EXHIBIT 10.84
OPTION AGREEMENT
This Option Agreement (the "Agreement") is by and among CASTLE DENTAL
CENTERS, INC., a Delaware corporation ("Castle"), CASTLE DENTAL CENTERS OF
FLORIDA, INC., a Florida corporation ("CDC-Florida"), FIRST DENTAL CARE, INC.
n/k/a XXXXXXXXX ENTERPRISES, INC. ("GEI"), XXXXXX X. XXXXXXXXX, D.D.S.
(individually and together with GEI ("Xxxxxxxxx") and NATIONSBANK OF TEXAS,
N.A. ("NationsBank"), and DECLARATION OF TRUST FOR THE DEFINED BENEFIT PLANS
OF ZENECA HOLDINGS, INC., DECLARATION OF TRUST FOR THE DEFINED BENEFIT PLANS OF
ICI AMERICAN HOLDINGS, INC., and DELAWARE STATE EMPLOYEES' RETIREMENT FUND, who
agree as follows:
1. CONSIDERATION. Contemporaneously with the execution and delivery of
this Agreement, certain of the parties hereto have exchanged limited mutual
releases and have concluded the restructuring of that certain indebtedness of
Castle to Xxxxxxxxx and entities related thereto more particularly described as:
(a) that certain promissory note dated May 19, 1996 in the original principal
amount of $1,787,938, as modified (the "Performing Note"); (b) that certain
promissory note dated May 19, 1996, in the original principal amount of
$656,588, as modified; (c) that certain promissory note dated May 19, 1996, in
the original principal amount of $286,775, as modified (collectively, the
"Restructured Notes"). This Option Agreement is granted in connection with the
exchange of the limited mutual releases and is neither a payment on or security
device for the repayment of the debts held by Xxxxxxxxx or related entities.
2. GRANT OF OPTION. Subject to the terms and conditions of this Agreement,
following a payment default under the Performing Note as set forth in paragraph
3 below, Xxxxxxxxx is hereby granted an exclusive and non-transferable, except
as hereinafter provided, option, but not the obligation to purchase either (a)
from Castle, all of the issued and outstanding shares of capital stock of
CDC-Florida, or (b) from CDC-Florida, all of the assets and liabilities specific
to the operation of CDC-Florida. Whether Xxxxxxxxx wishes to acquire the stock
of CDC-Florida or its assets shall be determined by Xxxxxxxxx in writing at the
time of the exercise of the option. Contemporaneouly with the consummnation of
the purchase pursuant to said option, all security interests in the assets of
CDC-Florida (except for those specific to the operations of CDC-Florida that
existed at the time of CDC-Florida's acquisition thereof and those security
interests granted by CDC-Florida to secure its acquisition of tangible personal
property thereafter acquired in the normal conduct of its business) and if
Xxxxxxxxx elects to purchase CDC-Florida stock, all security interests in the
stock of CDC-Florida shall be released, and such assets and/or CDC-Florida's
stock shall be transferred free and clear of all claims, liens, and
encumbrances, except for those security interests that existed prior to May 19,
1996, and those security interests granted by CDC-Florida to secure its
acquisition of tangible personal property after such date in the normal conduct
of its business. NationsBank, as lienholder, has executed a counterpart hereof
to indicate its agreement to release its security interest in the assets of
CDC-Florida upon the payment of the
option purchase price as set forth herein. It is the intent of parties that this
option grant to Xxxxxxxxx the right to purchase all of the assets of CDC-Florida
to enable Xxxxxxxxx to reacqire all the assets transferred by that certain asset
purchase agreement between Xxxxxxxxx and affiliates, as seller, and CDC-
Florida, as purchaser, so as to place the parties in as near the same position
with respect to such assets they would have occupied had such transaction not
occurred in the first instance as is possible.
3. OPTION TERM. Subject to the next sentence, this option shall be
exercisable by Xxxxxxxxx or his assigns at any time following a payment default
under the Performing Note, subject to the cure periods set forth therein, but
the option shall terminate on July 31, 1998, if not perviously exercised.
Notwithstanding the foregoing, in the event NationsBank, its successors or
assigns, declares a default and acceleration in the payment or performance of
the obligations owed to it by Castle, said option shall be exercisable only
during a period commencing on the date of the receipt by Xxxxxxxxx of notice of
such default, and said option shall terminate, if not previously exercised, on
the 61st day thereafter. The closing of the purchase pursuant to this option
shall occur within thirty (30) days of the exercise of the option. Time is of
the essence and Xxxxxxxxx'x failure to close the purchase in a timely manner
shall void the option and this Option Agreement shall thereafter be of no
further force or effect. Until exercisable under the terms hereof, this option
shall not be transferable.
4. AUTOMATIC TERMINATION OF THE OPTIONS. Unless sooner terminated, at such
time as the Restructured Notes have been paid in full, this option agreement
shall automatically terminate and shall be of no further force and effect.
5. CONSIDERATION FOR OPTION EXERCISE. The consideration payable by
Xxxxxxxxx for the conveyance of the assets of CDC-Florida or CDC-Florida stock,
whichever Xxxxxxxxx elects, payable upon the closing of the option purchase,
shall consist of the following, all of which shall be free and clear of all
claims, liens, and encumbrances of third parties whatsoever; (a) $3.1 million in
cash, to be delivered to NationsBank in exchange for the release of its liens on
the assets of CDC-Florida; (b) the Restructured Notes; and (c) all shares of
capital stock of Castle previously issued to Greensberg or its affiliates on May
19, 1996, duly endorsed and in proper form for transfer. If Xxxxxxxxx elects to
purchase the stock of CDC-Florida, Castle shall deliver all shares of capital
stock of CDC-Florida, duly endorsed and in proper form for transfer to
Xxxxxxxxx, free and clear of all liens and encumbrances, whatsoever. If
Xxxxxxxxx elects to purchase the assets of CDC-Florida, all such assets shall be
conveyed in the same form of transfer as said assets were transferred to
CDC-Florida by Xxxxxxxxx and related entities on May 19, 1996. In addition,
should Xxxxxxxxx elect to purchase the assets of CDC-Florida, the Option
Agreement between Xxxxxx X. Xxxxxxxxx, D.D.S. and CDC-Florida, the Management
Services Agreement between CDC-Florida and Castle First Dental Care, P.A., and
the Trademark License Agreement and the Trandename License Agreement, all
executed and delivered in connection with the May 19, 1996, transaction shall be
terminated.
6. CONDUCT OF BUSINESS. Heretofore, CDC-Florida represents and warrants
that it has not transferred any non-cash assets conveyed to it by Xxxxxxxxx or
related entities on May 19, 1996, except in the ordinary course of business and,
while this option remains outstanding, and prior to the closing of the purchase,
CDC-Florida shall conduct business only in the ordinary course, shall transfer
none of its existing assets other than in the ordinary course of business and
shall maintain a current status on accounts payable.
7. EFFECTIVE DATE. The effective date of this option shall be the _______
day of __________________, 1997.
CASTLE DENTAL CENTER, INC.
By:____________________________________
Name:_________________
Title:______________
CASTLE DENTAL CENTERS
OF FLORIDA, INC.
By:____________________________________
Name:_________________
Title:______________
XXXXXXXXX ENTERPRISES, INC.
By:____________________________________
Name:_________________
Title:______________
_______________________________________
XXXXXX X. XXXXXXXXX, D.D.S.
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CONSENT OF SUPERIOR LENDERS
NationsBank, by its execution hereof, does hereby consent to the granting
of this option and, should the option be exercised, and the cash consideration
of $3.1 million be delivered to NationsBank for payment on the indebtedness of
Castle owing to NationsBank, to the transfer of the stock of CDC-Florida or the
transfer of the assets of CDC-Florida upon the payment of the consideration
specified, free of its security interests therein, and by execution hereof
agrees that the granting of this option does not constitute security for the
repayment of any obligations owed to Xxxxxxxxx or related entities by Castle and
that the completion of the sale pursuant to the exercise of this option shall
not constitute a payment on any obligation owed to Xxxxxxxxx or related entities
by Castle. By their execution hereof, the Declaration of Trust for the Defined
Benefit Plans of Zeneca Holdings, Inc., the Declaration of Trust for the Defined
Benefit Plans of ICI American Holdings, Inc., and the Delaware State Employees'
Retirement Fund, the holders of senior subordinated debt of Castle to which the
Castle debt to Xxxxxxxxx is subordinate, do hereby consent to the granting of
this option and do hereby consent to the sale and purchase should said option be
exercised upon the terms specified, free and clear of its security interests,
and do hereby acknowledge and agree that this option agreement does not
constitute security for the repayment of the debt due Xxxxxxxxx by Castle and
that the transfer of assets or stock of CDC-Florida, whichever the case may be,
pursuant to the exercise of this option shall not constitute a payment thereon.
NATIONSBANK OF TEXAS, N.A.
By:____________________________________
Name:_________________
Title:______________
DECLARATION OF TRUST FOR THE
DEFINED BENEFIT PLANS OF ZENECA
HOLDINGS, INC.
By: Pecks Management Partners, Ltd.
its Investment Advisor
By:_________________________________
X.X. Xxxxxx, Managing Director
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DECLARATION OF TRUST FOR THE
DEFINED BENEFIT PLANS OF ICI
AMERICAN HOLDINGS, INC.
By: Pecks Management Partners, Ltd.
its Investment Advisor
By:_________________________________
X.X. Xxxxxx, Managing Director
DELAWARE STATE EMPLOYEES'
RETIREMENT FUND
By: Pecks Management Partners, Ltd.
its Investment Advisor
By:_________________________________
X.X. Xxxxxx, Managing Director
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