Exhibit 10.23
ESOP LOAN AGREEMENT
THIS ESOP LOAN AGREEMENT (the "Agreement") is made and entered into as of
April 1, 2002, by and among GreatBanc Trust Company, an Illinois corporation,
not in its individual or corporate capacity, but solely as trustee of the
Xxxxxxxx Dental Company Employee Stock Ownership Plan and Trust (the "Borrower")
and Xxxxxxxx Dental Company, a South Carolina corporation (the "Company").
In consideration of the mutual agreements set forth herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged by the parties, the Borrower and the Company agree as follows:
ARTICLE I.
Definitions
Section 1.1 Definitions. For purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires,
capitalized terms used in this Agreement shall have the meanings set forth
below, and shall include the plural as well as the singular. Capitalized terms
used but not defined in this Agreement shall have the meanings given to such
terms in the Stock Purchase Agreement.
"Agreement" has the meaning specified in the introductory paragraph.
"Borrower" has the meaning specified in the introductory paragraph. All
references to the Borrower in this Agreement shall mean any and all of the
Borrower, the Trust and the Plan.
"Code" means the United States Internal Revenue Code of 1986, as amended,
and includes any successor statute and all rules and regulations issued by the
IRS pursuant to the Code or any successor law.
"Company" has the meaning specified in the introductory paragraph.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning specified in Article IV of this
Agreement.
"IRS" means the United States Internal Revenue Service.
"Loan" means the extension of credit to the Borrower for the purpose of
financing the Purchase Price of the Shares as defined in Section 2.1 of this
Agreement.
"Loan Documents" means this Agreement, the Note, the Pledge Agreement and
all stock powers to be executed by the Borrower pursuant to Section 3.1.
"Note" has the meaning specified in Section 2.1 of this Agreement.
"Plan" means the employee stock ownership plan under the Trust Agreement.
"Pledge Agreement" means a pledge agreement properly executed by the
Borrower in favor of the Company.
"Prohibited Transaction" has the meaning assigned to that term in ERISA.
"Shares" has the meaning specified in Section 2.1 of this Agreement.
"Stock Purchase Agreement" has the meaning specified in Section 2.1 of this
Agreement.
"Trust" means the Xxxxxxxx Dental Company Employee Stock Ownership Plan and
Trust under the Trust Agreement.
"Trust Agreement" means the Xxxxxxxx Dental Company Employee Stock
Ownership Plan and Trust Agreement dated December 19, 1995, as amended.
ARTICLE II.
Amount and Terms of Loan
Section 2.1 Loan. Upon the execution and subject to the provisions of this
Agreement the Company shall lend to the Borrower the sum of $12,611,503.87 (the
"Loan"). The Borrower shall use all proceeds of the Loan solely to purchase
772,237 shares of common stock of the Company (the "Shares") held by certain
selling shareholders of the Company pursuant to the closing of that certain
Stock Purchase Agreement dated April 1, 2002 by and among the Borrower, the
Company and certain selling shareholders of the Company (the "Stock Purchase
Agreement"). The Borrower's obligations to repay the Loan and to pay interest
thereon is evidenced by the Borrower's $12,611,503.87 Promissory Note dated
April 1, 2002 payable to the order of the Company (together with any amendments,
extensions, renewals, and replacements thereof, collectively called the "Note").
Section 2.2 Payment and Balance. All payments of principal and interest
under the Note and the other Loan Documents shall be made to the Company in
immediately available funds. The Borrower agrees that the amount shown on the
books and records of the Company as being the unpaid balance of principal and
accrued interest under the Note and Loan Documents shall be prima facie evidence
thereof.
ARTICLE III.
Documents
Section 3.1 Documents to be Delivered. Upon the execution of this
Agreement, prior to the purchase of the Shares, the Borrower shall deliver to
the Company all of the following, in form and substance acceptable to the
Company:
(a) The Note, properly executed by the Borrower.
(b) The Pledge Agreement, properly executed by the Borrower.
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(c) One or more stock certificates for the Shares, accompanied by
stock powers for all such certificates, properly executed by the Borrower,
and all UCC forms and other writings, properly executed, which are deemed
by the Company to be necessary or desirable to grant to the Company a
perfected security interest constituting a first lien on the Shares and all
other property described in the Pledge Agreement.
ARTICLE IV.
Default; Recourse
The Borrower shall be considered to be in "Default" if the Borrower fails
to pay when due any principal, interest or other sums owing on the Note or
otherwise owing to the holder of the Note (an "Event of Default"). In case of an
Event of Default, the holder of the Note may declare the Note due and payable,
but only to the extent of such Default. Except as provided herein or in the
Pledge Agreement, Default shall not result in acceleration of the Note. The Note
is without recourse against the Borrower except that contributions made by the
Company or its affiliates to the Borrower and dividends and earnings
attributable to assets of the Borrower shall be used to make payments on the
Note as and to the extent provided in the Plan, subject to any limitations on
such use which may be necessary to comply with the requirements of Sections
54.4975-7(b)(5) and (6) of the Treasury Regulations or any other applicable laws
or regulations.
ARTICLE V.
Covenants
Section 5.1 Guaranteed ESOP Allocation to Participants. The Company agrees
that for each Plan year during the period beginning January 1, 2001 and ending
June 15, 2010, the Plan (or any successor plan) shall provide annual allocations
to employees of the Company who were participants in the Plan on January 1, 2002
(and are not excluded from continuing participation in the Plan as permitted by
Code Section 410(b)(3)), in an amount based on the fair market value of employer
securities which are allocated, which is not less than six percent (6%) of their
compensation during said period (which is not in excess of the compensation
limit under Code Section 401(a)(17) for such period).
Section 5.2 Company Contributions to the Plan. The Company agrees that it
shall make contributions to the Plan (or any successor plan) sufficient to
enable the Plan (or any successor plan) to pay principal and interest on the
Note, or any refinancing thereof, when due and payable.
ARTICLE VI.
Covenants
Section 6.1 Waiver and Amendment. No provision of any of the Loan Documents
can be waived, modified, amended, abridged, replaced, supplemented or
terminated, except by a writing executed by the Borrower and the Company. A
waiver shall be effective only in the specific instance and for the specific
purpose given. No delay or failure by the Company to exercise any right or
remedy shall be a waiver thereof, nor shall any single or partial exercise by
the Company of any right or remedy preclude any other exercise thereof or the
exercise of any
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other right or remedy. All rights and remedies of the Company under this
Agreement and any other writing are cumulative and not exclusive.
Section 6.2 Nonrecourse Obligations. Notwithstanding any provision of the
Loan Documents, the Loan Documents shall be without recourse against the
Borrower to the extent that, but only to the extent that, upon the occurrence of
an Event of Default, the Company shall not have any right to assets of the
Borrower other than: (a) the collateral under the Pledge Agreement, (b)
contributions (other than contributions of employee securities) that are made
under the Plan to meet the obligations of the Borrower under the Loan Documents,
and (c) earnings attributable to the investment of such contributions. Nothing
in this Section 6.2 shall constitute a waiver of any indebtedness under the Loan
Documents, or shall be construed to prevent recourse to or enforcement against
any security for any of the Loan Documents, of all obligations contained in the
Loan Documents.
Section 6.3 Notices. All notices, requests, demands and other
communications provided for under this Agreement and the writings contemplated
by this Agreement shall be in writing and shall be delivered in person, faxed,
or deposited in the mail, postage prepaid, addressed as follows:
If to the Borrower: Xxxxxxxx Dental Company Employee Stock
Ownership Plan and Trust
c/o GreatBanc Trust Company
0000 Xxxx 00/xx/ Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxx, Xxxxxxxxx & Battles, P.A.
3900 Xxxxx Xxxxxxx Tower
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: A. Xxxxx Xxxxx
Facsimile: (000) 000-0000
If to the Company: Xxxxxxxx Dental Company
X.X. Xxx 0000
0000 Xxxx Xxxxxx Xxxxx
Xxxxx, XX 00000
Attention: President
Facsimile No.: (000) 000-0000
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If to the Company: Xxxxxx and Xxxxxx, Professional Association
2400 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or, as to each party, at such other address or fax number as shall be designated
by such party in a written notice to the other party complying as to delivery
with the terms of this Section 6.3. All such notices, requests, demands and
other communications shall be effective when actually delivered, faxed, or
deposited in the mail.
Section 6.4 Binding Effect and Assignment. The Loan Documents shall bind
and benefit the parties hereto and thereto and their respective successors and
assigns, except that the Borrower shall have no right to assign any of its
rights hereunder or thereunder or any interest herein or therein without the
prior written consent of the Company or its successors and assigns. Any
assignment in violation of the preceding sentence shall be void. The parties
hereby acknowledge that the Company may assign its rights under the Loan
Documents to an Affiliate of the Company, and the Borrower hereby consents to
such assignment and agrees to take such actions and execute such documents,
instruments, agreements, assignment, transfers and amendments as may be
necessary or desirable to effectuate such assignment. If any provision or
application of any of the Loan Documents is held unlawful or unenforceable in
any respect, such illegality or unenforceability shall not affect the other
provisions or applications which can be given effect, and this Agreement and
such writings shall be construed as if the unlawful or unenforceable provision
or application had never been contained herein or therein or prescribed hereby
or thereby.
Section 6.5 Jurisdiction and Venue. The Borrower and the Company consent to
the personal jurisdiction of the state and federal courts located in the State
of Minnesota in connection with any controversy related in any way to any of the
Loan Documents or any transaction or matter relating to any of the Loan
Documents, waive any argument that venue in such forums is not convenient, and
agree that any litigation initiated by any party in connection with any of the
Loan Documents or any transaction or matter relating to any of the Loan
Documents shall be venued in either the District Court of Hennepin County,
Minnesota, or the United States District Court, District of Minnesota.
Section 6.6 Headings. Article and Section headings in this Agreement are
for convenience of reference only, and shall not constitute a part of this
Agreement for any other purpose or a limitation of the scope of the particular
Articles or Sections to which they refer.
Section 6.7 Governing Law. This Agreement and the writings contemplated by
this Agreement shall be governed by and construed in accordance with the
internal laws of the State of Minnesota (excluding conflict of law rules).
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Section 6.8 Survival. All representations, warranties, covenants and
agreements of the Borrower shall survive the closing of the transactions
contemplated hereby and the issuance of the Note.
Section 6.9 Entire Agreement. This Agreement and Loan Documents constitute
the entire agreement between the parties and supercede any prior understandings
or agreements by or between the parties, written or oral, which may be related
to the subject matter hereof in any way. This Agreement and the Loan Documents
shall continue in full force and effect for so long as the Borrower shall be
indebted to the Company or its successors and assigns.
Section 6.10 Modifications. The parties acknowledge that the payments of
principal and interest on the Note are intended to release sufficient Shares
each year to satisfy the anticipated benefit requirements of the Plan over the
duration of the Note. In order to provide those benefits, the parties understand
that it may be advisable to accelerate or delay payments of principal under the
Note. The parties hereby agree that the Borrower may, with the written consent
of the Company, commit in writing to a revised payment schedule that provides
for the prepayment of all or any portion of the principal. The parties may also
agree to refinance the Note. From the date of any such commitment to accelerate
payments or of any such agreement to refinance, the terms of this Agreement and
the other Loan Documents shall be considered to include such commitment or
refinancing. The Borrower further agrees to consider any proposals for such a
commitment or refinancing made by the Company, and to agree to such proposals if
the Borrower concludes that its consent to such proposal will not result in a
violation of its fiduciary obligations under applicable federal laws or result
in a Prohibited Transaction.
Section 6.11. Counterparts and Facsimile Signatures. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same Agreement. The
counterparts of this Agreement and all Ancillary Documents may be executed and
delivered by facsimile signature by any of the parties to any other party and
the receiving party may rely on the receipt of such document so executed and
delivered by facsimile as if the original had been received.
Executed as of the date first above written.
[SIGNATURE PAGE FOLLOWS]
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THE BORROWER REPRESENTS, WARRANTS AND CERTIFIES TO THE COMPANY AND AGREES
THAT THE BORROWER HAS READ ALL OF THIS AGREEMENT AND UNDERSTANDS ALL OF ITS
PROVISIONS.
GREATBANC TRUST COMPANY, XXXXXXXX DENTAL COMPANY
an Illinois corporation, not in its
individual or corporate capacity, but
solely as trustee of the Xxxxxxxx
Dental Company Employee Stock Ownership By________________________________
Plan and Trust Its___________________________
By_______________________________
Its____________________________
[SIGNATURE PAGE TO ESOP LOAN AGREEMENT]
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