the Administrative Agent
irrevocable written, telex or facsimile notice (promptly confirmed in writing)
of each borrowing (including, without limitation, a conversion as permitted by
Section 2.02(e) hereof) not later than 9:00 A.M., Los Angeles, California time,
(i) three (3) Business Days before a proposed Eurodollar Loan borrowing or
conversion and (ii) on the day of an Alternate
31
Base Loan borrowing or conversion. Such notice shall be in the form of Exhibit 0
annexed hereto and which shall specify (w) whether the Loans then being
requested are to be Alternate Base Loans or Eurodollar Loans, it being agreed
that all Loans made on the Closing Date shall be Alternate Base Loans, (x) the
date of such borrowing (which shall be a Business Day) and amount thereof, (y)
if such Loans are to be Eurodollar Loans, the Interest Period with respect
thereto and (z) that (A) the Borrowers have concurrently given notice under the
1999 Credit Agreement of a borrowing which is pro rata (based on the aggregate
of the Total Revolving Credit Commitment under this Agreement and the "Total
Revolving Credit Commitment" under the 1999 Credit Agreement) and (B) the
allocation of such borrowing between this Agreement and the 1999 Credit
Agreement. If no election as to the type of Loan is specified in any such
notice, all such Loans shall be Alternate Base Loans. If no Interest Period with
respect to any Eurodollar Loan is specified in any such notice, then an Interest
Period of one (1) month's duration shall be deemed to have been selected. The
Administrative Agent shall promptly advise the Lenders of any notice given
pursuant to this Section 2.03 and of each Lender's portion of the requested
borrowing. In addition, the Borrowers shall specify whether the requested Loan
is for a Permitted Acquisition, Capital Expenditures (in which case the
Borrowers shall certify that such advance is not in violation of Section 7.07
hereof), or for other requirements of the Borrowers; PROVIDED, HOWEVER, that no
requested borrowing may be for a Permitted Acquisition or a Permitted De Novo
Capital Expenditure unless and until the aggregate of the Total Revolving Credit
Commitment under this Agreement and the "Total Revolving Credit Commitment"
under the 1999 Credit Agreement shall have been increased to $120,000,000;
PROVIDED, FURTHER, that no such requested borrowing for a Permitted Acquisition
or a Permitted De Novo Capital Expenditure shall, when taken together with all
other borrowings for Permitted Acquisitions and Permitted De Novo Capital
Expenditures made hereunder and under the 1999 Credit Agreement since the
Closing Date, exceed $5,000,000.
SECTION 2.04 NOTES; REPAYMENT OF LOANS. (a) All Revolving Credit Loans
made by a Lender to the Borrowers shall be evidenced by a single Revolving
Credit Note, duly executed on behalf of the Borrowers, dated the Closing Date,
in substantially the form of EXHIBIT B annexed hereto, delivered and payable to
such Lender in a principal amount equal to its Revolving Credit Commitment on
such date. The outstanding balance of each Revolving Credit Loan, as evidenced
by any such Revolving Credit Note, shall mature and be due and payable on the
Revolving Credit Termination Date if such date occurs earlier than the
Conversion Date or, subject to the terms and conditions of this Agreement,
including, without limitation, that no Default or Event of Default shall then
exist, shall be converted to a Term Loan on the Conversion Date. The Term Loan
made by a Lender on the Conversion Date shall be evidenced by a single Term
Note, duly executed on behalf of the Borrowers, dated the Conversion Date, in
substantially the form of EXHIBIT A annexed hereto, delivered and payable to
such Lender in a principal amount equal to its PRO RATA share (based on its
Revolving Credit Commitment) of the Revolving Credit Loans being converted on
such date; PROVIDED, HOWEVER, that the failure of the Borrowers to deliver Term
Notes pursuant to the provisions of this Section shall not affect
32
the liability of the Borrowers to repay the amount of Revolving Credit Loans
being converted.
(b) Each Revolving Credit Note shall bear interest from its date on the
outstanding principal balance thereof, as provided in Section 2.05 hereof.
(c) The aggregate principal amount of the Term Loan, as evidenced by
the Term Notes, shall be payable in fourteen (14) consecutive quarterly
installments on the first Business Day of each October, January, April and July
of each year (the date of each such installment, a "REPAYMENT DATE"), commencing
with the first Business Day of the first full fiscal quarter succeeding the
Conversion Date, in the amount set forth in the next sentence, and such payments
shall be distributed ratably among the Lenders in accordance with their PRO RATA
share of such Term Loan. Payments of principal on each Repayment Date shall be
in equal amounts calculated on an amortization schedule which assumes a maturity
date ending three (3) years and six (6) months subsequent to the Conversion Date
and which will be confirmed in writing to the Borrowers by the Administrative
Agent; PROVIDED, HOWEVER, that the final installment under such Term Note shall
be in the amount of the unpaid principal balance of such Term Note and shall be
payable on the Final Maturity Date.
To the extent not previously paid, the Term Loan shall be due and
payable on the Final Maturity Date. Each Term Note shall bear interest from its
date on the outstanding principal balance thereof, as provided in Section 2.05.
All principal payments in respect of the Term Loan shall be accompanied by
accrued interest on the principal amount being repaid to the date of payment. No
scheduled payment of principal in respect of the Term Loan shall be made to the
extent that a lesser principal payment would result in the payment in full of
the outstanding amount of the Term Loan, and such lesser amount is paid.
(d) Each Lender, or the Administrative Agent on its behalf, shall, and
is hereby authorized by the Borrowers to, endorse on the schedule attached to
the Term Note or Revolving Credit Note, as applicable, of such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Loan to the
Borrowers from such Lender, as well as the date and amount of each payment and
prepayment with respect thereto; PROVIDED, HOWEVER, that the failure of any
person to make such a notation on a Note shall not affect any obligations of the
Borrowers under such Note. Any such notation shall be conclusive and binding as
to the date and amount of such Loan or portion thereof, or payment or prepayment
of principal or interest thereon, absent manifest error.
(e) Each of the Borrowers shall be jointly and severally liable with
the other Borrower(s) for the Obligations, and each of the Obligations shall be
secured by all of the Collateral. Each of the Borrowers acknowledges that it is
a co-borrower hereunder and is jointly and severally liable under this Agreement
and the other Loan Documents. All
33
Credits extended to any of the Borrowers or requested by any of the Borrowers
shall be deemed to be Credits extended for each of the Borrowers, and each of
the Borrowers hereby authorizes each other of the Borrowers to effectuate
Credits on its behalf. Notwithstanding anything to the contrary contained in
this Agreement or any of the other Loan Documents, the Agents and the Lenders
shall be entitled to rely upon any request, notice or other communication
received by them from any of the Borrowers on behalf of all Borrowers, and shall
be entitled to treat their giving of any notice hereunder to any of the
Borrowers as notice to each and all Borrowers.
Each of the Borrowers agrees that the joint and several liability of
the Borrowers provided for in this subsection (e) shall not be impaired or
affected by any modification, supplement, extension or amendment or any contract
or agreement to which the other Borrower(s) may hereafter agree (other than an
agreement signed by the Administrative Agent and the Lenders specifically
releasing such liability), nor by any delay, extension of time, renewal,
compromise or other indulgence granted by the Administrative Agent or any Lender
with respect to any of the Obligations, nor by any other agreements or
arrangements whatsoever with the other Borrower(s) or with any other person,
each of the Borrowers hereby waiving all notice of such delay, extension,
release, substitution, renewal, compromise or other indulgence, and hereby
consenting to be bound thereby as fully and effectually as if it had expressly
agreed thereto in advance. The liability of each of the Borrowers is direct and
unconditional as to all of the Obligations, and may be enforced without
requiring the Administrative Agent or any Lender first to resort to any other
right, remedy or security. Each of the Borrowers hereby expressly waives
promptness, diligence, notice of acceptance and any other notice with respect to
any of the Obligations, the Notes, this Agreement or any other Loan Document and
any requirement that the Administrative Agent or any Lender protect, secure,
perfect or insure any Lien or any property subject thereto or exhaust any right
or take any action against any of the Borrowers or any other person or any
collateral.
Each of the Borrowers hereby irrevocably waives and releases each other
of the Borrowers from all "claims" (as defined in Section 101(5) of the
Bankruptcy Code) to which such Borrowers are or would be entitled by virtue of
the provisions of the first paragraph of this subsection (e) or the performance
of such Borrower's obligations thereunder including, without limitation, any
right of subrogation (whether contractual, under Section 509 of the Bankruptcy
Code or otherwise), reimbursement, contribution, exoneration or similar right,
or indemnity, or any right of recourse to security for any of the Obligations.
SECTION 2.05 INTEREST ON LOANS. (a) Subject to the provisions of
Section 2.05(c) and Section 2.08 hereof, each Alternate Base Loan shall bear
interest at a rate per annum equal to the Alternate Base Rate plus the
applicable Interest Margin.
34
(b) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Eurodollar Loan shall bear interest at a rate per annum equal to
the Adjusted LIBO Rate PLUS the applicable Interest Margin.
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date, the Conversion Date, the Revolving Credit
Termination Date and on the Final Maturity Date, as applicable. Interest on each
Alternate Base Loan and Eurodollar Loan shall be computed based on the number of
days elapsed in a year of 360 days. The Administrative Agent shall determine
each interest rate applicable to the Loans and shall promptly advise the
Borrowers and the Lenders of the interest rate so determined.
SECTION 2.06 FEES. (a) The Borrowers shall pay each Lender, through the
Administrative Agent, (i) on the first Business Day of each October, January,
April and July, commencing July 1, 2000, (ii) on the date of any reduction of
the Revolving Credit Commitments pursuant to this Agreement including, without
limitation, Section 2.07 hereof and (iii) on the earlier to occur of (x) the
Revolving Credit Termination Date and (y) the Conversion Date, in immediately
available funds, a commitment fee (the "REVOLVING CREDIT COMMITMENT FEE") equal
to 0.500% on the average daily unused (treating Letter of Credit Usage as usage)
amount of the Revolving Credit Commitment of such Lender, during the quarter (or
shorter period commencing with the date hereof or ending with the Revolving
Credit Termination Date) ending on such date. The Revolving Credit Commitment
Fee due to each Lender under this Section 2.06 shall commence to accrue on the
date hereof and cease to accrue on the earliest of (i) the Revolving Credit
Termination Date, (ii) the termination of the Revolving Credit Commitment of
such Lender pursuant to this Agreement including, without limitation, pursuant
to Section 2.07 hereof and (iii) the Conversion Date. The Revolving Credit
Commitment Fee shall be calculated on the basis of the actual number of days
elapsed in a year of 360 days.
(b) On the Closing Date, the Borrowers shall pay each Lender, through
the Administrative Agent, a facility fee equal to 0.750% of such Lender's
Revolving Credit Commitment.
(c) The Borrowers shall pay to the Administrative Agent an
administrative fee of $3,500 in connection with any reallocation of the Total
Revolving Credit Commitment hereunder; PROVIDED, HOWEVER, if there is a
concurrent reallocation of the "Total Revolving Credit Commitment" under the
1999 Credit Agreement, the Borrowers shall only be obligated to pay one such
administrative fee.
SECTION 2.07 TERMINATION AND REDUCTION OF REVOLVING CREDIT COMMITMENTS.
(a) Upon at least two (2) Business Days' prior irrevocable written notice (or
facsimile notice promptly confirmed in writing) to the Administrative Agent, the
Borrowers may at any time in whole permanently terminate, or from time to time
in part permanently reduce, the Total Revolving Credit Commitment, ratably among
the Lenders in
35
accordance with the amounts of their Revolving Credit Commitments; PROVIDED,
HOWEVER, that the Total Revolving Credit Commitment shall not be reduced at any
time to an amount less than the Revolving Credit Loans outstanding under the
Revolving Credit Commitments and the Letter of Credit Usage at such time; and
PROVIDED, FURTHER, that the Borrowers shall have concurrently provided notice
under the 1999 Credit Agreement for a pro rata (based on the aggregate of the
"Total Revolving Credit Commitment" under the 1999 Credit Agreement and the
Total Revolving Credit Commitment under this Agreement) reduction of the "Total
Revolving Credit Commitment" thereunder. Each partial reduction of the Total
Revolving Credit Commitment shall be in a minimum of $100,000 or an integral
multiple of $100,000.
(b) Simultaneously with any termination or reduction of the Total
Revolving Credit Commitment pursuant to paragraph (a) of this Section 2.07, the
Borrowers shall pay to each Lender, through the Administrative Agent, the
Revolving Credit Commitment Fee due and owing through and including the date of
such termination or reduction on the amount of the Revolving Credit Commitment
of such Lender so terminated or reduced.
(c) The Revolving Credit Commitment of each Lender shall automatically
and permanently terminate on the earlier of (i) the Revolving Credit Termination
Date and (ii) the Conversion Date, and all Revolving Credit Loans still
outstanding on such date shall be due and payable in full together with accrued
interest thereon on the Revolving Credit Termination Date if such date occurs
earlier than the Conversion Date, or, subject to the terms and conditions of
this Agreement, including, without limitation, that no Default or Event of
Default shall then exist, shall be converted to a Term Loan on the Conversion
Date.
SECTION 2.08 INTEREST ON OVERDUE AMOUNTS: ALTERNATE RATE OF INTEREST.
(a) If the Borrowers shall default in the payment of the principal of or
interest on any Loan or any other amount becoming due hereunder, by acceleration
or otherwise, the Borrowers shall on demand from time to time pay interest, to
the extent permitted by law, on all Obligations outstanding up to the date of
actual payment of such defaulted amount (after as well as before judgment) at a
rate per annum equal to two percent (2%) in excess of the rates otherwise
applicable thereto.
(b) In the event, and on each occasion, that on the day two (2)
Business Days prior to the commencement of any Interest Period for a Eurodollar
Loan the Administrative Agent shall have determined that dollar deposits in the
amount of each Eurodollar Loan are not generally available in the London
interbank market, or that the rate at which dollar deposits are being offered
will not reflect adequately and fairly the cost to any Lender of making or
maintaining such Eurodollar Loan during such Interest Period, or that reasonable
means do not exist for ascertaining the Adjusted LIBO Rate, the Administrative
Agent shall as soon as practicable thereafter give written notice (or facsimile
notice promptly confirmed in writing) of such determination to the Borrowers and
36
the Lenders, and any request by the Borrowers for the making of a Eurodollar
Loan pursuant to Section 2.03 hereof or conversion or continuation of any Loan
into a Eurodollar Loan pursuant to Section 2.02 hereof shall, until the
circumstances giving rise to such notice no longer exist, be deemed to be a
request for an Alternate Base Loan, Each determination by the Administrative
Agent made hereunder shall be conclusive absent manifest error.
SECTION 2.09 PREPAYMENT OF LOANS. (a) Subject to the terms and
conditions contained in this Section 2.09 and elsewhere in this Agreement, the
Borrowers shall have the right to prepay any Loan at any time in whole or from
time to time in part without penalty (except as otherwise provided for herein);
PROVIDED, HOWEVER, that each such partial prepayment of a Loan shall be in an
integral multiple of $100,000; and PROVIDED, FURTHER, that the Borrowers shall
have concurrently prepaid "Loans" under the 1999 Credit Agreement on a pro rata
basis (based, prior to the Conversion Date, on the aggregate of the "Total
Revolving Credit Commitment" under the 1999 Credit Agreement and the Total
Revolving Credit Commitment under this Agreement and following the Conversion
Date, on the aggregate of the unpaid principal amount of Term Loans under this
Agreement and the unpaid principal amount of "Term Loans" under the 1999 Credit
Agreement).
(b) On the date of any termination or reduction of the Total Revolving
Credit Commitment pursuant to Section 2.07(a) hereof or elsewhere in this
Agreement, the Borrowers shall pay or prepay so much of the Revolving Credit
Loans as shall be necessary in order that the aggregate principal amount of the
Revolving Credit Loans PLUS the Letter of Credit Usage outstanding will not
exceed the Total Revolving Credit Commitment following such termination or
reduction. Any prepayments required by this paragraph (b) shall be applied to
outstanding Revolving Credit Alternate Base Loans up to the full amount thereof
before they are applied to outstanding Revolving Credit Eurodollar Loans;
PROVIDED, HOWEVER, that the Borrowers shall not be required to make any
prepayment of any Eurodollar Loan pursuant to this Section until the last day of
the Interest Period with respect thereto SO LONG AS an amount equal to such
prepayment is deposited by the Borrowers in a cash collateral account with the
Administrative Agent to be held in such account on terms satisfactory to the
Administrative Agent.
(c) The Borrowers shall make prepayments of the Revolving Credit Loans
from time to time such that the outstanding principal balance of such Revolving
Credit Loans PLUS the Letter of Credit Usage does not exceed the Total Revolving
Credit Commitment. Any prepayments required by this paragraph (c) shall be
applied to outstanding Revolving Credit Alternate Base Loans up to the full
amount thereof before they are applied to outstanding Revolving Credit
Eurodollar Loans; PROVIDED, HOWEVER, that the Borrowers shall not be required to
make any prepayment of any Eurodollar Loan pursuant to this Section until the
last day of the Interest Period with respect thereto SO LONG AS an amount equal
to such prepayment is deposited by the Borrowers in a cash collateral
37
account with the Administrative Agent to be held in such account on terms
satisfactory to the Administrative Agent.
(d) Within three (3) Business Days of (i) the sale or other disposition
of any assets of any Loan Party (excluding (x) sales of assets in the ordinary
course of business, and (y) subject to Section 6.02 hereof, sales of worn-out or
obsolete assets but only to the extent that the net proceeds realized are
applied within three (3) Business Days of any sale or other disposition to
purchase other assets and pending such application or prepayment all such net
proceeds shall be maintained in a cash collateral account with the
Administrative Agent on terms and conditions acceptable to the Administrative
Agent) or of the capital stock of any Loan Party (subject to Section 7.05
hereof), or (ii) the consummation of the issuance of any debt securities of any
of the Loan Parties, the Borrowers shall make a mandatory prepayment of the
Loans in an amount equal to 100% of the proceeds received (net of taxes due and
any reasonable expenses of sale), which proceeds shall be applied as set forth
in paragraph (g) below. Nothing contained in this paragraph (d) shall be or be
deemed to be a consent to the sale of any assets or stock or the issuance of any
stock or debt securities.
(e) Within 105 days of the end of each Fiscal Year of the Borrowers,
commencing with the Fiscal Year ending December 31, 2002, the Borrowers shall
make a mandatory prepayment of the Loans in an amount equal to the Mandatory
Prepayment, if any, of the Borrowers and their subsidiaries for the Fiscal Year
then ended, such prepayment to be applied as set forth in paragraph (g) below.
(f) (i) Except as provided in clause (ii) below, promptly and in any
event not more than three (3) Business Days following the receipt by the
Administrative Agent or any of the Borrowers or any subsidiary of any of the
Borrowers of any net proceeds of (x) any casualty insurance required to be
maintained pursuant to Section 6.03 hereof on account of each separate loss,
damage or injury (each, a "CASUALTY EVENT") in excess of $200,000 (or, if there
shall be continuing a Default or an Event of Default, of the full amount of net
proceeds) to any asset of such Borrowers or such subsidiary (including, without
limitation, any Collateral), or (y) any business interruption insurance required
to be maintained pursuant to Section 6.03 hereof on account of any business
interruption event (each, a "BI EVENT") in excess of $200,000 (or, if there
shall be continuing a Default or Event of Default, of the full amount of net
proceeds), such Borrowers or subsidiary shall notify the Administrative Agent of
such receipt in writing or by telephone promptly confirmed in writing, and not
later than three (3) Business Days following receipt by the Administrative Agent
or such Borrowers or subsidiary of any such proceeds, there shall become due and
payable a prepayment of the Loans in an amount equal to 100% of such proceeds.
Prepayments from such net proceeds shall be applied as set forth in paragraph
(g) below.
(ii) In the case of the receipt of net proceeds described in
clause (i) above with respect to a Casualty Event or BI Event, the
Borrowers may elect,
38
by written notice delivered to the Administrative Agent not later than
the day on which a prepayment would otherwise be required under clause
(i), (x) in the case of proceeds received with respect to a BI Event,
to use such proceeds in the ordinary course of such Borrower's
business and (y) in the case of proceeds received with respect to any
Casualty Event, to apply all or a portion of such net proceeds for the
purpose of replacing, repairing, restoring or rebuilding (referred to
herein as a "REBUILDING") the relevant tangible property, and, in any
such event, any required prepayment under clause (i) above shall be
reduced dollar for dollar by the amount of such election under clause
(x) or clause (y) of this sentence. An election under this clause (ii)
shall not be effective unless: (x) at the time of such election there
is continuing no Default or Event of Default; (y) the Borrowers shall
have certified to the Administrative Agent that: (i) the net proceeds
of the insurance adjustment with respect to a Casualty Event, together
with other funds available to the Borrowers shall be sufficient to
complete such Rebuilding in accordance with all applicable laws,
regulations and ordinances; and (ii) no Default or Event of Default
has arisen or will arise as a result of such BI Event, Casualty Event
or Rebuilding; and (z) if the amount of net proceeds in question
exceeds $1,000,000, the Borrowers shall have obtained the written
consent of the Required Lenders to such election.
(iii) In the event of an election under clause (ii) above,
pending application of the net proceeds to business operations with
respect to a BI Event or to Rebuilding with respect to a Casualty
Event, the Borrowers shall not later than the time at which prepayment
would have been, in the absence of such election, required under clause
(i) above, apply such net proceeds to the prepayment of the outstanding
principal balance, if any, of the Revolving Credit Loans (not in
permanent reduction of the Revolving Credit Commitment), and deposit
(the "SPECIAL DEPOSIT") with the Administrative Agent, the balance, if
any, of such net proceeds remaining after such application, pursuant to
agreements in form, scope and substance reasonably satisfactory to the
Administrative Agent. The Special Deposit, together with all earnings
on such Special Deposit, shall be available to the Borrowers solely for
the applicable Rebuilding or ordinary course business operations, as
the case may be; PROVIDED, HOWEVER, that at such time as a Default or
Event of Default shall occur, the balance of the Special Deposit and
earnings thereon may be applied by the Administrative Agent to repay
the Obligations in such order as the Administrative Agent shall elect.
The Administrative Agent shall be entitled to require proof, as a
condition to the making of any withdrawal from the Special Deposit,
that the proceeds of such withdrawal are being applied for the purposes
permitted hereunder.
(iv) Notwithstanding anything to the contrary contained in
this paragraph (f), on the date three (3) Business Days following the
receipt by
39
the Administrative Agent or any Borrower of any net proceeds of any
insurance referred to in Section 6.16 hereof, there shall become due
and payable a prepayment of principal in respect of the Obligations in
an amount equal to 100% of such net proceeds. All prepayments made
pursuant to this clause (iv) shall be applied in the manner set forth
in paragraph (g) below.
(g) When making a prepayment, whether mandatory or otherwise, pursuant
to paragraph (a), (b), (c), (d), (e) or (f) above, the Borrowers shall furnish
to the Administrative Agent, not later than 11:00 A.M. (Los Angeles,
California time) (i) three (3) Business Days prior to the date of such
prepayment of Alternate Base Loans and (ii) five (5) Business Days prior to the
date of such prepayment of Eurodollar Loans, written, telex or facsimile notice
(promptly confirmed in writing) of prepayment which shall specify the prepayment
date and the principal amount of each Loan (or portion thereof) to be prepaid,
which notice shall be irrevocable and shall commit the Borrowers to prepay such
Loan by the amount stated therein on the date stated therein. All prepayments
shall be accompanied by accrued interest on the principal amount being prepaid
to the date of prepayment. Prepayments made pursuant to paragraph (d), (e) or
(f) above shall be applied as follows: (A) prior to the Conversion Date, pro
rata (based on the aggregate of the Total Revolving Credit Commitment under this
Agreement and the "Total Revolving Credit Commitment" under the 1999 Credit
Agreement) between the Revolving Credit Loans and the "Revolving Credit Loans"
under the 1999 Credit Agreement and, with respect to the portion being applied
to the Revolving Credit Loans under this Agreement, to outstanding Revolving
Credit Alternate Base Loans up to the full amount thereof and then to Revolving
Credit Eurodollar Loans up to the full amount thereof, and (B) following the
Conversion Date, pro rata (based on the aggregate of the unpaid principal amount
of Term Loans under this Agreement and the unpaid principal amount of "Term
Loans" under the 1999 Credit Agreement) between the Term Loans and the "Term
Loans" under the 1999 Credit Agreement and, with respect to the portion being
applied to Term Loans under this Agreement, to outstanding Term Alternate Base
Loans pro rata over the remaining Repayment Dates up to the full amount thereof
and then to outstanding Term Eurodollar Loans PRO RATA over the remaining
Repayment Dates up to the full amount thereof; PROVIDED, HOWEVER, that if at
the time of the making of any prepayment in accordance with clause (A), there
are undrawn Letters of Credit outstanding, then in the discretion of the
Administrative Agent, all or any portion of any such prepayment to be applied to
Revolving Credit Loans under this Agreement (not to exceed an amount equal to
the aggregate undrawn amount of all such outstanding Letters of Credit)
remaining after payment in full of the Revolving Credit Loans shall be deposited
by the Borrowers in a cash collateral account to be held by the Administrative
Agent for its own benefit and for the benefit of the Lenders for application by
the Administrative Agent to the payment of any drawing made under any such
Letters of Credit; PROVIDED, HOWEVER, that the Borrowers shall not be required
to make any prepayment of any Term or Revolving Credit Eurodollar Loan required
pursuant to this Section 2.09(g) until the last day of the Interest Period with
respect thereto SO LONG AS an amount equal to such prepayment is deposited by
the
40
Borrowers into a cash collateral account with the Administrative Agent to be
held in such account pursuant to terms satisfactory to the Administrative Agent.
(h) All prepayments under this Section 2.09 shall be subject to Section
2.12 hereof.
(i) Except as otherwise expressly provided in this Section 2.09,
payments with respect to any paragraph of this Section 2.09 are in addition to
payments made or required to be made under any other paragraph of this Section
2.09.
(j) All prepayments of the Term Loan under this Section 2.09 shall be
applied PRO RATA over the remaining Repayment Dates. The amount of the Term Loan
prepaid may not be reborrowed.
SECTION 2.10 RESERVE REQUIREMENTS; CHANGE IN CIRCUMSTANCES. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
(or in the case of any assignee of any Lender, the date of assignment) any
change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law), or any change in GAAP or regulatory accounting principles applicable to
the Administrative Agent or any Lender, shall: (i) subject the Administrative
Agent or any Lender (which shall for the purpose of this Section 2.10 include
any assignee or lending office of the Administrative Agent or any Lender) to any
charge, fee, deduction or withholding of any kind or to any tax with respect to
any amount paid or to be paid to either the Administrative Agent or any Lender
with respect to any Eurodollar Loans made by such Lender to the Borrowers or
with respect to the obligations of any Lender under Sections 2.17 through 2.20
hereof or under any Letter of Credit (other than (x) taxes imposed on the
overall net income of the Administrative Agent or such Lender and (y) franchise
taxes imposed on the Administrative Agent or such Lender, in either case by the
jurisdiction in which such Lender or the Administrative Agent has its principal
office or its lending office with respect to such Eurodollar Loan or any
political subdivision or taxing authority of either thereof); (ii) change the
basis of taxation of payments to any Lender or the Administrative Agent of the
principal of or interest on any Eurodollar Loan or any other fees or amounts
payable with respect to any Letter of Credit or otherwise hereunder (other than
taxes imposed on the overall net income of such Lender or the Administrative
Agent by the jurisdiction in which such Lender or the Administrative Agent has
its principal office or by any political subdivision or taxing authority
therein); (iii) impose, modify or deem applicable any reserve, special deposit
or similar requirement against assets of, deposits with or for the account of,
or loans or loan commitments extended by, or Letters of Credit issued and
maintained by such Lender; or (iv) impose on any Lender or, with respect to
Eurodollar Loans, the London interbank market, any other condition affecting
this Agreement, Letters of Credit issued and maintained by or Eurodollar Loans
made by such Lender; and the result of any of the foregoing shall be to increase
the cost to any such Lender of making or maintaining any Eurodollar Loan or
Letter of Credit, or to reduce the
41
amount of any payment (whether of principal, interest, fee, compensation or
otherwise) receivable by such Lender or to require such Lender to make any
payment in respect of any Eurodollar Loan or Letter of Credit, then the
Borrowers shall pay to such Lender or the Administrative Agent, as the case may
be, upon such Lender's or the Administrative Agent's demand, such additional
amount or amounts as will compensate such Lender or the Administrative Agent for
such additional costs or reduction. The Administrative Agent and each Lender
agree to give notice to the Borrowers of any such change in law, regulation,
interpretation or administration with reasonable promptness after becoming
actually aware thereof and of the applicability thereof to the Transactions.
Notwithstanding anything contained herein to the contrary, nothing in clause (i)
or (ii) of this Section 2.10(a) shall be deemed to (x) permit the Administrative
Agent or any Lender to recover any amount thereunder which would not be
recoverable under Section 2.16 hereof or (y) require the Borrowers to make any
payment of any amount to the extent that such payment would duplicate any
payment made by the Borrowers pursuant to Section 2.16 hereof.
(b) If at any time and from time to time after the date of this
Agreement, any Lender shall determine that the adoption of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change in any
applicable law, rule, regulation or guideline regarding capital adequacy,
including, without limitation, the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards", or any change in the
interpretation or administration of any thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such Lender (or its lending office)
with any request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
or will have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a consequence of
its obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies and the policies of such Lender's holding company with
respect to capital adequacy), then from time to time the Borrowers shall pay to
such Lender such additional amount or amounts as will compensate such Lender for
such reduction. Each Lender agrees to give notice to the Borrowers of any
adoption of, change in, or change in interpretation or administration of, any
such law, rule, regulation or guideline with reasonable promptness after
becoming actually aware thereof and of the applicability thereof to the
Transactions.
(c) A statement of any Lender or the Administrative Agent setting forth
such amount or amounts, supported by calculations in reasonable detail, as shall
be necessary to compensate such Lender (or the Administrative Agent) as
specified in paragraphs (a) and (b) above shall be delivered to the Borrowers
and shall be conclusive absent manifest error. The Borrowers shall pay such
Lender or the Administrative Agent, as the case may be, the amount shown as due
on any such statement within ten (10) days after its receipt of the same.
42
(d) Failure on the part of any Lender or the Administrative Agent to
demand compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or any Letter of Credit or
reduction in the rate of return earned on such Lender's capital, shall not
constitute a waiver of such Lender's or the Administrative Agent's rights to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in rate of return in such Interest Period or in any
other Interest Period or with respect to such Letter of Credit. The protection
under this Section 2.10 shall be available to each Lender and the Administrative
Agent regardless of any possible contention of the invalidity or inapplicability
of any law, regulation or other condition which shall give rise to any demand by
such Lender or the Administrative Agent for compensation.
(e) Any Lender claiming any additional amounts payable pursuant to this
Section 2.10 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, any such additional amounts and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender.
SECTION 2.11 CHANGE IN LEGALITY. (a) Notwithstanding anything to the
contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations to
make Eurodollar Loans as contemplated hereby, then, by written notice to
Borrowers and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder, whereupon the Borrowers shall be prohibited
from requesting Eurodollar Loans from such Lender hereunder unless such
declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans, made by
such Lender be converted to Alternate Base Loans, in which event (A)
all such Eurodollar Loans shall be automatically converted to Alternate
Base Loans as of the effective date of such notice as provided in
paragraph (b) below and (B) all payments of principal which would
otherwise have been applied to repay the converted Eurodollar Loans
shall instead be applied to repay the Alternate Base Loans resulting
from the conversion of such Eurodollar Loans.
(b) For purposes of Section 2.11(a) hereof, a notice to the Borrowers
by any Lender shall be effective, if lawful, on the last day of the then current
Interest Period or, if there are then two or more current Interest Periods, on
the last day of each such Interest
43
Period, respectively, otherwise, such notice shall be effective with respect to
the Borrowers on the date of receipt by the Borrowers.
SECTION 2.12 INDEMNITY. The Borrowers shall indemnify the
Administrative Agent and each Lender against any loss or reasonable expense
(including, but not limited to, any loss or reasonable expense sustained or
incurred or to be sustained or incurred by reason of or in connection with
the execution and delivery or assignment of, or payment under, any Letter of
Credit, or in liquidating or employing deposits from third parties acquired
to affect or maintain any Loan or part thereof as a Eurodollar Loan) which
the Administrative Agent or such Lender may sustain or incur as a consequence
of the following events (regardless of whether such events occur as a result
of the occurrence of a Default or an Event of Default or the exercise of any
right or remedy of the Administrative Agent or the Lenders under this
Agreement or any other agreement, or at law): any failure of the Borrowers to
fulfill on the date of any Credit Event the applicable conditions set forth
in Article V hereof applicable to it; any failure of the Borrowers to borrow
hereunder after irrevocable notice of borrowing pursuant to Section 2.03
hereof has been given; any payment, prepayment or conversion of a Eurodollar
Loan on a date other than the last day of the relevant Interest Period; any
default in payment or prepayment of the principal amount of any Loan or any
part thereof or interest accrued thereon, or with respect to any Letter of
Credit, in each case, as and when due and payable (at the due date thereof,
by irrevocable notice of prepayment or otherwise); or the occurrence of an
Event of Default. Without limiting the foregoing, the Borrowers further agree
to indemnify and hold harmless the Administrative Agent, each Lender as well
as their respective officers and directors, each person who controls the
Administrative Agent or Lender within the meaning of Section 15 of the
Securities Act of 1933 or any applicable state securities law and their
respective successors, from and against any and all claims, damages, losses,
liabilities, costs or expenses, joint or several, to which they or any of
them may become subject under any Federal or state securities law, rule or
regulation, at common law or otherwise, insofar as such claims, damages,
losses, liabilities, costs or expenses arise out of or are based upon the
execution and delivery by the Administrative Agent or any Lender of any
Letter of Credit or the execution and delivery of any other document in
connection therewith. Such loss or reasonable expense shall include, without
limitation, an amount equal to the excess, if any, of (i) the amount of
interest which would have accrued on the principal or other amount so paid,
prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to, in the case of a
Loan, the last day of the Interest Period for such Loan (or, in the case of a
failure to borrow, the Interest Period for such Loan which would have
commenced on the date of such failure to borrow), at the applicable rate of
interest for such Loan provided for herein over (ii) the amount of interest
(as reasonably determined by such Lender) that would be realized by such
Lender in reemploying the funds so paid, prepaid or converted or not borrowed
for such period or Interest Period, as the case may be. Any such Lender shall
provide to the Borrowers a statement, signed by an officer of such Lender,
explaining any loss or expense and setting forth, if applicable, the
computation pursuant to the preceding sentence, and such statement shall be
conclusive absent manifest error. The Borrowers shall pay such Lender
44
the amount shown as due on any such statement within ten (10) days after the
receipt of the same. The indemnities contained herein shall survive the
expiration or termination of this Agreement and of the Letters of Credit.
SECTION 2.13 PRO RATA TREATMENT: ASSUMPTION BY AND DELEGATION OF
AUTHORITY TO THE ADMINISTRATIVE AGENT. (a) Except as permitted under Sections
2.10, 2.11 and 2.16 hereof or as described in subsection (d) below, each
borrowing, each payment or prepayment of principal of the Notes, each payment of
interest on the Notes, each payment of any fee or other amount payable hereunder
and each reduction of the Total Revolving Credit Commitment shall be made PRO
RATA among the Lenders in the proportions that their Revolving Credit
Commitments bear to the Total Revolving Credit Commitment or that the aggregate
principal amount of such Lender's Term Loan bears to the aggregate principal
amount of the Term Loans made by all of the Lenders, as the case may be.
(b) Notwithstanding the occurrence or continuance of a Default or Event
of Default or other failure of any condition to the making of Loans or
occurrence of other Credit Events hereunder subsequent to the Credit Events on
the Closing Date, unless the Administrative Agent shall have been notified in
writing by any Lender in accordance with the provisions of paragraph (c) below
prior to the date of a proposed Credit Event that such Lender will not make the
amount that would constitute its PRO RATA share of the applicable Credits on
such date available to the Administrative Agent, the Administrative Agent may
assume that such Lender has made such amount available to the Administrative
Agent on such date, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrowers a corresponding amount. If such
amount is made available to the Administrative Agent on a date after such Credit
Event date, such Lender shall pay to the Administrative Agent on demand an
amount equal to the product of (i) the daily average Federal funds rate during
such period as quoted by the Administrative Agent, times (ii) the amount of such
Lender's PRO RATA share of such Credits, times (iii) a fraction the numerator of
which is the number of days that elapse from and including such Credit Event
date to the date on which such Lender's PRO RATA share of such Credits shall
have become immediately available to the Administrative Agent and the
denominator of which is 360. A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this subsection shall be
conclusive in the absence of manifest error. If such Lender's PRO RATA share of
such Credits is not in fact made available to the Administrative Agent by such
Lender within three Business Days of such Credit Event date, the Administrative
Agent shall be entitled to recover such amount with interest thereon at the rate
per annum applicable to the Loans hereunder, on demand, from the Borrowers.
(c) Unless and until the Administrative Agent shall have received
notice from the Required Lenders as to the existence of a Default, an Event of
Default or some other circumstance which would relieve the Lenders of their
respective obligations to extend Credits hereunder, which notice shall be in
writing and shall be signed by the
45
Required Lenders and shall expressly state that the Required Lenders do not
intend to make available to the Administrative Agent such Lenders' ratable share
of Credits extended after the effective date of such notice, the Administrative
Agent shall be entitled to continue to make the assumptions described in Section
2.13(b) above. After receipt of the notice described in the preceding sentence,
which shall become effective on the third Business Day after receipt of such
notice by the Administrative Agent (unless otherwise agreed by the
Administrative Agent; PROVIDED, HOWEVER, that if the Administrative Agent in its
discretion determines not to fund under the 1999 Credit Agreement, then it shall
not fund under this Agreement), the Administrative Agent shall be entitled to
make the assumptions described in Section 2.13(b) above as to any Credits as to
which it has not received a written notice to the contrary prior to 11:00 A.M.
(Los Angeles, California time) on the Business Day next preceding the day on
which such Credits are to be extended. The Administrative Agent shall not be
required to extend any Credits as to which it shall have received notice by a
Lender of such Lender's intention not to make its ratable portion of such
Credits available to the Administrative Agent. Any withdrawal of authorization
as described under this Section 2.13(c) shall not affect the validity of any
Credits extended prior to the effectiveness thereof.
(d) In the event that any Lender fails to fund its ratable portion
(based on its Revolving Credit Commitment) of any Revolving Credit Loan which
such Lender is obligated to fund under the terms of this Agreement (the funded
portion of such borrowing being hereinafter referred to as a "NON PRO RATA
Loan"), until the earlier of such Lender's cure of such failure or the
termination of the Total Revolving Credit Commitment, in the Administrative
Agent's sole discretion, the proceeds of all amounts thereafter repaid to the
Administrative Agent for the benefit of the Lenders by the Borrowers and
otherwise required to be applied to such Lender's share of any other Obligation
pursuant to the terms of this Agreement, may be advanced to the Borrowers by the
Administrative Agent on behalf of such Lender to cure, in full or in part, such
failure by such Lender, but shall nevertheless be deemed to have been paid to
such Lender in satisfaction of such other Obligation. Notwithstanding anything
in this Agreement to the contrary:
(i) the foregoing provisions to this subsection (d) shall
apply only with respect to the proceeds of payments of Obligations and
shall not affect the conversion or continuation of Loans pursuant to
Section 2.02;
(ii) any such Lender shall be deemed to have cured its failure
to fund at such time as an amount equal to such Lender's ratable
portion (based on its Revolving Credit Commitment) of the requested
principal portion of such Revolving Credit Loan is fully funded to the
Borrowers whether made by such Lender itself or by operation of the
terms of this subsection (d) and whether or not the Non Pro Rata Loan
with respect thereto has been converted or continued;
46
(iii) amounts advanced to the Borrowers to cure, in full or in
part, any such Lender's failure to fund its Revolving Credit Loans
("CURE LOANS") shall bear interest at the rate applicable to Alternate
Base Loans under Section 2.05 in effect from time to time, and for all
other purposes of this Agreement shall be treated as if they were
Alternate Base Loans;
(iv) regardless of whether or not an Event of Default has
occurred and is continuing, and notwithstanding the instructions of the
Borrowers as to their desired application, all repayments of principal
which would be applied to the outstanding Revolving Credit Alternate
Base Loans shall be applied FIRST, ratably to Revolving Credit
Alternate Base Loans constituting Non Pro Rata Loans, SECOND, ratably
to Revolving Credit Alternate Base Loans other than those constituting
Non Pro Rata Loans or Cure Loans and, THIRD, ratably to Revolving
Credit Alternate Base Loans constituting Cure Loans;
(v) for so long as, and until the earlier of any such Lender's
cure of the failure to fund its ratable portion (based on its Revolving
Credit Commitment) of any Revolving Credit Loan and the termination of
the Total Revolving Credit Commitment, the term "Required Lenders" for
all purposes of this Agreement shall exclude all Lenders whose failure
to fund their ratable portion (based on their respective Revolving
Credit Commitments) of any Revolving Credit Loan have not been cured;
and
(vi) for so long as and until any such Lender's failure to
fund its ratable portion (based on its Revolving Credit Commitment) of
any Revolving Credit Loan is cured in accordance with this subsection
(d), such Lender shall not be entitled to any Revolving Credit
Commitment Fee with respect to its Revolving Credit Commitment.
SECTION 2.14 SHARING OF SETOFFS. Each Lender agrees that if it shall,
through the exercise of a right of banker's lien, setoff or counterclaim against
the Borrowers, including, but not limited to, a secured claim under Section 506
of Title 11 of the United States Code or other security or interest arising
from, or in lieu of, such secured claim, received by such Lender under any
applicable bankruptcy, insolvency or other similar law or otherwise, obtain
payment (voluntary or involuntary) in respect of a Note or exposure under the
Letter of Credit Usage held by it as a result of which the unpaid principal
portion of the Notes or exposure under the Letter of Credit Usage held by it
shall be proportionately less than the unpaid principal portion of the Notes or
exposure under the Letter of Credit Usage held by any other Lender, it shall be
deemed to have simultaneously purchased from such other Lender a participation
in the Notes and exposure under the Letter of Credit Usage held by such other
Lender, so that the aggregate unpaid principal amount of the Notes and exposure
under the Letter of Credit Usage and participations in Notes and exposure under
the Letter of Credit Usage held by it shall be in the same proportion to the
aggregate unpaid principal amount of all Notes and exposure under the
47
Letter of Credit Usage then outstanding as the principal amount of the Notes and
exposure under the Letter of Credit Usage held by it prior to such exercise of
banker's lien, setoff or counterclaim was to the principal amount of all Notes
and exposure under the Letter of Credit Usage outstanding prior to such exercise
of banker's lien, setoff or counterclaim; PROVIDED, HOWEVER, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.14
and the payment giving rise thereto shall thereafter be recovered, such purchase
or purchases or adjustments shall be rescinded to the extent of such recovery
and the purchase price or prices or adjustments restored without interest. The
Borrowers expressly consent to the foregoing arrangements and agree that any
Lender holding a participation in a Note and exposure under the Letter of Credit
Usage deemed to have been so purchased may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all moneys owing
by the Borrowers to such Lender as fully as if such Lender held a Note and
exposure under the Letter of Credit Usage in the amount of such participation.
Solely for the purposes of this Section 2.14, references to Notes and Letter of
Credit Usage shall mean the aggregate of Notes and participations in Letter of
Credit Usage held by each Lender and each "Lender" under the 1999 Credit
Agreement, in the aggregate for both this Agreement and the 1999 Credit
Agreement. For such purposes, SCHEDULE 2.14 annexed hereto sets forth the
combined percentage of each Lender's Revolving Credit Commitment under this
Agreement PLUS each "Lender's" (under the 1999 Credit Agreement) "Revolving
Credit Commitment" under the 1999 Credit Agreement on the Closing Date (and
thereafter as such Schedule may be amended from time to time).
SECTION 2.15 PAYMENTS AND COMPUTATIONS. (a) The Borrowers shall make
each payment hereunder and under any instrument delivered hereunder not later
than 12:00 noon (Los Angeles, California time) on the day when due in lawful
money of the United States (in freely transferable dollars) for the account of
the Lenders, in immediately available funds, without set-off or counterclaim to
the Administrative Agent at an address or location designated by the
Administrative Agent at least forty-eight (48) hours prior to the date such
payment or delivery is required. Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon. The Administrative Agent shall distribute any such payments
received by it for the account of any other person to the appropriate recipient
promptly following receipt thereof. The Administrative Agent may charge, when
due and payable, the Borrowers' account with the Administrative Agent for all
interest, principal and Revolving Credit Commitment Fees or other fees owing to
the Administrative Agent or the Lenders on or with respect to this Agreement
and/or the Loans and other Loan Documents. If at any time there is not
sufficient availability to cover any of the payments referred to in the prior
sentence, and in any event upon the occurrence of any Default, the Borrowers
shall make any such payments upon demand.
(b) If the Administrative Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received
48
by the Administrative Agent from Borrower and such related payment is not
received by the Administrative Agent, then the Administrative Agent will be
entitled to recover such amount from such Lender without setoff, counterclaim or
deduction of any kind. If the Administrative Agent determines at any time that
any amount received by the Administrative Agent under this Agreement must be
returned to Borrowers or paid to any other person pursuant to any solvency law
or otherwise, then, notwithstanding any other term or condition of this
Agreement, the Administrative Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay to the
Administrative Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as the
Administrative Agent is required to pay to Borrowers or such other person,
without setoff, counterclaim or deduction of any kind.
SECTION 2.16 TAXES. (a) Any and all payments by the Borrowers hereunder
shall be made, in accordance with Section 2.15 hereof, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings in any such case imposed by the United
States or any political subdivision thereof, excluding:
(i) in the case of the Administrative Agent and each Lender,
taxes imposed or based on its net income, and franchise or capital
taxes imposed on it, (A) if the Administrative Agent or such Lender is
organized under the laws of the United States or any political
subdivision thereof and (B) if the Administrative Agent or such Lender
is not organized under the laws of the United States or any political
subdivision thereof, and its principal office or Applicable Lending
Office is located in the United States, and in the case of both (A) and
(B), withholding taxes payable with respect to payments to the
Administrative Agent or such Lender at its principal office or
Applicable Lending Office under laws (including, without limitation,
any treaty, ruling, determination or regulation) in effect on the date
hereof, but not any increase in withholding tax resulting from any
subsequent change in such laws (other than withholding with respect to
taxes imposed or based on its net income or with respect to franchise
or capital taxes), and
(ii) taxes (including withholding taxes) imposed by reason of
the failure of the Administrative Agent or any Lender, in either case
that is organized outside the United States, to comply with Section
2.16(f) hereof (or the inaccuracy at any time of the certificates,
documents and other evidence delivered thereunder)
(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "TAXES"). If the Borrowers
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders or the Administrative Agent, (x) the sum
payable shall be increased by the amount necessary
49
so that after making all required deductions (including without limitation
deductions applicable to additional sums payable under this Section 2.16) such
Lender or the Administrative Agent (as the case may be) receives an amount equal
to the sum it would have received had no such deductions been made, (y) the
Borrowers shall make such deductions and (z) the Borrowers shall pay the full
amount deducted to the relevant tax authority or other authority in accordance
with applicable law.
(b) In addition, the Borrowers agree to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "OTHER TAXES").
(c) The Borrowers will indemnify each Lender and the Administrative
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction (except as
specified in clauses (a)(i) and (ii)) on amounts payable under this Section
2.16) paid by such Lender or the Administrative Agent (as the case may be) and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto. This indemnification shall be made within 30 days from the
date such Lender or the Administrative Agent (as the case may be) makes written
demand therefor. If any Lender receives a refund in respect of any Taxes or
Other Taxes for which such Lender has received payment from the Borrowers
hereunder, such Lender shall promptly notify the Borrowers of such refund and
such Lender shall, within 30 days of receipt of a request by the Borrowers,
repay such refund to the Borrowers, provided that the Borrowers, upon the
request of such Lender, agrees to return such refund (plus any penalties,
interest or other charges) to such Lender in the event such Lender is required
to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrowers in respect of any payment to any Lender, the
Borrowers will furnish to the Administrative Agent, at its address referred to
in Section 11.01 hereof, such certificates, receipts and other documents as may
be reasonably required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement hereunder,
the agreements and obligations contained in this Section 2.16 shall survive the
payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States shall
deliver to the Borrowers on the date hereof (or, in the case of an assignee, on
the date of the assignment) and from time to time as required for renewal under
applicable law duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or any successor or additional forms), as appropriate,
indicating in each case that such Lender is entitled to receive payments under
this Agreement without any deduction or withholding of any United States federal
income taxes. The Administrative Agent (if the Administrative
50
Agent is an entity organized outside the United States) and each Lender that is
organized outside the United States shall promptly notify the Borrowers and the
Administrative Agent of any change in its Applicable Lending Office and upon
written request of the Borrowers such Lender shall, prior to the immediately
following due date of any payment by the Borrowers or any Guarantor hereunder or
under any other Loan Document, deliver to the Borrowers or such Guarantor, as
the case may be (with copies to the Administrative Agent), such certificates,
documents or other evidence, as required by the Code or Treasury Regulations
issued pursuant thereto, including without limitation Internal Revenue Service
Form 4224, Form 1001 and any other certificate or statement of exemption
required by Treasury Regulation Section 1.1441-4(a) or Section 1.1441-6(c) or
any subsequent version thereof, properly completed and duly executed by such
Lender establishing that such payment is (i) not subject to withholding under
the Code because such payment is effectively connected with the conduct by such
Lender of a trade or business in the United States or (ii) totally exempt from
United States tax under a provision of an applicable tax treaty. The Borrowers
shall be entitled to rely on such forms in their possession until receipt of any
revised or successor form pursuant to this Section 2.16(f). If the
Administrative Agent or a Lender fails to provide a certificate, document or
other evidence required pursuant to this Section 2.16(f), then (i) the Borrowers
shall be entitled to deduct or withhold on payments to the Administrative Agent
or such Lender as a result of such failure, as required by law, and (ii) the
Borrowers shall not be required to make payments of additional amounts with
respect to such withheld Taxes pursuant to clause (x) of Section 2.16(a) to the
extent such withholding is required solely by reason of the failure of the
Administrative Agent or such Lender to provide the necessary certificate,
document or other evidence.
(g) Each Lender and the Administrative Agent shall use reasonable
efforts to avoid or minimize any amounts which might otherwise be payable
pursuant to this subsection 2.16 (including seeking refunds of any amounts that
are reasonably believed not to have been correctly or legally asserted);
PROVIDED, HOWEVER, that such efforts shall not include the taking of any actions
by such Lender or the Administrative Agent that would result in any tax, costs
or other expense to such Lender or the Administrative Agent (other than a tax,
cost or other expense for which such Lender or the Administrative Agent shall
have been reimbursed or indemnified by the Borrowers pursuant to this Agreement
or otherwise) or any action which would or might in the reasonable opinion of
such Lender or the Administrative Agent have an adverse effect upon its
business, operations or financial condition or otherwise be disadvantageous to
such Lender or the Administrative Agent.
SECTION 2.17 ISSUANCE OF LETTERS OF CREDIT. Upon the request of the
Borrowers, and subject to the conditions set forth in Article V hereof and such
other conditions to the opening of Letters of Credit as the Administrative Agent
requires of its customers generally, the Administrative Agent shall from time to
time open standby letters of credit (each, a "LETTER OF CREDIT") for the account
of the Borrowers, the aggregate undrawn amount of all outstanding Letters of
Credit not at any time to exceed $100,000; PROVIDED, HOWEVER, that the
Borrowers may not request the Administrative Agent to open a
51
Letter of Credit if after giving effect thereto (measured by the face amount of
such Letter of Credit) the sum of the aggregate principal amount of the
Revolving Credit Loans outstanding hereunder PLUS the Letter of Credit Usage
would exceed the Total Revolving Credit Commitment. The issuance of each Letter
of Credit shall be made on at least three (3) Business Days' prior written
notice from the Borrowers to the Administrative Agent, at its Domestic Lending
Office, which written notice shall be an application for a Letter of Credit on
the Administrative Agent's customary form completed to the satisfaction of the
Administrative Agent, together with the proposed form of the Letter of Credit
(which shall be satisfactory to the Administrative Agent) and such other
certificates, documents and other papers and information as the Administrative
Agent may reasonably request. The Administrative Agent shall not at any time be
obligated to issue any Letter of Credit if such issuance would conflict with, or
cause the Administrative Agent or any Lender to exceed any limits imposed by,
any applicable requirements of law. The expiration date of any standby Letter of
Credit shall not be later than 365 days from the date of issuance thereof, and,
in any event, no Letter of Credit shall have an expiration date later than the
Conversion Date. The Letters of Credit shall be issued with respect of
transactions occurring in the ordinary course of business of the Borrowers.
SECTION 2.18 PAYMENT OF LETTERS OF CREDIT; REIMBURSEMENT. Upon the
issuance of any Letter of Credit, the Administrative Agent shall notify each
Lender of the principal amount, the number, and the expiration date thereof and
the amount of such Lender's participation therein. By the issuance of a Letter
of Credit hereunder and without further action on the part of the Administrative
Agent or the Lenders, each Lender hereby accepts from the Administrative Agent a
participation (which participation shall be nonrecourse to the Administrative
Agent) in such Letter of Credit equal to such Lender's PRO RATA (based on its
Revolving Credit Commitment) share of such Letter of Credit, effective upon the
issuance of such Letter of Credit. Each Lender hereby absolutely and
unconditionally assumes, as primary obligor and not as a surety, and agrees to
pay and discharge, and to indemnify and hold the Administrative Agent harmless
from liability in respect of, such Lender's PRO RATA share of the amount of any
drawing under a Letter of Credit. Each Lender acknowledges and agrees that its
obligation to acquire participations in each Letter of Credit issued by the
Administrative Agent and its obligation to make the payments specified herein,
and the right of the Administrative Agent to receive the same, in the manner
specified herein, are absolute and unconditional and shall not be affected by
any circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or an Event of Default hereunder, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever. The Administrative Agent shall review, on behalf of the Lenders,
each draft and any accompanying documents presented under a Letter of Credit and
shall notify each Lender of any such presentment. Promptly after it shall have
ascertained that any draft and any accompanying documents presented under such
Letter of Credit appear on their face to be in substantial conformity with the
terms and conditions of the Letter of Credit, the Administrative Agent shall
give telephonic or facsimile notice to the Lenders and the Borrowers of the
receipt and amount of such draft and the date on which payment thereon
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will be made, and the Lenders shall, by 11:00 A.M., Los Angeles, California time
on the date such payment is to be made, pay the amounts required to the
Administrative Agent at an address or location designated by the Administrative
Agent in immediately available funds, and the Administrative Agent, not later
than 3:00 P.M. Los Angeles, California time on such day, shall make the
appropriate payment to the beneficiary of such Letter of Credit. If in
accordance with the prior sentence the Lenders shall pay any draft presented
under a Letter of Credit, then the Administrative Agent, on behalf of the
Lenders, shall charge the general deposit account of the Borrowers with the
Administrative Agent for the amount thereof, together with the Administrative
Agent's customary overdraft fee in the event the funds available in such account
shall not be sufficient to reimburse the Lenders for such payment and the
Borrowers shall not otherwise have discharged such reimbursement obligation by
11:00 A.M., Los Angeles, California time, on the date of such payment. If the
Lenders have not been reimbursed with respect to such drawing as provided above,
the Borrowers shall pay to the Administrative Agent, for the account of the
Lenders, the amount of the drawing together with interest on such amount at a
rate per annum (computed on the basis of the actual number of days elapsed over
a year of 360 days) equal to the rate applicable to Alternate Base Loans
hereunder PLUS two percent (2%), payable on demand. The obligations of the
Borrowers under this Section 2.18 to reimburse the Lenders and the
Administrative Agent for all drawings under Letters of Credit shall be joint and
several, absolute, unconditional and irrevocable and shall be satisfied strictly
in accordance with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which
the Borrowers or any other person may at any time have against the
beneficiary under any Letter of Credit, the Administrative Agent or any
Lender (other than the defense of payment in accordance with the terms of
this Agreement or a defense based on the gross negligence or willful
misconduct of the Administrative Agent or any Lender) or any other
person in connection with this Agreement or any other transaction;
(c) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(d) payment by the Administrative Agent or any Lender under any Letter
of Credit against presentation of a draft or other document which does not
comply with the terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not similar
to any of the foregoing.
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It is understood that in making any payment under any Letter of Credit
(x) the Administrative Agent's and any Lender's exclusive reliance on the
documents presented to it under such Letter of Credit as to any and all matters
set forth therein, including, without limitation, reliance on the amount of any
draft presented under such Letter of Credit, whether or not the amount due to
the beneficiary equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect, if such document on its face appears to be in order, and whether or not
any other statement or any other document presented pursuant to such Letter of
Credit proves to be forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (y) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, not be deemed willful misconduct or gross
negligence of the Administrative Agent or any Lender.
SECTION 2.19 ADMINISTRATIVE AGENT'S ACTIONS WITH RESPECT TO LETTERS OF
CREDIT. Any Letter of Credit may, in the discretion of the Administrative Agent
or its correspondents, be interpreted by them (to the extent not inconsistent
with such Letter of Credit) in accordance with the Uniform Customs and Practice
for Documentary Credits of the International Chamber of Commerce, as adopted or
amended from time to time, or any other rules, regulations and customs
prevailing at the place where any Letter of Credit is available or the drafts
are drawn or negotiated. The Administrative Agent and its correspondents may
accept and act upon the name, signature, or act of any party purporting to be
the executor, administrator, receiver, trustee in bankruptcy, or other legal
representative of any party designated in any Letter of Credit in the place of
the name, signature, or act of such party.
SECTION 2.20 LETTER OF CREDIT FEES. The Borrowers agree to pay (i) to
the Administrative Agent for the account of each Lender a participation fee with
respect to its participations in Letters of Credit, which shall accrue at a rate
per annum equal to the margin over the Adjusted LIBO Rate applicable to interest
on Eurodollar Loans on the average daily amount of such Lender's PRO RATA share
of the Letter of Credit Usage (excluding any portion attributable to
unreimbursed drawings) during the period from and including the Closing Date to
but excluding the later of the date on which such Lender's Revolving Credit
Commitment terminates and the date on which such Lender ceases to have any share
of the Letter of Credit Usage, and (ii) an issuance fee and other related fees
charged by the Administrative Agent for transactions of this nature as set forth
on SCHEDULE 2.20 hereto (as such Schedule may be amended from time to time)
payable to the Administrative Agent for its own account at its Domestic Lending
Office in immediately available funds. Participation fees and other fees accrued
through and including the last day of September, December, March and June of
each year shall be payable on the first Business Day following each such period,
commencing July 1, 1999; PROVIDED that all such fees shall be payable on the
date on which the Revolving Credit Commitment terminates and any such fees
accruing after the date on which the Revolving Credit Commitment terminates
shall be payable on demand. Any other fees payable to
54
the Administrative Agent pursuant to this paragraph shall be payable within 10
days after demand. All participation fees and fronting fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
III. COLLATERAL SECURITY
SECTION 3.01 SECURITY DOCUMENTS. The Obligations and the 1999
Obligations shall be secured by the Collateral described in the Security
Documents and are entitled to the benefits thereof. The Borrowers shall duly
execute and deliver the Security Documents, all consents of third parties
necessary to permit the effective granting of the Liens created in such
agreements, financing statements pursuant to the Uniform Commercial Code and
other documents, all in form and substance satisfactory to the Administrative
Agent, as may be reasonably required by the Administrative Agent to grant to the
Lenders a valid, perfected and enforceable first priority Lien on and security
interest in (subject only to the Liens permitted under Section 7.01 hereof) the
Collateral.
SECTION 3.02 FILING AND RECORDING. The Borrowers shall, at their sole
cost and expense, cause all instruments and documents given as evidence of
security pursuant to this Agreement to be duly recorded and/or filed or
otherwise perfected in all places necessary, in the opinion of the
Administrative Agent, and take such other actions as the Administrative Agent
may reasonably request, in order to perfect and protect the Liens of the
Administrative Agent and Lenders in the Collateral. The Borrowers, to the extent
permitted by law, hereby authorize the Administrative Agent to file any
financing statement in respect of any Lien created pursuant to the Security
Documents which may at any time be required or which, in the opinion of the
Administrative Agent, may at any time be desirable although the same may have
been executed only by the Administrative Agent or, at the option of the
Administrative Agent, to sign such financing statement on behalf of the
Borrowers and file the same, and the Borrowers hereby irrevocably designate the
Administrative Agent, its agents, representatives and designees as its agent and
attorney-in-fact for this purpose. In the event that any re-recording or
refiling thereof (or the filing of any statements of continuation or assignment
of any financing statement) is required to protect and preserve such Lien, the
Borrowers shall, at the Borrowers' cost and expense, cause the same to be
recorded and/or refiled at the time and in the manner requested by the
Administrative Agent.
IV. REPRESENTATIONS AND WARRANTIES
Each of the Borrowers and each of the Guarantors jointly and severally
represents and warrants to each of the Lenders and each of the Agents that both
before and after giving effect to the consummation of the Transactions:
55
SECTION 4.01 ORGANIZATION, LEGAL EXISTENCE. Unless otherwise noted on
Schedule 4.01 annexed hereto, each Loan Party is a legal entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, has the requisite power and authority to own its property and
assets and to carry on its business as now conducted and as currently proposed
to be conducted and is qualified to do business in every jurisdiction where such
qualification is required, except where the failure to so qualify would not have
a Material Adverse Effect (all such jurisdictions being listed in SCHEDULE 4.01
annexed hereto). Each Loan Party has the corporate power to execute, deliver and
perform its obligations under this Agreement and the other Loan Documents to
which it is a party, and to borrow hereunder and to execute and deliver the
Notes.
SECTION 4.02 AUTHORIZATION. The execution, delivery and performance by
each of the Loan Parties of this Agreement and each of the other Loan Documents
to which it is a party, the borrowings hereunder by the Borrowers, the execution
and delivery by the Borrowers of the Notes and the grant of security interests
in the Collateral created by the Security Documents (collectively, the
"TRANSACTIONS") (a) have been duly authorized by all requisite corporate and, if
required, stockholder action and (b) will not (i) violate (A) any provision of
law, statute, rule or regulation or the certificate or articles of incorporation
or other applicable constitutive documents or the by-laws of any Loan Party, or
their respective subsidiaries, as the case may be, (B) any order of any court,
or any rule, regulation or order of any other agency of government binding upon
any Loan Party, or (C) any provisions of any material indenture, agreement or
other instrument to which any Loan Party, or their respective subsidiaries, or
any of their respective properties or assets are or may be bound, (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any material indenture, agreement or
other instrument referred to in (b)(i)(C) above or (iii) result in the creation
or imposition of any Lien of any nature whatsoever (other than in favor of the
Administrative Agent, for its own benefit and for the benefit of the Lenders, as
contemplated by this Agreement and the Security Documents) upon any property or
assets of any Loan Party.
SECTION 4.03 GOVERNMENTAL APPROVALS. No registration or filing (other
than the filings necessary to perfect the Liens created by the Security
Documents) with consent or approval of, or other action by, any Federal, state
or other governmental agency, authority or regulatory body is or will be
required in connection with the Transactions, other than any which have been
made or obtained.
SECTION 4.04 BINDING EFFECT. This Agreement and each of the other Loan
Documents executed and delivered by any of the Loan Parties constitutes a legal,
valid and binding obligation of such person, and is enforceable in accordance
with its terms. Each of the Notes, when duly executed and delivered by the
Borrowers, will constitute a legal, valid and binding obligation of the
Borrowers enforceable in accordance with its terms.
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SECTION 4.05 MATERIAL ADVERSE CHANGE. Except as set forth in SCHEDULE
4.05 annexed hereto, there has been no material adverse change in the business,
assets, operations or financial condition of any of the Borrowers or any of
their subsidiaries since December 31, 1998.
SECTION 4.06 LITIGATION: COMPLIANCE WITH LAWS: ETC. (a) Except as set
forth in SCHEDULE 4.06(a) annexed hereto, there are not any actions, suits or
proceedings at law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or, to the knowledge of any
Responsible Officer of any Loan Party, threatened against or affecting any of
the Loan Parties or the businesses, assets or rights of any of the Loan Parties
(i) which involve any of the Transactions or (ii) as to which it is probable
(within the meaning of Statement of Financial Accounting Standards No. 5) that
there will be an adverse determination and which, if adversely determined,
would, individually or in the aggregate, materially impair the ability of any of
the Loan Parties to conduct business substantially as now conducted, or have a
Material Adverse Effect.
(b) Except as set forth in SCHEDULE 4.06(b) annexed hereto, no Loan
Party is in violation of any law, or in default with respect to any judgment,
writ, injunction, decree, rule or regulation of any court or governmental agency
or instrumentality, except where such violation or default would not have a
Material Adverse Effect.
SECTION 4.07 FINANCIAL STATEMENTS. (a) The Borrowers have heretofore
furnished to the Administrative Agent the financial statements of Holdings for
the nine month period ended September 30, 1999. Such financial statements
present fairly the Consolidated financial condition and results of operations of
Holdings and its subsidiaries as of the dates and for the periods indicated, and
such balance sheets and the notes thereto disclose all material liabilities,
direct or contingent, of Holdings and its subsidiaries, as of the dates thereof.
(b) Attached hereto as SCHEDULE 4.07(b) are quarterly, through December
31, 2000, and annually thereafter through the December 31, 2002, projected
income statements, balance sheets and cash flows of Holdings on a Consolidated
basis, together with a schedule confirming the ability of the Borrowers to
consummate the Transactions and demonstrating prospective compliance with all
financial covenants contained in this Agreement, such projections disclosing all
assumptions made by Borrowers in formulating such projections and giving effect
to the Transactions. The projections are based upon reasonable estimates and
assumptions, all of which are reasonable in light of the conditions which
existed at the time the projections were made, have been prepared on the basis
of the assumptions stated therein, and reflect as of the Closing Date the
reasonable estimate of the Borrowers of the results of operations and other
information projected therein.
57
(c) The financial statements referred to in this Section 4.07 have been
prepared in accordance with GAAP, in each case subject to normal year-end audit
adjustments and, in the case of the financial statements delivered pursuant to
clause (b) above, subject to the absence of footnotes.
SECTION 4.08 FEDERAL RESERVE REGULATIONS. (a) No Loan Party is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, (i) to
purchase or carry Margin Stock or to extend credit to others for the purpose of
purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including, without limitation, Regulation U or X thereof. If requested by any
Lender, the Borrowers or any subsidiary thereof shall furnish to such Lender a
statement on Federal Reserve Form U-1 referred to in said Regulation U.
SECTION 4.09 TAXES. Each Loan Party has filed or caused to be filed all
Federal, state, local and foreign tax returns which are required to be filed by
it, on or prior to the date hereof, other than tax returns in respect of taxes
that (x) are not franchise, capital or income taxes, (y) in the aggregate are
not material and (z) would not, if unpaid, result in the imposition of any
material Lien on any property or assets of any Loan Party. Each Loan Party has
paid or caused to be paid all taxes shown to be due and payable on such filed
returns or on any assessments received by it, other than (i) any taxes or
assessments the validity of which such Loan Party is contesting in good faith by
appropriate proceedings, and with respect to which such Loan Party shall, to the
extent required by GAAP have set aside on its books adequate reserves and (ii)
taxes other than income, capital or franchise taxes that in the aggregate are
not material and which would not, if unpaid, result in the imposition of any
material Lien on any property or assets of any Loan Party. No Federal income tax
returns of any Loan Party have been audited by the United States Internal
Revenue Service and no Loan Party has as of the date hereof requested or been
granted any extension of time to file any Federal, state, local or foreign tax
return. No Loan Party is party to or has any obligation under any tax sharing
agreement.
SECTION 4.10 EMPLOYEE BENEFIT PLANS. With respect to the provisions of
ERISA, except as set forth on SCHEDULE 4.10 hereto:
(i) No Reportable Event has occurred or is continuing with respect to
any Pension Plan.
(ii) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any Plan subject
to Part 4 of Subtitle B of Title I of ERISA.
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(iii) None of the Borrowers or any ERISA Affiliate is now, or has
been during the preceding five years, obligated to contribute to a Pension
Plan or a Multiemployer Plan. None of the Borrowers or any ERISA Affiliate
has (A) ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA, (B) withdrawn as a substantial
employer so as to become subject to the provisions of Section 4063 of ERISA,
(C) ceased making contributions to any Pension Plan subject to the provisions
of Section 4064(a) of ERISA to which the Borrowers, any subsidiary or any
ERISA Affiliate made contributions, (D) incurred or caused to occur a
"complete withdrawal" (within the meaning of Section 4203 of ERISA) or a
"partial withdrawal" (within the meaning of Section 4205 of ERISA) from a
Multiemployer Plan that is a Pension Plan so as to incur withdrawal liability
under Section 4201 of ERISA (without regard to subsequent reduction or waiver
of such liability under Section 4207 or 4208 of ERISA), or (E) been a party
to any transaction or agreement under which the provisions of Section 4204 of
ERISA were applicable.
(iv) No notice of intent to terminate a Pension Plan has been
filed, nor has any Plan been terminated pursuant to the provisions of Section
4041(e) of ERISA.
(v) The PBGC has not instituted proceedings to terminate (or
appoint a trustee to administer) a Pension Plan and no event has occurred or
condition exists which might constitute grounds under the provisions of
Section 4042 of ERISA for the termination of (or the appointment of a trustee
to administer) any such Plan.
(vi) With respect to each Pension Plan that is subject to the
provisions of Title I, Subtitle B, Part 3 of ERISA, the funding method used in
connection with such Plan is acceptable under ERISA, and the actuarial
assumptions and methods used in connection with funding such Pension Plan
satisfy the requirements of Section 302 of ERISA. The assets of each such
Pension Plan (other than the Multiemployer Plans) are at least equal to the
present value of the greater of (i) accrued benefits (both vested and
non-vested) under such Plan, or (ii) "benefit liabilities" (within the meaning
of Section 4001(a)(16) of ERISA) under such Plan, in each case as of the
latest actuarial valuation date for such Plan (determined in accordance with the
same actuarial assumptions and methods as those used by the Plan's actuary in
its valuation of such Plan as of such valuation date). No such Pension Plan has
incurred any "accumulated funding deficiency" (as defined in Section 412 of the
Code), whether or not waived.
(vii) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the knowledge of the Responsible Officers
of any Loan Party, which could reasonably be expected to be asserted, against
any Plan or the assets of any such Plan. No civil or criminal action brought
pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending
or, to the knowledge of the Responsible Officers of any Loan Party threatened
against any fiduciary or any Plan. None of the Plans or any fiduciary thereof
(in its capacity as such) has been the direct or indirect subject of any
audit, investigation or examination by any governmental or quasi-governmental
agency.
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(viii) All of the Plans comply currently, and have complied in the
past, both as to form and operation, with their terms and with the provisions of
ERISA and the Code, and all other applicable laws, rules and regulations; all
necessary governmental approvals for the Plans have been obtained and a
favorable determination as to the qualification under Section 401(a) of the
Code of each of the Plans which is an employee pension benefit plan (within the
meaning of Section 3(2) of ERISA) has been made by the Internal Revenue Service
and a recognition of exemption from federal income taxation under Section 501(c)
of the Code of each of the funded employee welfare benefit plans (within the
meaning of Section 3(1) of ERISA) has been made by the Internal Revenue Service,
and nothing has occurred since the date of each such determination or
recognition letter that would adversely affect such qualification.
SECTION 4.11 NO MATERIAL MISSTATEMENTS. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of any Loan Party to the Administrative Agent or any Lender in connection with
any of the Transactions or this Agreement, the Security Documents, the Notes or
any other Loan Documents or included therein contained or contains any material
misstatement of fact or omitted or omits to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.12 INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING
COMPANY ACT. No Loan Party is an "investment company" as defined in, or is
otherwise subject to regulation under, the Investment Company Act of 1940. No
Loan Party is a "holding company" as that term is defined in or is otherwise
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 4.13 SECURITY INTEREST. Each of the Security Documents
creates and grants to the Administrative Agent, for its own benefit and for
the benefit of the Lenders, a legal, valid and perfected first (except as
permitted pursuant to Section 7.01 hereof) priority security interest in the
collateral identified therein. Such collateral or property is not subject to
any other Liens whatsoever, except Liens permitted by Section 7.01 hereof.
SECTION 4.14 USE OF PROCEEDS. All proceeds of each borrowing under
the Total Revolving Credit Commitment shall be used for working capital
requirements of the Borrowers and, subject to Section 2.03 of this Agreement,
if the aggregate of the Total Revolving Credit Commitment under this
Agreement and the "Total Revolving Credit Commitment" under the 1999 Credit
Agreement has been increased to $120,000,000, also for Permitted Acquisitions
and Permitted De Novo Capital Expenditures.
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SECTION 4.15 SUBSIDIARIES. As of the Closing Date, SCHEDULE 4.15
annexed hereto sets forth each subsidiary of each Borrower, its jurisdiction of
incorporation, its capitalization and ownership of capital stock of each
subsidiary.
SECTION 4.16 TITLE TO PROPERTIES; POSSESSION UNDER LEASES;
TRADEMARKS. (a) Each Borrower and each of their subsidiaries has good and
marketable title to, or valid leasehold interest in, all of its respective
properties and assets shown on the most recent balance sheet referred to in
Section 4.07(a) hereof and all assets and properties acquired since the date
of such balance sheet, except for such properties as are no longer used or
useful in the conduct of its business or as have been disposed of in the
ordinary course of business, and except for minor defects in title that do
not materially interfere with the ability of any of the Borrowers or any
subsidiary thereof to conduct its business as now conducted. All such assets
and properties are free and clear of all Liens other than those permitted by
Section 7.01 hereof.
(b) Each Borrower and each of their subsidiaries has complied
with all obligations under all leases to which it is a party and under which
it is in occupancy, except where the failure to so comply would not have a
Material Adverse Effect, and all such leases are in full force and effect and
each Borrower and each of their subsidiaries enjoys peaceful and undisturbed
possession under all such leases.
(c) Each Borrower and each of their subsidiaries owns or controls
all material trademarks, trademark rights, trade names, trade name rights,
copyrights, patents, patent rights and licenses which are necessary for the
conduct of the business of such Borrowers and such subsidiary. No Borrower or
subsidiary thereof is infringing upon or otherwise acting adversely to any of
such trademarks, trademark rights, trade names, trade name rights,
copyrights, patent rights or licenses owned by any other person or persons.
There is no claim or action by any such other person pending, or to the
knowledge of any Responsible Officer of any Borrower or any subsidiary
thereof, threatened, against any Borrowers or any subsidiary thereof with
respect to any of the rights or property referred to in this Section 4.16(c).
SECTION 4.17 SOLVENCY. (a) The fair salable value of the assets
of each Borrower and its Consolidated subsidiaries is not less than the
amount that will be required to be paid on or in respect of the probable
liability on the existing debts and other liabilities (including contingent
liabilities) of such Borrower and its Consolidated subsidiaries, as they
become absolute and mature. For the purposes hereof, the "fair saleable
value" of assets shall mean the price a buyer is willing to pay for such
assets in an arm's-length transaction.
(b) The assets of each Borrower and its Consolidated subsidiaries
do not constitute unreasonably small capital for such Borrowers and their
Consolidated subsidiaries to carry out their business as now conducted and as
proposed to be conducted including the capital needs of such Borrower and its
Consolidated subsidiaries,
61
taking into account the particular capital requirements of the business
conducted by such Borrower and its Consolidated subsidiaries and projected
capital requirements and capital availability thereof.
(c) No Borrower or any subsidiary thereof intends to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be received by such Borrower and such
subsidiary, and of amounts to be payable on or in respect of debt of such
Borrowers and such subsidiary). The cash flow of each Borrower and its
Consolidated subsidiaries, after taking into account all anticipated uses of
the cash of such Borrower and its Consolidated subsidiaries, will at all
times be sufficient to pay all such amounts on or in respect of debt of such
Borrower and its Consolidated subsidiaries when such amounts are required to
be paid.
(d) No Borrower or any subsidiary thereof believes that final
judgments against it in actions for money damages presently pending will be
rendered at a time when, or in an amount such that, it will be unable to
satisfy any such judgments promptly in accordance with their terms (taking
into account the maximum reasonable amount of such judgments in any such
actions and the earliest reasonable time at which such judgments might be
rendered). The cash flow of such Borrower and its Consolidated subsidiaries,
after taking into account all other anticipated uses of the cash of such
Borrower and its Consolidated subsidiaries (including the payments on or in
respect of debt referred to in paragraph (c) of this Section), will at all
times be sufficient to pay all such judgments promptly in accordance with
their terms.
SECTION 4.18 PERMITS, ETC. Each Loan Party possesses all licenses,
permits, approvals and consents, including, without limitation, all
environmental, health and safety licenses, permits, approvals and consents
(collectively, "PERMITS") of all Federal, state and local governmental
authorities as required to conduct properly its business, each such Permit is
and will be in full force and effect, each Loan Party is in compliance in all
material respects with all such Permits, and no event (including, without
limitation, any violation of any law, rule or regulation) has occurred which
allows the revocation or termination of any such Permit or any restriction
thereon.
SECTION 4.19 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as
disclosed in SCHEDULE 4.19 hereto: (i) the operations of the Loan Parties
comply in all material respects with all applicable Environmental Laws; (ii)
the Loan Parties and all of their present facilities or operations, as well
as to the knowledge of the Responsible Officers of the Borrowers and their
subsidiaries their past facilities or operations, are not subject to any
judicial proceeding or administrative proceeding or any outstanding written
order or agreement with any governmental authority or private party
respecting (a) any Environmental Law, (b) any Remedial Work, or (c) any
Environmental Claims arising from the Release of a Contaminant into the
environment; (iii) to the best of the knowledge of the Responsible Officers
of the Loan Parties, none of their operations is the subject of any Federal
or state investigation evaluating whether any Remedial Work is needed to
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respond to a Release of any Contaminant into the environment; (iv) no Loan
Party nor, to the knowledge of the Responsible Officers of the Loan Parties, any
predecessor of any Loan Party has filed any notice under any Environmental Law
indicating past or present treatment, storage, or disposal of a Hazardous
Material or reporting a spill or Release of a Contaminant into the environment;
(v) to the best of the knowledge of the Responsible Officers of the Loan
Parties, no Loan Party has any contingent liability in connection with any
Release of any Contaminant into the environment; (vi) none of the operations of
the Loan Parties involve the generation, transportation, treatment or disposal
of Hazardous Materials, except for Hazardous Materials used in the ordinary
course of business of the Loan Parties in accordance in all material respects
with Environmental Laws; (vii) no Loan Party has disposed of any Contaminant by
placing it in or on the ground or waters of any premises owned, leased or used
by any of them and to the knowledge of the Loan Parties neither has any lessee,
prior owner, or other person; (viii) no underground storage tanks or surface
impoundments are on any property of the Loan Parties; and (ix) no Lien in favor
of any governmental authority for (A) any liability under any Environmental Law
or regulations, or (B) damages arising from or costs incurred by such
governmental authority in response to a Release of a Contaminant into the
environment, has been filed or attached to the property of the Loan Parties.
SECTION 4.20 NO CHANGE IN CREDIT CRITERIA OR COLLECTION POLICIES.
There has been no material change in credit criteria or collection policies
concerning account receivables of any of the Borrowers since December 31,
1998. All account receivables are valid, binding and enforceable obligations
of account debtors, except to the extent reserves are taken in accordance
with GAAP with respect to contractual adjustments for account receivables.
SECTION 4.21 EMPLOYEE MATTERS. Except as disclosed in SCHEDULE
4.21 hereto, (a) no Loan Party nor any of such person's employees are subject
to any collective bargaining agreement, (b) to the knowledge on the date
hereof of a Responsible Officer the Loan Parties, no petition for
certification or union election is pending with respect to the employees of
any Loan Party and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any Loan Party
and (c) there are no strikes, slowdowns, work stoppages or controversies
pending or, to the knowledge of a Responsible Officer of the Loan Parties,
threatened between any Loan Party and their respective employees, other than
employee grievances arising in the ordinary course of business none of which
could have, either individually or in the aggregate, a Material Adverse
Effect.
SECTION 4.22 YEAR 2000. To the knowledge of the Responsible
Officers of the Borrowers, the cost to the Borrowers of reprogramming and
testing of the Borrowers' and their subsidiaries' computer systems and
related equipment to permit proper functioning in and following the year 2000
(including, without limitation, reprogramming errors) will not reasonably be
expected to result in a Material Adverse Effect.
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SECTION 4.23 MANAGEMENT AGREEMENTS. Each of the Management
Agreements (other than the Administrative Service Agreements listed on
SCHEDULE III annexed hereto) entered into by any Borrower or any Guarantor
which is a direct subsidiary of a Borrower prior to the Closing Date either
satisfies the criteria set forth on SCHEDULE I annexed hereto or is
substantially in the form attached hereto as EXHIBIT J-1, J-2 or J-3.
SECTION 4.24 BANK ACCOUNTS. SCHEDULE 4.24 attached hereto sets
forth a list of all of the bank accounts of the Borrowers' and their
subsidiaries in existence as of the Closing Date. Each such bank account is
subject to a blocked account letter with the Administrative Agent (such
blocked account letter to be in form and substance satisfactory to the
Administrative Agent).
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and extend other Credits
hereunder shall be subject to the following conditions precedent.
SECTION 5.01 ALL CREDIT EVENTS. On each date on which a Credit
Event is to occur:
(a) The Administrative Agent shall have received a
notice of borrowing as required by Section 2.03 hereof or a request
for the issuance of a Letter of Credit pursuant to Section 2.17 hereof,
(b) The representations and warranties set forth in
Article IV hereof and in any documents delivered herewith, including,
without limitation, the Loan Documents, shall be true and correct in
all material respects with the same effect as though made on and as of
such date (except insofar as such representations and warranties relate
expressly to an earlier date).
(c) Each of the Borrowers shall be in compliance with
all the terms and provisions contained herein on its part to be
observed or performed and at the time of and immediately after such
Credit Event no Default or Event of Default shall have occurred and be
continuing.
(d) The Agent shall have received a certificate signed
by the Financial Officer of each of the Borrowers (i) as to the
compliance with (b) and (c) above and (ii) with respect to each
Revolving Credit Loan and each Letter of Credit, demonstrating that
after giving effect thereto the sum of the aggregate principal amount
of Revolving Credit Loans outstanding at such time PLUS the Letter of
Credit Usage outstanding at such time shall not exceed the Total
Revolving Credit Commitment.
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(e) Credits shall be extended under this Agreement and
the 1999 Credit Agreement on a pro rata basis (based on the aggregate
of the Total Revolving Credit Commitment under this Agreement and the
"Total Revolving Credit Commitment" under the 1999 Credit Agreement).
SECTION 5.02 FIRST BORROWING. The obligations of the Lenders in
respect of the first Credit Event hereunder is subject to the following
additional conditions precedent:
(a) The Lenders shall have received the favorable written
opinion of counsel for the Borrowers and each of the Guarantors and
Grantors, substantially in the form of EXHIBIT C hereto, dated the
Closing Date, addressed to the Lenders and satisfactory to the
Administrative Agent.
(b) The Lenders shall have received (i) a copy of the
certificate or articles of incorporation or constitutive documents, in
each case as amended to date, of each of the Borrowers, the Grantors
and the Guarantors, certified as of a recent date by the Secretary of
State or other appropriate official of the state of its organization,
and a certificate as to the good standing of each from such Secretary
of State or other official and from the Secretary of State or other
official of each state in which it is qualified to do business, in each
case dated as of a recent date; (ii) a certificate of the Secretary of
each Borrower, Grantor and Guarantor, dated the Closing Date and
certifying (A) that attached thereto is a true and complete copy of
such person's By-laws as in effect on the date of such certificate and
at all times since a date prior to the date of the resolution described
in item (B) below, (B) that attached thereto is a true and complete
copy of a resolution adopted by such person's Board of Directors
authorizing the execution, delivery and performance of this Agreement,
the Security Documents, the Notes, the other Loan Documents and the
Credit Events hereunder, as applicable, and that such resolution has
not been modified, rescinded or amended and is in full force and
effect, (C) that such person's certificate or articles of incorporation
or constitutive documents has not been amended since the date of the
last amendment thereto shown on the certificate of good standing
furnished pursuant to (i) above, and (D) as to the incumbency and
specimen signature of each of such person's officers executing this
Agreement, the Notes, each Security Document or any other Loan Document
delivered in connection herewith or therewith, as applicable; (iii) a
certificate of another of such person's officers as to incumbency and
signature of its Secretary; and (iv) such other documents as the
Administrative Agent or any Lender may reasonably request.
(c) The Administrative Agent shall have received a
certificate, dated the Closing Date and signed by the Financial Officer
of each Borrower, confirming
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compliance with the conditions precedent set forth in paragraphs (b)
and (c) of Section 5.01 hereof and the conditions set forth in this
Section 5.02.
(d) Each Lender shall have received its Revolving Credit
Note, each duly executed by the Borrowers, payable to its order and
otherwise complying with the provisions of Section 2.04 hereof.
(e) The Administrative Agent shall have received (i) such
amendments to, or confirmations of (as requested by the Agents), the
Security Documents existing on the Closing Date, (ii) such additional
Security Documents (as requested by the Agents, including, without
limitation, an Assignment of Contract with respect to each Management
Agreement and Shares Acquisition Agreement in effect on the Closing
Date (to the extent not previously delivered to the Administrative
Agent)), (iii) to the extent not previously delivered to the
Administrative Agent, certificates evidencing the Pledged Stock,
together with undated stock powers executed in blank, each duly
executed by the applicable Grantors and (iv) confirmations of the
Guarantees, including, without limitation, the Holdings Guarantee.
(f) The Syndication Agent shall have received certified
copies of requests for copies or information on Form UCC-11 or
certificates satisfactory to the Syndication Agent of a UCC Reporter
Service from April, 1999, listing all effective financing statements
which name as debtor DCA, or any Guarantor or any Grantor, in
California or Florida, together with copies of such financing
statements. With respect to any Liens not permitted pursuant to Section
7.01 hereof, the Syndication Agent shall have received termination
statements in form and substance satisfactory to it.
(g) Each document (including, without limitation, each
Uniform Commercial Code financing statement) required by law or
requested by the Syndication Agent to be filed, registered or recorded
in order to create in favor of the Administrative Agent for its own
benefit and for the benefit of the Lenders a first priority perfected
security interest in the Collateral acquired after the closing under
the 1999 Credit Agreement shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested. The Syndication Agent
shall have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or recordation.
(h) The Syndication Agent shall have received the results
of a search of tax and other Liens, and judgments and of the Uniform
Commercial Code filings made with respect to DCA and each Grantor from
April, 1999 in which Uniform Commercial Code filings, if any, have been
made against DCA, each Guarantor and each Grantor pursuant to paragraph
(g) above.
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(i) The Lenders and the Agents shall have received and
determined to be in form and substance satisfactory to them:
(i) the financial statements described in
Section 4.07 hereof;
(ii) evidence that the Transactions are in
compliance with all applicable laws and regulations;
(iii) evidence of payment of all fees owed to the
Administrative Agent and Syndication Agent and the Lenders by
the Borrowers under this Agreement or otherwise;
(iv) evidence that all requisite third party
consents (including, without limitation, consents with respect
to each of the Borrowers and each of the Grantors and
Guarantors) to the Transactions have been received;
(v) evidence that there has been no material
adverse change in the business, assets, operations or
financial condition of the Borrowers and subsidiaries since
December 31, 1998; and
(vi) evidence that there are no actions, suits or
proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory
authority now pending or threatened against or affecting any
Borrowers or any subsidiary thereof or any of their respective
businesses, assets or rights which involve any of the
Transactions.
(j) Each Agent shall have received and had the
opportunity to review and determine to be in form and substance
satisfactory to it, if applicable, copies of an amendment to the terms
and provisions of the Convertible Subordinated Note in form and
substance satisfactory to the Agents.
(k) Messrs. ▇▇▇▇, Scholer, Fierman, ▇▇▇▇ & Handler, LLP,
counsel to the Syndication Agent and Buchalter, Nemer, Fields &
Younger, counsel to the Administrative Agent, shall have each received
payment in full for all legal fees charged, and all costs and expenses
incurred, by such counsel through the Closing Date in connection with
the transactions contemplated under this Agreement, the Security
Documents and the other Loan Documents and instruments in connection
herewith and therewith.
(l) All legal matters in connection with the Transactions
shall be satisfactory to the Administrative Agent, the Lenders and
their respective counsel in their sole discretion.
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(m) The Borrowers shall have executed and delivered to
the Administrative Agent a disbursement authorization letter with
respect to the disbursement of the proceeds of the Credit Events made
on the Closing Date, in form and substance satisfactory to the
Administrative Agent.
(n) Each Agent shall have received such other documents
as the Lenders or such Agent or such Agent's counsel shall reasonably
deem necessary.
VI. AFFIRMATIVE COVENANTS
Each of the Borrowers covenant and agree with each Lender and each
Agent that, so long as this Agreement shall remain in effect or the principal of
or interest on any Note, any amount under any Letter of Credit or any fee,
expense or other Obligation payable hereunder or in connection with any of the
Transactions shall be unpaid, it will, and will cause each of its subsidiaries
and, with respect to Section 6.07 hereof, each ERISA Affiliate, to:
SECTION 6.01 LEGAL EXISTENCE. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
SECTION 6.02 BUSINESSES AND PROPERTIES. At all times do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect the rights, licenses, Permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses;
maintain and operate such businesses in the same general manner in which they
are presently conducted and operated; comply with all laws, rules,
regulations and governmental orders (whether Federal, state or local)
applicable to the operation of such businesses whether now in effect or
hereafter enacted (including, without limitation, all applicable laws, rules,
regulations and governmental orders relating to public and employee health
and safety and all Environmental Laws) and with any and all other applicable
laws, rules, regulations and governmental orders, the lack of compliance with
which would have a Material Adverse Effect; take all actions which may be
required to obtain, preserve, renew and extend all Permits and other
authorizations which are material to the operation of such businesses; and
at all times maintain, preserve and protect all property material to the
conduct of such businesses and keep such property in good repair, working
order and condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 6.03 INSURANCE. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers,
(b) maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies similarly situated
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and in the same or similar businesses, PROVIDED, HOWEVER, that such insurance
shall insure the property of the Borrowers against all risk of physical damage,
including, without limitation, loss by fire, explosion, theft, fraud and such
other casualties as may be reasonably satisfactory to the Administrative Agent,
but in no event at any time in an amount less than the replacement value of the
Collateral, (c) maintain in full force and effect public liability insurance
against claims for personal injury or death or property damage occurring upon,
in, about or in connection with the use of any properties owned, occupied or
controlled by any Borrowers or any of their subsidiaries, in such amount as the
Administrative Agent shall reasonably deem necessary, (d) maintain business
interruption insurance to such extent as is customary with companies similarly
situated and in the same or similar businesses, (e) cause each Affiliated Dental
Practice to maintain such medical malpractice insurance as is customary for
similar dental practices and (f) maintain such other insurance as may be
required by law or as may be reasonably requested by the Administrative Agent
for purposes of assuring compliance with this Section 6.03. All insurance
covering tangible personal property subject to a Lien in favor of the
Administrative Agent for its own benefit and for the benefit of the Lenders
granted pursuant to the Security Documents shall provide that, in the case of
each separate loss the full amount of insurance proceeds shall be payable to the
Administrative Agent and shall further provide for at least 30 days' prior
written notice to the Administrative Agent of the cancellation or substantial
modification thereof.
SECTION 6.04 TAXES. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon such
properties or any part thereof.
SECTION 6.05 FINANCIAL STATEMENTS, REPORTS, ETC. Furnish to the
Administrative Agent, with copies for each of the Lenders:
(a) within 105 days after the end of each Fiscal Year, (i)
Consolidated balance sheets and Consolidated income statements showing
the financial condition of Holdings and its subsidiaries as of the
close of such Fiscal Year and the results of their operations during
such year, (ii) a Consolidated statement of shareholders' equity and a
Consolidated statement of cash flow, as of the close of such Fiscal
Year, comparing such financial condition and results of operations to
such financial condition and results of operations for the comparable
period during the immediately preceding Fiscal Year, all the foregoing
financial statements to be audited by independent public accountants
acceptable to the Administrative Agent (which report shall not contain
any qualification except with respect to new accounting principles
mandated by the Financial Accounting Standards Board) and to be in form
and substance acceptable to the Administrative Agent, (iii)
consolidating income statements by market place as of the close of such
Fiscal Year, such consolidating income statements to be in form and
substance
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acceptable to the Agents and (iv) consolidating balance sheets, income
statements and statements of cash flows showing the financial
condition of Holdings, Dental Service and DCA as of the close of such
Fiscal Year and the results of such person's operations during such
year, comparing such financial condition and results of operations to
such financial condition and results of operations for the comparable
period during the immediately preceding Fiscal Year, in the case of
clauses (iii) and (iv), prepared and certified by the Financial
Officer of the Borrowers as having been prepared in accordance with
GAAP and, with respect to clause (iv), as presenting fairly the
financial condition and results of operations of the applicable
person;
(b) within 45 days after the end of each fiscal quarter of
Holdings, (i) unaudited Consolidated balance sheets and Consolidated
income statements showing the financial condition and results of
operations of Holdings and its subsidiaries as of the end of each such
quarter, (ii) a Consolidated statement of shareholders' equity, (iii) a
Consolidated statement of cash flow, in each case for the fiscal
quarter just ended and for the period commencing at the end of the
immediately preceding Fiscal Year and ending with the last day of such
quarter, and comparing such financial condition and results of
operations to the projections for the applicable period provided under
paragraph (g) below and to the results for the comparable period during
the immediately preceding Fiscal Year, (iv) consolidating income
statements by market place as of the end of each such fiscal quarter,
such consolidating income statements to be in form and substance
acceptable to the Agents and shall reconcile with the Consolidated
income statements delivered pursuant to clause (i) of this paragraph
(b) and (v) "same practice" performance comparative information in form
and substance satisfactory to the Administrative Agent;
(c) within (x) 30 days after the end of each month other than
for any month coinciding with the end of a fiscal quarter and (y)
within 45 days after the end of each month coinciding with the end of a
fiscal quarter, (i) unaudited Consolidated balance sheets and income
statements showing the financial condition and results of operations of
Holdings and its subsidiaries as of the end of each such month, (ii) a
Consolidated statement of shareholders' equity, (iii) a Consolidated
statement of cash flow, in each case for the month just ended and for
the period commencing at the end of the immediately preceding Fiscal
Year and ending with the last day of such month, and comparing such
financial condition and results of operations to the projections for
the applicable period provided under paragraph (g) below and to the
results for the comparable period during the immediately preceding
Fiscal Year and (iv) income statements by market place as of the end of
each such month, such financial statements to be in form and substance
satisfactory to the Agents, in each case prepared and certified by the
Financial Officer of the Borrowers as presenting fairly the financial
condition and results of operations of Holdings and its
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subsidiaries and as having been prepared in accordance with GAAP, in
each case subject to the absence of footnotes and normal year-end
audit adjustments;
(d) promptly after the same become publicly available, copies
of such registration statements, annual, periodic and other reports,
and such proxy statements and other information, if any, as shall be
filed by the Borrowers or any of their subsidiaries with the Securities
and Exchange Commission pursuant to the requirements of the Securities
Act of 1933 or the Securities Exchange Act of 1934;
(e) concurrently with any delivery under (a) or (b) above, (i)
a certificate of the Financial Officer of each of the Borrowers, which
certificate shall certify that to the best of his or her knowledge no
Default or Event of Default has occurred (including (i) calculations
demonstrating compliance, as of the dates of the financial statements
being furnished, with the covenants set forth in Sections 7.07, 7.08,
7.09, 7.10 and 7.11 hereof and (ii) appropriate schedules as may be
requested by the Administrative Agent in support of such calculations,
(such schedules to be in substantially the form of EXHIBIT L annexed
hereto) and, if such a Default or Event of Default has occurred,
specifying the nature and extent thereof and any corrective action
taken or proposed to be taken with respect thereto and, if such a
Default or Event of Default has occurred, specifying the nature and
extent thereof and any corrective action taken or proposed to be taken
with respect thereto, and shall in addition certify that in the course
of preparing the audit and the certificate referred to herein, such
accountants have not become aware of the occurrence of any other
Default or Event of Default and, if such a Default or Event of Default
has occurred, specifying the nature thereof; PROVIDED, HOWEVER, that
any certificate delivered concurrently with (a) above shall be signed
by the Financial Officer of a Borrower and (ii) an update to the
organizational chart for Holdings and its subsidiaries, evidencing any
acquisitions made during the applicable fiscal quarter;
(f) concurrently with any delivery under (a) above, any
related management letter prepared by the independent public
accountants who reported on the financial statements delivered under
(a) above, with respect to the internal audit and financial controls of
any of the Borrowers and their subsidiaries;
(g) within 30 days after the beginning of each Fiscal Year, a
summary of business plans and financial operation projections
(including, without limitation, with respect to Capital Expenditures)
for the Borrowers and their respective subsidiaries for such Fiscal
Year (including monthly balance sheets, statements of income and of
cash flow) and annual projections through the Final Maturity Date
prepared by management and in form, substance and detail (including,
without limitation, principal assumptions) satisfactory to the
Administrative Agent;
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(h) as soon as practicable, copies of all reports, forms,
filings, loan documents and financial information submitted to
governmental agencies and/or its shareholders.
(i) immediately upon becoming aware thereof, notice to the
Administrative Agent of the breach by any party of any material
agreement with any of the Borrowers or of any "Default" or "Event of
Default" under the 1999 Credit Agreement;
(j) within 30 days of the closing of any Permitted
Acquisition, copies of all documents related thereto and which were not
previously required to be delivered to the Administrative Agent
pursuant to the terms of this Agreement; and
(k) such other information as the Administrative Agent or any
Lender may reasonably request.
SECTION 6.06 LITIGATION AND OTHER NOTICES. Give the Administrative
Agent prompt written notice of the following:
(a) the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint
prohibiting, or having the effect of prohibiting, the making of the
Loans or occurrence of other Credit Events, or invalidating, or having
the effect of invalidating, any provision of this Agreement, the Notes
or the other Loan Documents, or the initiation of any litigation or
similar proceeding seeking any such injunction, order, decision or
other restraint;
(b) the filing or commencement of any action, suit or
proceeding against any Borrowers or any of their subsidiaries or, to
the extent known by a Responsible Officer of a Borrower, against any
Affiliated Dental Practice, whether at law or in equity or by or before
any court or any Federal, state, municipal or other governmental agency
or authority, (i) which is material and is brought by or on behalf of
any governmental agency or authority, or in which injunctive or other
equitable relief is sought or (ii) as to which it is probable (within
the meaning of Statement of Financial Accounting Standards No. 5) that
there will be an adverse determination and which, if adversely
determined, would (A) reasonably be expected to result in liability of
one or more Borrowers or a subsidiary thereof or an Affiliated Dental
Practice in an aggregate amount of $200,000 or more, not reimbursable
by insurance or (B) materially impair the right of any Borrowers or a
subsidiary thereof to perform its obligations under this Agreement, any
Note or any other Loan Document to which it is a party;
(c) any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken
with respect thereto; and
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(d) any development in the business or affairs of any
Borrowers or any of their subsidiaries which has had or which is likely
to have, in the reasonable judgment of any Responsible Officer of such
Borrower, a Material Adverse Effect.
SECTION 6.07 ERISA. (a) Pay and discharge promptly any liability
imposed upon it pursuant to the provisions of Title IV of ERISA; PROVIDED,
HOWEVER, that neither the Borrowers nor any ERISA Affiliate shall be required to
pay any such liability if (1) the amount, applicability or validity thereof
shall be diligently contested in good faith by appropriate proceedings, and (2)
such person shall have set aside on its books reserves which, in the opinion of
the independent certified public accountants of such person, are adequate with
respect thereto.
(b) Deliver to the Administrative Agent, promptly, and in any event
within 5 days, after (i) the occurrence of any Reportable Event, a copy of the
materials that are filed with the PBGC, or the materials that would have been
required to be filed if the 30-day notice requirement to the PBGC was not
waived, (ii) any Borrowers or any ERISA Affiliate or an administrator of any
Pension Plan files with participants, beneficiaries or the PBGC a notice of
intent to terminate any such Plan, a copy of any such notice, (iii) the receipt
of notice by any Borrowers or any ERISA Affiliate or an administrator of any
Pension Plan from the PBGC of the PBGC's intention to terminate any Pension Plan
or to appoint a trustee to administer any such Plan, a copy of such notice, (iv)
the filing thereof with the Internal Revenue Service, copies of each annual
report that is filed on Treasury Form 5500 with respect to any Plan, together
with certified financial statements (if any) for the Plan and any actuarial
statements on Schedule B to such Form 5500, (v) any Borrowers or any ERISA
Affiliate knows or has reason to know of any event or condition which might
constitute grounds under the provisions of Section 4042 of ERISA for the
termination of (or the appointment of a trustee to administer) any Pension Plan,
an explanation of such event or condition, (vi) the receipt by any Borrowers or
any ERISA Affiliate of an assessment of withdrawal liability under Section 4201
of ERISA from a Multiemployer Plan, a copy of such assessment, (vii) any
Borrowers or any ERISA Affiliate knows or has reason to know of any event or
condition which might cause any one of them to incur a liability under Section
4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or 4971 of the Code, an
explanation of such event or condition, and (viii) any Borrowers or any ERISA
Affiliate knows or has reason to know that an application is to be, or has been,
made to the Secretary of the Treasury for a waiver of the minimum funding
standard under the provisions of Section 412 of the Code, a copy of such
application, and in each case described in clauses (i) through (iii) and (v)
through (vii) together with a statement signed by the Financial Officer setting
forth details as to such Reportable Event, notice, event or condition and the
action which such Borrowers or such ERISA Affiliate proposes to take with
respect thereto.
SECTION 6.08 MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS; RIGHT TO AUDIT. Maintain financial records in accordance with
accepted
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financial practices and, upon reasonable notice (which may be telephonic), at
all reasonable times and as often as any Lender may request, permit any
authorized representative designated by such Lender to visit and inspect the
properties and financial records of the Borrowers and their subsidiaries and to
make extracts from such financial records at the Borrowers' expense, and permit
any authorized representative designated by such Lender to discuss the affairs,
finances and condition of the Borrowers and their subsidiaries with the
appropriate Financial Officer and such other officers as the Borrowers shall
deem appropriate and the Borrowers' independent public accountants, as
applicable. The Administrative Agent agrees that it shall schedule any meeting
with any such independent public accountant through the Borrowers and a
Responsible Officer of one or more Borrowers shall have the right to be present
at any such meeting. At the Borrowers' expense, the Administrative Agent shall
have the right to audit, as often as it may request, the existence and condition
of the accounts receivables, inventory, books and records of the Borrowers and
their subsidiaries and to review their compliance with the terms and conditions
of this Agreement and the other Loan Documents.
SECTION 6.09 USE OF PROCEEDS. Use the proceeds of the Credit Events
only for the purposes set forth in Section 4.14 hereof.
SECTION 6.10 FISCAL YEAR-END. Cause its Fiscal Year to end on December
31 in each year.
SECTION 6.11 FURTHER ASSURANCES. Execute any and all further documents
and take all further actions which may be required under applicable law, or
which the Administrative Agent may reasonably request (including any actions
necessary to obtain the consents contemplated in Article XIII hereof), to
grant, preserve, protect and perfect the first priority security interest
created by the Security Documents in the Collateral.
SECTION 6.12 ADDITIONAL GRANTORS AND GUARANTORS. Promptly inform the
Administrative Agent of the creation or acquisition of any direct or indirect
subsidiary (subject to the provisions of Section 7.06 hereof) and cause each
direct or indirect subsidiary not in existence on the date hereof to enter into
a Guarantee in form and substance satisfactory to the Administrative Agent, and
to execute the Security Documents, as applicable (PROVIDED, HOWEVER, the
Succession Agreements listed on SCHEDULE IV annexed hereto and the
Administrative Services Agreements between Serra Park and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ D.D.S.,
Dental Corporation are not required to be assigned to the Administrative Agent
until each is replaced in accordance with Section 6.19 hereof), as a Grantor,
and cause the direct parent of each such subsidiary to pledge all of the capital
stock of such subsidiary pursuant to the Pledge Agreement and cause each such
subsidiary to pledge its accounts receivable and all other assets pursuant to
the Security Agreement. In connection with the foregoing, to the extent that any
such subsidiary is acquired or created in connection with a Permitted
Acquisition, each of such subsidiary and its direct parent shall sign an Joinder
Agreement. Promptly inform the Administrative
74
Agent of the acquisition by any Loan Party of 51% or more of the equity
interests of Celebration and cause Celebration, at such time, to enter into a
Guarantee in form and substance satisfactory to the Administrative Agent, and to
execute the Security Documents, as applicable, as a Grantor, and cause the
direct parent of Celebration to pledge all of the equity interests in
Celebration owned by such parent pursuant to the Pledge Agreement and cause
Celebration to pledge its accounts receivable and all other assets pursuant to
the Security Agreement.
SECTION 6.13 ENVIRONMENTAL LAWS. (a) Comply, and cause each of their
subsidiaries to comply, in all material respects with the provisions of all
Environmental Laws, and shall keep their properties and the properties of their
subsidiaries free of any Lien imposed pursuant to any Environmental Law. The
Borrowers shall not cause or suffer or permit, and shall not suffer or permit
any of their subsidiaries to cause or suffer or permit, the property of the
Borrowers or their subsidiaries to be used for the generation, production,
processing, handling, storage, transporting or disposal of any Hazardous
Material, except for Hazardous Materials used in the ordinary course of business
of the Borrowers and disclosed in SCHEDULE 6.13 hereto, in which case such
Hazardous Materials shall be used, stored, generated, treated and disposed of
only in compliance, in all material respects, with Environmental Law.
(b) Supply to the Administrative Agent copies of all submissions by the
Borrowers or any of their subsidiaries to any governmental body and of the
reports of all environmental audits and of all other environmental tests,
studies or assessments (including the data derived from any sampling or survey
of asbestos, soil, or subsurface or other materials or conditions) that may be
conducted or performed (by or on behalf of the Borrowers or any of their
subsidiaries) on or regarding the properties owned, operated, leased or occupied
by the Borrowers or any of their subsidiaries or regarding any conditions that
might have been affected by Hazardous Materials on or Released or removed from
such properties. The Borrowers shall also permit and authorize, and shall cause
their subsidiaries to permit and authorize, the consultants, attorneys or other
persons that prepare such submissions or reports or perform such audits, tests,
studies or assessments to discuss such submissions, reports or audits with the
Administrative Agent and the Lenders.
(c) Promptly (and in no event more than two (2) Business Days after the
Borrowers become aware or are otherwise informed of such event) provide oral and
written notice to the Administrative Agent upon the happening of any of the
following:
(i) any Borrower, any subsidiary of any Borrower, or any
tenant or other occupant of any property of such Borrowers or such
subsidiary receives written notice of any claim, complaint, charge or
notice of a violation or potential violation of any Environmental Law;
75
(ii) there has been a spill or other Release of Hazardous
Materials upon, under or about or affecting any of the properties
owned, operated, leased or occupied by any Borrowers or any subsidiary
of any Borrowers in amounts that may have to be reported under
Environmental Law, or Hazardous Materials at levels or in amounts that
may have to be reported, remedied or responded to under Environmental
Law are detected on or in the soil or groundwater;
(iii) any Borrowers or any subsidiary of any Borrowers are or
may be liable any costs of cleaning up or otherwise responding to a
Release of Hazardous Materials;
(iv) any part of the properties owned, operated, leased or
occupied by any Borrowers or any subsidiary of any Borrowers are or may
be subject to a Lien under any Environmental Law; or
(v) any Borrowers or any subsidiary of any Borrowers
undertakes any Remedial Work with respect to any Hazardous Materials.
(d) Without in anyway limiting the scope of Section 11.04(c) and in
addition to any obligations thereunder, each of the Borrowers hereby indemnifies
and agrees to hold the Administrative Agent and the Lenders harmless from and
against any liability, loss, damage, suit, action or proceeding arising out of
its business or the business of its subsidiaries pertaining to Hazardous
Materials, including, but not limited to, claims of any governmental body or any
third person arising under any Environmental Law or under tort, contract or
common law. To the extent laws of the United States or any applicable state or
local law in which property owned, operated, leased or occupied by any Borrowers
or any subsidiary of any Borrowers are located provide that a Lien upon such
property of such Borrowers or such subsidiary may be obtained for the removal of
Hazardous Materials which have been or may be Released, no later than sixty days
after notice that a Release has occurred is given by the Administrative Agent to
such Borrowers or such subsidiary, such Borrowers or such subsidiary shall
deliver to the Administrative Agent a report issued by a qualified third party
engineer assessing the existence and extent of any Hazardous Materials located
upon or beneath the specified property. To the extent any Hazardous Materials
located therein or thereunder either subject the property to Lien or require
removal to safeguard the health of any persons, the removal thereof shall be an
affirmative covenant of the Borrowers hereunder.
(e) In the event that any Remedial Work is required to be performed by
any Borrowers or any subsidiary of any Borrowers under any applicable
Environmental Law, any judicial order, or by any governmental entity, such
Borrowers or such subsidiary shall commence all such Remedial Work at or prior
to the time required therefor under such Environmental Law or applicable
judicial orders and thereafter diligently prosecute to
76
completion all such Remedial Work in accordance with and within the time allowed
under such applicable Environmental Laws or judicial orders.
SECTION 6.14 PAY OBLIGATIONS TO LENDERS AND PERFORM OTHER COVENANTS.
(a) Make full and timely payment of the Obligations, whether now existing or
hereafter arising, (b) duly comply with all the terms and covenants contained in
this Agreement (including, without limitation, the borrowing limitations and
mandatory prepayments in accordance with Article II hereof) and in each of the
other Loan Documents, all at the times and places and in the manner set forth
therein, and (c) except for the filing of continuation statements and the making
of other filings by the Administrative Agent as secured party or assignee, at
all times take all actions necessary to maintain the Liens and security
interests provided for under or pursuant to this Agreement and the Security
Documents as valid and perfected first Liens on the property intended to be
covered thereby (subject only to Liens expressly permitted hereunder) and supply
all information to the Administrative Agent necessary for such maintenance.
SECTION 6.15 MAINTAIN OPERATING ACCOUNTS. Maintain all of its operating
accounts and cash management arrangements with the Administrative Agent or
pursuant to arrangements consented to in writing by the Administrative Agent.
SECTION 6.16 LIFE INSURANCE. Maintain in full force and effect, at all
times, the key man life insurance policies on ▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
Amend any assignments presently in effect to the Administrative Agent so that
there shall be assigned to the Administrative Agent for its own benefit and for
the benefit of the Lenders as security for the Obligations all monies payable
under or in respect of such insurance policy.
SECTION 6.17 YEAR 2000. Take all actions necessary to permit the proper
functioning, in and following the year 2000 of (i) the Borrowers' computer
systems and (ii) equipment containing embedded microchips (including systems and
equipment supplied by others or with which Borrowers' systems interface and
which are within the control of the Borrowers) and the testing of all such
systems and equipment, as so programmed, unless the failure to take such actions
would not reasonably be expected to have a Material Adverse Effect.
SECTION 6.18 ASSIGNMENT OF CONTRACTS. In connection with each Permitted
Acquisition, cause the applicable Loan Party to execute and deliver to the
Administrative Agent an Assignment of Contract with respect to the related
Management Agreement, Purchase Agreement, Shares Acquisition Agreement or
Purchase Agreement, as applicable PROVIDED, HOWEVER, the Succession Agreement
listed on SCHEDULE IV annexed hereto and the Administrative Services Agreement
between Serra Park and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ D.D.S., Dental Corporation are not
required to be assigned to the Administrative Agent until each has been replaced
in accordance with Section 6.19 hereof.
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SECTION 6.19 RE-EXECUTION OF SERRA PARK MANAGEMENT AGREEMENT. Cause
Serra Park to enter into a Management Agreement with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ D.D.S.,
Dental Corporation and have its rights under all such Management Agreements
assigned to the Administrative Agent pursuant to an Assignment of Contracts no
later than the 15th Business Day prior to the related Affiliated Dental Practice
resuming operations.
SECTION 6.20 GOOD STANDING. Within 30 days of the Closing Date cause
each entity described on SCHEDULE 4.01 as not in good standing in any
jurisdiction to be in good standing in each jurisdiction so listed.
SECTION 6.21 LANDLORD WAIVERS; UCC AMENDMENTS. Within 45 days of the
relocation of any of the Borrowers or Guarantors, obtain a landlord waiver in
form and substance reasonably acceptable to the Administrative Agent with
respect to such location and within five (5) Business Days after such relocation
file, or cause to be filed any and all amendments to Uniform Commercial Code
financing statements necessary to reflect such relocation of the Borrowers and
the Guarantors.
SECTION 6.22 PURCHASE AGREEMENTS. Upon the request of the
Administrative Agent, enforce any indemnification rights which might arise under
any Purchase Agreement to the extent the related loss, if not indemnified, would
be material.
SECTION 6.23 INTENTIONALLY OMITTED.
SECTION 6.24 CASH MANAGEMENT ARRANGEMENTS. Within 60 days of the
Closing Date, confirm to the Administrative Agent that each of the banks holding
accounts into which the Affiliated Dental Practices' cash receipts are deposited
has been directed to sweep the amounts on deposit in such accounts to an account
maintained at bank reasonably acceptable to the Administrative Agent; PROVIDED,
HOWEVER, that to the extent that such bank is a bank other than the
Administrative Agent, such bank enter into a blocked account letter with the
Administrative Agent (such blocked account letter to be in form and substance
satisfactory to the Administrative Agent); PROVIDED, FURTHER, that to the extent
that the Administrative Agent notifies the Borrowers that any of such bank will
not enter into a blocked account letter, the Borrowers shall, within 30 days of
such notice, redirect each of applicable banks holding the accounts into which
the Affiliated Dental Practices' cash receipts are deposited to sweep the
amounts on deposit in such accounts to an account maintained with the
Administrative Agent or to an account which is subject to blocked account letter
acceptable to the Administrative Agent.
SECTION 6.25 ADDITIONAL CAPITAL. No later than December 31, 2000, raise
not less than $30,000,000 net to Holdings from the sale of capital stock or the
issuance of Subordinated Indebtedness, such sale or issuance to be on terms and
conditions acceptable to the Required Lenders, the proceeds of which shall be
applied in accordance with Section 2.09(g) hereof.
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VII. NEGATIVE COVENANTS
Each of the Borrowers covenant and agree with each Lender and each
Agent that, so long as this Agreement shall remain in effect or the principal of
or interest on any Note, any amount under any Letter of Credit, or any fee,
expense or other Obligation payable hereunder or in connection with any of the
Transactions shall be unpaid, it will not and will not cause or permit any of
their subsidiaries and, in the case of Section 7.15 hereof, any ERISA Affiliate
to, either directly or indirectly:
SECTION 7.01 LIENS. Incur, create, assume or permit to exist any Lien
on any of its property or assets (including the stock of any direct or indirect
subsidiary), whether owned at the date hereof or hereafter acquired, or assign
or convey any rights to or security interests in any future revenues, except:
(a) Liens incurred and pledges and deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance, old-age pensions and other social security
benefits (not including any lien described in Section 412(m) of the
Code);
(b) Liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendors' liens and other similar liens,
incurred in good faith in the ordinary course of business and securing
obligations which are not overdue for a period of more than 15 days or
which are being contested in good faith by appropriate proceedings as
to which any Borrowers or any of their subsidiaries, as the case may
be, shall, to the extent required by GAAP, have set aside on its books
adequate reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as to
which adequate reserves have been established in accordance with GAAP;
PROVIDED, HOWEVER, that in no event shall the aggregate amount of such
reserves be less than the aggregate amount secured by such Liens;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other
encumbrances incurred, created, assumed or permitted to exist and
arising by, through or under a landlord or owner of the leased
property, with or without consent of the lessee) which do not in the
aggregate materially detract from the value of its property or assets
or materially impair the use thereof in the operation of its business;
79
(e) Liens upon any equipment acquired through the purchase or
lease by any Borrowers or any of their subsidiaries which are created
or incurred contemporaneously with such acquisition to secure or
provide for the payment of any part of the purchase price of, or lease
payments on, such equipment (but no other amounts and not in excess of
the purchase price or lease payments); PROVIDED, HOWEVER, that any such
Lien shall not apply to any other property of the Borrowers or any of
their subsidiaries; and PROVIDED, FURTHER, that after giving effect to
such purchase or lease, compliance is maintained with Section 7.07
hereof; PROVIDED, FURTHER, that the aggregate outstanding amount of
any such Liens shall not exceed $5,000,000 at any time outstanding;
(f) Liens existing on the date of this Agreement and set forth
in SCHEDULE 7.01 annexed hereto but not the extension, renewal or
refunding of the Indebtedness secured thereby;
(g) Liens created in favor of the Administrative Agent for its
own benefit and the benefit of the Lenders under this Agreement and the
"Lenders" under the 1999 Credit Agreement on a pro rata, pari passu
basis;
(h) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of
business; or
(i) Liens granted by any Borrower or any Guarantor other than
Holdings which is a direct subsidiary of one of the Borrowers in
connection with a Permitted Acquisition made by a Borrower or any such
Guarantor to secure seller notes issued in connection with such
Permitted Acquisition.
SECTION 7.02 SALE AND LEASE-BACK TRANSACTIONS. Enter into any
arrangement, directly or indirectly, with any person whereby any Borrowers or
any of their subsidiaries shall sell or transfer any property, real or personal,
and used or useful in its business, whether now owned or hereafter acquired, and
thereafter rent or lease such property or other property which such Borrowers or
such subsidiary intends to use for substantially the same purpose or purposes as
the property being sold or transferred.
SECTION 7.03 INDEBTEDNESS. Incur, create, assume or permit to exist any
Indebtedness other than (i) Indebtedness secured by Liens permitted under
SECTIONS 7.01 (f), (ii) Indebtedness (including, without limitation, Guarantees)
existing on the date hereof and listed in SCHEDULE 7.03 annexed hereto, but not
the extension, renewal or refunding thereof, (iii) Indebtedness incurred
hereunder (which may be increased to $30,000,000) and Indebtedness under the
1999 Credit Agreement, (iv) Indebtedness to trade creditors incurred in the
ordinary course of business, (v) Guarantees constituting the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
80
business, (vi) Guarantees of the Obligations, (vii) purchase money Indebtedness
to the extent permitted by Sections 7.01 (e) and 7.07 hereof, (viii)
Subordinated Indebtedness, (ix) earn-out liabilities incurred in connection with
Permitted Acquisitions and (x) Guarantees of seller notes issued in connection
with a Permitted Acquisition made by any Borrower or any Guarantor (other than
Holdings) which is a direct subsidiary of one of the Borrowers.
SECTION 7.04 DIVIDENDS, DISTRIBUTIONS AND PAYMENTS. Declare or pay,
directly and indirectly, any cash dividends or make any other distribution,
whether in cash, property, securities or a combination thereof, with respect to
(whether by reduction of capital or otherwise) any shares of its capital stock
or directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any subsidiary to purchase or acquire) any shares of any class
of its capital stock or set aside any amount for any such purpose; PROVIDED,
HOWEVER, that the Borrowers may pay Preferred Dividends so long as no Default or
Event of Default shall have occurred and be continuing at such time or shall
occur as a result of such payment; PROVIDED, FURTHER, that a Guarantor may pay
dividends to its immediate parent so long as such parent is a Guarantor or a
Borrower and so long as no Default or Event of Default shall have occurred and
be continuing at such time or shall occur as a result of such payment; PROVIDED,
HOWEVER, that the Borrowers may pay dividends to Holdings, so long as no Default
or Event of Default shall have occurred and be continuing at such time or shall
occur as a result of such payment, for the purpose of enabling Holdings to:
(i) make regularly scheduled payments of interest under the
Subordinated Indebtedness of Holdings incurred in connection with the
exchange (to the extent permitted by the terms of this Agreement) of
the Convertible Subordinated Notes; PROVIDED, that in no event shall
the amount distributed to Holdings pursuant to this clause exceed the
amount of such scheduled payment of interest;
(ii) repurchase preferred stock of Holdings in accordance with
the terms and provisions of its certificate of incorporation (as in
effect on the Closing Date); PROVIDED, that in no event shall the
amount distributed to Holdings pursuant to this clause exceed $100 in
the aggregate; and
(iii) repurchase common stock of Holdings; PROVIDED, that in
no event shall the amount distributed to Holdings pursuant to this
clause exceed $1,444,276 in the aggregate.
SECTION 7.05 CONSOLIDATIONS, MERGERS AND SALES OF ASSETS. Consolidate
with or merge into any other person, or sell, lease, transfer or assign to any
persons or otherwise dispose of (whether in one transaction or a series of
transactions) any portion of its assets (whether now owned or hereafter
acquired), or sell any of its inventory, other than in the normal course of
business, or permit another person to merge into it, or acquire
81
all or substantially all the capital stock or assets of any other person, other
than Permitted Acquisitions and Permitted De Novo Capital Expenditures.
SECTION 7.06 INVESTMENTS. Own, purchase or acquire any stock,
obligations, assets (not in the ordinary course of business) or securities of,
or any interest in, or make any capital contribution or loan or advance to, any
other person, or make any other investments, except:
(a) certificates of deposit in dollars of any commercial banks
registered to do business in any state of the United States (i) having
capital and surplus in excess of $1,000,000,000 and (ii) whose
long-term debt rating is at least investment grade as determined by
either Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service,
Inc.;
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith and
credit of the United States;
(c) investments in money market mutual funds having assets in
excess of $2,500,000,000;
(d) commercial paper at the time of acquisition having the
highest rating obtainable from either Standard & Poor's Ratings Group
or ▇▇▇▇▇'▇ Investors Service, Inc.,
(e) federally tax exempt securities rated A or better by
either Standard & Poor's Ratings Group or ▇▇▇▇▇'▇ Investors Service,
Inc.;
(f) investments in the stock of any subsidiary existing on the
Closing Date, but not any additional investments therein;
(g) Permitted De Novo Capital Expenditures;
(h) Permitted Acquisitions;
(i) loans or advances by a Borrower to a Guarantor (other than
Holdings), PROVIDED, that such loans or advances are evidenced by a
promissory note substantially in the form of Exhibit P annexed hereto
or otherwise in form and substance satisfactory to the Administrative
Agent and such notes are pledged to the Administrative Agent (for its
benefit and for the benefit of the Lenders) pursuant to the Pledge
Agreement;
(j) loans or advances by a Borrower to an Affiliated Dental
Practice (PROVIDED, HOWEVER, that no loans or advances shall be made to
an Affiliated Dental
82
Practice listed on SCHEDULE V annexed hereto in excess of the monthly
cash receipts for such entity until such time that such entity has
complied with Section 6.19 hereof), made in the ordinary course of
business to fund operating expenses in accordance with the terms of
the related Management Agreement;
(k) loans or advances by a Borrower to Dedicated Dental, made
in the ordinary course of business to fund operating expenses; and
(l) loans or advances by a Borrower to a subsidiary (other
than a Guarantor) which is in the Dental Insurance Business, made in
the ordinary course of business to fund operating expenses; PROVIDED
that the stock of such subsidiary is pledged to the Administrative
Agent pursuant to the terms of the Pledge Agreement;
PROVIDED that, in each case mentioned in (a), (b), (d) and (e) above, such
obligations shall mature not more than one year from the date of acquisition
thereof.
SECTION 7.07 CAPITAL EXPENDITURES. Commencing with the fiscal quarter
ending March 31, 2000, permit the aggregate amount of payments made for Capital
Expenditures and De Novo Capital Expenditures, including Capitalized Lease
Obligations and Indebtedness secured by Liens permitted under Section 7.01 (e)
hereof, for the four fiscal quarter period and for each four fiscal quarter
period thereafter, to exceed 6% of the Borrowers' and their subsidiaries' net
patient revenues for such period. Upon the written consent of the Required
Lenders, the foregoing limitation may be increased to an amount not in excess of
8% of the Borrowers' and their subsidiaries' net patient revenues for any such
period.
SECTION 7.08 NET WORTH. Permit the Net Worth of Holdings and its
subsidiaries (on a Consolidated basis) at any time to be less than the sum of
(i)(x) the Net Worth of Holdings and its subsidiaries (on a Consolidated basis)
on March 31, 1999 MINUS (y) $750,000, PLUS (ii) 100% of extraordinary gains
arising after March 31, 1999 through the date of determination, PLUS (iii) 100%
of the net proceeds received by Holdings after March 31, 1999 through the date
of determination from any sale of common stock of Holdings, PLUS (iv) 100% of
the value of any capital stock issued by Holdings as consideration in connection
with any Permitted Acquisitions occurring after March 31, 1999 through the date
of determination PLUS (v) 70% of the positive Net Income of Holdings and its
subsidiaries (on a Consolidated basis) for the period commencing on March 31,
1999 through and including the date of determination.
SECTION 7.09 LEVERAGE RATIO: INTEREST LEVERAGE RATIO. (a) LEVERAGE
RATIO. Permit the Leverage Ratio of Holdings and its subsidiaries on a
Consolidated basis at the end of any fiscal quarter to be greater than the
respective amounts set forth below opposite such dates:
83
Quarter Ending Ratio
-------------- -----
December 31, 1999, March 3.75:1.00
31, 2000 and June 30,
2000
September 30, 2000, 3.25:1.00
December 31, 2000, March
31, 2001, June 30, 2001
and September 30, 2001
December 31, 2001 and 3.00:1.00
March 31, 2002
June 30, 2002 and 2.50:1.00
September 30, 2002
December 31, 2002 and 2.25:1.00
March 31, 2003
Each June 30, September 2.00:1.00;
30, December 31 and
March 31 thereafter
(b) INTEREST LEVERAGE RATIO. Permit the Interest Leverage Ratio of
Holdings and its subsidiaries on a Consolidated basis at the end of any fiscal
quarter to be greater than the respective amounts set forth below opposite such
dates:
Quarter Ending Ratio
-------------- -----
December 31, 1999, March 4.75:1.00
31, 2000 and June 30,
2000
September 30, 2000, 4.25:1.00
December 31, 2000, March
31, 2001, June 30, 2001
and September 30, 2001
December 31, 2001 and 4.00:1.00
March 31, 2002
June 30, 2002 and 3.50:1.00
September 30, 2002
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December 31, 2002 and 3.25:1.00
March 31, 2003
Each June 30, September 3.00:1.00;
30, December 31 and
March 31 thereafter
SECTION 7.10 INTEREST COVERAGE RATIOS. (a) Commencing with the fiscal
quarter ending December 31, 1999, permit the ratio for each four fiscal quarter
period, of (i) EBITDA of Holdings and its subsidiaries on a Consolidated basis
for such period to (ii) the sum of (x) Cash Interest Expense of Holdings and its
subsidiaries on a Consolidated basis for such period PLUS (y) the aggregate
amount of all Preferred Dividends paid in cash during such period to be less
than 3.00:1.00 for the four quarter periods ending December 31, 1999 and March
31, 2000, 2.75:1.00 for the four quarter periods ending June 30, 2000,
September 30, 2000 and December 31, 2000 and 3.00:1.00 at the end of each four
quarter period thereafter.
(b) Commencing with the fiscal quarter ending December 31, 1999, permit
the ratio for each four fiscal quarter period, of (i) the sum of (x) EBITDA of
Holdings and its subsidiaries on a Consolidated basis for such period MINUS (y)
the aggregate amount of all Maintenance Capital Expenditures made by the
Borrowers and their subsidiaries during such period to (ii) the sum of (x) Cash
Interest Expense of Holdings and its subsidiaries on a Consolidated basis for
such period PLUS (y) the aggregate amount of all Preferred Dividends paid in
cash during such period to be less than 2.50:1.00 for the four quarter periods
ending December 31, 1999 and March 31, 2000, 2.25:1.00 for the four quarter
periods ending June 30, 2000, September 30, 2000 and December 31, 2000 and
2.50:1.00 at the end of each four quarter period thereafter.
SECTION 7.11 FIXED CHARGE RATIO. Commencing with the fiscal quarter
ending June 30, 2000, permit the Fixed Charge Coverage Ratio of Holdings and its
subsidiaries on a Consolidated basis for each one fiscal quarter period (in the
case of the fiscal quarter ending June 30, 2000), two fiscal quarter period (in
the case of the fiscal quarter ending September 30, 2000), three fiscal quarter
period (in the case of the fiscal quarter ending December 31, 2000) or four
fiscal quarter period (in the case of the fiscal quarter ending March 31, 2001)
and for each four fiscal quarter period thereafter to be less than 1.25:1.00.
SECTION 7.12 BUSINESS. Alter the nature of its business as operated on
the date of this Agreement in any material respect.
SECTION 7.13 SALES OF ACCOUNTS RECEIVABLES. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory notes,
drafts or trade acceptances or other rights to receive payment held by it, with
or without recourse,
85
except (i) for the purpose of collection or settlement in the ordinary course of
business or (ii) the sale of any such accounts to the Administrative Agent.
SECTION 7.14 USE OF PROCEEDS. Permit the proceeds of any Credit Event
to be used for any purpose which entails a violation of, or is inconsistent
with, Regulation U or X of the Board, or for any purpose other than those set
forth in Section 4.14 hereof.
SECTION 7.15 ERISA. (a) Engage in any transaction in connection with
which any of the Borrowers or any ERISA Affiliate could be subject to either a
material civil penalty assessed pursuant to the provisions of Section 502 of
ERISA or a material tax imposed under the provisions of Section 4975 of the
Code.
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA, or take any other action which could result in a material
liability of any of the Borrowers or any ERISA Affiliate to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Plan, the Borrowers or any ERISA Affiliate are required to pay
as contributions thereto, or, with respect to any Pension Plan, permit to exist
any material "accumulated funding deficiency" (within the meaning of Section 302
of ERISA and Section 412 of the Code), whether or not waived, with respect
thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision of
security under Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION 7.16 ACCOUNTING CHANGES. Make any change in their accounting
treatment or financial reporting practices except as required or permitted by
GAAP.
SECTION 7.17 PREPAYMENT OR MODIFICATION OF LNDEBTEDNESS: MODIFICATION
OF CHARTER DOCUMENTS, ETC. (a) Directly or indirectly prepay, redeem, purchase
or retire any Indebtedness, including, without limitation, any Subordinated
Indebtedness other than Indebtedness incurred hereunder and under the 1999
Credit Agreement, on a pro rata basis.
(b) Modify, amend or otherwise alter the terms and provisions of any
Subordinated Indebtedness or any Management Agreement or Shares Acquisition
Agreement (unless any such amendment is required by law); PROVIDED, HOWEVER,
that the Convertible Subordinated Notes may be exchanged for Subordinated
Indebtedness of Holdings so long as (i) no Default or Event of Default shall
have occurred and be continuing at the time of such exchange or shall occur as a
result of such payment, (ii) the Administrative Agent shall have received at
least seven days prior written notice of such exchange, (iii) such exchange
shall not cause a Material Adverse Effect and (iv) such
86
exchange shall be on such other terms and conditions satisfactory to the
Administrative Agent.
(c) Modify, amend or alter their certificates or articles of
incorporation or preferred stock/certificates of designations.
(d) Change the instructions described in Section 6.24 hereof to the
banks holding accounts into which the Affiliated Dental Practices' Receivables
are deposited.
SECTION 7.18 TRANSACTIONS WITH AFFILIATES. Except as otherwise
specifically set forth in this Agreement, directly or indirectly purchase,
acquire or lease any property from, or sell, transfer or lease any property to,
or enter into any other transaction with, any stockholder, Affiliate or agent of
any Borrower, except at prices and on terms not less favorable to it than that
which would have been obtained in an arm's-length transaction with a
non-affiliated third party.
SECTION 7.19 CONSULTING FEES. Pay any management, consulting or other
fees of any kind to any Borrower, or to any Affiliate of the Borrowers or any of
the Borrowers' subsidiaries, other than those fees listed on SCHEDULE 7.19
annexed hereto.
SECTION 7.20 NEGATIVE PLEDGES, ETC. Enter into any agreement (other
than this Agreement, the 1999 Credit Agreement or any other Loan Document) which
(a) prohibits the creation or assumption of any Lien upon any of the Collateral,
including, without limitation, any hereafter acquired property, or (b)
specifically prohibits the amendment or other modification of this Agreement,
the 1999 Credit Agreement or any other Loan Document.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein called
"EVENTS OF DEFAULT"):
(a) any representation or warranty made or deemed made by any Loan
Party in or in connection with this Agreement, any of the Security Documents,
the Notes or other Loan Documents or any Credit Events hereunder, shall prove to
have been incorrect in any material respect when made or deemed to be made;
(b) default shall be made in the payment of any principal of any Note
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration thereof or
otherwise;
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(c) default shall be made in the payment of any interest on any Note,
or any fee or any other amount payable hereunder, or under the Notes, Letters of
Credit, or any other Loan Document or in connection with any other Credit Event
or the Transactions when and as the same shall become due and payable;
(d) default shall be made in the due observance or performance of any
covenant, condition or agreement to be observed or performed on the part of any
Loan Party pursuant to the terms of this Agreement, any of the Notes, any of the
Security Documents or any other Loan Document;
(e) any Loan Party shall (i) voluntarily commence any proceeding or
file any petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation or similar
law, (ii) consent to the institution of, or fail to contravene in a timely and
appropriate manner, any such proceeding or the filing of any such petition,
(iii) apply for or consent to the appointment of a receiver, trustee, custodian,
sequestrator or similar official for any Loan Party or for a substantial part of
its property or assets, (iv) file an answer admitting the material allegations
of a petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in writing
its inability or fail generally to pay its debts as they become due or (vii)
take corporate action for the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of any Loan Party, or of a substantial part of the property or assets
of any Loan Party, under Title 11 of the United States Code or any other Federal
state or foreign bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for any Loan Party or for a substantial part of the property of any Loan Party,
or (iii) the winding-up or liquidation of any Loan Party; and such proceeding or
petition shall continue undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall continue unstayed and in effect for 30
days;
(g) default shall be made with respect to (i) the 1999 Credit Agreement
or (ii) any other Indebtedness or obligations under a capitalized lease of any
Loan Party (excluding Indebtedness outstanding hereunder) which either
individually or taken together with other such Indebtedness as to which a
default has occurred shall exceed $150,000 if the effect of any such default
under either (i) or (ii) above shall be to accelerate, or to permit the holder
or obligee of any such Indebtedness or obligations under a capitalized lease (or
any trustee on behalf of such holder or obligee) at its option to accelerate,
the maturity of such Indebtedness or obligations under a capitalized lease;
(h) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by any Loan Party, any ERISA Affiliate, or an
administrator of any Plan of
88
a notice of intent to terminate such a Plan in a "distress termination" under
the provisions of Section 4041 of ERISA, (iii) the receipt of notice by any Loan
Party, any ERISA Affiliate, or an administrator of a Plan that the PBGC has
instituted proceedings to terminate (or appoint a trustee to administer) such a
Pension Plan, (iv) any other event or condition exists which might, in the
opinion of the Administrative Agent, constitute grounds under the provisions of
Section 4042 of ERISA for the termination of (or the appointment of a trustee to
administer) any Pension Plan by the PBGC, (v) a Pension Plan shall fail to
maintain the minimum funding standard required by Section 412 of the Code for
any plan year or a waiver of such standard is sought or granted under the
provisions of Section 412(d) of the Code, (vi) any Loan Party or any ERISA
Affiliate has incurred, or is likely to incur, a liability under the provisions
of Section 4062, 4063, 4064 or 4201 of ERISA, (vii) any Loan Party or any ERISA
Affiliate fails to pay the full amount of an installment required under Section
412(m) of the Code, (viii) the occurrence of any other event or condition with
respect to any Plan which would constitute an event of default under any other
agreement entered into by any Loan Party or any ERISA Affiliate, and in each
case in clauses (i) through (viii) of this subsection (h), such event or
condition, together with all other such events or conditions, if any, could
subject any Loan Party or any ERISA Affiliate to any taxes, penalties or other
liabilities which, in the opinion of the Administrative Agent, could have a
Material Adverse Effect on the financial condition of any Loan Party or any
ERISA Affiliate;
(i) any Loan Party or any ERISA Affiliate (i) shall have been notified
by the sponsor of a Multiemployer Plan that it has incurred any material
withdrawal liability to such Multiemployer Plan, and (ii) does not have
reasonable grounds for contesting such withdrawal liability and is not in fact
contesting such withdrawal liability in a timely and appropriate manner;
(j) a judgment (not reimbursed by insurance policies of any Loan Party)
or decree for the payment of money, a fine or penalty which when taken together
with all other such judgments, decrees, fines and penalties shall exceed
$250,000 shall be rendered by a court or other tribunal against any Loan Party
and (i) shall remain undischarged or unbonded for a period of 30 consecutive
days during which the execution of such judgment, decree, fine or penalty shall
not have been stayed effectively or (ii) any judgment creditor or other person
shall legally commence actions to collect on or enforce such judgment, decree,
fine or penalty;
(k) this Agreement, any Note, any of the Security Documents, any
Guarantee or other Loan Documents shall for any reason cease to be, or shall be
asserted by any Loan Party not to be, a legal, valid and binding obligation of
any Loan Party, enforceable in accordance with its terms, or the security
interest or Lien purported to be created by any of the Security Documents shall
for any reason cease to be, or be asserted by any Loan Party not to be, a valid,
first priority perfected security interest in any Collateral (except to the
extent otherwise permitted under this Agreement or any of the Security
Documents);
89
(l) a Change of Control shall occur; or
(m) any material damage to, or loss, theft or destruction of, any
material Collateral, whether or not insured, or any strike, lockout, labor
dispute, embargo, condemnation, act of God or public enemy, or other casualty
which causes, for more than thirty (30) consecutive days beyond the coverage
period of any applicable business interruption insurance, the cessation or
substantial curtailment of revenue producing activities at any facility of a
Loan Party if any such event or circumstance could have a Material Adverse
Effect; or
(n) change in law shall occur which results in any of the Borrowers not
enjoying rights equivalent to those in effect on June 15, 1999 with respect to
such Borrower's relationship with Affiliated Dental Practices;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and upon the written request of the Required Lenders
shall, by written notice (or facsimile notice promptly confirmed in writing) to
the Borrowers, take any or all of the following actions at the same or different
times: (i) terminate forthwith all or any portion of the Total Revolving Loan
Commitment and the obligations of the Lenders to issue Letters of Credit
hereunder; (ii) declare the Notes and any amounts then owing to the Lenders on
account of drawings under any Letters of Credit to be forthwith due and payable,
and (iii) require that the Borrowers remit to the Administrative Agent cash
collateral in an amount equal to the aggregate undrawn amount of all outstanding
Letters of Credit at such time, such cash collateral to be held by the
Administrative Agent for its own benefit and the benefit of the Lenders in a
cash collateral account on terms and conditions satisfactory to the
Administrative Agent, whereupon the principal of such Notes, together with
accrued interest and fees thereon and any amounts then owing to the Lenders on
account of drawings under any Letters of Credit and other liabilities of the
Borrowers accrued hereunder, shall become forthwith due and payable both as to
principal and interest, without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by the Borrowers, anything
contained herein or in the Notes to the contrary notwithstanding; PROVIDED,
HOWEVER, that with respect to a default described in paragraph (e) or (f) above,
the Total Revolving Credit Commitment and the obligation of the Lenders to issue
Letters of Credit shall automatically terminate and the principal of the Notes,
together with accrued interest and fees thereon and any amounts then owing to
the Lenders on account of drawings under any Letters of Credit and any other
liabilities of the Borrowers accrued hereunder shall automatically become due
and payable, both as to principal and interest, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Borrowers, anything contained herein or in the Notes to the contrary
notwithstanding.
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IX. AGENTS
In order to expedite the transactions contemplated by this
Agreement, Union Bank of California, N.A. is hereby appointed to act as
Administrative Agent on behalf of the Lenders and each Lender hereby confirms
that the Administrative Agent may also act as such under the terms of the
1999 Credit Agreement. Each of the Lenders and each subsequent holder of any
Note or issuer of any Letter of Credit by its acceptance thereof, irrevocably
authorizes the Administrative Agent to take such action on its behalf and to
exercise such actions and powers hereunder and under the Security Documents
and other Loan Documents as are specifically delegated to or required of the
Administrative Agent by the terms hereof and the terms thereof together with
such actions and powers as are reasonably incidental thereto. Neither the
Administrative Agent nor any of its directors, officers, employees or agents
shall be liable as such for any action taken or omitted to be taken by it or
them hereunder or under any of the Security Documents and other Loan
Documents or in connection herewith or therewith (a) at the request or with
the approval of the Required Lenders (or, if otherwise specifically required
hereunder or thereunder, the consent of all the Lenders) or (b) in the
absence of its or their own gross negligence or willful misconduct.
Notwithstanding any provisions to the contrary elsewhere herein or in the
other Loan Documents, the Administrative Agent shall not have any duties or
responsibilities except those expressly set forth herein or in the other Loan
Documents, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into the Credit Agreement or in the
other Loan Documents or otherwise exist against the Administrative Agent.
The Administrative Agent is hereby expressly authorized on behalf of
the Lenders, without hereby limiting any implied authority, (a) to receive on
behalf of each of the Lenders any payment of principal of or interest on the
Notes outstanding hereunder and all other amounts accrued hereunder which are
paid to the Administrative Agent, and promptly to distribute to each Lender its
proper share of all payments so received, (b) to distribute to each Lender
copies of all notices, agreements and other material as provided for in this
Agreement or in the Security Documents and other Loan Documents as received by
the Administrative Agent (c) to maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the Loans, the
Collateral and related matters, (d) to open and maintain bank accounts and lock
boxes as the Administrative Agent deems necessary and appropriate in accordance
with the Loan Documents with respect to the Collateral, (e) to take all actions
with respect to this Agreement and the Security Documents and other Loan
Documents as are specifically delegated to the Administrative Agent, and (f) to
incur and pay such expenses as the Administrative Agent may deem necessary or
appropriate in connection with the foregoing.
In the event that (a) any Borrowers fail to pay when due the principal
of or interest on any Note, any amount payable under any Letter of Credit, or
any fee payable hereunder or (b) the Administrative Agent receives written
notice of the occurrence of a Default or an Event of Default (the Administrative
Agent being deemed not to have
91
knowledge of any Default or Event of Default unless and until written notice
thereof is given to the Administrative Agent by any Borrower or a Lender), the
Administrative Agent within a reasonable time shall give written notice thereof
to the Lenders, and shall take such action with respect to such Event of Default
or other condition or event as it shall be directed to take by the Required
Lenders; PROVIDED, HOWEVER, that, unless and until the Administrative Agent
shall have received such directions, the Administrative Agent may take such
action or refrain from taking such action hereunder or under the Security
Documents or other Loan Documents with respect to a Default or Event of Default
as it shall deem advisable in the best interests of the Lenders.
Neither the Administrative Agent nor the Syndication Agent
(collectively, the "AGENTS") shall be responsible in any manner to any of the
Lenders for the effectiveness, enforceability, perfection, value, genuineness,
validity or due execution of this Agreement, the Notes or any of the other Loan
Documents or Collateral or any other agreements or certificates, requests,
financial statements, notices or opinions of counsel or for any recitals,
statements, warranties or representations contained herein or in any such
instrument or be under any obligation to ascertain or inquire as to the
performance or observance of any of the terms, provisions, covenants,
conditions, agreements or obligations of this Agreement or any of the other Loan
Documents or any other agreements on the part of the Borrowers and, without
limiting the generality of the foregoing, the Agents shall, in the absence of
knowledge to the contrary, be entitled to accept any certificate furnished
pursuant to this Agreement or any of the other Loan Documents as conclusive
evidence of the facts stated therein and shall be entitled to rely on any note,
notice, consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good faith to be genuine
and correct and to have been signed or sent by the proper person or persons. It
is understood and agreed that each of the Agents may exercise its rights and
powers under other agreements and instruments to which it is or may be a party,
and engage in other transactions with the Borrowers, as though it were not one
of the Agents hereunder.
The Administrative Agent shall promptly give notice to the Lenders of
the receipt or sending of any material notice, schedule, report, projection,
financial statement or other document or information pursuant to this Agreement
or any of the other Loan Documents and shall promptly forward a copy thereof to
each Lender.
Neither of the Agents nor any of their respective directors, officers,
employees or agents shall have any responsibility to the Borrowers on account of
the failure or delay in performance or breach by any Lender other than such
Agents of any of its obligations hereunder or to any Lender on account of the
failure of or delay in performance or breach by any other Lender or the
Borrowers of any of their respective obligations hereunder or in connection
herewith.
Each of the Agents may consult with legal counsel selected by it in
connection with matters arising under this Agreement or any of the other Loan
Documents
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and any action taken or suffered in good faith by it in accordance with the
opinion of such counsel shall be full justification and protection to it. Each
of the Agents may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.
The Administrative Agent and the Borrowers may deem and treat the payee
of any Note as the holder thereof until written notice of transfer shall have
been delivered as provided herein by such payee to the Administrative Agent and
the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it and
any other Credit Event applicable to it, the Administrative Agent in its
individual capacity and not as an Administrative Agent shall have the same
rights, powers and duties hereunder and under any other agreement executed in
connection herewith as any other Lender and may exercise the same as though it
were not the Administrative Agent, and the Administrative Agent and its
affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrowers or other affiliate thereof as if it were not
the Administrative Agent. Each of the Lenders hereby acknowledges that each of
the Agents and/or one or more Affiliates of such Agents may at any time and from
time to time be a holder of equity interests in a Loan Party.
Each Lender agrees (i) to reimburse each of the Agents in the amount of
such Lender's PRO RATA share (based on the aggregate of the Total Revolving
Credit Commitment under this Agreement and the "Total Revolving Credit
Commitment" under the 1999 Credit Agreement) of any expenses incurred for its
own benefit and/or for the benefit of the Lenders by the Agents, including
counsel fees and compensation of agents and employees paid for services rendered
on behalf of the Lenders, not reimbursed by the Borrowers and (ii) to indemnify
and hold harmless each of the Agents and any of their respective directors,
officers, employees or agents, on demand, in the amount of such PRO RATA share,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against it in its capacity as the Administrative Agent or any of them in any way
relating to or arising out of this Agreement or any of the other Loan Documents
or any action taken or omitted by it or any of them under this Agreement or any
of the other Loan Documents, to the extent not reimbursed by the Borrowers;
PROVIDED, HOWEVER, that no Lender shall be liable to any of the Agents for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgment, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of such Agents or any of their respective
directors, officers, employees or agents. The foregoing agreement shall survive
the repayment of all Obligations and the termination of this Agreement.
With respect to the release of Collateral, Lenders hereby irrevocably
authorize the Administrative Agent, at its option and in its discretion, to
release any Lien granted to or held by the Administrative Agent upon any
property covered by this
93
Agreement or the other Loan Documents (i) upon termination of the Total
Revolving Credit Commitment and payment and satisfaction of all Obligations;
(ii) constituting property being sold or disposed of in compliance with the
provisions of this Agreement (and the Administrative Agent may rely in good
faith conclusively on any certificate to such effect, without further inquiry);
or (iii) constituting property leased to any of the Borrowers or any of their
subsidiaries under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been, and
is not intended by such Borrower or such subsidiary to be, renewed or extended;
PROVIDED, HOWEVER, that (x) the Administrative Agent shall not be required to
execute any release on terms which, in the Administrative Agent's opinion, would
expose the Administrative Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (y) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens upon (or obligations of any Loan Party, in
respect of), all interests retained by any Loan Party, including (without
limitation) the proceeds of any sale, all of which shall continue to constitute
part of the property covered by this Agreement or the Loan Documents.
With respect to perfecting Lenders' security interest in Collateral
which, in accordance with Article 9 of the Uniform Commercial Code in any
applicable jurisdiction, can be perfected only by possession, each Lender hereby
appoints each other Lender for the purpose of perfecting such interest. Should
any Lender (other than the Administrative Agent) obtain possession of any such
Collateral, such Lender shall notify the Administrative Agent, and, promptly
upon the Administrative Agent's request, shall deliver such Collateral to the
Administrative Agent or in accordance with the Administrative Agent's
instructions. Each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any Loan Document or to realize
upon any Collateral for the Loans, it being understood and agreed that such
rights and remedies may be exercised only by the Administrative Agent.
In the event that a petition seeking relief under Title 11 of the
United States Code or any other Federal, state or foreign bankruptcy,
insolvency, liquidation or similar law is filed by or against any Loan Party,
the Administrative Agent is authorized to file a proof of claim on behalf of
itself and the Lenders in such proceeding for the total amount of Obligations
owed by such Loan Party. With respect to any such proof of claim which the
Administrative Agent may file, each Lender acknowledges that without reliance on
such proof of claim, such Lender shall make its own evaluation as to whether an
individual proof of claim must be filed in respect of such Obligations owed to
such Lender and, if so, take the steps necessary to prepare and timely file such
individual claim.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and any other Loan Document to which such
Lender is party. Each Lender also acknowledges that it will, independently and
without reliance upon the Agents or any
94
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any other Loan Document, any
related agreement or any document furnished hereunder.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notifying the Lenders and the Borrowers. Upon any such resignation, the Lenders
shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by such Lenders and
shall have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank organized under the laws of the
United States, or any State thereof, having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Administrative
Agent hereunder by a successor bank, such successor shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under each of the other
Loan Documents. After any Administrative Agent's resignation hereunder, the
provisions of this Article 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
Administrative Agent.
The Lenders hereby acknowledge that the Administrative Agent shall be
under no duty to take any discretionary action permitted to be taken by the
Administrative Agent pursuant to the provisions of this Agreement or any of the
other Loan Documents unless it shall be requested in writing to do so by the
Required Lenders. The Lenders further hereby acknowledge that neither of the
Agents is acting as the fiduciary of, or the trustee for, any of the Lenders and
except as expressly set forth herein, neither of the Agents shall have any duty
to disclose, and shall not be liable for the failure to disclose, any
information communicated to such Agents by or relating to the Borrowers or any
of their respective subsidiaries.
X. COLLECTION OF RECEIVABLES
The Borrowers and the Guarantors will, at the request of the
Administrative Agent, at their own cost and expense upon the occurrence of an
Event of Default, (i) arrange for remittances on Receivables owned by the
Borrowers and the Guarantors to be made directly to lockboxes designated by the
Administrative Agent or in such other manner as the Administrative Agent may
direct, and (ii) promptly deposit all payments received by the Borrowers and the
Guarantors on account of Receivables, whether in the form of cash, checks,
notes, drafts, bills of exchange, money orders or otherwise, in one or more
accounts designated by the Administrative Agent in precisely the form received
(but with any endorsements of the Borrowers necessary for deposit or
collection), subject to
95
withdrawal by the Administrative Agent only, as hereinafter provided, and until
such payments are deposited, such payments shall be deemed to be held in trust
by the Borrowers or the Guarantors, as the case may be, for and as the Lenders'
property and shall not be commingled with the Borrowers' or the Guarantors', as
the case may be, other funds.
Upon the occurrence and continuance of an Event of Default, the
Administrative Agent may send a notice of assignment and/or notice of the
Administrative Agent's security interest to any and all Customers or any third
party holding or otherwise concerned with any of the Collateral, and thereafter
the Administrative Agent shall have the sole right to collect the Receivables
and/or take possession of the Collateral and the books and records relating
thereto. Neither the Borrowers nor the Guarantors shall, without the
Administrative Agent's prior written consent, grant any extension of the time of
payment of any Receivable, compromise or settle any Receivable for less than the
full amount thereof, release, in whole or in part, any person or property liable
for the payment thereof, or allow any credit or discount whatsoever thereon
except, prior to the occurrence and continuance of an Event of Default, as may
be customary in the Borrowers' or the Guarantors', as the case may be, business.
XI. MISCELLANEOUS
SECTION 11.01 NOTICES. Notices, consents and other communications
provided for herein shall be in writing and shall be delivered or mailed (or in
the case of telex or facsimile communication, delivered by telex, graphic
scanning, telecopier or other telecommunications equipment, with receipt
confirmed) addressed,
(a) if to all or any of the Borrowers, Guarantors, or Grantors, at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Chief Financial Officer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to the Chief
Executive Officer (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(b) if to the Syndication Agent, at The Chase Manhattan Bank, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Credit Executive
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to Kaye, Scholer, et al., LLP, at ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇);
(c) if to the Administrative Agent, at Union Bank of California, N.A.,
Two Walnut Creek Center, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Vice President, Commercial Finance Division
(Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇), with a copy to Buchalter, Nemer, Fields &
Younger, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇, Esq. (Telecopy
No. (▇▇▇) ▇▇▇-▇▇▇▇); and
(d) if to any Lender, at the address set forth below its name in
SCHEDULE 2.01 annexed hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by any telex, facsimile or other telecommunications equipment,
in each case addressed to such party as provided in this Section 11.01 or in
accordance with the latest unrevoked direction from such party.
SECTION 11.02 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made by any Borrowers or any subsidiary thereof
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement, any of the Security Documents, any Guarantee or
any other Loan Document, shall be considered to have been relied upon by the
Lenders and shall survive the making by the Lenders of the Loans and the
execution and delivery to the Lenders of the Notes and the occurrence of any
other Credit Event and shall continue in full force and effect as long as the
principal of or any accrued interest on the Notes or any other fee or amount
payable under the Notes or this Agreement or any other Loan Document is
outstanding and unpaid and so long as the Total Revolving Credit Commitment has
not been terminated.
SECTION 11.03 SUCCESSORS AND ASSIGNS; PARTICIPATIONS. (a) Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any Loan Party, any ERISA Affiliate,
any subsidiary of any thereof, the Administrative Agent or the Lenders, that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns. Without limiting the generality of the
foregoing, the Borrowers specifically confirm that any Lender may at any time
and from time to time pledge or otherwise grant a security interest in any Loan
or any Note (or any part thereof) to any Federal Reserve Bank. No Borrowers may
assign or transfer any of its rights or obligations hereunder without the
written consent of all the Lenders.
(b) Each Lender, without the consent of the Borrowers or the Agents,
may sell participations to one or more banks or other entities in all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit Commitment) and the Loans
owing to it and undrawn Letters of Credit and the Notes held by it); PROVIDED,
HOWEVER, that (i) such Lender's obligations under this Agreement (including,
without limitation, its Revolving Credit Commitment) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for
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the performance of such obligations, (iii) the banks or other entities buying
participations shall be entitled to the cost protection provisions contained in
Section 2.10, 2.12 and 2.16 hereof, but only to the extent any of such Sections
would be available to the Lender which sold such participation, and (iv) the
Borrowers, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; PROVIDED, FURTHER, HOWEVER, that such Lender
shall retain the sole right and responsibility to enforce the obligations of the
Loan Parties relating to the Loans, including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this
Agreement, other than amendments, modifications or waivers with respect to
decreasing any fees payable hereunder or the amount of principal or the rate of
interest payable on the Loans, or extending the dates fixed for any payment of
principal of or interest on, the Loans or increasing or extending the Revolving
Credit Commitments or the release of all Collateral.
(c) Each Lender may assign by novation, to any one or more banks or
other entities without the prior written consent of the Agents, all or a portion
of its interests, rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of its Revolving
Credit Commitment and the same portion of the Loans and undrawn Letters of
Credit at the time owing to it and the Note or Notes held by it), PROVIDED,
HOWEVER, that (i) each such assignment shall be of a constant, and not a
varying, percentage of all of the assigning Lender's rights and obligations
under this Agreement and the 1999 Credit Agreement, which shall include the same
percentage interest in the Loans, Letters of Credit and Notes and the "Loans,"
"Letters of Credit" and "Notes" under the 1999 Credit Agreement, (ii) (x) prior
to the Conversion Date, the amount of the Revolving Credit Commitment and the
"Revolving Credit Commitment" under the 1999 Credit Agreement of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall be in a minimum principal amount of
$4,000,000 (unless to another Lender, in which event there shall be no minimum
requirement) and the amount of the Revolving Credit Commitment and the
"Revolving Credit Commitment" under the 1999 Credit Agreement retained by such
Lender shall not be less than $4,000,000 (unless such Lender's minimum hold
position shall fall below $4,000,000 by reason of an assignment to another
Lender) or shall be zero, and (y) after the Conversion Date, the amount of the
Term Loan and the "Term Loan" under the 1999 Credit Agreement of the assigning
Lender being assigned pursuant to each such assignment (determined as of the
date the Assignment and Acceptance with respect to such assignment is delivered
to the Administrative Agent) shall be in a minimum principal amount of
$4,000,000 (unless to another Lender, in which event there shall be no minimum
requirement) and the amount of the Term Loan and the "Term Loan" under the 1999
Credit Agreement retained by such Lender shall not be less than $4,000,000
(unless such Lender's minimum hold position shall fall below $4,000,000 by
reason of an assignment to another Lender) or shall be zero, (iii) the parties
to each such assignment shall execute and deliver to the Administrative Agent,
for its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with any Note subject to
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such assignment and a processing and recordation fee of $3,000 with respect to
this Agreement and the 1999 Credit Agreement combined) and (iv) the Assignee, if
it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire in the form provided to such Assignee by the
Administrative Agent. Upon such execution, delivery, acceptance and recording
and after receipt of the written consent of the Administrative Agent, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (x) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder and under the other Loan Documents and (y) the Lender which is
assignor thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.10, 2.12, 2.16 and 11.04, as well as any fees accrued for
its account hereunder and not yet paid).
(d) By executing and delivering an Assignment and Acceptance, the
Lender which is assignor thereunder and the assignee thereunder confirm to, and
agree with, each other and the other parties hereto as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the
interest being assigned thereunder free and clear of any adverse claim, and that
its Commitment and the outstanding balance of its Loans and participations in
Letters of Credit, in each case without giving effect to assignments thereof
which have not become effective, are as set forth in such Assignment and
Acceptance, such Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, perfection, genuineness, sufficiency or value of this
Agreement, the other Loan Documents or any Collateral with respect thereto or
any other instrument or document furnished pursuant hereto or thereto; (ii) such
Lender makes no representation or warranty and assumes no responsibility with
respect to the financial condition of any Loan Party or the performance or
observance by any Loan Party of any of their respective obligations under this
Agreement, any Guarantees or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (iii) such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance and confirms that it has received a copy of this
Agreement, any Guarantees and of the other Loan Documents, together with copies
of financial statements and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Administrative Agent, such Lender or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the
Administrative Agent to take such action as the Administrative Agent on its
behalf and to exercise such powers
99
under this Agreement as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Lender.
(e) The Administrative Agent shall maintain at its address
referred to in Section 11.01 hereof a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders and the Revolving Credit Commitment, as the case may be, of,
and principal amount of the Loans owing to, each Lender from time to time
(the "REGISTER"). The entries in the Register shall be conclusive, in the
absence of manifest error, and the Borrowers, the Administrative Agent and
the Lenders may treat each person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by
an assigning Lender and an assignee together with any Note or Notes subject
to such assignment, any processing and recordation fee and, if required, an
Administrative Questionnaire and the written consent to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been
completed and is precisely in the form of EXHIBIT F annexed hereto, (i)
accept such Assignment and Acceptance, (ii) record the information contained
therein in the Register and (iii) give prompt notice thereof to the Lenders
and the Borrowers. Within five (5) Business Days after receipt of such
notice, the Borrowers, at their own expense, shall execute and deliver to the
Administrative Agent in exchange for each surrendered Note or Notes a new
Note or Notes to the order of such assignee in an amount equal to its portion
of the Revolving Credit Commitment or of the Term Loan, assumed by it
pursuant to such Assignment and Acceptance and, if the assigning Lender has
retained any Revolving Credit Commitment or Term Loan hereunder, a new Note
or Notes to the order of the assigning Lender in an amount equal to the
Revolving Credit Commitment or Term Loan retained by it hereunder. Such new
Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, or, with
respect to the Term Notes, the principal amount of the Term Notes,
outstanding at such time as evidenced by the Term Note or Notes, shall be
dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of EXHIBIT A or EXHIBIT B, as the case
may be. Notes surrendered to the Borrowers shall be canceled by the Borrowers.
(g) Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to the Borrowers furnished to such
Lender by or on behalf of the Borrowers in connection with this Agreement;
PROVIDED, HOWEVER, that prior to any such disclosure, each
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such assignee or participant or proposed assignee or participant shall agree to
preserve the confidentiality of any confidential Information relating to the
Borrowers received from such Lender.
SECTION 11.04 EXPENSES: INDEMNITY. (a) Each of the Borrowers agrees
to pay all reasonable out-of-pocket expenses incurred by the Agents in
connection with the preparation of this Agreement and the other Loan
Documents or with any amendments, modifications, waivers, extensions,
renewals, renegotiations or "workouts" of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
incurred by the Agents or any of the Lenders in connection with the
enforcement or protection of its rights in connection with this Agreement or
any of the other Loan Documents or with the Loans made or the Notes or
Letters of Credit issued hereunder, or in connection with any pending or
threatened action, proceeding, or investigation relating to the foregoing,
including but not limited to the reasonable fees and disbursements of counsel
for the Agents and ongoing field examination expenses and charges, and, in
connection with such enforcement or protection, the reasonable fees and
disbursements of counsel for the Lenders. Each of the Borrowers further
indemnifies the Lenders from and agrees to hold them harmless against any
documentary taxes, assessments or charges made by any governmental authority
by reason of the execution and delivery of this Agreement or the Notes.
(b) Each of the Borrowers indemnifies the Agents and each Lender
and their respective directors, officers, employees and agents against, and
agrees to hold the Agents, each Lender and each such person harmless from,
any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees and expenses, incurred by or asserted
against the Lender or any such person arising out of, in any way connected
with, or as a result of (i) the use of any of the proceeds of the Loans, (ii)
this Agreement, the Guarantees, any of the Security Documents, or the other
documents contemplated hereby or thereby, (iii) the performance by the
parties hereto and thereto of their respective obligations hereunder and
thereunder (including but not limited to the making of the Total Revolving
Credit Commitment) and consummation of the transactions contemplated hereby
and thereby, (iv) breach of any representation or warranty, or (v) any claim,
litigation, investigation or proceedings relating to any of the foregoing,
whether or not the Agents, any Lender or any such person is a party thereto;
PROVIDED, HOWEVER, that such indemnity shall not, as to the Agents or any
Lender, apply to any such losses, claims, damages, liabilities or related
expenses to the extent that they result from the gross negligence or willful
misconduct of any Agent or any Lender.
(c) Each of the Borrowers indemnifies, and agrees to defend and
hold harmless the Administrative Agent and the Lenders and their respective
officers, directors, shareholders, agents and employees (collectively, the
"INDEMNITEES") from and against any loss, cost, damage, liability, lien,
deficiency, fine, penalty or expense (including, without limitation,
reasonable attorneys' fees and reasonable expenses for investigation,
removal, cleanup and remedial costs and modification costs incurred to
permit, continue or resume
101
normal operations of any property or assets or business of the Borrowers or any
subsidiary thereof) arising from a violation of, or failure to comply with any
Environmental Law and to remove any Lien arising therefrom except to the extent
caused by the gross negligence or willful misconduct of any Indemnitee, which
any of the Indemnitees may incur or which may be claimed or recorded against any
of the Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain operative
and in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term
or provision of this Agreement or the Notes, or any investigation made by or
on behalf of the Agents or any Lender. All amounts due under this Section
11.04 shall be payable on written demand therefor.
SECTION 11.05 APPLICABLE LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA
(OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION 11.06 RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, upon the request of the Required Lenders each Lender
shall and is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender to or for the credit or the
account of any of the Borrowers against any and all of the obligations of the
Borrowers now or hereafter existing under this Agreement and the 1999 Credit
Agreement and the Notes held by such Lender and the "Notes" held by the
"Lenders" under the 1999 Credit Agreement, irrespective of whether or not such
Lender shall have made any demand under this Agreement or the 1999 Credit
Agreement or the Notes or the "Notes" held by the "Lenders" under the 1999
Credit Agreement and although such obligations may be unmatured. Each Lender
agrees to notify promptly the Administrative Agent and the Borrowers after any
such setoff and application made by such Lender, but the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of each Lender under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which may be available
to such Lender; PROVIDED, HOWEVER, that such rights are subject to the
provisions of Section 2.14 hereof.
SECTION 11.07 PAYMENTS ON BUSINESS DAYS. (a) Should the principal
of or interest on the Notes or any fee or other amount payable hereunder
become due and payable on other than a Business Day, payment in respect
thereof may be made on the next succeeding Business Day (except as otherwise
specified in the definition of "Interest Period"), and such extension of time
shall in such case be included in computing interest, if any, in connection
with such payment.
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(b) All payments by any of the Borrowers hereunder and all Loans
made by the Lenders hereunder shall be made in lawful money of the United
States of America in immediately available funds at the office of the
Administrative Agent set forth in Section 11.01 hereof.
SECTION 11.08 WAIVERS: AMENDMENTS. (a) No failure or delay of any
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lenders hereunder are cumulative
and not exclusive of any rights or remedies which they may otherwise have. No
waiver of any provision of this Agreement or the Notes nor consent to any
departure by any of the Borrowers therefrom shall in any event be effective
unless the same shall be authorized as provided in paragraph (b) below, and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given. No notice to or demand on any of the Borrowers in
any case shall entitle it to any other or further notice or demand in similar or
other circumstances. Each holder of any of the Notes shall be bound by any
amendment, modification, waiver or consent authorized as provided herein,
whether or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; PROVIDED, HOWEVER, that
no such agreement shall (i) change the principal amount of, or extend or advance
the maturity of or the dates for the payment of principal of or interest on, any
Note or reduce the rate of interest on any Note, (ii) change the Revolving
Credit Commitment of any Lender or amend or modify the provisions of this
Section, Section 2.06, Section 2.13, Section 4.14 or Section 11.04 hereof or the
definition of "Required Lenders," or (iii) release any material portion of
Collateral, in each case without the prior written consent of each Lender
affected thereby, and PROVIDED, FURTHER, HOWEVER, that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Agents under this
Agreement or the other Loan Documents without the written consent of the Agents.
Any Lender shall be permitted to increase its Revolving Credit Commitment
without the consent of any other Lender to the extent such increase has been
authorized pursuant to Section 7.03(iii) hereof and upon any such increase, the
Administrative Agent is authorized to substitute revised SCHEDULES 2.01(a) and
2.14 annexed hereto and the Borrower shall issue to such Lender a replacement
Revolving Credit Note, in form and substance satisfactory to such Lender. Any
other proposed increase in the Total Revolving Credit Commitment hereunder which
would cause the aggregate of the Total Revolving Credit Commitment hereunder and
the "Total Revolving Credit Commitment" under the 1999 Credit Agreement to
exceed $120,000,000 shall require the consent of all Lenders. Each Lender and
holder of any Note shall be bound by any modification or amendment authorized by
this Section regardless of whether its Notes shall be marked to make reference
thereto, and
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any consent by any Lender or holder of a Note pursuant to this Section shall
bind any person subsequently acquiring a Note from it, whether or not such Note
shall be so marked.
(c) In the event that the Borrowers request, with respect to this
Agreement or any other Loan Document, an amendment, modification or waiver and
such amendment, modification or waiver would require the unanimous consent of
all of the Lenders in accordance with Section 11.08(b) above, and such
amendment, modification or waiver is agreed to in writing by the Borrowers and
the Required Lenders but not by all of the Lenders, then notwithstanding
anything to the contrary in Section 11.08(b) above, with the written consent of
the Borrowers and such Required Lenders, the Borrowers and Required Lenders may,
but shall not be obligated to, amend this Agreement without the consent of the
Lender or Lenders who did not agree to the proposed amendment, modification or
waiver (the "MINORITY LENDERS") solely to provide for (i) the termination of the
Revolving Credit Commitment of each Minority Lender, (ii) the assignment in
accordance with Section 11.03 hereof to one or more persons of each Minority
Lender's interests, rights and obligations under this Agreement (including,
without limitation, all of such Minority Lender's Revolving Credit Commitment as
well as its portion of all outstanding Loans and the Note or Notes held by such
Minority Lender) and the other Loan Documents and/or an increase in the
Revolving Credit Commitment of one or more Required Lenders, in each case so
that after giving effect thereto the Total Revolving Credit Commitment shall be
in the same amounts as prior to the events described in this paragraph, (iii)
the repayment to the Minority Lenders in full of all Loans outstanding and
accrued interest thereon at the time of the assignment and/or increase in
Commitments described in clause (ii) above with the proceeds of Loans made by
such persons who are to become Lenders by assignment or with the proceeds of
Loans made by Required Lenders who have agreed to increase their Revolving
Credit Commitment, (iv) the payment to the Minority Lenders by the Borrowers of
all fees and other compensation due and owing such Minority Lenders under the
terms of this Agreement and the other Loan Documents and (v) such other
modifications as the Required Lenders and Borrowers shall deem necessary in
order to effect the changes specified in clauses (i) through (iv) hereof.
SECTION 11.09 SEVERABILITY. In the event any one or more of the
provisions contained in this Agreement or in the Notes should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall not
in any way be affected or impaired thereby.
SECTION 11.10 ENTIRE AGREEMENT: WAIVER OF JURY TRIAL, ETC. (a) This
Agreement, the Notes and the other Loan Documents constitute the entire contract
between the parties hereto relative to the subject matter hereof. Any previous
agreement among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan Documents. Except as
expressly provided herein or in the Notes or the Loan Documents (other than this
Agreement), nothing in this Agreement, the Notes or in the other Loan Documents,
expressed or implied, is intended
104
to confer upon any party, other than the parties hereto, any rights, remedies,
obligations or liabilities under or by reason of this Agreement, the Notes or
the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby waives
any right it may have to a trial by jury in respect of any litigation
directly or indirectly arising out of, under or in connection with this
Agreement, the Notes, any of the other Loan Documents or the Transactions.
(c) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to in
paragraph (b) of this Section 11.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that no representative, agent
or attorney of any Lender has represented, expressly or otherwise, that such
Lender would not, in the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that it has been induced to enter into this
Agreement, the Notes or the other Loan Documents, as applicable, by, among
other things, the mutual waivers and certifications herein.
SECTION 11.11 CONFIDENTIALITY. The Agents and the Lenders agree to
keep confidential (and to cause their respective officers, directors, employees,
agents and representatives to keep confidential) all information, materials and
documents furnished to the Agents or any Lender (the "INFORMATION").
Notwithstanding the foregoing, the Agents and each Lender shall be permitted to
disclose Information (i) to such of its officers, directors, employees, agents
and representatives as need to know such Information in connection with its
participation in any of the Transactions or the administration of this Agreement
or the other Loan Documents; (ii) to the extent required by applicable laws and
regulations or by any subpoena or similar legal process, or requested by any
governmental agency or authority, (iii) to the extent such Information (A)
becomes publicly available other than as a result of a breach of this Agreement,
(B) becomes available to the Agents or such Lender on a non-confidential basis
from a source other than any Loan Party or any of its subsidiaries or (C) was
available to the Agents or such Lender on a non-confidential basis prior to its
disclosure to the Agents or such Lender by any Loan Party or any of its
subsidiaries; (iv) to the extent any Loan Party or any of its subsidiaries shall
have consented to such disclosure in writing; (v) in connection with the sale
of any Collateral pursuant to the provisions of any of the other Loan Documents;
or (vi) pursuant to Section 11.03(g) hereof.
SECTION 11.12 SUBMISSION TO JURISDICTION. (a) Any legal action or
proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in the courts of the State of California or of the
United States of America for the Northern District of California, and, by
execution and delivery of this Agreement, each Loan Party hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts.
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(b) Each Loan Party hereby irrevocably waives, in connection with
any such action or proceeding, 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 jurisdictions.
(c) Each Loan Party hereby irrevocably consents to the service of
process of any of the aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to each such person, as the case may be, at its address set forth in Section
11.01 hereof.
(d) Nothing herein shall affect the right of the Administrative
Agent or any Lender to serve process in any other manner permitted by law or
to commence legal proceedings or otherwise proceed against any Loan Party in
any other jurisdiction.
SECTION 11.13 COUNTERPARTS: FACSIMILE SIGNATURE. This Agreement
may be executed in counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract, and
shall become effective when copies hereof which, when taken together, bear
the signatures of each of the parties hereto shall be delivered to the
Administrative Agent. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of a manually
executed signature page hereto.
SECTION 11.14 HEADINGS. Article and Section headings and the Table
of Contents used herein are for convenience of reference only and are not to
affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor and not
merely as a surety, jointly and severally with each other Guarantor, the due and
punctual payment of the principal of and interest on each of the Notes and the
"Notes" under the 1999 Credit Agreement, when and as due, whether at maturity,
by acceleration, by notice of prepayment or otherwise, and the due and punctual
performance of all other Obligations and all other "Obligations" under the 1999
Credit Agreement, (such "Obligations" together with the Obligations under this
Agreement are collectively referred to solely for the purposes of this Article
XII as the "Obligations"). Each Guarantor further agrees that the Obligations
may be extended and renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee notwithstanding
any extension or renewal of any Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice of
acceptance of
106
its guarantee and notice of protest for nonpayment. The obligations of a
Guarantor hereunder shall not be affected by (a) the failure of any Lender or
the Administrative Agent to assert any claim or demand or to enforce any right
or remedy against the Borrowers or any other Guarantor under the provisions of
this Agreement, the 1999 Credit Agreement, the Notes or any of the other Loan
Documents or otherwise: (b) any rescission, waiver, amendment or modification of
any of the terms or provisions of this Agreement, the Notes, the "Notes" under
the 1999 Credit Agreement, any of the other Loan Documents, any guarantee or any
other agreement, (c) the release of any security held by the Administrative
Agent for the Obligations or any of them; or (d) the failure of any Lender to
exercise any right or remedy against any other Guarantor of the Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender to any security (including, without
limitation, any Collateral) held for payment of the Obligations or to any
balance of any deposit account or credit on the books of any Lender in favor of
any of the Borrowers or any other person.
The obligations of each Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including,
without limitation, any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement, the 1999 Credit Agreement, the Notes, the
"Notes" under the 1999 Credit Agreement or under any other Loan Document, any
guarantee or any other agreement, by any waiver or modification of any provision
thereof, by any default, failure or delay, willful or otherwise, in the
performance of the Obligations, or by any other act or omission which may or
might in any manner or to any extent vary the risk of such Guarantor or
otherwise operate as a discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of principal of or interest on any Obligation is rescinded or must
otherwise be returned by the Administrative Agent or any Lender upon the
bankruptcy or reorganization of any of the Borrowers or otherwise.
Each of the Guarantors irrevocably waives acceptance hereof,
presentment, demand, notices of nonperformance, protests, notices of protest,
notices of dishonor, and notices of acceptance of this guarantee and of the
existence, creation, or incurring of new or additional Obligations and any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any person against the Borrowers or any other person or any
collateral. Each of the Guarantors waives any defense arising by
107
reason of any disability or other defense of the Borrowers, or the cessation
from any cause whatsoever of the liability of the Borrowers, or any claim that
the obligations of such Guarantor exceed or are more burdensome than those of
the Borrowers. Each of the Guarantors waives any rights and defenses that are or
may become available to such Guarantor by reason of Sections 2787 to 2855,
inclusive, of the California Civil Code. Each of the Guarantors waives all
rights and defenses that such Guarantor may have because any of the Obligations
is secured by real property. This means, among other things; (i) the
Administrative Agent or any Lender may collect from any of the Guarantors
without first foreclosing on any real or personal property collateral pledged by
the Borrowers; and (ii) if the Administrative Agent forecloses on any real
property collateral pledged by the Borrowers: (1) the amount of the Obligations
may be reduced only by the price for which that collateral is sold at the
foreclosure sale, even if the collateral is worth more than the sale price, and
(2) the Administrative Agent may collect from each or any of the Guarantors even
if the Administrative Agent, by foreclosing on the real property collateral, has
destroyed any right such Guarantor may have to collect from the Borrowers. This
is an unconditional and irrevocable waiver of any rights and defenses each of
the Guarantors may have because any of the Obligations is secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code
of Civil Procedure. Each of the Guarantors waives any right or defense it may
have at law or equity, including California Code of Civil Procedure Section
580a, to a fair market value hearing or action to determine a deficiency
judgment after a foreclosure. No provision or waiver herein shall be construed
as limiting the generality of any other waiver contained herein.
Each of the Guarantors authorizes the Administrative Agent or any
Lender, without notice or demand and without affecting the liability of each of
the Guarantors hereunder, from time to time, either before or after revocation
hereof, to (a) receive and hold security for the payment of this guarantee or
any of the Obligations, and exchange, enforce, waive, release, fail to perfect,
sell, or otherwise dispose of any such security; (b) apply such security and
direct the order or manner of sale thereof as the Administrative Agent or any
Lender in its discretion may determine; and (c) release or substitute any one
or more of the endorsers or guarantors.
Notwithstanding any payment made by or for the account of any of the
Guarantors pursuant hereto, no Guarantor shall be subrogated to any right of the
Administrative Agent or any Lender until such time as the Administrative Agent
shall have received final payment of the full amount of all Obligations. Until
the Obligations shall have been paid in full, even though the Obligations are in
excess of the liability of any Guarantor hereunder, such Guarantor waives (a)
any right of subrogation, reimbursement, indemnification, and contribution
(contractual, statutory, or otherwise) including, without limitation, any claim
or right of subrogation under the Bankruptcy Code (Title 11, United States Code)
or any successor statute, arising from the existence or performance hereof, (b)
any right to enforce any remedy which the Administrative Agent or any Lender now
has or may hereafter have against the Borrowers, and (c) any benefit of, and any
right to participate in, any
108
security now or hereafter held by the Administrative Agent or any Lender. Each
of the Guarantors understands and acknowledges that if the Administrative Agent
forecloses, either by judicial foreclosure or by exercise of power of sale, any
deed of trust securing the Obligations, that foreclosure could impair or destroy
any ability that such Guarantor may have to seek reimbursement, contribution, or
indemnification from the Borrowers or others based on any right such Guarantor
may have of subrogation, reimbursement, contribution, or indemnification for any
amounts paid by such Guarantor under this guarantee. Each of the Guarantors
further understands and acknowledges that in the absence of this paragraph, such
potential impairment or destruction of such Guarantor's rights, if any, may
entitle such Guarantor to assert a defense to this guarantee based on Section
580d of the California Code of Civil Procedure as interpreted in UNION BANK ▇.
▇▇▇▇▇▇▇, 265 Cal. App. 2d. 40 (1968). By executing this agreement, each of the
Guarantors freely, irrevocably, and unconditionally: (i) waives and relinquishes
that defense and agrees that such Guarantor will be fully liable hereunder even
though the Administrative Agent may foreclose, either by judicial foreclosure or
by exercise of power of sale, any deed of trust securing the Obligations; (ii)
agrees that such Guarantor will not assert that defense in any action or
proceeding which the Administrative Agent or any Lender may commence to enforce
this agreement; (iii) acknowledges and agrees that the rights and defenses
waived by such Guarantor herein include any right or defense that such Guarantor
may have or be entitled to assert based upon or arising out of any one or more
of Sections 580a, 580b, 580d, or 726 of the California Code of Civil Procedure
or Section 2848 of the California Civil Code; and (iv) acknowledges and agrees
that the Administrative Agent and each Lender is relying on this waiver in
creating the Obligations, and that this waiver is a material part of the
consideration which the Administrative Agent and each Lender is receiving for
creating the Obligations.
Each of the Guarantors acknowledges and agrees that it shall have the
sole responsibility for obtaining from the Borrowers such information concerning
the Borrowers's financial conditions or business operations as such Guarantor
may require, and that neither the Administrative Agent nor any Lender has any
duty at any time to disclose to such Guarantor any information relating to the
business operations or financial conditions of the Borrowers.
XIII. LENDERS' ACKNOWLEDGMENT
Notwithstanding any language to the contrary in this Agreement or in
any other Loan Document, the Administrative Agent and the Lenders signatory
hereto hereby acknowledge and agree that to the extent required under applicable
rule or law (a) the rights of the Administrative Agent in the pledge by Dental
Service of the capital stock of Dedicated Dental and by Holdings of the capital
stock of Dental Service, in each case in favor of the Administrative Agent,
shall be subordinate at all times to the Regulatory Tangible Net Equity
Requirement of the ▇▇▇▇-▇▇▇▇▇ Act (as such terms are hereinafter defined) and to
the requirements of Rule 1300.76 promulgated under the ▇▇▇▇-▇▇▇▇▇ Act and (b)
any transfer or assignment (whether for value or otherwise) of any ownership
interest in the capital stock of
109
Dedicated Dental or Dental Service on foreclosure or otherwise will require the
filing of a notice of a material modification and prior approval by the
California DMO Regulator (as such term is hereinafter defined) under the
▇▇▇▇-▇▇▇▇▇ Act.
In addition, (i) the pledge by Dental Service of the capital stock of
Dedicated Dental and by Holdings of the capital stock of Dental Service, in each
case in favor of the Administrative Agent, shall not become effective until
Dental Service and Dedicated Dental (as the case may be) shall have obtained all
Governmental Approvals necessary or required under the California DMO
Regulations in connection with the execution, delivery or performance by, or
enforcement against, Dental Service of this Agreement, including, without
limitation, the Governmental Approvals relating to the filing of a material
modification application for the approval with the California DMO Regulator, and
that all such Governmental Approvals remain in full force and effect and (ii)
the pledge by Dental Service of the capital stock of Dedicated Dental and by
Holdings of the capital stock of Dental Service, in each case in favor of the
Administrative Agent, of the stock certificates evidencing all of the issued and
outstanding capital stock of Dental Service and Dedicated Dental, respectively,
pursuant to the Pledge Agreement, are subject to applicable California DMO
Regulations, including, without limitation, the "Upstream Undertakings" made by
Dedicated Dental to the California DMO Regulator in connection with the
application for material modification under the ▇▇▇▇-▇▇▇▇▇ Laws.
For the purposes of this Article XIII, the following terms shall have the
meanings specified below:
"CALIFORNIA DMO" means a DMO that is subject to the ▇▇▇▇-▇▇▇▇▇ Laws and
includes, without limitation, Dedicated Dental and any future subsidiary of
Holdings or Dental Service that is a California DMO or regulated dental care
service contractor.
"CALIFORNIA DMO REGULATIONS" means any law (statutory or common),
treaty, rule or regulation applicable to any California DMO under federal or
state law and any regulations, orders or directives promulgated or issued
pursuant to the foregoing and includes, without limitation, the ▇▇▇▇-▇▇▇▇▇ Laws
which may apply to the Borrowers, Holdings or subsidiaries thereof and any
undertakings required by a California DMO Regulator.
"CALIFORNIA DMO REGULATOR" means any Governmental Authority charged
with the administration, oversight or enforcement of a California DMO
Regulation, whether primarily, secondarily, or jointly.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof (including any California DMO Regulator),
any central bank (or similar monetary or regulatory authority) thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
110
"▇▇▇▇-▇▇▇▇▇ LAWS" means the ▇▇▇▇-▇▇▇▇▇ Health Care Service Plan Act of
1975, as amended, including, without limitation, any rules or regulations
promulgated thereunder or related thereto.
"REGULATORY TANGIBLE NET EQUITY" means, for any California DMO,
"tangible net equity," "net worth" or such similar financial concept as defined
by any California DMO Regulation promulgated by any California DMO Regulator as
shall be applicable to California DMOs.
"REGULATORY TANGIBLE NET EQUITY REQUIREMENT" means, as to any
California DMO, the minimum level at which a California DMO is required by any
applicable California DMO Regulation or California DMO Regulator to maintain its
Regulatory Tangible Net Equity.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
111
IN WITNESS WHEREOF, the Borrowers, Guarantors (other than Holdings),
the Administrative Agent, the Syndication Agent and the Lenders have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
GENTLE DENTAL SERVICE CORPORATION,
as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GENTLE DENTAL MANAGEMENT, INC.,
as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
DENTAL CARE ALLIANCE, INC.,
as a Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
GMS HAWAII ACQUISITION COMPANY, as a
Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GMS DENTAL GROUP MANAGEMENT OF
HAWAII, INC., as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GMS DENTAL GROUP MANAGEMENT OF
SOUTHERN CALIFORNIA, INC., as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GMS DENTAL GROUP MANAGEMENT OF
THE MOUNTAIN STATES, INC., as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GENTLE DENTAL MANAGEMENT - PACIFIC
NORTHWEST, INC., as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GENTLE DENTAL OF IRVINE, as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GDSC OF PIEDMONT, INC., as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
GENTLE DENTAL LEGACY, INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
DENTAL CARE ALLIANCE OF FLORIDA, INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
DENTAL CARE ALLIANCE OF MICHIGAN, INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
DENTAL CARE ALLIANCE OF GEORGIA, INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
DENTAL CARE ALLIANCE OF INDIANA, INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
DENTAL ONE ASSOCIATES, INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
DENTAL CARE ALLIANCE OF PENNSYLVANIA, INC.,
as a Guarantor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
SERRA PARK DENTAL SERVICES,
INCORPORATED, as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
SPDS DMI, INCORPORATED, as a Guarantor
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
UNION BANK OF CALIFORNIA, N.A.,
as Administrative Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
THE CHASE MANHATTAN BANK,
as Syndication Agent and as a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
FIRST NATIONAL BANK, as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President-Team Leader
SOVEREIGN BANK, as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
SCHEDULE 2.01(a)
REVOLVING CREDIT COMMITMENTS
----------------------------
Approximate
Revolving Credit Percentage of Total
Lender Commitment Revolving Credit Commitment
------ ---------- ---------------------------
The Chase Manhattan Bank $5,000,000 45.454545%
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Credit Executive
First National Bank $1,000,000 9.090910%
▇▇▇ ▇▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Sovereign Bank $5,000,000 45.454545%
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE 2.02
DOMESTIC LENDING OFFICES
------------------------
Lender Domestic Lending Office
------ -----------------------
The Chase Manhattan Bank The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Credit Executive
First National Bank ▇▇▇ ▇▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Sovereign Bank ▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE 2.03
EURODOLLAR LENDING OFFICES
--------------------------
Lender Eurodollar Lending Office
------ -------------------------
The Chase Manhattan Bank The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Credit Executive
First National Bank ▇▇▇ ▇▇▇▇ "▇" ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Sovereign Bank ▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
SCHEDULE 2.14
PERCENTAGES
-----------
Lender Percentage
------ ----------
The Chase Manhattan Bank 14.851485%
Union Bank of California, N.A. 14.851485%
U.S. Bank National Association 14.851485%
Fleet Capital Corporation 14.851485%
Bank of America, N.A. 14.851485%
First National Bank 5.940594%
Citizens Bank of Massachusetts 9.900990%
Sovereign Bank 9.900990%