EXHIBIT 10.1
EXECUTION VERSION
SECOND AMENDED AND RESTATED
LOAN AGREEMENT
BANK OF AMERICA, N.A.
$10,000,000 REVOLVING CREDIT FACILITY
$15,000,000 ACQUISITION REVOLVING CREDIT FACILITY
AND
$35,000,000 TERM LOAN FACILITY
PROVIDED TO
NATIONAL DENTEX CORPORATION,
AND
GREEN DENTAL LABORATORIES, INC.,
NOVEMBER 7, 2006
TABLE OF CONTENTS
1. The Credit Facility; Advances................................... 1
(a) The Credit Facility............................................. 1
(b) Advances........................................................ 2
2. Interest; Payments; Fees; Borrowing............................. 3
(a) Interest........................................................ 3
(b) Payments........................................................ 3
(c) Additional Payments............................................. 4
(d) Voluntary Prepayments of Cost of Funds Rate Loans, Fixed
Rate Loans and Prime Rate Loans.............................. 4
(e) Notice of Borrowing............................................. 5
(f) Special Provisions Governing Loans.............................. 5
(g) Voluntary Prepayment of Fixed Rate Loans........................ 10
(h) Increased Capital Costs......................................... 10
(i) Taxes........................................................... 11
3. Letters of Credit............................................... 12
(a) Issuance........................................................ 12
(b) Notice of Proposed Issuance..................................... 12
(c) Conditions to Issuance.......................................... 12
(d) Expiry Dates.................................................... 12
(e) Drawings........................................................ 12
(f) Reimbursement by the Borrowers.................................. 12
(g) Exculpatory Provisions.......................................... 13
(h) Indemnification by Borrowers.................................... 13
4. Definitions..................................................... 14
5. Representations and Warranties.................................. 21
(a) Organization.................................................... 21
(b) Authority....................................................... 21
(c) Approvals; Compliance with Statutes, Etc........................ 22
(d) Valid Obligations............................................... 22
(e) Assets.......................................................... 22
(f) Agreements...................................................... 22
(g) Insurance....................................................... 23
(h) Litigation and Other Proceedings................................ 23
(i) Labor Matters................................................... 23
(j) ERISA........................................................... 23
(k) Financial Statements............................................ 23
(l) Projections..................................................... 24
(m) Taxes........................................................... 24
(n) Investments..................................................... 24
(o) Investment Company.............................................. 24
(p) Equity Structure................................................ 25
(q) Consolidated Total Funded Debt.................................. 25
(r) Patents, Copyrights and Trademarks.............................. 25
(s) Representations Accurate........................................ 25
6. Covenants....................................................... 25
(a) Payments........................................................ 25
(b) Merger of Keller Group, Incorporated............................ 25
(c) Financial Report................................................ 25
(d) Other Financial Reports......................................... 26
(e) Maintain Rights................................................. 27
(f) No Transfers.................................................... 28
(g) No Mergers...................................................... 28
(h) Payment of Taxes................................................ 28
(i) Guaranties...................................................... 28
(j) Agreements...................................................... 28
(k) Investments..................................................... 29
(l) Property........................................................ 29
(m) Books and Records............................................... 29
(n) Notices......................................................... 30
(o) Liens........................................................... 30
(p) Modifications................................................... 31
(q) Additional Indebtedness......................................... 31
(r) Payments to Affiliated Persons.................................. 32
(s) Minimum Consolidated Net Worth.................................. 32
(t) Fixed Charge Coverage Ratio..................................... 32
(u) Maximum Consolidated Total Funded Debt to Consolidated EBITDA... 32
(v) Minimum Consolidated EBITDA..................................... 32
(w) Bank Accounts................................................... 32
(x) Further Assurances.............................................. 33
(y) Valuation Report................................................ 33
7. Conditions of Closing........................................... 33
(a) Line of Credit Notes; Amended and Restated Term Note............ 33
(b) Warranties and Covenants........................................ 33
(c) Closing Certificate............................................. 33
(d) Financial Statements............................................ 33
(e) Annual Report................................................... 34
(f) Intentionally Omitted........................................... 34
(g) No Adverse Change............................................... 34
(h) Closing Fees and Legal Expenses................................. 34
(i) Legal Opinions.................................................. 34
(j) Projections..................................................... 34
(k) Approvals....................................................... 34
(l) Legality of Transactions........................................ 34
(m) Proof of Corporate Action; Good Standing........................ 34
(n) Organizational and Capital Structure............................ 35
ii
(o) Lien Searches................................................... 35
(p) Other Searches.................................................. 35
8. Conditions of Making Subsequent Advances........................ 35
(a) Representations and Warranties.................................. 35
(b) Performance..................................................... 35
(c) Acquisitions.................................................... 36
9. Events of Default............................................... 37
(a) Representations and Warranties.................................. 37
(b) Covenants....................................................... 37
(c) Acceleration.................................................... 37
(d) Loan Documents.................................................. 37
(e) Voluntary Bankruptcy............................................ 37
(f) Involuntary Bankruptcy.......................................... 38
(g) Seizure of Assets............................................... 38
(h) Judgments....................................................... 38
(i) Liens........................................................... 38
(j) Casualty Loss................................................... 38
(k) Qualified Audit Report.......................................... 38
(l) Change of Control............................................... 38
(m) ERISA........................................................... 39
10. Remedies........................................................ 39
11. Joint and Several Liability..................................... 40
12. Miscellaneous................................................... 41
(a) Waivers......................................................... 41
(b) Delays.......................................................... 41
(c) Notices......................................................... 41
(d) Set-Off......................................................... 42
(e) Jurisdiction; Waiver of Jury Trial.............................. 42
(f) Usury........................................................... 43
(g) Execution....................................................... 43
(h) Governing Law................................................... 43
(i) Fees; Indemnification........................................... 43
(j) Binding Nature.................................................. 43
(k) Assignment; Participations; Pledge to Federal Reserve........... 44
(l) Under Seal...................................................... 45
(m) Use of Proceeds................................................. 45
(n) Confidentiality................................................. 45
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Exhibits
EXHIBIT FORM
- ------- ----
A Form of Second Amended and Restated First Line of Credit Note
B Form of Second Amended and Restated Second Line of Credit Note
C Form of Amended and Restated Term Note
D Form of Compliance Certificate
E Form of Joinder Agreement
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SCHEDULES
Schedule 5(a) Jurisdictions of Business Qualification of the Borrowers
Schedule 5(b) Authority
Schedule 5(c) Approvals
Schedule 5(e) Assets and Properties; Liens
Schedule 5(g) Insurance
Schedule 5(h) Litigation and Other Proceedings
Schedule 5(i) Labor Matters
Schedule 5(m) Taxes
Schedule 5(n) Investments
Schedule 5(p) Equity Structure of Borrowers
Schedule 5(q) Funded Debt
Schedule 5(r) Patents and Trademarks
Schedule 6(w) Bank Accounts
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BANK OF AMERICA, N.A.
100 Federal Street
Boston, Massachusetts 02110
November 7, 2006
David L. Brown, President and
Chief Executive Officer
National Dentex Corporation
526 Boston Post Road
Wayland, MA 01778
Re: Loan Agreement
Dear Mr. Brown:
This Second Amended and Restated Loan Agreement (the "Agreement") is made
as of November 7, 2006, by and among (a) (i) National Dentex Corporation, a
Massachusetts corporation ("Dentex"), and (ii) Green Dental Laboratories, Inc.,
an Arkansas corporation ("Green", and with Dentex, each a "Borrower" and
together, the "Borrowers"), and (b) Bank of America, N.A., organized and
existing under the laws of the United States (the "Bank").
WHEREAS, Dentex, Green and the Bank are party to that certain Amended and
Restated Loan Agreement dated as of August 9, 2005 (the "Existing Loan
Agreement") consisting of a $5,000,000 revolving credit facility, a $20,000,000
acquisition revolving credit facility and a $20,000,000 term loan facility; and
WHEREAS, the Bank and the Borrowers have agreed to amend and restate the
Existing Loan Agreement to, among other things: (a) increase the term loan
facility to an aggregate principal amount of $35,000,000; (b) use the proceeds
of such increase in the term loan to repay a portion of the outstanding
principal balance under the Second Line of Credit (as defined below); (c) reduce
the Second Line of Credit (as defined below) to $15,000,000; and (d) increase
the First Line of Credit (as defined below) to $10,000,000.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged (these recitals being an integral
part of this Loan Agreement) the parties hereto hereby agree that the Existing
Loan Agreement is amended and restated in its entirety as follows:
1. The Credit Facility; Advances.
(a) The Credit Facility. The Credit Facility shall consist of the
following:
(i) a revolving line of credit (the "First Line of Credit") in an
amount equal to $10,000,000, available until the day prior to, and due and
payable on, the Lines of Credit Termination Date (as hereinafter defined); the
First Line of Credit shall include (A) a sublimit for the issuance, on the terms
and conditions set forth in this Agreement, of letters of credit for the
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Borrowers' account, provided, that the Bank's LC Exposure (as hereinafter
defined) at any time shall not exceed $1,500,000, and (B) a sublimit of
$5,000,000 to fund acquisitions by the Borrowers subject to and in accordance
with Section 8 and the other terms and conditions applicable to advances under
the Second Line of Credit. Advances under the First Line of Credit may be used
by the Borrowers for their general corporate purposes, to refinance existing
indebtedness, for the issuance of Letters of Credit and to fund acquisitions by
the Borrowers in accordance with clause (i)(B) above.
(ii) a revolving line of credit (the "Second Line of Credit") in
an amount equal to $15,000,000, available until the day prior to, and due and
payable on, the Lines of Credit Termination Date (The First Line of Credit and
the Second Line of Credit may collectively hereinafter be referred to as the
"Lines of Credit"). Advances under the Second Line of Credit may be used by the
Borrowers solely to fund acquisitions by the Borrowers in accordance with
Section 8 and the other terms and conditions hereof.
(iii) a term loan in the principal amount of $35,000,000 (the
"Term Loan"), such increased principal amount to be funded by the Bank on the
Closing Date to repay a portion of the outstanding principal under the Second
Line of Credit. The Borrowers, jointly and severally, promise to pay to the Bank
the principal amount of the Term Loan in consecutive monthly installments, in an
amount equal to $416,666.67, commencing on December 15, 2006 and on the 15th day
of each month thereafter until the Term Loan Termination Date and with a final
payment on the Term Loan Termination Date in an amount equal to the unpaid
balance of the Term Loan. The proceeds of the Term Loan shall be applied on the
Closing Date solely to the repayment of the Second Line of Credit. No amount
repaid with respect to the Term Loan may be reborrowed.
(b) Advances. After the Closing, advances under the Lines of Credit
may be made, from time to time, until the day prior to the Lines of Credit
Termination Date, in such amounts as the Borrowers may request; provided, that
in the case of the First Line of Credit the aggregate principal amount of all
advances at any time outstanding under the First Line of Credit (after giving
effect to all amounts requested) plus the aggregate LC Exposure at such time,
shall not exceed $10,000,000; and in the case of the Second Line of Credit, the
aggregate principal amount of all advances at any time outstanding under the
Second Line of Credit (after giving effect to all amounts requested) shall not
exceed $15,000,000; provided, that any such advances under the Second Line of
Credit, and any advances under the First Line of Credit for the purpose of
funding any acquisition by the Borrowers, are subject to the provisions set
forth in Section 8(c) and 6(k) hereof; and provided, further, that at the time
the Borrowers request an advance under the Lines of Credit and after giving
effect to the making thereof, no Default or Event of Default has occurred and is
continuing. Subject to the terms of this Agreement, advances under the First
Line of Credit, once repaid, may be reborrowed; advances under the Second Line
of Credit, once repaid, may be reborrowed, subject to the provisions set forth
in Section 8(c) and 6(k) hereof. If at any time the outstanding principal amount
of the advances under a Line of Credit exceeds the amount determined by
reference to the limits set forth in the first sentence of this Section 1(b),
the Borrowers shall promptly pay an amount equal to such excess to the Bank.
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2. Interest; Payments; Fees; Borrowing.
(a) Interest. Each advance, from time to time, under either Line of
Credit, and the Term Loan or any portion thereof as applicable shall bear
interest (i) at an annual rate equal to the Prime Rate (as hereinafter defined)
plus the Applicable Margin with respect thereto as in effect from time to time
(in which case such advance or Term Loan or portion thereof, as applicable,
shall be designated as a "Prime Rate Loan"); (ii) at the option of the
Borrowers, at the LIBOR Lending Rate for the applicable Interest Period plus the
Applicable Margin with respect thereto as in effect from time to time (in which
case such advance or Term Loan or portion thereof, as applicable, shall be
designated as a "LIBOR Rate Loan"); (iii) at the option of the Borrowers, at the
Cost of Funds Rate for the applicable Interest Period plus the Applicable Margin
with respect thereto as in effect from time to time (in which case such advance
or Term Loan or portion thereof, as applicable, shall be designated as a "Cost
of Funds Rate Loan"); or (iv) at the option of the Borrowers, at a fixed rate
equal to the rate announced by the Bank on the date of the Notice of Borrowing
or on the date of any conversion of a Loan to such fixed rate (in which case
such advance or Term Loan or portion thereof, as applicable, shall be designated
as a "Fixed Rate Loan"). If any such interest rate is unlawful, then the rate
shall be the highest rate permitted under applicable law. Interest shall be
payable (i) in the case of Prime Rate Loans and Fixed Rate Loans, in arrears on
the first (1st) Business Day of each month; (ii) in the case of LIBOR Rate Loans
and Cost of Funds Rate Loans, on the Interest Payment Dates applicable thereto;
and (iii) in the case of any advance, when such advance shall be due (whether at
maturity, by reason of prepayment or acceleration or otherwise) or converted,
but only to the extent then accrued on the amount so due or converted. Each
change in the rate of interest payable on the Prime Rate Loans shall take effect
simultaneously with the corresponding change in the Prime Rate. After the
occurrence and during the continuance of a Default or Event of Default and until
such Default or Event of Default has been cured, remedied or waived by the Bank,
the principal amount of the Lines of Credit and the Term Loan shall bear
interest at the annual rate of two percent (2%) above the Prime Rate, or, if
such rate is unlawful, the highest rate permitted under applicable law (the
"Post-Default Rate"). Any amounts overdue under this Agreement shall bear
interest at the Post-Default Rate. Interest at the Post-Default Rate shall be
payable on demand.
(b) Payments. All payments received by the Bank from any of the
Borrowers, except for the payments referred to in Subsection (c) below and
regularly scheduled payments of the Term Loan under Section 1(a)(iii) hereof,
shall be applied first to expenses due hereunder, then to accrued interest and
then to principal. Upon the occurrence and during the continuance of an Event of
Default hereunder, however, payments may be applied in such manner as the Bank
may, in its sole discretion, determine. All computations of interest shall be
made on the basis of a 360-day year. Advances under the Lines of Credit shall be
evidenced by this Agreement, the records of the Bank and, (i)(A) with respect to
the First Line of Credit, a promissory note in the form of Exhibit A hereto (the
"Second Amended and Restated First Line of Credit Note"), and (B) with respect
to the Second Line of Credit, a promissory note in the form of Exhibit B hereto
(the "Second Amended and Restated Second Line of Credit Note"), each due on the
Lines of Credit Termination Date (references in this Agreement to the term "Line
of Credit Note(s)" shall, except where the context does not otherwise permit, be
deemed to apply to both the Second Amended and Restated First Line of Credit
Note and the Second Amended and Restated Second Line of Credit Note); and (ii)
with respect to the Term Loan, a promissory note in the form of Exhibit C hereto
(the "Amended and Restated Term Note"), dated
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as of the Closing Date and due on the fifth (5th) anniversary of the Closing
Date. The LC Reimbursement Obligations shall be evidenced by this Agreement, the
records of the Bank and the Letters of Credit. The records of the Bank shall be
prima facie evidence of the advances hereunder, the aggregate unpaid amount of
the Term Loan and the LC Reimbursement Obligations and, in each case, of accrued
interest thereon and of all payments made in respect thereof.
All payments due to the Bank hereunder, under the Line of Credit Notes or
the Amended and Restated Term Note shall be made in U.S. Dollars in immediately
available funds at Bank of America, N.A., 100 Federal Street, Boston, MA 02110
or at such other address as the Bank may designate by notice to the Borrowers. A
payment to the Bank shall not be deemed to have been made on any day unless such
payment shall have been received by the Bank, at such address, in U.S. Dollars
in immediately available funds, no later than 12:00 noon (Boston time) on such
day.
If any payment under this Agreement becomes due and payable on a day that
is not a Business Day and this Agreement does not otherwise provide for such
contingency, the maturity thereof shall be extended to the next succeeding
Business Day, and with respect to any payment of principal, interest thereon
shall be payable at the then applicable rate during any such extension.
(c) Additional Payments. In addition to the amounts specified above,
the Borrowers shall pay to the Bank the following in connection with the Credit
Facility:
(i) an unused facility fee equal to 1/8 of 1% per annum of the
average unborrowed portion of the First Line of Credit (giving effect, without
duplication, to the Bank's LC Exposure thereunder), such average to be computed
for the three-month period preceding each Payment Date on which such unused
facility fee is payable (or such longer or shorter period as has elapsed from
the Closing Date to the first of such Payment Dates), payable quarterly in
arrears on the last Payment Dates specified herein, commencing on the first such
date following the Closing Date and on each Payment Date thereafter through the
Lines of Credit Termination Date (with the last such fee payable on the Lines of
Credit Termination Date);
(ii) a facility fee of $10,000.00 per annum for the Second Line
of Credit, payable annually in advance on the last day of June in each year;
(iii) a Letter of Credit issuance fee equal to 1% of the original
face amount of each Letter of Credit issued hereunder, payable at the time of
issuance of such Letter of Credit; and
(iv) an audit fee of $1,000 for each field audit of the
Borrower's books and records performed by the Bank, up to a maximum of $1,000 in
audit fees for each 12-month period.
(d) Voluntary Prepayments of Cost of Funds Rate Loans, Fixed Rate
Loans and Prime Rate Loans.
The Borrowers may, upon notice to the Bank, at any time or from
time to time voluntarily prepay any Loan in whole or in part without premium or
penalty; provided, that
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(i) such notice must be received by the Bank not later than 1:00 p.m. (A) three
(3) Business Days prior to any date of prepayment of a Cost of Funds Rate Loan
or a Fixed Rate Loan and (B) on the date of prepayment of a Prime Rate Loan;
(ii) any prepayment of a Cost of Funds Rate Loan shall be in an integral
multiple of (X) $500,000 in the case of Cost of Funds Rate Loans advanced under
the First Line of Credit; (Y) $1,000,000 in the case of Cost of Funds Rate Loans
advanced under the Second Line of Credit; and (Z) $1,000,000 in the case of Cost
of Funds Rate Loans of any portion of the Term Loan; and (iii) any prepayment of
a Prime Rate Loan or a Fixed Rate Loan shall be in a principal amount of
$500,000 or a whole multiple of $100,000 in excess thereof, or, in each case, if
less, the entire principal amount thereof then outstanding. Each such notice
shall specify the date and amount of such prepayment and the type(s) of Loan(s)
to be prepaid. If such notice is given by the Borrowers, the Borrowers shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. Any prepayment of a Loan shall be
accompanied by all accrued interest thereon. Any prepayment of a Fixed Rate Loan
shall be accompanied by such accrued interest, together with any Redeployment
Costs required pursuant to Section 2(g).
(e) Notice of Borrowing. Whenever the Borrowers elect to obtain a
LIBOR Rate Loan or Cost of Funds Rate Loan or Fixed Rate Loan under either of
the Lines of Credit or in respect of the Term Loan or any portion thereof, they
may request that the Bank provide quotes as of any specified date as to the
LIBOR Lending Rate or Cost of Funds Rate Loan or Fixed Rate Loan for any or all
Interest Periods, and the Bank shall promptly provide such quotes. The Borrowers
shall give the Bank prior telecopied or telephone notice, on a Business Day, (i)
not later than 10:00 a.m. (Boston time) on the day of any advance with respect
to a Prime Rate Loan or Fixed Rate Loan and (ii) not later than 10:00 a.m.
(Boston time) at least two (2) Business Days prior to the day of any advance
with respect to a LIBOR Rate Loan or Cost of Funds Rate Loan. Each such notice
shall be irrevocable once given and shall specify the principal amount of the
advance to be made, the date of the advance (which shall be a Business Day),
whether each advance is to be maintained as a Prime Rate Loan, Cost of Funds
Rate Loan, LIBOR Rate Loan, or Fixed Rate Loan, and in the case of a LIBOR Rate
Loan, Cost of Funds Rate Loan or Fixed Rate Loan, the Interest Period applicable
thereto. If such notice is given by telephone, it shall be immediately confirmed
in writing. In the event that the Borrowers at any time fail in such notice to
specify any of the information required by this subsection to be given with
respect to a LIBOR Rate Loan, Cost of Funds Rate Loan, or Fixed Rate Loan, then
the Borrowers shall be deemed to have requested that the Bank make a Prime Rate
Loan. All advances hereunder shall be disbursed by the Bank not later than 12:00
noon (Boston time) on the requested date therefor, in U.S. Dollars in
immediately available funds, by credit to the Borrowers' operating account with
the Bank.
(f) Special Provisions Governing Loans. Notwithstanding any other
provisions of this Agreement to the contrary, the following provisions shall
govern with respect to any LIBOR Rate Loans or Cost of Funds Rate Loans (as
applicable):
(i) Repayment, Continuation and Conversion. Each LIBOR Rate Loan
or Cost of Funds Rate Loan shall mature and, with respect to such Loans under
the Lines of Credit, become payable in full on the last day of the Interest
Period relating thereto. Upon maturity, a LIBOR Rate Loan or Cost of Funds Rate
Loan may be continued for an additional Interest Period or may be converted to a
Prime Rate Loan as provided in clause (ii) below.
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(ii) Continuation and Conversion Elections. Subject to the
provisions hereof, the Borrowers shall have the option (A) to convert at any
time one or more integral multiples of $500,000 of its outstanding Prime Rate
Loans under the First Line of Credit into one or more LIBOR Rate Loans, Cost of
Funds Rate Loans or Fixed Rate Loans, (B) to convert at any time one or more
integral multiples of $1,000,0000 of its outstanding Prime Rate Loans under the
Second Line of Credit into one or more LIBOR Rate Loans, Cost of Funds Rate
Loans or Fixed Rate Loans, (C) to convert at any time one or more integral
multiples of $1,000,000 of its outstanding Prime Rate Loans under the Term Loan
into one or more LIBOR Rate Loans, Cost of Funds Rate Loans, or Fixed Rate
Loans, (D) effective on and as of the expiration date of the Interest Period of
a LIBOR Rate Loan or Cost of Funds Rate Loan, to continue such loan LIBOR Rate
Loan or Cost of Funds Rate Loan, respectively, as such, with an equivalent or
different Interest Period, or (E) effective on and as of the expiration date of
the Interest Period of a LIBOR Rate Loan or Cost of Funds Rate Loan, to convert
such loan to a Prime Rate Loan; provided, however, that (1) a LIBOR Rate Loan or
Cost of Funds Rate Loans may only be continued pursuant to clause (D) above if
the outstanding principal amount of such loan equals or exceeds $500,000 in the
case a LIBOR Rate Loan or Cost of Funds Rate Loan advanced under the First Line
of Credit, $1,000,000 in the case of a LIBOR Rate Loan or Cost of Funds Rate
Loans advanced under the Second Line of Credit, or $1,000,000 in the case of
LIBOR Rate Loan or Cost of Funds Rate Loans under the Term Loan; (2) no portion
of the outstanding principal amount of any advance may be converted to, or
continued as, a LIBOR Rate Loan or Cost of Funds Rate Loan when any Default or
Event of Default has occurred and is continuing; and (3) no portion of the
outstanding principal amount of any LIBOR Rate Loan or Cost of Funds Rate Loan
may be converted to a LIBOR Rate Loan or Cost of Funds Rate Loan, respectively,
of a different duration if such LIBOR Rate Loan or Cost of Funds Rate Loan
relates to any Hedging Obligations unless the maturity of the relevant Hedging
Obligations has been appropriately adjusted in a manner satisfactory to the
Bank.
The Borrowers shall deliver a notice of conversion/continuation
to the Bank, on a Business Day, no later than 10:00 a.m. (Boston time) at least
two (2) Business Days in advance of the proposed conversion/continuation date
for a LIBOR Rate Loan or a Cost of Funds Rate Loan. A notice of
conversion/continuation shall, in the case of a conversion to, or continuation
of, a LIBOR Rate Loan or a Cost of Funds Rate Loan, be irrevocable and shall be
given by the Borrowers to specify (V) the proposed conversion/continuation date
(which shall be a Business Day), (W) whether the Loan to be converted/continued
is a First Line of Credit Loan, Second Line of Credit Loan or the Term Loan or a
portion thereof, (X) the amount of the First or Second Line of Credit Loan or
the Term Loan, or a portion thereof, to be converted/continued, (Y) (1) whether
the First or Second Line of Credit Loan or portion of the Term Loan to be
converted/continued is a Prime Rate Loan, Cost of Funds Rate Loan, LIBOR Rate
Loan, or Fixed Rate Loan, and (2) whether the First or Second Line of Credit
Loan or portion of the Term Loan into which such First or Second Line of Credit
Loan is converted/continued is to be a Prime Rate Loan, Cost of Funds Rate Loan
LIBOR Rate Loan, or Fixed Rate Loan, and (Z) in the case of a conversion to, or
a continuation of, a LIBOR Rate Loan or Cost of Funds Rate Loan, the requested
Interest Period.
In lieu of delivering the above-described notice, the Borrowers
may give the Bank telephonic notice by the required time of any proposed
conversion/continuation; provided, that such notice shall be immediately
confirmed in writing.
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If the Borrowers fail to give such notice with respect to a LIBOR
Rate Loan or Cost of Funds Rate Loan at least two (2) Business Days before the
last day of the then current Interest Period with respect thereto, the Borrowers
shall be deemed to have delivered to the Bank a notice to convert such Loan into
a Prime Rate Loan and such loan shall, on such last day, automatically convert
into a Prime Rate Loan. Any notice of conversion/continuation given pursuant to
this subsection shall be irrevocable on and after the date of delivery thereof
to the Bank, and the Borrowers shall be bound to convert or continue in
accordance therewith.
(iii) Determination and Notice of LIBOR Lending Rate, Cost of
Funds Rate or Fixed Rate. Promptly after receipt of notice from the Borrowers
that they wish to elect a LIBOR Rate Loan, Cost of Funds Rate Loan, or Fixed
Rate Loan, the Bank shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the applicable LIBOR
Lending Rate, Cost of Funds Rate, or Fixed Rate, as applicable, which rate shall
apply to the LIBOR Rate Loans, Cost of Funds Rate Loans, or Fixed Rate Loans, as
applicable, for which an interest rate is then being determined for the
applicable Interest Period, and shall promptly give notice thereof (in writing
or by telephone and confirmed in writing) to the Borrowers.
(iv) Basis for Determining Interest Rate Inadequate. If the Bank
shall have determined that:
(A) U.S. Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Bank in the London interbank
market,
(B) by reason of circumstances affecting the Bank in the
London interbank market, adequate means do not exist for ascertaining the LIBOR
Lending Rate applicable hereunder to LIBOR Rate Loans of any duration, or
(C) the LIBOR Lending Rate no longer adequately reflects the
Bank's cost of funding LIBOR Rate Loans of any duration,
then, upon notice from the Bank to the Borrowers and until the Bank shall notify
the Borrowers that the circumstances causing such suspension no longer exist,
(1) the obligations of the Bank under this Agreement to make or continue any
Loans as, or to convert any Loans into, LIBOR Rate Loans of such duration shall
forthwith be suspended and (2) each affected outstanding LIBOR Rate Loan shall
be converted into a Prime Rate Loan on the last day of the then current Interest
Period applicable thereto.
(v) LIBOR Rate Lending Unlawful. If the Bank shall determine
(which determination shall, upon notice thereof to the Borrowers, be conclusive
and binding on the Borrowers, absent manifest error) that the introduction of or
any change in or in the interpretation of any law, rule, regulation or guideline
(whether or not having the force of law) makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for the Bank to
make, continue or maintain any LIBOR Rate Loan as, or to convert any loan into,
a LIBOR Rate Loan of a certain duration, the obligations of the Bank to make,
continue, maintain or convert into any such LIBOR Rate Loans shall, upon such
determination, forthwith be suspended until the Bank shall notify the Borrowers
that the circumstances causing such
7
suspension no longer exist, and all LIBOR Rate Loans of such type shall
automatically convert into Prime Rate Loans on the last day of the then current
Interest Periods applicable thereto or sooner, if required by such law or
assertion.
(vi) Voluntary Prepayment of LIBOR Rate Loans. LIBOR Rate Loans
in connection with which the Borrowers have entered into Hedging Obligations
with the Bank may not be prepaid; other LIBOR Rate Loans may be prepaid only
upon the terms and conditions set forth herein. The Borrowers shall give the
Bank, no later than 10:00 a.m. (Boston time), at least four (4) Business Days'
notice of any proposed prepayment of any LIBOR Rate Loans, specifying the
proposed date of payment of such LIBOR Rate Loans, and the principal amount to
be paid. Each partial prepayment of the principal amount of LIBOR Rate Loans
shall be in an integral multiple of (A) $500,000 in the case of LIBOR Rate Loans
advanced under the First Line of Credit, (B) $1,000,000 in the case of LIBOR
Rate Loans advanced under the Second Line of Credit, and (C) $1,000,000 in the
case of LIBOR Rate Loans of any portion of the Term Loan, and accompanied by the
payment of all charges outstanding on such LIBOR Rate Loans and of all accrued
interest on the principal repaid to the date of payment.
Borrowers acknowledge that prepayment or acceleration of a LIBOR
Rate Loan during an Interest Period shall result in the Bank incurring
additional costs, expenses and/or liabilities and that it is extremely difficult
and impractical to ascertain the extent of such costs, expenses and/or
liabilities. Therefore, all full or partial prepayments of LIBOR Rate Loans
shall be accompanied by, and the Borrowers hereby jointly and severally promise
to pay, on each date a LIBOR Rate Loan is prepaid or the date all sums payable
hereunder become due and payable, by acceleration or otherwise, in addition to
all other sums then owing, an amount (the "LIBOR Prepayment Fee") determined by
the Bank pursuant to the following formula:
(1) the then current rate for U.S. Treasury securities
(bills on a discounted basis shall be converted to a
bond equivalent) with a maturity date closest to the
end of the Interest Period as to which prepayment is
made, subtracted from
(2) the LIBOR Lending Rate applicable to the LIBOR Rate
Loan being prepaid, plus 1.5%.
If the result of this calculation is zero or a negative number, then
there shall be no LIBOR Prepayment Fee. If the result of this
calculation is a positive number, then the resulting percentage shall
be multiplied by:
(3) the amount of the LIBOR Rate Loan being prepaid.
The resulting amount shall be divided by:
(4) 360
and multiplied by:
(5) the number of days remaining in the Interest Period as
to which the prepayment is being made.
8
Said amount shall be reduced to present value calculated by using the
referenced U.S. Treasury securities rate and the number of days
remaining on the Interest Period for the LIBOR Rate Loan being
prepaid.
The resulting amount of these calculations shall be the LIBOR Prepayment
Fee.
(vii) Indemnities. In addition to the LIBOR Prepayment Fee, the
Borrowers agree to reimburse the Bank (without duplication) for any increase in
the cost to the Bank, or reduction in the amount of any sum receivable by the
Bank, in respect, or as a result of:
(A) any conversion or repayment or prepayment of the
principal amount of any LIBOR Rate Loan on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to Section
2(e)(vi) or otherwise;
(B) any Loan not being made as a LIBOR Rate Loan in
accordance with the borrowing request therefor;
(C) any LIBOR Rate Loan not being continued as, or converted
into, a LIBOR Rate Loan in accordance with the continuation/conversion notice
therefor; or
(D) any costs associated with marking to market any Hedging
Obligations that (in the reasonable determination of the Bank) are required to
be terminated as a result of any conversion, repayment or prepayment of the
principal amount of any LIBOR Rate Loan on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to Section
2(e)(vi) or otherwise.
The Bank shall promptly notify the Borrowers in writing of the occurrence
of any such event, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate the Bank for
such increased cost or reduced amount. Such additional amounts shall be payable
by the Borrowers to the Bank within five (5) days of its receipt of such notice,
and such notice shall, in the absence of manifest error, be conclusive and
binding on the Borrowers. The Borrowers understand, agree and acknowledge the
following: (i) the Bank does not have any obligation to purchase, sell and/or
match funds in connection with the use of the LIBOR Rate as a basis for
calculating the rate of interest on a LIBOR Rate Loan; (ii) the LIBOR Rate may
be used merely as a reference in determining such rate; and (iii) the Borrowers
have accepted the LIBOR Rate as a reasonable and fair basis for calculating such
rate, the LIBOR Prepayment Fee, and other funding losses incurred by the Bank.
Borrowers further agree to pay the LIBOR Prepayment Fee and other funding
losses, if any, whether or not the Bank elects to purchase, sell and/or match
funds.
(viii) Increased Costs. If on or after the date hereof the
adoption of any applicable law, rule or regulation or guideline (whether or not
having the force of law), or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
9
(A) shall subject the Bank to any tax, duty or other charge
with respect to its LIBOR Rate Loans or Letters of Credit issued by it or its
obligation to make LIBOR Rate Loans or issue Letters of Credit, or shall change
the basis of taxation of payments to the Bank of the principal of or interest on
its LIBOR Rate Loans or any other amounts due under this Agreement in respect of
its LIBOR Rate Loans or the Letters of Credit or its obligation to make LIBOR
Rate Loans or issue Letters of Credit (except for the introduction of, or change
in the rate of, tax on the overall net income of the Bank or franchise taxes,
imposed by the jurisdiction (or any political subdivision or taxing authority
thereof) under the laws of which the Bank is organized or in which the Bank's
principal executive office is located); or
(B) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System of
the United States) against assets of, deposits with or for the account of, or
credit extended by, the Bank or shall impose on the Bank or on the London
interbank market any other condition affecting its LIBOR Rate Loans or Letters
or Credit issued by it or its obligation to make LIBOR Rate Loans or issue
Letters of Credit;
(C) and the result of any of the foregoing is to increase
the cost to the Bank of making or maintaining any LIBOR Rate Loan or issuing any
Letter of Credit, or to reduce the amount of any sum received or receivable by
the Bank under this Agreement with respect thereto, by an amount deemed by the
Bank to be material, then, within 15 days after demand by the Bank, the
Borrowers shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or reduction. A statement of the
Bank as to any such additional amount or amounts (including calculations thereof
in reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the Borrowers. In determining such amount, the Bank may use any
method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.
(g) Voluntary Prepayment of Fixed Rate Loans. Borrowers acknowledge
that prepayment of a Fixed Rate Loan prior to the end of the applicable Interest
Period shall result in the Bank incurring additional costs, expenses and/or
liabilities and that it is extremely difficult and impractical to ascertain the
extent of such costs, expenses and/or liabilities. Therefore, all full or
partial prepayments of Fixed Rate Loans shall be accompanied by, and the
Borrowers hereby jointly and severally promise to pay, on each date a Fixed Rate
Loan is prepaid, in addition to all other sums then owing, the Bank's (i) cost
of obtaining funds for the Fixed Rate Loan that is the subject of such
prepayment for the period from the date of such prepayment to the last day of
the Interest Period in effect (or that would have been in effect) for such Fixed
Rate Loan over (ii) the amount of interest likely to be realized by the Bank in
redeploying the funds released or not utilized by reason of such prepayment for
such period (the "Redeployment Costs"). A certificate of the Bank setting forth
any amount or amounts which the Bank is entitled to receive pursuant to this
Section shall be delivered to the Borrowers and shall be conclusive absent
manifest error.
(h) Increased Capital Costs. If any change in, or the introduction,
adoption, effectiveness, interpretation, reinterpretation or phase-in of, any
law or regulation, directive, guideline, decision or request (whether or not
having the force of law) of any court, central bank,
10
regulator or other governmental authority affects or would affect the amount of
capital required or expected to be maintained by the Bank, or person controlling
the Bank, and the Bank determines (in its sole and absolute discretion) that the
rate of return on its or such controlling person's capital as a consequence of
its commitments or the Loans made or Letters of Credit issued by the Bank is
reduced to a level below that which the Bank or such controlling person could
have achieved but for the occurrence of any such circumstance, then, in any such
case upon notice from time to time by the Bank to the Borrowers, the Borrowers
shall immediately pay directly to the Bank additional amounts sufficient to
compensate the Bank or such controlling person for such reduction in rate of
return. A statement of the Bank as to any such additional amount or amounts
(including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrowers. In determining such
amount, the Bank may use any method of averaging and attribution that it (in its
reasonable discretion) shall deem applicable.
(i) Taxes. All payments by the Borrowers of principal of, and interest
on, the Loans and all other amounts payable hereunder shall be made free and
clear of and without deduction for any present or future income, excise, stamp
or franchise taxes and other taxes, fees, duties, withholdings or other charges
of any nature whatsoever imposed by any taxing authority, but excluding
franchise taxes and taxes imposed on or measured by the Bank's net income or
receipts (such non-excluded items being called "Taxes"). In the event that any
withholding or deduction from any payment to be made by the Borrowers hereunder
is required in respect of any Taxes pursuant to any applicable law, rule or
regulation, then the Borrowers will:
(A) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(B) promptly forward to the Bank an official receipt or
other documentation satisfactory to the Bank evidencing such payment to such
authority; and
(C) pay to the Bank such additional amount or amounts as are
necessary to ensure that the net amount actually received by the Bank will equal
the full amount the Bank would have received had no such withholding or
deduction been required.
Moreover, if any Taxes are directly asserted against the Bank with respect
to any payment received by the Bank hereunder, the Bank may pay such Taxes and
the Borrowers will promptly pay such additional amount (including any penalties,
interest or expenses) as is necessary in order that the net amount received by
the Bank after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount the Bank would have received had such Taxes not
been asserted.
If the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority or fail to remit to the Bank the required receipts or other required
documentary evidence, the Borrowers shall indemnify the Bank for any incremental
Taxes, interest or penalties that may become payable by the Bank as a result of
any such failure.
11
3. Letters of Credit.
(a) Issuance. The Bank agrees, on the terms and conditions set forth
in this Agreement, to issue standby letters of credit hereunder (each a "Letter
of Credit") at the request of the Borrowers from time to time prior to the date
that is 30 days before the Lines of Credit Termination Date; provided, that
immediately after each such Letter of Credit is issued, (i) the LC Exposure
shall not exceed $1,500,000, and (ii) the sum of the outstanding principal
amount of all First Line of Credit Loans plus the LC Exposure shall not exceed
$10,000,000. All Letters of Credit issued and outstanding under the Existing
Loan Agreement, on and as of the Closing Date shall become Letters of Credit
hereunder.
(b) Notice of Proposed Issuance. With respect to each Letter of
Credit, the Borrowers shall give the Bank at least two (2) Business Days' prior
notice (i) specifying the date such Letter of Credit is to be issued and (ii)
describing the proposed terms of such Letter of Credit and the nature of the
transactions to be supported thereby.
(c) Conditions to Issuance. The Bank shall not issue any Letter of
Credit unless:
(i) such Letter of Credit shall be reasonably satisfactory in
form and substance to the Bank,
(ii) the Borrowers shall have executed and delivered such other
instruments and agreements relating to such Letter of Credit as the Bank shall
have reasonably requested, and
(iii) the conditions specified in Sections 7 and 8 hereof shall
have been satisfied at or prior to the time such Letter of Credit is to be
issued.
(d) Expiry Dates. No Letter of Credit shall have an expiry date later
than the fifth (5th) Business Day before the Lines of Credit Termination Date.
Subject to the preceding sentence, each Letter of Credit issued hereunder shall
expire on or before the anniversary of the date of such issuance; provided, that
the expiry date of any Letter of Credit may be extended from time to time at the
Borrowers' request and with the Bank's consent for a period not exceeding one
year.
(e) Drawings. If the Bank receives a demand for payment under any
Letter of Credit issued by it and determines that such demand should be honored,
the Bank shall (i) make such payment in accordance with the terms of such Letter
of Credit and (ii) reasonably promptly notify the Borrowers as to the amount
paid by the Bank as a result of such demand and the date of such payment (an "LC
Payment Date").
(f) Reimbursement by the Borrowers. If any amount is drawn under any
Letter of Credit, the Borrowers irrevocably and unconditionally agree to
reimburse the Bank for such amount together with any and all reasonable charges
and expenses which the Bank may pay or incur relative to such drawing. Such
reimbursement shall be due and payable on the relevant LC Payment Date or the
date on which the Bank notifies the Borrowers of such drawing, whichever is
later; provided, that if such notice is given after 12:00 noon (Boston time) on
the
12
later of such dates, such reimbursement shall be due and payable on the next
following Business Day (the date on which it is due and payable being an "LC
Reimbursement Due Date").
In addition, the Borrowers agree to pay, on the applicable LC Reimbursement
Due Date, interest on each amount drawn under a Letter of Credit, for each day
from and including the date such amount is drawn to but excluding such LC
Reimbursement Due Date, at a rate per annum equal to the Applicable Margin with
respect to the LIBOR Rate Loans as in effect on such day. The Borrowers also
agree to pay, on demand, interest on any overdue amount (including any overdue
interest) payable under this subsection (f), for each day from and including the
date when such amount becomes due to but excluding the date such amount is paid
in full, at a rate per annum equal to the sum of the Prime Rate for such day
plus 2.0% (or, if such rate is unlawful, the highest rate permitted under
applicable law).
(g) Exculpatory Provisions. The obligations of the Borrowers under
this Section 3 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrowers may have or have had against the Bank, any beneficiary of
any Letter of Credit or any other person. The Borrowers assume all risks of the
acts or omissions of any beneficiary of any Letter of Credit with respect to the
use of such Letter of Credit by such beneficiary. Neither the Bank nor any of
its officers, directors, employees and agents shall be responsible for, and the
obligations of the Borrowers to reimburse the Bank for drawings pursuant to this
Section 3 (other than obligations resulting solely from the gross negligence or
willful misconduct of the Bank) shall not be excused or affected by, among other
things, (i) the use which may be made of any Letter of Credit or any acts or
omissions of any beneficiary or transferee in connection therewith; (ii) the
validity, sufficiency or genuineness of documents presented under any Letter of
Credit or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by the Bank against presentation of documents to it which do not
comply with the terms of the relevant Letter of Credit; or (iv) any dispute
between or among the Borrowers, any beneficiary of any Letter of Credit or any
other person or any claims or defenses whatsoever of the Borrowers or any other
person against any beneficiary of any Letter of Credit. The Bank shall not be
liable for any error, omission, interruption or delay in transmission, dispatch
or delivery of any message or advice, however transmitted, in connection with
any Letter of Credit. Any action taken or omitted by the Bank in connection with
any Letter of Credit and the related drafts and documents, if done without
willful misconduct or gross negligence, shall be binding on the Borrowers and
shall not place the Bank under any liability to the Borrowers.
(h) Indemnification by Borrowers. Each of the Borrowers agrees to
indemnify and hold harmless the Bank from and against any and all claims,
damages, losses, liabilities, costs or expenses (including, without limitation,
the reasonable fees and disbursements of counsel) which the Bank may reasonably
incur (or which may be claimed against the Bank by any person whatsoever) by
reason of or in connection with any execution and delivery or transfer of, or
payment or failure to pay under, any Letter of Credit or any actual or proposed
use of any Letter of Credit; provided, that the Borrowers shall not be required
to indemnify the Bank for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of the Bank in determining whether a request
presented under any Letter of Credit issued by it complied with the terms of
such Letter
13
of Credit or (ii) the Bank's failure to pay under any Letter of Credit issued by
it after the presentation to it of a request strictly complying with the terms
and conditions of such Letter of Credit. Nothing in this subsection is intended
to limit the obligations of the Borrowers under any other provision of this
Section 3.
4. Definitions. All defined terms used in this Agreement which are not
otherwise defined herein shall have the respective meanings assigned to them in
the Loan Documents. For purposes of this Agreement and of the Loan Documents,
the following additional definitions shall apply:
(a) The term "Affiliated Person" shall mean any person or entity
controlling, controlled by or under common control with any of the Borrowers.
(b) The term "Anti-Terrorism Order" shall mean Executive Order No.
13,224 66 Fed Reg. 49,079 (2001) issued by the President of the United States of
America (Executive Order Blocking Property and Prohibiting Transactions with
Persons Who Commit, Threaten to Commit, or Support Terrorism).
(c) The term "Applicable Margin" shall mean, for any Type of Loans,
the percentage determined in accordance with the following table:
RATIO OF CONSOLIDATED
TOTAL FUNDED DEBT TO PRIME LIBOR COST OF FUNDS
CONSOLIDATED EBITDA RATE LOANS RATE LOANS RATE LOANS
- --------------------- ---------- ---------- -------------
Greater than 2.5:1.0 0% 3.00% 3.00%
Greater than 2.0:1.0 but less 0% 2.75% 2.75%
than or equal to 2.5:1.0
Greater than 1.5:1.0 but less 0% 2.25% 2.25%
than or equal to 2.0:1.0
Greater than 1.0:1.0 but less 0% 1.75% 1.75%
than or equal to 1.5:1.0
Less than or equal to 1.0:1.0 0% 1.25% 1.25%
For purposes of determining the Applicable Margin, the Ratio of Consolidated
Total Funded Debt to Consolidated EBITDA (calculated for the period of four (4)
consecutive fiscal quarters
14
ending on the date of calculation) will be tested quarterly, commencing with the
fiscal quarter of the Borrowers ending December 31, 2006, based on the
Compliance Certificate required to be delivered pursuant to Section 6(d) hereof
with respect to such fiscal quarter. Notwithstanding the foregoing, from the
Closing Date through the date on which the Compliance Certificate for the fiscal
quarter ending December 31, 2006 is required to be delivered pursuant to Section
6(d), the Applicable Margin shall be equal to 0% for Prime Rate Loans and 2.75%
for LIBOR Rate Loans and Cost of Funds Loans. For purposes of determining the
Applicable Margin, any interest rate change shall be effective on the first
(1st) Business Day of the fiscal month following delivery of the Compliance
Certificate required to be delivered pursuant to Section 6(d) hereof is
delivered to the Bank, together with a notice to the Bank (which shall be
verified by the Bank) specifying any change in the Applicable Margin, and if the
Borrowers have failed to deliver the Compliance Certificate required to be
delivered pursuant to Section 6(d) hereof, the Applicable Margin that would
otherwise be in effect shall automatically be increased to the highest margin
until such Compliance Certificate is delivered.
(d) The term "Business Day" shall mean:
(i) any day which is neither a Saturday or Sunday nor a legal
holiday on which commercial banks are authorized or required to be closed in
Boston, Massachusetts;
(ii) when such term is used to describe a day on which a
borrowing, payment, prepaying, or repaying is to be made in respect of any LIBOR
Rate Loan, any day which is: (i) neither a Saturday or Sunday nor a legal
holiday on which commercial banks are authorized or required to be closed in New
York City; and (ii) a London Banking Day; and
(iii) when such term is used to describe a day on which an
interest rate determination is to be made in respect of any LIBOR Rate Loan, any
day which is a London Banking Day.
(e) The term "Capital Expenditure" shall mean any payment made or
required to be made, directly or indirectly, by any of the Borrowers or any of
their subsidiaries for the purpose of acquiring or constructing fixed assets,
real property or equipment which, in accordance with GAAP, would be added as a
debit to the fixed asset account of the Borrowers or any of their subsidiaries,
including, without limitation, amounts paid or payable under any conditional
sale or other title retention agreement or under any lease or other periodic
payment agreement which is of such a nature that payment obligations of the
Borrowers thereunder would be required by GAAP to be capitalized and shown as
liabilities on the consolidated balance sheet of the Borrowers and their
subsidiaries.
(f) The term "Closing" shall mean a closing at which the Credit
Facility is to be entered into as reflected herein.
(g) The term "Closing Date" shall mean November 7, 2006.
(h) The term "Consolidated" or "consolidated" shall mean, with
reference to any term defined herein, that term as applied to the accounts of
the Borrowers and their subsidiaries consolidated in accordance with GAAP.
15
(i) The term "Consolidated Adjusted EBITDA" for any fiscal period
shall mean an amount equal to Consolidated EBITDA for such fiscal period minus
the sum of any amounts attributable to any of the following for such fiscal
period: (i) income tax expense, (ii) cash dividends or distributions in respect
of Dentex's capital stock (specifically, excluding cash dividends or
distributions in respect of the capital stock of Dentex's direct and indirect
subsidiaries), (iii) payments by the Borrowers in respect of any repurchase,
redemption, conversion or other retirement of any of the Borrowers' capital
stock, and (iv) payments due by the Borrowers in respect of the deferred
purchase price of assets pursuant to acquisitions permitted by Sections 8(c) and
6(k) hereunder, all as determined in accordance with GAAP to the extent
applicable. For the avoidance of confusion, whenever Consolidated Adjusted
EBITDA is calculated, it shall be calculated (i) for the period of four (4)
consecutive fiscal quarters ending on the date of such calculation; and (ii)
with respect to any Borrower and its subsidiaries that were acquired by Dentex
or its subsidiaries within 12-months of the date of such calculation, such
acquired entity's historical financial statements shall be used for any periods
prior to the acquisition that are included in such four (4) consecutive fiscal
quarter period being calculated.
(j) The term "Consolidated EBITDA" for any fiscal period shall mean an
amount equal to Consolidated Net Income for such fiscal period, plus, to the
extent deducted in determining Consolidated Net Income for such fiscal period,
interest expense, income tax expense, depreciation expense and amortization
expense incurred by the Borrowers and their subsidiaries, on a consolidated
basis, for such fiscal period, all as determined in accordance with GAAP. For
purposes of determining Consolidated EBITDA for a division or separate
operation, there shall be taken into account all income and expenses properly
allocable to such division or operation, including corporate overhead,
administrative costs, taxes and interest. For the avoidance of confusion,
whenever Consolidated EBITDA is calculated, it shall be calculated (i) for the
period of four (4) consecutive fiscal quarters ending on the date of such
calculation; and (ii) with respect to any Borrower and its subsidiaries that
were acquired by Dentex or its subsidiaries within 12-months of the date of such
calculation, such acquired entity's historical financial statements shall be
used for any periods prior to the acquisition that are included in such four (4)
consecutive fiscal quarter period being calculated.
(k) The term "Consolidated Net Income" for any fiscal period shall
mean the net income or net loss, after deduction of or credit for applicable
income taxes, of the Borrowers and their subsidiaries, as such net income or net
loss would be set forth on a consolidated income statement for such fiscal
period prepared in accordance with GAAP; provided, that there shall be excluded
any items of gain which (i) are not ordinary by GAAP definition or (ii) are not
a result of ordinary operations, as determined in the Bank's sole discretion.
For the avoidance of confusion, whenever Consolidated Net Income is calculated,
it shall be calculated (i) for the period of four (4) consecutive fiscal
quarters ending on the date of such calculation; and (ii) with respect to any
Borrower and its subsidiaries that were acquired by Dentex or its subsidiaries
within 12-months of the date of such calculation, such acquired entity's
historical financial statements shall be used for any periods prior to the
acquisition that are included in such four (4) consecutive fiscal quarter period
being calculated.
(l) The term "Consolidated Net Worth" on any date shall mean, for the
Borrowers and their subsidiaries on a consolidated basis, Shareholders' Equity
on such date.
16
(m) The term "Consolidated Total Funded Debt" shall mean, as of any
date of determination, for the Borrowers and their subsidiaries on a
consolidated basis, (i) all outstanding Indebtedness, current or funded, secured
or unsecured, incurred in connection with borrowings or the making available of
credit or funds, (ii) all Indebtedness issued, incurred or assumed in respect of
the purchase price of property, except for trade accounts payable incurred in
the ordinary course of the Borrowers' or their subsidiaries' business consistent
with the policies of the Borrowers or their subsidiaries on which interest is
not being accrued and which are payable within 90 days of the statement date of
such trade accounts payable, and which have not been outstanding longer than 90
days from the statement date of such trade accounts payable, (iii) all
capitalized lease obligations (as defined by GAAP), and (iv) all direct
obligations arising under letters of credit (including standby and commercial),
bankers' acceptances, bank guaranties, surety bonds and similar instruments.
(n) The term "Cost of Funds Rate" means the per annum rate of interest
which Bank is required to pay, or is offering to pay, for wholesale liabilities
of like tenor, adjusted for reserve requirements and such other requirements as
may be imposed by federal, state or local government and regulatory agencies, as
determined by Bank.
(o) The term "Default" shall mean any condition or event that, with
the giving of notice or lapse of time, or both, would, unless cured or waived,
become an Event of Default.
(p) The term "Fixed Charge Coverage Ratio" shall mean as of the end of
any fiscal quarter of the Borrowers the ratio of (i) Consolidated EBITDA for the
period of four consecutive fiscal quarters ending with such fiscal quarter,
determined in accordance with GAAP, to (ii) the sum of (A) the aggregate amount
of principal payments of Indebtedness of the Borrowers or any of their
subsidiaries scheduled to have been made during such period plus (B) the
aggregate amount of interest expense of the Borrowers or any of their
subsidiaries for such period.
(q) The term "Fixed Rate" shall mean the rate of interest quoted by
the Bank from time to time in Boston as its "fixed rate", which is not
necessarily the Bank's lowest rate of interest.
(r) The term "GAAP" shall mean generally accepted accounting
principles in the United States of America as in effect from time to time.
(s) The term "Hedging Obligation" shall mean all liabilities of the
Borrowers to the Bank under interest rate swap agreements or any other
agreements or arrangements designed to protect the Borrowers against
fluctuations in interest rates or currency exchange rates.
(t) The term "Indebtedness" shall mean, with respect to any person,
(i) all indebtedness or other obligations of such person for borrowed money or
for the deferred purchase price of property or services, (ii) all indebtedness
or other obligations of any other person for borrowed money or for the deferred
purchase price of property or services in respect of which such person is
liable, contingently or otherwise, to pay or advance money or property as
guarantor, endorser or otherwise (except as endorser for collection in the
ordinary course of
17
business), or which such person has agreed to purchase or otherwise acquire, and
(iii) all lease obligations of such person which are required, in accordance
with GAAP, to be capitalized on the books of the lessee.
(u) The term "Insolvent" shall mean, with respect to any person, when
any of the following events shall have occurred and be continuing in respect of
such person: death, dissolution, termination of existence, business failure,
insolvency, appointment of a receiver for any part of the property of, an
assignment for the benefit of creditors by, or a commencement of any proceedings
under any bankruptcy or insolvency law or any law relating to the relief of
debtors, readjustment of indebtedness, reorganization, composition or extension
by or against, such person.
(v) The term "Interest Period" shall mean:
(i) with respect to any LIBOR Rate Loan:
(A) initially, the period beginning on (and including) the
date on which such LIBOR Rate Loan is made or continued as, or converted into, a
LIBOR Rate Loan pursuant to Section 2(e) or Section 2(f)(ii) and ending on (but
excluding) the day which numerically corresponds to such date 30, 60, 90, or 180
days thereafter, in each case as the Borrowers may select in their notice
pursuant to Section 2(d) or Section 2(f)(ii); and
(B) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such LIBOR Rate Loan and ending
30, 60, 90, or 180 days thereafter, as selected by the Borrowers by irrevocable
notice to the Bank not less than two (2) Business Days prior to the last day of
the then current Interest Period with respect thereto;
provided, however, that:
(1) the Borrowers shall not be permitted to select Interest
Periods to be in effect at any one time which have
expiration dates occurring on more than five (5)
different dates;
(2) Interest Periods commencing on the same date for LIBOR
Rate Loans comprising part of the same advance under
this Agreement shall be of the same duration;
(3) Interest Periods for LIBOR Rate Loans in connection
with which the Borrowers have entered into a Hedging
Obligation with the Bank shall be of the same duration
as the relevant periods set under such Hedging
Obligation;
(4) if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall
end on the next following Business Day unless such day
falls in the
18
next calendar month, in which case such Interest Period
shall end on the first preceding Business Day;
(5) no Interest Period may end later than the Termination
Date; and
(6) no Interest Period may be selected when a Default or an
Event of Default has occurred and is continuing;
(ii) with respect to any Cost of Funds Rate Loan:
(A) initially, the period beginning on (and including) the
date on which such Cost of Funds Rate Loan is made or continued as, or converted
into, a Cost of Funds Rate Loan pursuant to Section 2(e) or Section 2(f)(ii) and
ending on (but excluding) the day that is seven (7), 14 or 30 days thereafter
(or, if such day is not a Business Day, such Interest Period shall end on the
next following Business Day unless such day falls in the next calendar month, in
which case such Interest Period shall end on the first preceding Business Day),
in each case as the Borrowers may select in their notice pursuant to Section
2(e) or Section 2(f)(ii); and
(B) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Cost of Funds Rate Loan
and ending seven (7), 14 or 30 days thereafter, as selected by the Borrowers by
irrevocable notice to the Bank not less than two (2) Business Days prior to the
last day of the then current Interest Period with respect thereto.
(iii) with respect to any Fixed Rate Loan, the period beginning
on (and including) the date on which such Fixed Rate Loan is made, or converted
into a Fixed Rate Loan, pursuant to Section 2(e) and ending on the date
specified in the Notice of Borrowing.
(w) The term "Interest Payment Date" shall mean, with respect to (i)
any LIBOR Rate Loan having an Interest Period of 90 days or less, the last
Business Day of such Interest Period, and as to any LIBOR Rate Loan having an
Interest Period longer than 90 days, each Business Day which is 90 days, or a
whole multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period, and (ii) any Cost of Funds Rate Loan or Fixed Rate
Loan, the last Business Day of the Interest Period applicable thereto.
(x) The term "LC Exposure" shall mean, at any time, the sum, without
duplication, of (i) the aggregate amount that is (or may thereafter become)
available for drawing under all Letters of Credit outstanding at such time plus
(ii) the aggregate unpaid amount of all LC Reimbursement Obligations at such
time.
(y) The term "LC Reimbursement Obligations" shall mean, at any time,
all obligations of the Borrowers to reimburse the Bank for amounts paid by the
Bank in respect of drawings under Letters of Credit.
(z) The term "Letter of Credit" shall have the meaning set forth in
Section 3(a) hereof.
19
(aa) The term "LIBOR Rate" shall mean, with respect to any Interest
Period for any LIBOR Rate Loan, the offered rate for deposits of U.S. Dollars in
an amount approximately equal to the amount of the requested LIBOR Rate Loan for
a term coextensive with the designated Interest Period which the British
Bankers' Association fixes as its LIBOR rate and which appears on the Telerate
Page 3750 as of 11:00 a.m. London time on the day which is two (2) London
Banking Days prior to the beginning of such Interest Period.
(bb) The term "LIBOR Lending Rate" means, with respect to any LIBOR
Rate Loan to be made, continued or maintained as, or converted into, a LIBOR
Rate Loan for any Interest Period, a rate per annum for such Interest Period
determined pursuant to the following formula:
LIBOR Rate
LIBOR Lending Rate = ---------------------------------
(1.00 - LIBOR Reserve Percentage)
(cc) The term "LIBOR Reserve Percentage" shall mean, with respect to
any day of any Interest Period for LIBOR Rate Loans, the maximum aggregate
(without duplication) of the rates (expressed as a decimal fraction) of reserve
requirements (including all basic, emergency, supplemental, marginal and other
reserves and taking into account any transitional adjustments or other scheduled
changes in reserve requirements) under any regulations of the Board of Governors
of the Federal Reserve System (the "Board") or other governmental authority
having jurisdiction with respect thereto as issued from time to time and then
applicable to assets or liabilities consisting of "Eurocurrency Liabilities," as
currently defined in Regulation D of the Board, having a term approximately
equal or comparable to such Interest Period.
(dd) The term "Lines of Credit Termination Date" shall mean the
maturity date of the Lines of Credit, November 7, 2009.
(ee) The term "Loan" shall mean an extension of credit by the Bank to
the Borrowers, in the form of an advance under either of the Lines of Credit, a
Letter of Credit issued under the First Line of Credit, or the Term Loan.
(ff) The term "Loan Documents" shall mean (i) this Agreement,
including the Exhibits and Schedules attached hereto and the Notes, (ii) any
agreement or agreements between the Borrowers and the Bank which give rise to
any Hedging Obligations and (iii) all other agreements, documents and
instruments relating to, arising out of, or in any way connected with any of the
foregoing referred to in clauses (i) and (ii) above.
(gg) The term "London Banking Day" shall mean a day on which dealings
in U.S. Dollar deposits are transacted in the London interbank market.
(hh) The term "Notes" shall refer to, collectively, the Second Amended
and Restated First Line of Credit Note, the Second Amended and Restated Second
Line of Credit Note, and the Amended and Restated Term Note.
(ii) The term "Patriot Act" shall mean Public Law 107-56 of the United
States of America, United and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act) Act of
2001.
20
(jj) The term "Payment Date" shall mean the last Business Day of each
April, July, October and January from and after the Closing Date.
(kk) The term "Prime Rate" shall mean the rate of interest quoted by
the Bank from time to time in Boston as its "Prime Rate," which is not
necessarily the Bank's lowest rate of interest.
(ll) The term "Shareholders' Equity" on any date shall mean
stockholders' equity determined in accordance with GAAP.
(mm) The term "Term Loan Termination Date" shall mean the maturity
date of the Term Loan, November 7, 2011.
(nn) The term "Termination Date" shall mean, as applicable, each of
the Lines of Credit Termination Date and the Term Loan Termination Date.
5. Representations and Warranties. The Borrowers, jointly and severally,
represent and warrant as follows (with the following representations and
warranties being deemed to apply to each subsidiary of a Borrower on the same
basis as which such representations and warranties expressly apply to such
Borrower):
(a) Organization. Each of the Borrowers is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization; is duly qualified to do business and in good
standing in each jurisdiction in the United States of America where such
qualification is required, except those jurisdictions where the failure to so
qualify will not have a material adverse effect on Dentex's and its
subsidiaries' business, prospects or financial condition, taken as a whole (a
list of the jurisdictions where the Borrowers are so qualified being set forth
on Schedule 5(a) hereto); and has all requisite corporate power and authority to
conduct its business as presently being conducted and as proposed to be
conducted after the Closing and to own its properties now and after the Closing;
and each of the Borrowers has all requisite corporate power and authority to
execute and deliver, and to perform all of its obligations under, this Agreement
and the other Loan Documents.
(b) Authority. The execution, delivery and performance by each of the
Borrowers of this Agreement and the other Loan Documents to which it is a party
have been duly authorized by all necessary corporate action and do not
contravene any provision of any of the Borrower's charter or by laws; do not
require any consents or approvals which have not been obtained (a list of any
required consents and approvals is set forth on Schedule 5(b) hereto); do not
violate any provision of any law, rule or regulation (including without
limitation Regulations T, U and X of the Board of Governors of the Federal
Reserve System) or any determination or award; do not and will not result in a
breach or constitute a default under any agreement to which any of the Borrowers
is a party or by which its properties are bound, including, without limitation,
any indenture, loan or credit agreement, lease, debt instrument or mortgage; or
result in or require the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance of any nature
upon or with respect to any of the Borrowers' properties; and none of the
Borrowers is in material default under any law, rule or regulation, order, writ,
judgment, injunction, decree, determination, award, indenture, loan or
21
credit agreement, lease, debt instrument or mortgage referred to above or will
not be in any such material default by virtue of the transactions to be entered
into at the Closing.
(c) Approvals; Compliance with Statutes, Etc.
(i) No authorization, consent, approval, license or exemption of,
or filing a registration with, any court or governmental department or
commission, board, bureau, agency or instrumentality, domestic or foreign, is or
will be necessary for the valid execution, delivery or performance by each of
the Borrowers of this Agreement and the other Loan Documents to which it is a
party, other than filings which have already been made and approvals which have
already been received, a list of which is set forth on Schedule 5(c) hereto.
Each of the Borrowers is the lawful holder of all licenses, permits,
certificates and governmental authorizations required for the conduct of its
business, except where the failure to hold any such licenses, permits,
certificates or authorizations, individually or in the aggregate, would not have
a material adverse effect on the business, prospects, property or financial
condition of Dentex and its subsidiaries, taken as a whole. No such material
license, permit, certificate or other governmental authorization has been
revoked, cancelled, rescinded, modified, denied or lost and not reissued or
reinstated, and none of the Borrowers has any reason to believe that any such
material license, permit, certificate or other governmental authorization will
be revoked, cancelled, rescinded, modified or lost.
(ii) Each of the Borrowers and each of the Borrowers'
subsidiaries is in compliance with all applicable laws, statutes, rules,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except for such non-compliances as
could not reasonably be expected to have a material adverse effect on Dentex,
its subsidiaries and their business, taken as a whole. Without limitation of the
foregoing, each of the Borrowers and each of their subsidiaries is in compliance
with, and neither the entering into of the Loan Documents or the use of the
proceeds of the Loans will violate: any law, rule or regulation relating to
anti-terrorism or money laundering, including the Anti-Terrorism Order, the
Patriot Act, the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto.
(d) Valid Obligations. This Agreement and the other Loan Documents to
which each of the Borrowers is a party have been duly executed and delivered by
each of the Borrowers and constitute legal, valid and binding obligations of
each of the Borrowers, enforceable in accordance with their respective terms.
(e) Assets. Except as noted on Schedule 5(e), each of the Borrowers
has good and clear marketable, record and insurable title to all of its assets
and properties, in each case subject to no mortgage, pledge, lien, lease,
encumbrance, charge, easement, restriction or encroachment.
(f) Agreements. None of the Borrowers is in default under or with
respect to any contractual obligation in any respect which could reasonably be
expected to be materially adverse to the business, operations, property or
financial condition of Dentex and its subsidiaries, taken as a whole, or which
could materially adversely affect the ability of any of the Borrowers to perform
its obligations under this Agreement or any of the other Loan Documents.
22
(g) Insurance. Attached hereto as Schedule 5(g) is a complete and
accurate list of all insurance policies of each of the Borrowers covering its
properties and assets as of the date hereof. Each of the Borrowers has
previously delivered or, at the request of the Bank, shall deliver on the
Closing Date complete and accurate copies of all insurance policies listed on
Schedule 5(g). Upon issuance of any insurance policy listed on Schedule 5(g) as
applied for, each of the Borrowers shall deliver, at the request of the Bank, a
complete and accurate copy of such policy to the Bank; provided, however, that
any policy so listed shall be delivered to the Bank within 60 days following the
Closing Date. Except policies listed as applied for, all insurance policies
listed on Schedule 5(g) are in full force and effect, with the premiums due
thereon paid, and each of the Borrowers is not in default with respect to any
such policy. In addition, all such policies satisfy the requirements set forth
in Section 6(l) hereof.
(h) Litigation and Other Proceedings. Except as set forth on Schedule
5(h) hereto, there are no actions, suits or proceedings pending or threatened
against any of the Borrowers before any court or any governmental department,
commission, board, bureau, agency or instrumentality, and none of the actions,
suits or proceedings listed on Schedule 5(h) could reasonably be expected to be
materially adverse, either individually or in the aggregate, to the business,
properties, financial condition or prospects of Dentex and its subsidiaries,
taken as a whole.
(i) Labor Matters. Except as set forth on Schedule 5(i) hereto, none
of the Borrowers is a party to any collective bargaining or similar agreement
and each of the Borrowers has complied in all material respects with all
applicable state and federal laws respecting employment and employment
practices, terms and conditions of employment, wages and hours and other laws
related to employment of employees of any such Borrower or its agents, and there
are no arrears in the payment of wages, withholding or social security taxes,
unemployment insurance premiums or other similar obligations of any of the
Borrowers other than in the ordinary course of business.
(j) ERISA. No "prohibited transaction" or "accumulated funding
deficiency" or "reportable event" has occurred with respect to any "single
employer plan" of any of the Borrowers that could subject any of the Borrowers
to a tax, penalty or liability in an amount in excess of $500,000 per such
occurrence. None of the Borrowers, any predecessor to any of the Borrowers or
any "commonly controlled entity" has ever been included in a "multiemployer
plan" as to which any of the Borrowers or any "commonly controlled entity" would
have liability if any of the Borrowers or any "commonly controlled entity" were
to withdraw therefrom (as each of the quoted terms is defined or used in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the
Internal Revenue Code of 1986, as amended (the "Code")).
(k) Financial Statements. Dentex has delivered to the Bank (i)
consolidated financial statements of Dentex and its consolidated subsidiaries,
including consolidated balance sheets, statements of income and retained
earnings and statements of changes in financial position (collectively, the
"2005 Financial Statements") for and as of the end of the fiscal year ended
December 31, 2005, and (ii) unaudited consolidated balance sheets and statements
of income of Dentex and its consolidated subsidiaries for and as of the end of
the fiscal quarter ended June 30, 2006 (collectively, together with the 2005
Financial Statements, the "Financial
23
Statements"). The 2005 Financial Statements have been audited by
PriceWaterhouseCooper, certified public accountants. The Financial Statements
present fairly in all material respects the consolidated financial condition and
performance and results of operation of Dentex and its consolidated subsidiaries
for and as of the end of the periods presented, in accordance with GAAP
consistently applied (subject, in the case of the unaudited Financial
Statements, to normal year-end audit adjustments and the omission of footnotes).
Since (1) December 31, 2005 with respect to Dentex and it subsidiaries acquired
prior to December 31, 2005; and (2) since the date of acquisition by Dentex of
any subsidiaries acquired after December 31, 2005, (i) the physical assets and
properties owned or leased by Dentex and its subsidiaries, taken as a whole,
have not suffered any material destruction or damage, regardless of whether or
not any such loss was insured, (ii) except for borrowings under the Existing
Loan Agreement, neither any of the Borrowers nor any of their subsidiaries has
incurred any Indebtedness or liabilities, fixed, contingent or otherwise, other
than in the ordinary course of business, and (iii) there has not been a material
adverse change in the business or operations of Dentex and its subsidiaries,
taken as a whole.
(l) Projections. Dentex has delivered to the Bank certain unaudited
projections of Dentex and its subsidiaries on a consolidated basis, including
projected balance sheets, projected results of operations, including projected
profit and loss statements, and projected cash flow statements, each as of the
end of each fiscal year through December 31, 2011. The projections have been
prepared in accordance with GAAP consistently applied with those used in the
preparation of the Financial Statements (subject to the addition of notes and,
in the case of interim projections, to recurring year-end adjustments). The
financial projections have been prepared using assumptions which Dentex believes
in good faith to be reasonable, having a reasonable factual basis; and such
financial projections represent the good faith judgment of the management of
Dentex as to the future financial results and condition of Dentex and its
subsidiaries.
(m) Taxes. Except as set forth on Schedule 5(m), each of the Borrowers
has filed all federal and state tax returns which are required to be filed and
has paid all taxes shown on such returns and on all assessments received by it,
to the extent that such taxes have become due. All of such tax returns are
accurate and complete. All other taxes and assessments of any nature with
respect to which any of the Borrowers is obligated and which have become due are
being paid or adequate accruals have been set up therefor.
(n) Investments. Except as set forth on Schedule 5(n), and except for
subsidiaries of any of the Borrowers acquired by such Borrower pursuant to
acquisitions that either (i) are funded by one or more advances under the Second
Line of Credit pursuant to Section 8 hereof or (ii) are permitted under Section
6(k) hereof, none of the Borrowers own any securities or other equity or debt
interests in any corporation, partnership or other business entity. All of the
Affiliated Persons of each of the Borrowers are set forth on Schedule 5(n).
(o) Investment Company. None of the Borrowers is an "investment
company" or a company "controlled" by an "investment company" (as each of the
quoted terms is defined or used in the Investment Company Act of 1940, as
amended).
24
(p) Equity Structure. The equity structure of Dentex and its
subsidiaries, including each class of their capital stock and other securities,
is set forth on Schedule 5(p). Each of Dentex's subsidiaries is wholly owned,
directly or indirectly through one or more subsidiaries, by Dentex.
(q) Consolidated Total Funded Debt. Attached as Schedule 5(q) hereto
is a list of the Consolidated Total Funded Debt, indicating, as applicable, the
original principal amount of each borrowing or debt, the current amount due
thereon, the terms and schedule for payments in respect thereof, and the
security, if any, given therefor or in connection therewith. Other than as set
forth on Schedule 5(q) hereto, none of such Consolidated Total Funded Debt is
secured by any lien, encumbrance, mortgage, pledge, or security interest given
by any of the Borrowers or any of their subsidiaries.
(r) Patents, Copyrights and Trademarks. Except as set forth on
Schedule 5(r), none of the Borrowers own any trademarks, copyrights or patents
which are material in the ordinary course of business as each of the Borrowers'
business is currently conducted or as such business is contemplated to be
conducted in the future.
(s) Representations Accurate. No representation or warranty made by
any of the Borrowers herein, in any other Loan Document or in any other
certificate furnished from time to time in connection herewith or therewith
contains or will contain any misrepresentation of a material fact or omits or
will omit to state any material fact necessary to make the statements herein or
therein (taken as a whole in conjunction with all such documents) not misleading
when made. There is no condition specific to the business of any of the
Borrowers which materially adversely affects, or which would in the future
materially adversely affect, the business, operations, property or financial
condition of Dentex and its subsidiaries, taken as a whole.
6. Covenants. Each of the Borrowers incorporates herein all of the
affirmative and negative covenants contained in the other Loan Documents. In
addition, each of the Borrowers represents, warrants, covenants and agrees as
follows (and shall cause each of its subsidiaries to comply with the following
representations, warranties, covenants and agreements on the same basis as which
such representations, warranties, covenants and agreements expressly apply to
each of the Borrowers):
(a) Payments. Each Borrower shall duly and punctually make, or cause
to be made, the payments required under this Agreement and the Notes and shall
perform and observe all of its other obligations under the Loan Documents.
(b) Merger of Keller Group, Incorporated. The Keller Group,
Incorporated, a Missouri corporation ("Keller"), shall be merged into Dentex on
or before December 15, 2006.
(c) Financial Report. Dentex shall furnish, or cause to be furnished,
to the Bank:
(i) as soon as available, but in any event within 120 days after
the end of each fiscal year of Dentex, a copy of the audited consolidated
balance sheet of Dentex and its
25
consolidated subsidiaries as at the end of such fiscal year and the related
audited consolidated statements of income, stockholders' equity and changes in
financial position for such fiscal year, in each case setting forth in
comparative form the figures for the previous year, reported on without a "going
concern" or like qualification or exception or qualification as to the scope of
the audit, by independent certified public accountants of nationally recognized
standing, together with any letter from Dentex's management prepared in
connection with Dentex's annual audit report;
(ii) as soon as available, but in any event within 60 days after
the end of each fiscal quarter end in each fiscal year of Dentex, copies of the
unaudited consolidated balance sheets of Dentex and its consolidated
subsidiaries as at the end of such quarterly period, together with the related
unaudited consolidated statements of income for such quarterly period and for
the portion of the fiscal year of Dentex through such quarterly period, in each
case certified by the Chief Financial Officer of Dentex as presenting fairly in
all material respects the financial condition and results of operations of
Dentex and its consolidated subsidiaries, in conformity with GAAP (subject to
normal year end audit adjustments and to the fact that such financial statements
may be condensed and may not include footnotes); all such financial statements
to be complete and correct in all material respects and prepared in reasonable
detail and in conformity with GAAP applied consistently throughout the periods
reflected therein; and
(iii) as soon as available, but in any event not less than 14
days prior to the end of each fiscal year of Dentex, a projected balance sheet,
projected cash flow statement (including proposed Capital Expenditures) and
projected profit and loss statement of Dentex and its consolidated subsidiaries
for the forthcoming fiscal year, in all cases setting forth such financial
information on a fiscal quarter by fiscal quarter basis for such forthcoming
fiscal year; provided, that in the event Dentex shall begin, after the Closing
Date, to prepare such projections for a period greater than the forthcoming
fiscal year, Dentex shall furnish the same to Bank pursuant to the terms of this
Section 6(c)(iii).
(d) Other Financial Reports. Dentex will also furnish, or cause to be
furnished, to the Bank:
(i) concurrently with the delivery of each set of the financial
statements referred to in paragraphs (i) and (ii) of Section 6(c), a certificate
of the President and Chief Financial Officer of Dentex in the form of Exhibit D
attached hereto (a "Compliance Certificate") (i) stating that, to the best of
such person's knowledge, during the period covered by such set of financial
statements, the Borrowers have observed or performed in all respects all of its
covenants and other agreements and satisfied in all material respects every
condition contained in this Agreement and the other Loan Documents to be
observed, performed or satisfied by it, and that, to the best of such person's
knowledge, no Default or Event of Default exists (except as specified in such
certificate), (ii) showing in detail the calculations supporting such statement
in respect of the covenants set forth in Sections 6(s) through 6(v) and (iii)
stating that such financial statements present fairly in all material respects
the financial condition and results of operations of Dentex and its consolidated
subsidiaries, in conformity with GAAP (subject, with respect to quarterly
financial statements, to normal year end audit adjustments and to the fact that
such financial statements may be condensed and may not include footnotes);
26
(ii) promptly after the same are sent and received, copies of all
financial statements, reports and notices which Dentex sends to holders of all
classes of capital stock of Dentex or which Dentex receives from such holders;
(iii) promptly, such additional financial and other information
as the Bank may from time to time reasonably request; and
(iv) as soon as available, a copy of each other report submitted
to such Borrower by its certified public accountants in connection with any
annual, interim or special audit made by them of the books of such Borrower.
(e) Maintain Rights. Each Borrower shall:
(i) keep in full force and effect its corporate existence and all
material rights, licenses, leases and franchises reasonably necessary to the
conduct of its business;
(ii) duly observe and conform to all applicable material
requirements of all governmental authorities in any way relating to it or the
conduct of its business, all applicable material laws and regulations wherever
its business is conducted, and all applicable decrees, orders and judgments;
(iii) perform or comply with the terms and conditions of each
material contract, agreement or obligation to which it is a party, and the
provisions of its charter documents;
(iv) keep true records and books of account;
(v) not engage in any business other than the dental laboratory
business in which it is now engaged and businesses reasonably related thereto;
(vi) not establish any subsidiaries, other than pursuant to
acquisitions that either (A) are funded by one or more advances under the Second
Line of Credit pursuant to Section 8 hereof, or (B) are permitted under Section
6(k) hereunder. All subsidiaries established or acquired by such Borrower or any
of its subsidiaries shall be wholly owned, either directly or indirectly through
one or more other subsidiaries, by such Borrower. If such subsidiaries are not
consolidated or merged with such Borrower within 45 days of their acquisition or
establishment, then any such subsidiaries shall become a borrower or guarantor
hereunder, at the Bank's sole discretion, provided, however, the foregoing
requirement to make such subsidiaries a borrower or guarantor hereunder shall
not apply to Impact Dental Laboratory Limited, a corporation organized under the
laws of the Province of Ontario, Canada ("Impact"). Upon forming or acquiring
any subsidiary, at the Bank's discretion such subsidiary and such Borrower shall
execute and deliver to the Bank (a) a joinder agreement substantially in the
form of Exhibit E attached hereto and the documents referred to therein and (b)
such other documents reasonably requested by the Bank consistent with the terms
of this Agreement which provide that such subsidiary shall become bound by all
of the terms, covenants and agreements contained in the Loan Documents. Upon
satisfaction of the conditions set forth in this Section 6(e), each newly-formed
or acquired subsidiary shall become a Borrower or guarantor hereunder and under
the
27
other Loan Documents to the same extent as if such subsidiary had been a party
hereto and thereto on the Closing Date; and
(vii) (A) with respect to Dentex, maintain its chief executive
office at 526 Boston Post Road, Wayland, MA 01778, and (B) with respect to
Green, maintain its chief executive office at 1099 Wilburn Road, Heber Springs,
Arkansas 72543, or at such other place in the United States of America as such
Borrower shall designate upon written notice to the Bank, where notices,
presentations and demands to or upon such Borrower in respect of the Loan
Documents may be given or made.
(f) No Transfers. None of the Borrowers shall otherwise dispose of any
assets necessary for the effective or efficient operation or proper maintenance
of its business, except for (i) sales of inventory in the ordinary course of
business, and (ii) sales of (A) obsolete equipment, and (B) equipment in the
ordinary course of business not to exceed $50,000 in any fiscal year.
(g) No Mergers. None of the Borrowers shall enter into any merger or
consolidation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any material
part of its business, property or tangible or intangible assets, whether now
owned or hereafter acquired, or acquire, by purchase or otherwise, all or
substantially all of the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any person or entity other than (i)
pursuant to acquisitions that either (A) are funded by one or more advances
under a Second Line of Credit pursuant to Section 8 hereof, or (B) are permitted
under Section 6(k) hereunder, or (ii) so long as no Default has occurred and is
continuing both before and after giving effect thereto, mergers between any
subsidiary of any of the Borrowers with and into any of the Borrowers or any
other subsidiary of any of the Borrowers, provided, that, except with respect to
a merger of Green into Dentex, if any Borrower is a constituent party to any
such merger it shall be the surviving corporation of such merger.
(h) Payment of Taxes. Each of the Borrowers shall discharge all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profit or upon any property, real, personal or mixed, belonging to it;
provided, however, that such Borrower shall not be required to pay any such tax,
assessment, charge or levy if the same shall not at the time be due and payable
or can be paid thereafter without penalty or if the validity thereof shall
currently be contested in good faith by appropriate proceedings and if such
Borrower shall have made adequate provision on its books for the payment of such
tax, assessment, charge or levy; and provided further, that such tax or other
sum shall be paid before it gives rise to a lien against the property of such
Borrower.
(i) Guaranties. None of the Borrowers shall become or be liable in
respect of any guaranty, except for guaranties in conjunction with an
acquisition that either (i) is funded by an advance under the Second Line of
Credit pursuant to Section 8 hereof or (ii) is permitted under Section 6(k)
hereunder, and endorsements by such Borrower in the ordinary course of business
of negotiable instruments for deposit or collection.
(j) Agreements. None of the Borrowers shall enter into any agreement
of any nature whatsoever, including without limitation any agreement which
constitutes or effects a
28
material modification of any agreement to which such Borrower is a party as of
the date hereof, other than in the ordinary course of its business; provided,
that any such agreement which is entered into with an Affiliated Person (i)
shall be subject to the restriction on compensation set forth in Section 6(r)
hereof, (ii) shall be on an arms-length basis, and (iii) shall be on terms and
conditions no more favorable than such Borrower could obtain from an unrelated
third party.
(k) Investments. None of the Borrowers shall make or permit to exist
any investments, directly or indirectly (in the form of any acquisition of
assets other than in the ordinary course of business or other than an
acquisition of the assets of an entity engaged in a dental laboratory business;
or in the form of any acquisition of stock, securities, indebtedness or
obligation of, or any loan, advance, capital contribution or transfer of
property to, or any guarantee or other commitment on behalf of, any person,
other than pursuant to an acquisition of the stock or business of an entity
engaged in a dental laboratory business; or otherwise), other than in (i) United
States Treasury securities, (ii) readily marketable direct obligations of the
United States of America or any agency thereof, backed by the full faith and
credit of the United States, (iii) certificates of deposit, time deposits or
banker's acceptances with a limit of $5,000,000 per institution issued by any of
the top 50 financial institutions in the United States of America or its
territories, each having total assets and surplus of at least $4,000,000,000.00,
(iv) commercial paper rated A1/P1 or better by Standard & Poor's
Corporation/Moody's Investors Service, Inc., (v) repurchase agreements made
against securities which meet the qualifications stated herein, (vi) tax-exempt
securities, including without limitation, municipal bonds or notes, rated A or
better by Moody's Investors Service, Inc, (vii) acquisitions in accordance with
the requirements of Section 8(c) hereof, or (viii) additional investments, in
addition to the purchase price paid by Dentex, by Dentex in Impact, not to
exceed an aggregate amount of $2,000,000, less any amounts paid in accordance
with Section 6(r)(iii) hereof, provided that immediately prior to and after
giving effect to any such investment there exists no Default or Event of Default
hereunder.
(l) Property. Each of the Borrowers will keep all of its property
reasonably necessary for the continued operation of its business in good working
order and condition, reasonable wear and tear excepted, and subject to Section 9
hereof, damage by fire and other casualty excepted, and maintain with
financially sound and reputable insurance companies insurance thereon in at
least such amounts and with such deductibles and against at least such risks
(including hazard) as are usually insured against in the same general area by
companies engaged in the same or similar businesses; and each of the Borrowers
will furnish to the Bank, upon its written request, full information with
respect to any insurance carried.
(m) Books and Records. Each of the Borrowers will (i) keep proper
books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of law shall be made of all dealings
and transactions in relation to its business and activities, and (ii) permit
representatives of the Bank to visit and inspect any of its properties and to
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired, and to discuss the business,
operations, properties and financial condition of such Borrower with its
officers and employees and with its independent certified public accountants.
29
(n) Notices. Each of the Borrowers will give, or cause to be given,
notice to the Bank, within five (5) days of knowledge thereof, of:
(i) the occurrence of any Default or Event of Default under this
Agreement;
(ii) any default or event of default under any other contractual
obligation of such Borrower which, if not paid or remedied by such Borrower or
waived by the obligee thereon, could result in liability to such Borrower in
excess of $500,000 in any single instance or $1,000,000 in the aggregate;
(iii) any litigation, investigation or proceeding of which such
Borrower has knowledge which may exist at any time between such Borrower and any
governmental authority which may have a material adverse effect on the business,
operations, property or financial condition of such Borrower, any litigation or
proceeding affecting such Borrower which may have a material adverse effect upon
such Borrower, or any material adverse development in previously disclosed
litigation;
(iv) the following events, as soon as possible and in any event
within 15 days after such Borrower knows thereof: (A) the occurrence of any
"reportable event" with respect to any "single employer plan" which in the
reasonable judgment of such Borrower could be expected to have a material
adverse affect on such Borrower or its business, (B) the institution of
proceedings or the taking or expected taking of any other action by such
Borrower or any "commonly controlled entity" to terminate any "single employer
plan" with respect to which there exists any vested unfunded pension liabilities
at the time of such termination, or (C) the "reorganization" or "insolvency" of
any "multiemployer plan" which may reasonably be expected to have a material
adverse affect on the business, operations, property or financial condition of
such Borrower (as each of the quoted terms is defined or used in ERISA or the
Code);
(v) a material adverse change in the business, operations,
property or financial condition of Dentex and its subsidiaries, taken as a
whole; and
(vi) the revocation, expiration or loss of any license, permit or
other governmental authorization of such Borrower material to the conduct of the
business of Dentex and its subsidiaries, taken as a whole;
each notice pursuant to paragraphs (i) through (vi) of this Section 6(n) to be
accompanied by a statement of the President or Chief Financial Officer of Dentex
setting forth details of the occurrence referred to therein and stating what
action, if any, such Borrower proposes to take with respect thereto.
(o) Liens. None of the Borrowers will create, incur, assume or suffer
to exist any lien, mortgage or other encumbrance upon any of its property,
assets or revenues, whether now owned or hereafter acquired, except for:
(i) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, or other like liens arising in the ordinary course of business in
respect of obligations
30
not overdue for a period of more than 60 days or which are being contested in
good faith by appropriate proceedings;
(ii) easements, rights of way, restrictions, license rights,
leases and other similar encumbrances incurred in the ordinary course of
business which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of such Borrower;
(iii) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation and
deposits securing liability to insurance carriers under self insurance
arrangements;
(iv) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business;
(v) liens existing on the assets or properties of such Borrower
and identified on Schedule 5(e) attached hereto;
(vi) purchase money liens securing additional Indebtedness
permitted under Section 6(q) hereof;
(vii) liens securing such Borrower's obligations under operating
leases; and
(viii) liens upon assets acquired after the Closing Date in
connection with any acquisition permitted under the terms of Sections 6(k) and
8(c) hereof provided that such liens shall not secure Indebtedness in an
aggregate amount in excess of $1,000,000.
In addition, none of the Borrowers shall, nor shall any of the Borrowers
permit any subsidiary to, enter into or permit to exist any arrangement or
agreement which directly or indirectly prohibits such Borrower or any such
subsidiary from creating or incurring any lien or encumbrance in favor of the
Bank under the Loan Documents.
(p) Modifications. None of the Borrowers will not permit the
modification or waiver of or any change in any provisions of any agreement
relating to Indebtedness of such Borrower if such modification, waiver or change
could have a material adverse effect on the ability of such Borrower to perform
its obligations under this Agreement or the other Loan Documents (such effect to
be determined by the Bank in its sole discretion).
(q) Additional Indebtedness. None of the Borrowers shall create,
incur, assume, agree to purchase or repurchase or provide funds in respect of or
otherwise become or be or remain liable with respect to any Indebtedness of any
type whatsoever owed to any person, except (i) with respect to any Indebtedness
incurred pursuant to the terms of this Agreement (including in conjunction with
an acquisition that is either funded by an advance under the Second Line of
Credit pursuant to Section 8 hereof or permitted under Section 6(k) hereof) or
outstanding on the date hereof and listed on Schedule 5(q) hereto; (ii)
obligations to make payments of money pursuant to so-called "earn-out"
agreements or other similar arrangements
31
providing for the payment by such Borrower of contingent consideration in
connection with the acquisition of one or more businesses; (iii) trade
indebtedness incurred in the ordinary course of such Borrower's business; and
(iv) Indebtedness in respect of Capital Expenditures not exceeding $1,000,000 in
the aggregate during any 12 month period.
(r) Payments to Affiliated Persons. None of the Borrowers shall make
any payment, compensation or distribution, directly or indirectly, whether in
cash or in property and whether in respect of stock ownership or employment,
management, consulting or other services or for any other reason whatsoever, to
any Affiliated Person, except that (i) each of the Borrowers may (A) pay
compensation in the form of salary, fringe benefits and reimbursement for
reasonable business expenses to Affiliated Persons who are directors or officers
of such Borrower in the ordinary course of business and in a manner consistent
with past practice, (B) pay bonuses to such Affiliated Persons and (C)
repurchase shares of such Borrower's capital stock from such Affiliated
Persons,; (ii) any subsidiary of such Borrower may pay dividends and make
distributions to such Borrower, provided that immediately prior to and after
giving effect to any such bonus payment or stock repurchase there exists no
Default or Event of Default hereunder, and the Bank receives a certificate to
such effect signed by the President or Chief Financial Officer of such Borrower;
and (iii) Dentex may make payments to Impact in an aggregate amount not to
exceed $2,000,000, less any amounts paid in accordance with Section 6(k)(viii)
hereof, provided that immediately prior to and after giving effect to any such
payment there exists no Default or Event of Default hereunder.
(s) Minimum Consolidated Net Worth. The Borrowers shall not permit
Consolidated Net Worth at any time to be less than $73,000,000.
(t) Fixed Charge Coverage Ratio. The Borrowers shall not permit the
Fixed Charge Coverage Ratio as of the end of any fiscal quarter to be less than
1.5:1.0.
(u) Maximum Consolidated Total Funded Debt to Consolidated EBITDA. As
at the end of any fiscal quarter, the ratio of (a) Consolidated Total Funded
Debt as of such date to (b) Consolidated EBITDA for the period of four (4)
consecutive fiscal quarters ending on the date of calculation (i) prior to and
including December 31, 2006, shall not exceed 2.5:1.0 and (ii) thereafter shall
not exceed 2.0:1.0.
(v) Minimum Consolidated EBITDA. For the period of four (4)
consecutive fiscal quarters then ended, the Borrowers shall not permit
Consolidated EBITDA to be less than (i) $15,300,000 on December 31, 2006, (ii)
$16,300,000 on March 31, 2007, (iii) $18,000,000 on June 30, 2007, (iv)
$19,000,000 on September 30, 2007, (v) $21,300,000 on December 31, 2007, (vi)
$22,000,000 on March 31, 2008, (vii) $22,800,000 on June 30, 2008, (viii)
$23,500,000 on September 30, 2008, (ix) $24,200,000 on December 31, 2008, (x)
$24,700,000 on March 31, 2009, (xi) $25,200,000 on June 30, 2009, (xii)
$25,700,000 on September 30, 2009, and (xiii) $26,200,000 on the last day of
each fiscal quarter thereafter.
(w) Bank Accounts. Dentex shall maintain its primary operating account
with the Bank. As of the Closing Date, none of the Borrowers and their
subsidiaries maintain any bank accounts other than as set forth on Schedule
6(w). For the avoidance of any doubt, it is hereby acknowledged that for the
purposes of this Section 6(w), "maintain its primary operating
32
account" means that Dentex shall maintain all of its cash management activities
with the Bank and, with respect to bank accounts established after the Closing
Date, Dentex shall use best efforts to establish such bank accounts with the
Bank.
(x) Further Assurances. At any time and from time to time each of the
Borrowers shall, and shall cause each of its subsidiaries to, execute and
deliver such further instruments and take such further action as may reasonably
be requested by the Bank to effect the purposes of this Agreement and the other
Loan Documents. Without limitation of the foregoing, upon receipt of an
affidavit of an officer of the Bank as to the loss, theft, destruction or
mutilation of any of the Notes, and, in the case of any such loss, theft,
destruction or mutilation, upon cancellation of such Note, each of the Borrowers
will issue, in lieu thereof, a replacement Note in the same principal amount
thereof and otherwise of like tenor.
(y) Valuation Report. The Bank shall receive a copy of the valuation
report prepared by Deloitte & Touche LLP, in form and substance satisfactory to
the Bank, within 60 days of the Closing Date.
7. Conditions of Closing. The obligation of the Bank to make any advances
under a Line of Credit, to issue any new Letter of Credit and to fund the Term
Loan is subject to the satisfaction of all of the following conditions on or
prior to the Closing:
(a) Line of Credit Notes; Amended and Restated Term Note. The Bank
shall have received each of the Notes, duly executed and delivered by the
Borrowers, each in form satisfactory to the Bank and its special counsel. Upon
receipt of the Notes, the Bank will cancel the notes executed in connection with
the Existing Loan Agreement, stamp such notes as "cancelled", and return such
cancelled notes to Dentex, at the address on the first page of this Agreement.
(b) Warranties and Covenants. All warranties and representations of
each of the Borrowers and their subsidiaries in this Agreement and the other
Loan Documents shall be true on the date of the Closing as if then given, each
of the Borrowers and their subsidiaries shall have performed or observed all of
the terms, covenants, conditions and obligations under this Agreement and the
other Loan Documents which are required to be performed or observed by it on or
prior to such date, and on such date there shall exist no Default or Event of
Default hereunder.
(c) Closing Certificate. The Bank shall have received a certificate,
dated as of the Closing and executed by the President and the Chief Financial
Officer of Dentex, in form and content satisfactory to the Bank, stating the
substance of the foregoing clause (b).
(d) Financial Statements. The Bank shall have received copies of (i)
the 2005 Financial Statements, together with the management letter for the
fiscal year ending December 31, 2005 for each of the Borrowers, (ii) the
unaudited consolidated balance sheets of Dentex and its consolidated
subsidiaries as of June 30, 2006, together with the related unaudited
consolidated statements of income for such period and for the portion of the
fiscal year of the Borrowers through such period, (iii) the opening pro forma
balance sheet of the Borrowers as of the date of Dentex's acquisition of Keller
(after giving effect thereto), (iv) the pro forma income statement
33
of the Borrowers as of December, 31 2006, (v) five (5) year projections for
Dentex and its consolidated subsidiaries, and (vi) audited financial statements
of Keller for the three fiscal years preceding the Closing Date, in the case of
(ii), (iii) and (iv) above, certified by the Chief Financial Officer of Dentex
as presenting fairly in all material respects the financial condition and
results of operations as of such date of Dentex and its consolidated
subsidiaries or each Borrower and its consolidated subsidiaries, as applicable,
in conformity with GAAP (subject to normal year-end audit adjustments and to the
fact that such financial statements may be condensed and may not include
footnotes), and Bank shall be satisfied with the foregoing. There shall have
been no material misstatements in, or omissions from, such financial statements
and any other documentation furnished to the Bank.
(e) Annual Report. The Bank shall have received copies of (i) Dentex's
Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and (ii)
Dentex's Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2006.
(f) Intentionally Omitted.
(g) No Adverse Change. There shall have occurred no material adverse
change in (i) the business, prospects, operations, properties or condition
(financial or otherwise) of Dentex and its subsidiaries, taken as a whole, since
the date of the June 30, 2006 financial statements, or (ii) the ability of any
of the Borrowers or any of their subsidiaries to perform their obligations under
the Loan Documents.
(h) Closing Fees and Legal Expenses. At or prior to the Closing, the
Borrowers shall have paid to the Bank (i) the annual $10,000 facility fee
referenced in Section 2(c)(ii) hereof, and (ii) all costs and expenses
(including legal fees) referred to in Section 12(h).
(i) Legal Opinions. All legal matters incident to this Agreement shall
be satisfactory to Goulston & Storrs, special counsel to the Bank, and the Bank
shall have received at the Closing the legal opinion of Posternak Blankstein &
Lund LLP, counsel to the Borrowers, and Gill Elrod Ragon Owen & Sherman, P.A.,
special counsel to Green, such opinions in form and substance satisfactory to
the Bank and its special counsel.
(j) Projections. The Bank shall have received copies of Dentex and its
consolidated subsidiaries' base line fiscal quarter by fiscal quarter
projections for fiscal year 2006, including profit and loss, balance sheet, cash
flow and schedules reflecting branch profit and losses.
(k) Approvals. All necessary consents, approvals and/or waivers in
connection with the consummation of the transactions contemplated by the Loan
Documents shall have been obtained by each of the Borrowers and copies thereof
shall have been delivered to the Bank.
(l) Legality of Transactions. No change in applicable law or
regulation shall have occurred as a consequence of which it shall have become
and continue to be unlawful (i) for the Bank to perform any of its respective
agreements or obligations under any of the Loan Documents, or (ii) for any of
the Borrowers or any of their subsidiaries to perform any of their agreements or
obligations under any of the Loan Documents.
(m) Proof of Corporate Action; Good Standing. The Bank shall have
received from each of the Borrowers and their subsidiaries a certificate,
certified by a duly authorized
34
officer of each Borrower or subsidiary to be true and complete on the Closing
Date, (i) attaching a copy of records of all corporate action taken by such
Borrower or such subsidiary to authorize (a) its execution and delivery of each
of the Loan Documents to which it is or is to become a party, (b) its
performance of all of its agreements and obligations under each of such
documents, and (c) any borrowings and other transactions contemplated by this
Agreement, (ii) certifying as to its charter or other organizational documents
and its by laws, and (iii) giving the name and bearing a specimen signature of
each individual who shall be authorized to sign, in the name and on behalf of
such Borrower, each of the Loan Documents to which it is or is to become a
party, to make application for the Loans and Letters of Credit, and to give
notices and to take other action on its behalf under the Loan Documents.
(n) Organizational and Capital Structure. The organizational and
capital structure of each of the Borrowers and any of their subsidiaries shall
be reasonably satisfactory to the Bank.
(o) Lien Searches. The Bank shall have received from the Borrowers the
results of lien searches (UCC, state tax, federal tax, judgment, litigation and
bankruptcy) with respect to Keller, in the State of Missouri, from a service
company reasonably satisfactory to the Bank, indicating no liens, mortgages or
other encumbrances on any of the Borrowers' property, assets or revenues, other
than liens permitted under Section 6(o) hereof, and otherwise in form and
substance satisfactory to the Bank.
(p) Other Searches. The Bank shall have received all other documents
and assurances which it requires or which it may reasonably request in
connection with the transactions contemplated by this Agreement, and such
documents shall be certified, when appropriate, by the proper authorities or
corporate officers. All such documents and all proceedings to be taken in
connection with such transactions shall be satisfactory in form and substance to
the Bank and its special counsel.
8. Conditions of Making Subsequent Advances. The obligation of the Bank to
make any advance under a Line of Credit or to issue any Letter of Credit is
subject to the satisfaction of the following conditions precedent on or before
the date of each such subsequent advance or issuance of a Letter of Credit (the
"Borrowing Date"):
(a) Representations and Warranties. The representations and warranties
contained in Section 5 hereof and otherwise made by each of the Borrowers and
their subsidiaries in the Loan Documents shall have been correct as of the date
on which made and shall also be correct at and as of such Borrowing Date with
the same effect as if made at and as of such time, except as may have been
disclosed to the Bank by any applicable Borrower and to which the Bank has
consented and to the extent that the facts upon which such representations and
warranties are based may in the ordinary course be changed by the transactions
permitted or contemplated hereby.
(b) Performance. Each of the Borrowers and their subsidiaries shall
have performed and complied with all terms, conditions, covenants and
obligations under this Agreement and the other Loan Documents required to be
performed or complied with by it prior
35
to or on such Borrowing Date, and on such Borrowing Date there shall exist no
Default or Event of Default hereunder.
Each request by the Borrowers for an advance under a Line of Credit shall
constitute certification by each of the Borrowers that the conditions specified
in Sections 8(a) and 8(b) will be duly satisfied on the date of such advance.
(c) Acquisitions. If the Borrowers desire to make a drawing under the
Second Line of Credit, the proceeds of which may only be used to fund an
acquisition by a Borrower, then the obligation of the Bank to make any such
advance is subject to the satisfaction of the following conditions precedent on
or before the Borrowing Date for such advance:
(i) The entity whose business, assets or stock is to be acquired
by a Borrower with funds from the requested advance must be primarily engaged in
the dental laboratory business or a business closely related thereto;
(ii) Such Borrower shall have provided, or cause to be provided,
to the Bank, a projected consolidated pro forma balance sheet, a projected
consolidated pro forma cash flow statement (including proposed Capital
Expenditures) and a projected consolidated pro forma profit and loss statement
of Dentex and its subsidiaries for the period ending on the last day of the
first full fiscal year following the date of the requested advance, in all cases
setting forth such financial information on a fiscal quarter by fiscal quarter
basis for such period and giving effect to such acquisition;
(iii) Such Borrower shall have provided, or cause to be provided,
to the Bank, (A) historical financial statements of the entity whose business,
assets or stock is to be acquired, as may be requested by Bank, and (B) evidence
satisfactory to the Bank in its sole discretion that the entity whose business,
assets or stock is to be acquired by such Borrower with funds from the requested
advance has historically generated recast positive cash flow; for purposes of
this provision, positive cash flow that is "recast" shall be determined by
calculating the acquired entity's net income by adjusting the amount of
depreciation and amortization incurred, any other non-cash charges,
non-recurring expenses, or excessive salaries incurred, and the manufacturing
costs to the level that the acquired entity would have incurred had it been
operated by such Borrower during such period;
(iv) immediately prior to, and after giving effect to, such
acquisition, no Default or Event of Default shall exist, and the Borrowers shall
have provided the Bank with evidence satisfactory to the Bank demonstrating the
Borrowers' compliance with all of their covenants and agreements under this
Agreement (including, but not limited to, the financial covenants set forth in
Sections 6(s) through (u), as evidenced by Borrowers' Compliance Certificate)
both prior to such acquisition and on a pro forma basis after giving effect to
such acquisition;
(v) upon consummation of such acquisition, any corporation or
business entity acquired which remains a separate legal entity from the
Borrowers shall be a party to such of the Loan Documents as is required by the
Bank, as more fully described in Section 6(e)(vi) hereof; and
36
(vi) such Borrower shall have obtained the prior written consent
(such consent not to be unreasonably withheld) of the Bank for (A) any single
acquisition with a purchase price, whether payable in cash or other
consideration, that exceeds $4,000,000, and (B) in any event, at such time as
the aggregate purchase price for acquisitions after the Closing exceeds
$10,000,000, for any single acquisition with a purchase price, whether payable
in cash or other consideration, that exceeds $2,000,000. Bank shall respond to
Borrower's request for consent within five (5) Business Days of Borrowers'
providing Bank with the information and documents in accordance with this
Section 8(c).
9. Events of Default. Each of the following shall constitute an event of
default (an "Event of Default") under this Agreement, each of the Notes and the
other Loan Documents:
(a) Representations and Warranties. Any representation or warranty
made by any of the Borrowers or any of their subsidiaries in this Agreement or
any other Loan Document shall prove to have been incorrect in any material
respect when made, or any information furnished in writing, whether in this
Agreement or any other Loan Document, shall prove to be untrue in any material
respect on the date on which it is or was given.
(b) Covenants. Any of the Borrowers or any of their subsidiaries shall
fail to perform or observe any covenant or condition contained or referred to in
this Agreement, or any of the Notes, including without limitation the failure to
make any payment of principal or interest on any of the Notes or other amounts
when due or any payment of any fee hereunder; provided, however, that failure to
make any payment of interest on any of the Notes shall not constitute an Event
of Default under this Agreement until such failure shall have continued for five
(5) days after the same became due and payable; provided further that any
failure to perform under Sections 6(b), (c), (d), (l) and (m) hereof shall not
constitute an Event of Default under this Agreement until such failure shall
have continued uncured for 10 days.
(c) Acceleration. Any event occurs which permits the acceleration of
the maturity of any Indebtedness of any of the Borrowers or any of their
subsidiaries in excess of $1,000,000 under any mortgage, deed of trust, security
or loan agreement, indenture, note or other undertaking; or any demand for
payment is made with respect to any Indebtedness of any of the Borrowers or any
of their subsidiaries.
(d) Loan Documents. Any default or event of default shall occur under
any of the Loan Documents (other than a default or event of default that is
elsewhere specifically dealt with in this Section 9).
(e) Voluntary Bankruptcy. Any of the Borrowers or any of their
subsidiaries shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or hereafter in effect
or seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
37
(f) Involuntary Bankruptcy. An involuntary case or other proceeding
shall be commenced against any of the Borrowers or any of their subsidiaries
seeking liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 60 days; or an order for relief shall be entered against any of
the Borrowers or any of their subsidiaries under the federal bankruptcy laws as
now or hereafter in effect;
(g) Seizure of Assets. There shall occur any seizure, vesting or
intervention by or under the authority of a governmental unit by which Dentex's
management is displaced or its authority in the conduct of its business is
materially curtailed.
(h) Judgments. Any judgment, order or writ in excess of $500,000 is
rendered or entered against any of the Borrowers or any of their subsidiaries
and not paid, satisfied or otherwise discharged within 60 days of the date such
judgment, order or writ becomes final and non appealable.
(i) Liens. A notice of lien, levy or assessment is filed or recorded
with respect to any material part of the assets of Dentex and its subsidiaries,
taken as a whole, by the United States, or any department, agency or
instrumentality thereof, or by any state, county, municipality or other
governmental agency, or any taxes or debts owing at any time hereafter to any
one of them become a lien upon a material part of the assets of Dentex and its
subsidiaries, taken as a whole.
(j) Casualty Loss. There shall occur any material casualty loss with
respect to a material part of Dentex's or any of its subsidiaries' assets, taken
as a whole.
(k) Qualified Audit Report. Any audit report required pursuant to
Section 6 is not an unqualified audit report, unless the reason for
qualification is not material, as determined in the Bank's sole and absolute
discretion.
(l) Change of Control. (i) (A) any person or group of persons acting
together (within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) shall have acquired at any time after the date hereof
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under said Act) of more than thirty percent
(30%) of the common stock or other capital securities of Dentex outstanding at
such time and (B) such person or group of persons (including any designees or
appointees of such person or group or person) shall hold or control (whether by
acting as a Director, by any voting agreement or arrangement or otherwise)
one-third (1/3) or more of the votes eligible to be cast by Directors at any
duly called meeting of the Board of Dentex; or (ii) Dentex shall fail to be the
beneficial owner of 100% of the capital stock or other ownership or profit
interests (whether voting or non-voting, and including all of the warrants,
options or other rights for the purchase or acquisition of shares of capital
stock or other ownership or profit interests) of Green, or any other of Dentex's
other direct subsidiaries; provided, however, that Dentex and any of its
subsidiaries may transfer all or any portion of its ownership interests in any
subsidiary to another direct or indirect subsidiary of Dentex; or (iii) Green
shall fail to be the beneficial owner of 100% of the
38
capital stock or other ownership or profit interests (whether voting or
non-voting, and including all of the warrants, options or other rights for the
purchase or acquisition of shares of capital stock or other ownership or profit
interests) of any of its subsidiaries; provided however, that Green may transfer
such capital stock or other ownership interests in its subsidiaries to Dentex or
any direct or indirect subsidiaries of Dentex.
(m) ERISA. The occurrence of any of the following: (a) Any "prohibited
transaction" or "accumulated funding deficiency" shall have occurred with
respect to any "single employer plan" of the Borrowers to the extent such
occurrence would cause liability to the Borrowers or any of their subsidiaries
in an amount in excess of $500,000 per occurrence; (b) any "reportable event"
shall have occurred with respect to any "single employer plan" of the Borrowers
which in the reasonable judgment of the Borrowers could be expected to have a
material adverse effect on Dentex and its subsidiaries or their business, taken
as a whole; (c) the Borrowers, any predecessor to any of the Borrowers or any
"commonly controlled entity" shall have been included in a "multiemployer plan"
as to which such Borrower or any "commonly controlled entity" has liability
because such Borrower or any "commonly controlled entity" withdrew therefrom to
the extent such occurrence would cause liability to such Borrower or any of its
subsidiaries in an amount in excess of $500,000 per occurrence; (d) the
institution of proceedings or the taking of any other action by the Borrowers or
any "commonly controlled entity" to terminate any "single employer plan" with
respect to which there exists any vested unfunded pension liabilities at the
time of such termination to the extent such occurrence would cause liability to
the Borrowers or any of their subsidiaries in an amount in excess of $500,000
per occurrence; or (e) the "reorganization" or "insolvency" of any
"multiemployer plan" which may reasonably be expected to have a material adverse
effect on the business, operations, property or financial conditions of Dentex
and its subsidiaries, taken as a whole (as each of the quoted terms is defined
or used in ERISA or the Code).
10. Remedies.
(a) Upon the occurrence and during the continuation of an Event of
Default under this Agreement, the Bank may exercise any one or more of the
following rights and remedies (all of which shall be cumulative):
(i) declare all or any part of the Loans or other amounts
outstanding hereunder, under any of the Notes and the other Loan Documents,
together with all accrued interest thereon and all fees and expenses related
thereto, to be forthwith due and payable, whereupon the same shall become
forthwith due and payable, without presentment, demand, protest or other notice
of any kind, all of which are expressly waived by each of the Borrowers;
(ii) terminate the Lines of Credit, the Bank's obligations to
issue Letters of Credit hereunder, and any other financial accommodations or
commitments of the Bank provided for by this Agreement or the other Loan
Documents;
(iii) not extend the expiry date of any outstanding Letter of
Credit;
(iv) proceed with every remedy that is provided for herein or in
the other Loan Documents, or that the Bank may have under applicable law;
39
provided, that if any Event of Default specified in clause (e) or (f) of Section
9 occurs, then without any notice to any of the Borrowers or any other act by
the Bank, the Lines of Credit, the Bank's obligations to issue Letters of Credit
hereunder, and any other financial accommodations or commitments provided for in
this Agreement or the other Loan Documents shall thereupon terminate and all
Loans and other amounts outstanding hereunder or under the Line of Credit Notes
or the other Loan Documents, together with all accrued interest thereon and all
fees and expenses related thereto shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by each of the Borrowers.
(b) Without limitation of any other right or remedy of the Bank, (i)
if an Event of Default shall have occurred and the Bank shall have demanded or
accelerated the Loans outstanding under the Credit Facility or (ii) if this
Agreement and/or the Credit Facility described herein shall have expired or
shall have been earlier terminated by either the Bank or the Borrowers for any
reason, the Borrowers shall, promptly after they receive a request from the
Bank, deposit with the Bank in cash a sum equal to the total of all then undrawn
amounts under all outstanding Letters of Credit issued by the Bank for the
account of the Borrowers, such cash deposit to serve as cash collateral for the
Borrowers' reimbursement obligations in respect of such undrawn amounts under
such Letters of Credit; provided, that if any Event of Default specified in
clause (e) or (f) of Section 9 occurs, the Borrowers shall deposit such amount
with the Bank forthwith without any notice or demand or any other act by the
Bank.
11. Joint and Several Liability
(a) Each of the Borrowers is accepting joint and several liability for
all of the obligations arising hereunder or under any of the other Loan
Documents in consideration of the financial accommodations to be provided by the
Bank under this Agreement, for the mutual benefit, directly and indirectly, of
each of the Borrowers and in consideration of the undertakings of each other
Borrower to accept joint and several liability for the Borrowers' obligations
arising hereunder or under any of the other Loan Documents.
(b) Each of the Borrowers, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrower with respect to the payment
and performance of all of the Borrowers' obligations arising hereunder or under
any of the other Loan Documents (including, without limitation, any obligations
arising under this Section 11), it being the intention of the parties hereto
that all of the obligations arising hereunder or under any of the other Loan
Documents shall be the joint and several obligations of each of the Borrowers
without preferences or distinction among them.
(c) If and to the extent that any of the Borrowers shall fail to make
any payment with respect to any of the obligations arising hereunder or under
any of the other Loan Documents as and when due or to perform any of the
obligations arising hereunder or under any of the other Loan Documents in
accordance with the terms thereof, then in each such event the other Borrower
will make such payment with respect to, or perform, such obligation.
(d) The obligations arising hereunder or under any of the other Loan
Documents of each of the Borrowers under the provisions of this Section 11
constitute full
40
recourse obligations of each such Borrower enforceable against each such
Borrower to the full extent of its properties and assets, to the fullest extent
permitted by applicable law, irrespective of the validity, regularity or
enforceability of this Loan Agreement against any other Borrower or any other
circumstance whatsoever.
(e) Each of the Borrowers hereby agrees that it will not enforce any
of its rights of contribution or subrogation against the other Borrower with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to the Bank with respect to any of the
obligations hereunder or under any of the other Loan Documents until such time
as all of the obligations hereunder or under any of the other Loan Documents
have been irrevocably paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to the Bank
hereunder or under any other Loan Document are hereby expressly made subordinate
and junior in right of payment, without limitation as to any increases in the
obligations arising hereunder or thereunder, to the prior payment in full of the
obligations hereunder or under any of the other Loan Documents and, in the event
of any insolvency, bankruptcy, receivership, liquidation, reorganization or
other similar proceeding under the laws of any jurisdiction relating to any
Borrower, its debts or its assets, whether voluntary or involuntary, all such
obligations arising hereunder or under any of the other Loan Documents shall be
paid in full before any payment or distribution of any character, whether in
cash, securities or other property, shall be made to any other Borrower
therefor.
12. Miscellaneous.
(a) Waivers. This Agreement and the other Loan Documents may not be
changed, waived, discharged or terminated orally or in writing, except that any
term of this Agreement or any other Loan Document may be amended and the
performance or observance by the Borrowers of any term of this Agreement or any
other Loan Document may be waived (either generally or in a particular instance
and either retroactively or prospectively) with, but only with, the prior
written consent of the Bank.
(b) Delays. No delay on the part of the Bank in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
partial exercise or waiver of any privilege or right hereunder preclude any
further exercise of such privilege or right or the exercise of any other right,
power or privilege. The rights and remedies expressed in this Agreement and in
the other Loan Documents are cumulative and not exclusive of any right or remedy
which the Bank may otherwise have. To the extent the Bank holds any collateral
as security for payment or any of the other obligations arising hereunder or
under any of the other Loan Documents, the Bank may release or surrender,
exchange or substitute any real estate or personal property, or both, or other
collateral security now or hereafter held as security for the payment of any of
the Notes or any other obligations of the Borrowers to the Bank under this
Agreement or the other Loan Documents or however arising. The Bank may extend
the time for payment or otherwise modify the terms of payment of any part or the
whole of any of the Notes.
(c) Notices. Any notices, consents or other communications to be given
under this Agreement or under the other Loan Documents shall be in writing and
shall be deemed given when mailed to the respective parties by overnight courier
or by registered mail addressed as set
41
forth on the first page of this Agreement, with all such notices, consents and
other communications to the Bank to be sent to the attention of Richard J.
MacDonald, or to such other addresses as either party may from time to time
designate for that purpose. A copy of each notice to the Bank shall also by sent
to the Bank's special counsel, Goulston & Storrs, 400 Atlantic Avenue, Boston,
Massachusetts 02110-3333, Attention: Philip A. Herman, Esquire. A copy of each
notice to the Borrowers shall also be sent to the Borrowers' counsel, Posternak
Blankstein & Lund LLP, 800 Boylston Street, Prudential Tower, Boston,
Massachusetts 02199-8004, Attention: Donald H. Siegel, P.C. Section headings and
defined terms in this Agreement and the other Loan Documents are included for
convenience only and are not intended to modify or define any term or provision
of any such instrument.
(d) Set-Off. Regardless of the adequacy of any collateral, any
deposits, balances or other sums credited by or due from the Bank to the
Borrowers or any of their subsidiaries may, at any time or from time to time,
without notice to any of the Borrowers or any of their subsidiaries or
compliance with any other condition precedent now or hereafter imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived), be
set off, appropriated and applied by the Bank against any or all such
obligations in such manner as the Bank in its sole discretion may determine.
(e) Jurisdiction; Waiver of Jury Trial. Each of the Borrowers, for
itself and its subsidiaries, irrevocably submits to the jurisdiction of the
courts of the Commonwealth of Massachusetts and the United States District Court
for the District of Massachusetts for the purpose of any suit, action or other
proceeding brought by the Bank arising out of or relating to this Agreement or
any other Loan Document, and each of the Borrowers, for itself and its
subsidiaries, waives and agrees not to assert by way of motion, as a defense or
otherwise in any such suit, action or proceeding, any claim that such Borrower
or any of its subsidiaries is not personally subject to the jurisdiction of the
courts of the Commonwealth of Massachusetts or the United States District Court
for the District of Massachusetts or that the property of such Borrower or any
of its subsidiaries is exempt or immune from execution or attachment, either
prior to judgment or in aid of execution, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper, or that this Agreement or any other Loan Document or the
subject matter hereof or thereof may not be enforced in or by such court. EACH
OF THE BORROWERS AND THE BANK HEREBY MUTUALLY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY, AND AGREE THAT NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
EACH PARTY HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS
WAIVER CONSTITUTES A MATERIAL
42
INDUCEMENT FOR BANK TO EXECUTE THIS AGREEMENT AND MAKE THE LOANS AND EXTEND
CREDIT TO BORROWERS.
(f) Usury. All agreements between the Borrowers and the Bank are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to Bank for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law. As used herein, the term "applicable law" shall mean the
law in effect as of the date hereof; provided, however, that in the event there
is a change in the law which results in a higher permissible rate of interest,
then the Notes shall be governed by such new law as of its effective date. In
this regard, it is expressly agreed that it is the intent of Borrowers and Bank
in the execution, delivery and acceptance of the Notes to contract in strict
compliance with the laws of the Commonwealth of Massachusetts from time to time
in effect. If, under or from any circumstances whatsoever, fulfillment of any
provision hereof or of any of the Loan Documents at the time of performance of
such provision shall be due, shall involve transcending the limit of such
validity prescribed by applicable law, then the obligation to be fulfilled shall
automatically be reduced to the limits of such validity, and if under or from
any circumstances whatsoever Bank should ever receive as interest an amount
which would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the principal balance evidenced
hereby and not to the payment of interest. This provision shall control every
other provision of all agreements between the Borrowers and the Bank.
(g) Execution. This Agreement may be signed in any number of
counterparts, which together will be one and the same instrument. This Agreement
shall become effective whenever each party shall have signed at least one such
counterpart.
(h) Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Massachusetts and for all purposes shall be construed in
accordance with the laws of such Commonwealth.
(i) Fees; Indemnification. Whether or not any funds are disbursed
hereunder, each of the Borrowers shall pay all of the Bank's reasonable costs
and expenses in connection with the preparation, execution, delivery, review,
administration and enforcement of this Agreement and the other Loan Documents,
including reasonable legal fees and disbursements. Each of the Borrowers hereby
agrees to indemnify and hold harmless the Bank from and against any and all
claims, damages, losses, liabilities, costs or expenses (including, without
limitation, the reasonable fees and disbursements of counsel) which the Bank may
reasonably incur (or which may be claimed against the Bank by any person
whatsoever) by reason of, in connection with or in any way related to this
Agreement and the other Loan Documents or any of the transactions contemplated
hereby or thereby; provided, that the Borrowers shall not be required to
indemnify the Bank for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent caused by gross negligence or
willful misconduct of the Bank.
(j) Binding Nature. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, that the
43
rights and obligations under this Agreement and under any of the other Loan
Documents may not be assigned by any of the Borrowers without the written
consent of the Bank.
(k) Assignment; Participations; Pledge to Federal Reserve.
(i) The Bank may, with the prior written consent of Dentex, which
consent shall be required so long as no Default or Event of Default has occurred
and is continuing and shall not be unreasonably withheld or delayed, at any time
or from time to time assign all or any portion of its rights and obligations
hereunder to one or more banks or other financial institutions (each, an
"Assignee"), and each of the Borrowers agree that it shall execute, or cause to
be executed, such documents, including without limitation, amendments to this
Agreement and to any other documents, instruments and agreements executed in
connection herewith as Bank shall deem necessary to effect the foregoing. In
addition, at the request of Bank and any such Assignee, the Borrowers shall
issue one or more new promissory notes, as applicable, to any such Assignee and,
if Bank has retained any of its rights and obligations hereunder following such
assignment, to Bank, which new promissory notes shall be issued in replacement
of, but not in discharge of, the liability evidenced by the promissory note held
by Bank prior to such assignment and shall reflect the amount of the respective
commitments and Loans held by such Assignee and Bank after giving effect to such
assignment. Upon the execution and delivery of appropriate assignment
documentation, amendments and any other documentation required by Bank in
connection with such assignment, and the payment by Assignee of the purchase
price agreed to by Bank and such Assignee, such Assignee shall be a party to
this Agreement and shall have all of the rights and obligations of Bank
hereunder (and under any and all other guaranties, documents, instruments and
agreements executed in connection herewith) to the extent that such rights and
obligations have been assigned by Bank pursuant to the assignment documentation
between Bank and such Assignee, and Bank shall be released from its obligations
hereunder and thereunder to a corresponding extent.
(ii) The Bank may, with the prior written consent of Dentex,
which consent shall be required so long as no Default or Event of Default has
occurred and is continuing and shall not be unreasonably withheld or delayed, at
any time and from time to time, grant to one or more banks or other financial
institutions (each, a "Participant") participating interests in the Bank's
obligation to lend hereunder and/or any or all of the Loans held by Bank
hereunder. In the event of any such grant by Bank of a participating interest to
a Participant, the Bank shall remain responsible for the performance of its
obligations hereunder and the Borrowers shall continue to deal solely and
directly with Bank in connection with Bank's rights and obligations hereunder.
(iii) The Bank may furnish any information concerning the
Borrowers in its possession from time to time to prospective Assignees or
Participants, provided, that the Bank shall require any such prospective
Assignee or Participant to agree in writing to maintain the confidentiality of
such information.
(iv) Notwithstanding any of the foregoing, the Bank may at any
time pledge or assign all or any portion of its rights under the Loan Documents
including any portion of any of the Notes to any of the 12 Federal Reserve Banks
organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. No
such pledge or assignment or enforcement thereof shall release the Bank from its
obligations under any of the Loan Documents.
44
(l) Under Seal. This Agreement shall be deemed to be an instrument
under seal and shall continue in full force and effect so long as any
indebtedness of any of the Borrowers to the Bank remains unpaid.
(m) Use of Proceeds. The Borrowers shall use the proceeds under this
Agreement (i) for working capital purposes of the Borrower, (ii) to refinance
existing Indebtedness of the Borrowers, (iii) in the case of the Second Line of
Credit, to fund acquisitions by the Borrower, to the extent permitted herein,
and (iv) in the case of the Term Loan, to pay the outstanding balance under the
Second Line of Credit on the Closing Date. No portion of the proceeds of any
loans shall be used, and no portion of any Letter of Credit is to be obtained,
in whole or in part, for the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in Regulations U, T or X of
the Board of Governors of the Federal Reserve System.
(n) Confidentiality. Notwithstanding any confidentiality provisions
contained herein, and in accordance with Section 1.6011-4(b)(3)(iii) of the
Treasury Regulations, each party to this Agreement (and each employee,
representative, or other agent of each party) may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure of
the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to such party
relating to such tax treatment and tax structure; provided, however, that,
pursuant to Section 1.6011-4(b)(3)(ii) of the Treasury Regulations, such
disclosure shall not be permitted to the extent, but only to the extent, such
disclosure would reasonably be considered to result in noncompliance with the
securities laws of any applicable jurisdiction. For the avoidance of doubt, the
parties acknowledge and agree that the tax treatment and tax structure of any
transaction does not include the name of any party to a transaction or any
sensitive business information (including, without limitation, specific
information about any party's intellectual property or other proprietary assets)
unless such information may be related or relevant to the purported or claimed
federal income tax treatment of the transaction.
If you agree with the terms of this Agreement, including the Exhibits
attached hereto and the other documents referred to herein, please sign below
where indicated in your capacity as President and Chief Executive Officer of the
Borrower.
[Remainder of page intentionally left blank.]
45
BANK OF AMERICA, N.A.
By: /s/ Richard J. MacDonald
------------------------------------
Name: Richard J. MacDonald
Title: Vice President
Accepted and Agreed to:
NATIONAL DENTEX CORPORATION
By: /s/ RICHARD F. BECKER, JR.
---------------------------------
Name: Richard F. Becker, Jr.
Title: Vice President, Treasurer and
Chief Financial Officer
GREEN DENTAL LABORATORIES, INC.
By: /s/ RICHARD F. BECKER, JR.
---------------------------------
Name: Richard F. Becker, Jr.
Title: Assistant Treasurer
Signature Page to Second Amended and Restated Loan Agreement