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EXHIBIT 1
SAFEGUARD HEALTH ENTERPRISES, INC.
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TERM SHEET AGREEMENT
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DATE: March 1, 2000 (the "Effective Date")
PARTIES: 1. SafeGuard Health Enterprises, Inc. (the "Company")
2. CAI Partners and Company II, L.P. and CAI Capital Partners and
Company II, L.P. (collectively "CAI")
3. Xxxx X. Xxxxxxxx ("Xxxxxxxx")
4. Silicon Valley Bank ("Bank")
5. Xxxx Xxxxxxx Mutual Life Insurance Company and the other holders
of the 7.91% Senior Notes of the Company due September 30, 2005
(collectively "Xxxxxxx")
6. Xxxxxx X. Xxxxxxx, D.D.S. ("Baileys")
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This Term Sheet Agreement (the "Agreement") summarizes various binding
agreements between the parties. It is not a letter of intent. The parties
contemplate that the agreements evidenced by this Agreement will be memorialized
in further documentation which may include a Shareholders Agreement, to be
prepared and executed by the parties at a later date. However, the agreements
evidenced by this Agreement are not subject to or conditioned upon the execution
and delivery of such further documentation.
1. Investor Senior Loan. On the Effective Date hereof, CAI, Anderson, and
Baileys (collectively the "Investors"), severally and not jointly, shall loan
the Company the aggregate amount of $8,000,000 (the "Investor Senior Loan") in
the following amounts: CAI -- $5,000,000; Xxxxxxxx -- $2,500,000; and Baileys --
$500,000. The Investor Senior Loan shall bear interest at the rate of ten
percent (10%) per annum. Interest is payable quarterly and at maturity. The
maturity date of the Investor Senior Loan is April 30, 2001. The maturity date
of the Investor Senior Loan shall be accelerated in the event of a liquidation
or dissolution of the Company. The Investor Senior Loan is unsecured but the
Company agrees with the Investors to comply with the same negative pledges with
respect to liens on its assets as is contained in the Loan Documents between the
Company and the Bank and the Note Purchase Agreement between the Company and
Xxxxxxx. The Company shall not incur any other indebtedness senior or equal to
the Investor Senior Loan. Repayment of the Investor Senior Loan in full shall be
prior to repayment of the Bank Loan and the Xxxxxxx Notes according to the
subordination agreement set forth below. In the event of the closing of the sale
of the Preferred Stock and Convertible Notes described below, the principal
balance of the Investor Senior Loan shall be cancelled as consideration for the
purchase of the Series A Preferred Stock and Series A Convertible Notes by the
Investors.
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2. Sale of Series A Preferred Stock and Series A Convertible Notes to the
Investors. The Investors, severally and not jointly, agree to purchase from the
Company (a) 64,000 shares of Series A Preferred Stock for an aggregate purchase
price of $6.4 million and (b) Series A Convertible Notes having an aggregate
principal amount of $1.6 million. The consideration for the Series A Preferred
Stock and the Series A Convertible Notes shall be cancellation of the
outstanding principal balance of the Investor Senior Loan. Accrued interest due
under the Investor Senior Loan shall be payable in cash to the Investors on the
date of closing.
a. Series A Preferred Stock. The Series A Preferred Stock shall have
the following rights, preferences and limitations:
i. The Series A Preferred Stock shall have a liquidation preference of
$100 per share or an aggregate liquidation preference of $6.4 million. The
liquidation preference shall be senior to all other securities of the
Company including the Series B, C and D Preferred Stock described below and
the Common Stock.
ii. The Series A Preferred Stock shall not have specified dividends
but shall be entitled to participate on an as-converted basis in any
dividends paid on the Common Stock of the Company or the Series B, C or D
Preferred Stock.
iii. The Series A Preferred Stock shall not be subject to mandatory
redemption at the election of the Investors but shall be subject to
redemption at a redemption price of $100 per share by the Company at any
time on or after ten (10) years after the original date of issuance.
iv. The Series A Preferred Stock shall be convertible into shares of
Common Stock at a conversion price of $1.00 per share. Each share of Series
A Preferred Stock shall be initially convertible into 100 shares of Common
Stock based on the $100 liquidation preferential amount thereof. The
conversion price and number of shares will be subject to customary
anti-dilution adjustments for stock splits, share dividends,
recapitalizations, stock issuances, etc., with the anti-dilution adjustment
for the issuance of shares at less than the conversion price being
determined on the "weighted average method."
v. Subject to the provisions of Section 3A hereof, the Series A
Preferred Stock, voting as a single class, shall be entitled to elect a
majority (4) of the Board of Directors. On all other matters, the holders
of the Series A Preferred Stock shall vote together with the holders of the
Common Stock and the Series B, C and D Preferred Stock and shall be
entitled to cast one vote for each share of Common Stock into which the
Series A Preferred Stock is convertible.
vi. The approval of the Series A Preferred Stock, voting as a separate
class, shall be required for the issuance of any securities having
liquidation or other rights senior or superior or equal in any respect to
the rights of the Series A Preferred Stock.
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b. Series A Convertible Notes. The Series A Convertible Notes shall
have the following terms.
i. The Series A Convertible Notes shall bear interest at the rate of
ten percent (10%) per annum from the date of issuance, payable quarterly
and at maturity.
ii. The Series A Convertible Notes shall be automatically converted
into shares of Series A Preferred Stock upon the approval by the
stockholders of the Company of an amendment to its certificate of
incorporation increasing the number of authorized shares of Common Stock
sufficient for the issuance of Common Stock upon the conversion of the
shares of Series A Preferred Stock and the Series B, C and D Preferred
Stock issuable upon the automatic conversion of the Series A Convertible
Notes and the Series B, C and D Convertible Notes. The conversion price
will be $100 per share and subject to the same anti- dilution protection as
the Series A Preferred Stock. Initially the Series A Convertible Note will
be convertible into an aggregate of 16,000 shares of Series A Preferred
Stock.
iii. The Series A Convertible Notes shall have no voting rights.
iv. The Series A Convertible Notes and the payment thereof shall be
senior and superior to the Series B, C and D Convertible Notes.
3. Sale of Series B, C and D Preferred Stock and Series B, C and D
Convertible Notes. The Bank and Xxxxxxx agree to purchase an aggregate of
176,000 shares of Series B, C and D Preferred Stock and Series B, C and D
Convertible Notes having an aggregate principal balance of $4.4 million. The
consideration for the Series B Preferred Stock and Series B Convertible Notes
shall be the cancellation of all indebtedness and obligations of any kind of the
Company, whether principal, interest, costs, expenses or other, to the Bank and
Xxxxxxx, respectively. The amount of shares of Series B, C and D Preferred Stock
and principal amount of the Series B, C and D Convertible Notes shall be
allocated to the Bank and Xxxxxxx, respectively, as follows: (i) the Bank and
Xxxxxxx shall each purchase 32,000 shares of Series B Preferred Stock (in the
aggregate 64,000 shares) and a Series B Convertible Note with a principal
balance of $.8 million (in the aggregate $1.6 million); (ii) the Bank shall
purchase 24,000 shares of Series C Preferred Stock and a Series C Convertible
Note with the principal balance of $.6 million, and (iii) Xxxxxxx shall purchase
88,000 shares of Series D Preferred Stock and a Series D Convertible Note with
the principal balance of $2.2 million.
a. Series B, C and D Preferred Stock. The rights, preferences and
limitations of the Series B, C and D Preferred Stock shall be identical except
as set forth below:
i. The Series B, C and D shall have a liquidation preference of $100
per share. The Series B Preferred Stock liquidation preference shall be
senior to the Series C Preferred Stock liquidation preference. The Series C
Preferred Stock liquidation preference shall be senior to the Series D
Preferred Stock liquidation preference. The Series B, C and D Preferred
Stock liquidation preferences shall be secondary to the Series A Preferred
Stock but prior to any liquidation rights of the Common Stock.
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ii. The Series B, C and D Preferred Stock shall not have specified
dividends but shall be entitled to participate on an as-converted basis in
any dividends paid on the Common Stock of the Company or the Series A, B, C
or D Preferred Stock as the case may be.
iii. The Series B, C and D Preferred Stock shall not be subject to
mandatory redemption at the election of the Investors but shall be subject
to redemption at a redemption price of $100 per share by the Company at any
time on or after ten (10) years after the original date of issuance.
iv. The Series B, C and D Preferred Stock shall be convertible into
shares of Common Stock at a conversion price of $1.00 per share. Each share
of Series B, C and D Preferred Stock shall be initially convertible into
100 shares of Common Stock based on the $100 liquidation preferential
amount thereof. The conversion price and number of shares will be subject
to customary anti-dilution adjustments for stock splits, share dividends,
recapitalizations, stock issuances, etc., with the anti-dilution adjustment
for the issuance of shares at less than the conversion price being
determined on the "weighted average method."
v. Subject to the provisions of Section 3A hereof, the Series B, C and
D Preferred Stock voting together as a single class, shall be entitled to
elect one director to the Board of Directors. On all other matters, the
holders of the Series B, C and D Preferred Stock shall vote together with
the holders of the Series A Preferred Stock and the Common Stock and shall
be entitled to cast one vote for each share of Common Stock into which the
Series B, C and D Preferred Stock is convertible.
vi. The approval of the Series B, C and D Preferred Stock, voting as a
separate class, shall be required for the issuance of any security of the
Company having liquidation or other rights senior and superior or equal in
any respect to the rights of the Series B, C and D Preferred Stock.
b. Series B, C and D Convertible Notes. The terms of the Series B, C
and D Convertible Notes shall be identical to the Series A Convertible Notes
except that (i) the Series B, C and D Convertible Notes shall be convertible
into Series B, C and D Preferred Stock, respectively and (ii) payment of the
Series B Convertible Note shall be senior and superior to the Series C
Convertible Note, (iii) payment of the Series C Preferred Note shall be senior
and superior to payment of the Series D Convertible Note. Initially the Series
B, C and D Convertible Notes will be convertible into an aggregate of 16,000
shares of Series B Preferred Stock, 6,000 shares of Series C Preferred Stock and
22,000 shares of Series D Preferred Stock, respectively.
3A. Change in Class Vote Applicable to Elections. In the event that CAI and
Xxxxxxxx at any time sell fifty percent (50%) or more of their respective
Investor Senior Loan or their respective Series A Preferred Stock and Series A
Convertible Notes, then, with respect to the election of directors, the Series
A, B, C and D Preferred Stock shall be entitled to vote together as a single
class to elect five (5) directors to the Board of Directors and the provisions
of Section 2.a.v. and Section 3.a.v. hereof with respect to the election of
directors shall not be applicable.
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4. Closing. The closing of the sale of the Preferred Stock and the
Convertible Notes shall occur on the first calendar day of the calendar month
following the month in which satisfaction of the following conditions occurs
effective immediately prior to the commencement of business on such day:
a. Regulatory Approval. Receipt of all required regulatory approvals
to the transactions contemplated by this Agreement unless otherwise waived by
CAI and Xxxxxxxx;
b. Performance. The performance by all of the Investors, the Bank and
Xxxxxxx of their obligations to purchase the Preferred Stock and the
Convertibles Notes as described above;
c. Bankruptcy. The Company shall not have been placed in bankruptcy,
either voluntary or involuntarily;
d. Receivership. Neither the Company nor any of its subsidiaries shall
have been placed in a receivership or conservatorship by any regulatory agency
unless otherwise waived by CAI and Xxxxxxxx; and
e. Forbearance. The Banks and Xxxxxxx have complied with the
forbearance and subordination agreements set forth in this agreement.
The Closing shall not be subject to any other conditions precedent.
5. Terminated Purchase Agreement. The Company, the Bank and Xxxxxxx
acknowledge and agree that CAI and Xxxxxxxx properly terminated that certain
Debenture and Note Purchase Agreement dated as of June 29, 1999 (the "Terminated
Purchase Agreement") pursuant to Sections 8.4(a) and 8.4(b) thereof and waives
and releases any contrary claim or assertion. This Agreement does not supersede
or extinguish any of the rights of CAI and Xxxxxxxx under the Terminated
Purchase Agreement that survived the termination thereof including, without
limitation, their rights to be reimbursed costs and expenses as provided
therein. Such costs and expenses which shall not exceed $250,000 in the
aggregate, together with the costs and expenses of CAI and Xxxxxxxx in
connection with this Agreement, shall be paid immediately after the execution of
this Agreement out of the proceeds of the Investor Senior Loan.
6. Subordination Agreement. The Bank and Xxxxxxx agree that the Investor
Senior Loan shall be paid 100% in full in cash before any payment of any kind
shall be made on the Bank Loan or the Xxxxxxx Notes. Any distribution which
would otherwise, but for the provision of this Agreement, be payable or
deliverable in respect of the Bank Loan or the Xxxxxxx Notes shall be paid or
delivered directly to the Investors in payment of the Investor Senior Loan until
the Investor Senior Loan, principal and interest, is paid 100% in full. For the
purpose thereof "distribution" means, with respect to any indebtedness (a) any
payment or distribution by any person of cash, securities or other property, by
set-off or otherwise, on account of such indebtedness or obligation, (b) any
redemption, purchase or other acquisition of such indebtedness or obligation by
any person or (c) the granting of any lien or security interest to or for the
benefit of the holders of such indebtedness or obligation in or upon any
property of any person. The Investor Senior Loan shall continue to be treated as
debt
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that is senior to the Bank Loan and the Xxxxxxx Notes and the provisions of this
Agreement shall continue to govern the relative rights and priorities of the
Investors, the Bank and Xxxxxxx even if all or part of the Investor Senior Loan
is subordinated, set aside, voided, invalidated or disallowed in connection with
any proceeding or sale or transfer or other distribution of all or substantially
all of the assets of the Company and this Agreement shall be reinstated if at
any time any payment of the Investor Senior Loan is rescinded or must otherwise
be returned by any holder of the Investor Senior Loan. The Bank and Xxxxxxx
agree not to initiate or prosecute any claim, action, or other proceeding
challenging the enforceability or validity of the Investor Senior Loan.
7. Forbearance Agreement. Until April 30, 2001, the Bank and Xxxxxxx shall
not demand or accept any payment, principal or interest, or accelerate or take
any enforcement action with respect to the Bank Loan and the Xxxxxxx Notes. For
the purposes hereof "enforcement action" means any of the following: (a) to take
from or for the account of the Company by set-off or in any other manner the
whole or any part of any monies which may now or after be owing by the Company
with respect to the Bank Loan or the Xxxxxxx Notes; (b) to xxx for payment of,
or initiate or participate in any other suit, action or proceeding against the
Company (i) to enforce payment of or to collect the whole or any part of the
Bank Loan or the Xxxxxxx Notes or (ii) to enforce any other rights, powers,
privileges or remedies under the Bank Loan Documents or the Xxxxxxx Note
Agreement; or (c) to take any action under the provisions of any state or
federal law to enforce, foreclose upon, take possession of or sell any property
or assets of the Company. In addition, the Bank and Xxxxxxx shall agree to
cooperate to the extent commercially reasonable with respect to any other
forbearance matters which shall be required in order for the Company to receive
a "clean" audit report in its financial statements without any qualifications or
exceptions.
8. Shareholders Agreement. The Investors, the Bank and Xxxxxxx agree to an
agreement among such parties having the following provisions:
a. Voting. Such parties agree to vote all shares of voting securities
of the Company now or hereafter held by such parties (i) to approve an amendment
to the certificate of incorporation of the Company increasing the authorized
number of shares of Common Stock of the Company to a number sufficient to permit
the conversion of the Series A Preferred Stock and the Series B Preferred Stock
issuable upon conversion of the Convertible Notes as specified above, and (ii)
to maintain the size of the Board of Directors at seven (7), and (iii) to take
and authorize any such further actions as may be necessary or required to fully
effectuate this Agreement. The holders of the Series A Preferred Stock shall
elect as a director an individual designated by the Bank and Xxxxxxx and
reasonably approved by the holders of the Series A Preferred Stock. Upon the
closing, the director designated by the Bank and Xxxxxxx shall be elected to the
Board of Directors to fill the vacant position as contemplated by Section 9(d)
below.
b. Drag-Along Rights. CAI and Xxxxxxxx shall have drag-along rights
with respect to the shares owned by the Bank and Xxxxxxx in connection with a
sale of the Company in a transaction approved by the Board of Directors of the
Company; provided that if the value of the securities of the Company in such
sale is less than $30 million, a fairness opinion by an investment banker shall
be provided.
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9. Certain Representations. SafeGuard, acting by and through its duly
authorized officers, and Baileys, individually, hereby represent and warrant to
the Investors, the Bank and Xxxxxxx as follows:
a. Material Events. To the best knowledge of the Company and Baileys,
there is no event or claim of any kind whatsoever that has occurred, is pending
or is threatened that has had or could have a material adverse effect on the
Company or would be considered a material event as such term is defined under
federal securities laws (including court decisions interpreting the same) which
event or claim has not been publicly disclosed in a report filed by the Company
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934, as amended, or otherwise publically disclosed in a press release
issued by the Company or that certain press release dated December 17, 1999
issued by Xxxxxx, Xxxxxxxxx & Xxxxx, L.L.P. related to a class action lawsuit
against the Company. For the purpose hereof, any notice of termination or
non-renewal, notice of intent to terminate or non-renew or termination or
non-renewal of any group or individual customer contracts which either
individually or in the aggregate represent a material number of the members of
the plan of the Company shall constitute a material adverse event.
b. Regulatory Compliance. Up to $5 million of the proceeds of the
Investor Senior Loan will be used immediately for a capital contribution to Safe
Health Life Company, the insurance subsidiary of the Company, required to be
made on the Effective Date by applicable governmental regulations. Except for
such capital infusion, all the other subsidiaries of the Company are in
compliance with all material provisions of the laws, rules and regulations
applicable to the certificate of authority or license held by such subsidiary
and none of the subsidiaries has any deficit in any required reserves, capital
or other funds required to be maintained by such subsidiary under applicable
regulatory requirements.
c. Board Approval. This Agreement and the transactions provided in
this Agreement, including, without limitation, the issuance of the Investor
Senior Loan, the Preferred Stock, the Convertible Notes and the approval of the
amendment to the certificate of incorporation as contemplated herein, have been
approved by the affirmative vote of not less than seventy-five percent (75%) of
the current members of the Board of Directors of the Company at a meeting duly
called and held in accordance with the Bylaws of the Company. The Board of
Directors have taken all action and adopted all approvals necessary in order
that the transactions contemplated by this Agreement do not and shall not cause
the rights issued to the stockholders of the Company pursuant to that certain
Rights Agreement, dated as of March 22, 1996 between the Company and American
Stock Transfer and Trust Company, as Rights Agent, to become exercisable or any
similar rights under any other rights agreement applicable to the stockholders
of the Company to become exercisable.
d. Board of Directors. The following changes with respect to the Board
of Directors of the Company have occurred or have been duly authorized and
approved by the Board of Directors of the Company in accordance with the Bylaws
of the Company:
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i. After the Board approvals described in Section 9(c) above, Messrs.
Cox, McKenna, Xxxx, Xxxxxxx and Xxxx resigned from the Board of Directors
of the Company and the incumbent directors of the Company were then
Baileys, Brendzel and Xxxxxx Xxxxx;
ii. Xxxx X. Xxxxxxxx, Xxxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx were then
by the Board of Directors appointed as directors of the Company effective
upon execution of this Agreement; and
iii. One vacancy shall remain on the Board of Directors of the Company
to be filled upon the closing by the holders of the Series B, C and D
Preferred Stock as provided in Section 8(a)(iii) above.
e. Employment Agreements. Messrs. Cox, Brendzel and Xxxxxxx have
agreed that any acceleration or vesting of any rights or benefits under his
respective employment agreement with the Company or otherwise resulting from a
change of control, including severance payments, shall not occur by virtue of
the transactions contemplated by this Agreement and have waived any claim that
such is the case.
10. Cancellation of Warrants. Upon the closing of the sale of the Preferred
Stock and the Convertible Notes, Xxxxxxx agrees that those certain Warrants for
an aggregate of 382,000 shares of Common Stock of the Company issued pursuant to
that certain First Amendment and Waiver to Note Purchase Agreement dated as of
May 28, 1999 shall be cancelled in all respects.
11. Registration Rights. None of the Investors, the Bank or Xxxxxxx shall
have any demand registration rights. The Investors, the Bank and Xxxxxxx shall
have piggyback registration rights with respect to any securities offering by
the Company (other than in connection with an acquisition or an employee benefit
plan) on a pro rata basis, subject to any underwriter's cutback on the total
number of shares available to be sold by stockholders of the Company in the
offering. The parties shall have indemnification rights in connection with any
such offering as specified in the Registration Rights Agreement attached as an
Exhibit to the Terminated Purchase Agreement. The Company will pay all
registration expenses but no selling expenses.
12. Certain Covenants.
a. Regulatory Filings. Each party hereto agrees to proceed in good
faith and as soon as practicable to make and pursue all regulatory filings and
to obtain of all regulatory approvals required for the transactions specified in
this Agreement.
b. Stockholder Meeting. Upon the closing of the sale of the Preferred
Stock and the Convertible Notes, SafeGuard shall immediately take all actions
required to call and hold a special meeting of the stockholders for the purposes
of approving an amendment to the certificate of incorporation of the Company to
increase the number of authorized shares of Common Stock of the Company as
contemplated by this Agreement.
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13. Other Understandings.
a. Board of Directors. So long as the Investor Senior Loan is
outstanding, three (3) directors of the Company shall be designees of CAI and
Xxxxxxxx.
b. Senior Debt. Notwithstanding any provision of this Agreement to the
contrary, the Board of Directors of the Company may borrow up to $3,500,000 for
working capital purposes on a basis senior and superior to the Investor Senior
Loan, the Bank Loan, the Xxxxxxx Notes, the Preferred Stock and the Convertible
Notes without the consent of the Investors, the Bank or Xxxxxxx.
c. Outstanding Shares. In connection with the transactions provided in
this Agreement, the issued and outstanding shares of Common Stock of the Company
on the Effective Date shall remain issued and outstanding and the stock options
granted to employees and officers of the Company under the stock option plan of
the Company prior to the Effective Date shall remain issued and outstanding in
accordance with their terms.
d. Costs and Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, the Company will pay (or reimburse upon request)
all costs and expenses of CAI and Xxxxxxxx including, without limitation,
reasonable fees and expenses of their consultants, counsel and accountants, in
connection with or leading to the preparation, negotiation and execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
e. Indemnity. The Company will pay and indemnify the Investors, the
Bank and Xxxxxxx and their respective stockholders, partners, trustees,
officers, employees and agents, against all liability and loss with respect to
(i) all claims for fees or commissions of brokerage or finders engaged by the
Company with respect to the transactions contemplated by this Agreement, (ii)
all taxes, fees and other public charges payable in connection with the issuance
of any of the Preferred Stock or Convertible Notes or the execution, delivery,
and enforcement of this Agreement for any of the rights of the Preferred Stock
or Convertible Notes, and (iii) all claims and suits, either direct or
derivative, commenced by or on behalf of the Company or the stockholders of the
Company relating to or arising out of this Agreement or the transactions
contemplated herein. Such rights shall survive the termination or consummation
of this Agreement. The Company shall indemnify the three directors designated by
CAI and Xxxxxxxx to the fullest extent permitted by applicable law.
f. Waiver. Baileys, the Bank and Xxxxxxx agree that they shall not
assert, and hereby waive, any claims in their capacity as a shareholder or
creditor of the Company against the three directors designated by CAI and
Xxxxxxxx for acts or omissions in their capacity as directors of the Company at
any time during the period from the Effective Date through the closing date
except for intentional acts of fraud or dishonesty.
g. Employment Agreement. Baileys agrees that any acceleration or
vesting of any rights or benefits under his employment agreement or otherwise
resulting from a change of control, including severance payments, shall not
occur by virtue of the occurrence of the transactions
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contemplated by this Agreement and waives any claim that such is the case. In
addition, Baileys agrees to voluntarily resign his position as chief executive
officer of the Company as of the Effective Date and the Company shall have no
obligation to make any severance payments of any kind thereunder as a result
thereof. Baileys shall remain as Chairman of the Board of Directors of the
Company. All other provisions of his employment agreement shall remain in full
force and effect.
14. Miscellaneous.
a. Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given upon (i) confirmation or receipt
of a facsimile transmission (ii) confirmed delivered by standard overnight
carrier, (iii) when delivered by hand or (iv) the expiration of five (5)
business days after the date when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to respective parties as
set forth in the prior Purchase Agreement, the Bank Loan Documents or the
Xxxxxxx Note Agreement, as applicable.
b. Entire Agreement. This Agreement constitutes the entire agreement
and supersedes all prior agreements and understandings (other than the
provisions of the Terminated Purchase Agreement that survive termination
thereof), both written or oral, among the parties or any of them, with respect
to the subject matter hereof.
c. Assignment. This Agreement shall not be assigned by operation in
law or otherwise, except that (i) Xxxxxxxx may assign part of his respective
rights and obligations hereunder to up to two third parties and (ii) CAI may
assign all or any part of its respective rights and obligations hereunder to any
affiliated investment partnership.
d. Amendment. This Agreement may not be amended except by instrument
in writing signed on behalf of each of the parties hereto.
e. Binding Effect. This Agreement shall be binding upon the parties
hereto, their respective heirs, representatives, successors and permitted
assigns specifically including any transferees of the Bank Loan, the Xxxxxxx
Notes, the Investor Senior Loan, the Preferred Stock and the Convertible Notes.
f. Exculpation. Among Investors, Bank and Xxxxxxx. Each of the
Investors, the Bank and Xxxxxxx acknowledges that such party is not relying upon
any person, firm or corporation, other than the representations of the Company
contained herein, in making its investment or decision to invest in the Investor
Senior Loan, the Preferred Stock or the Convertible Notes and specifically each
such party has not relied on any representation or warranty of any of such other
parties in making such investment or decision. The Company acknowledges that it
is not relying upon any representation or warranty of the Investors, the Bank
and Xxxxxxx in entering into this Agreement.
g. Arbitration. In the event of any dispute between any one or more or
all of the parties to this Agreement with respect to the respective rights and
obligations of the parties under
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this Agreement, such dispute shall be settled by arbitration in accordance with
the arbitration procedures set forth in the Terminated Purchase Agreement.
h. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
provisions thereof relating to conflicts of laws.
i. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Term Sheet
Agreement as of the Effective Date.
CAI PARTNERS AND COMPANY II, X.X. XXXX XXXXXXX LIFE INSURANCE
COMPANY f/k/a XXXX XXXXXXX MUTUAL
By: CAI PARTNERS G.P. AND COMPANY, LIFE INSURANCE COMPANY
L.P., GENERAL PARTNER
By: /s/ Xxxxxxx X. Xxxxxxx
By: /s/ Xxxxxx X. Xxxxxxx ----------------------------------
---------------------------- Name:
Xxxxxx X. Xxxxxxx --------------------------------
Title:
-------------------------------
CAI CAPITAL PARTNERS AND COMPANY XXXX XXXXXXX VARIABLE LIFE
II, L.P. INSURANCE COMPANY
By: CAI CAPITAL PARTNERS G.P. AND By: /s/ Xxxxxxx X. Xxxxxxx
COMPANY, L.P., GENERAL PARTNER ----------------------------------
Name:
By: /s/ Xxxxxx X. Xxxxxxx --------------------------------
---------------------------- Title:
Xxxxxx X. Xxxxxxx -------------------------------
INVESTORS PARTNER LIFE INSURANCE
COMPANY (f/k/a XXXX XXXXXXX LIFE
/s/ Xxxx X. Xxxxxxxx INSURANCE COMPANY OF AMERICA)
-------------------------------------
Xxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
/s/ Xxxxxx X. Xxxxxxx Name:
------------------------------------- --------------------------------
Xxxxxx X. Xxxxxxx, D.D.S., Trustee Title:
-------------------------------
SAFEGUARD HEALTH ENTERPRISES, INC. MELLON BANK, N.A., solely in its capacity as
Trustee for Xxxx Atlantic Master Trust
By: /s/ Xxxxxx X. Xxxxxxx (f/k/a Nynex Master Pension Trust), (as directed
------------------------------- by Xxxx Xxxxxxx Mutual Life Insurance
Xxxxxx X. Xxxxxxx, D.D.S., Company) and not in its individual capacity
Chairman and Chief Executive Officer
By: /s/ Xxxxxx Xxxxx
By: /s/ Xxxxxx X. Xxxxxxxx ----------------------------------
------------------------------- Name: Xxxxxx Xxxxx
Xxxxxx X. Xxxxxxxx, Secretary --------------------------------
Title: Authorized Signatory
-------------------------------
SILICON VALLEY BANK
By: /s/ Nido Paras
----------------------------------
Name: Nido Paras
--------------------------------
Title: Senior Vice President
-------------------------------
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