<PAGE>
Exhibit 4.1
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE
SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE ASSIGNED EXCEPT IN COMPLIANCE WITH THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION AND
QUALIFICATION.
PAYMENT OF THE INDEBTEDNESS EVIDENCED BY THIS SECURITY, INCLUDING PRINCIPAL,
PREMIUM, IF ANY, AND INTEREST, IS SUBJECT TO THE TERMS AND CONDITIONS OF A
SUBORDINATION AGREEMENT DATED OF EVEN DATE HEREWITH AMONG LEVINE LEICHTMAN
CAPITAL PARTNERS II, L.P., AS THE INITIAL HOLDER OF THIS SECURITY, UNION BANK OF
CALIFORNIA, N.A., AS ADMINISTRATIVE AGENT, AND OTHERS. A COPY OF THE
SUBORDINATION AGREEMENT MAY BE OBTAINED FROM THE ISSUER UPON REQUEST.
THIS SECURITY HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (OID). PURSUANT TO
TREASURY REGULATION Section 1.1275-3(b)(1), NORMAN R. HUFFAKER, A REPRESENTATIVE
OF THE ISSUER, WILL, BEGINNING TEN DAYS AFTER THE ISSUE DATE OF THIS SECURITY,
PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION DESCRIBED IN
TREASURY REGULATION Section 1.1275-3(b)(1)(i). MR. HUFFAKER MAY BE REACHED AT
TELEPHONE NUMBER (310) 765-2400.
SENIOR SUBORDINATED NOTE DUE 2005
$25,500,000.00 June 15, 2000
<PAGE>
FOR VALUE RECEIVED, GENTLE DENTAL SERVICE CORPORATION, a Washington
corporation ("GDSC"), GENTLE DENTAL MANAGEMENT, INC., a Delaware corporation
("GDMI") and DENTAL CARE ALLIANCE, INC., a Delaware corporation ("DCA" and,
together with GDSC and GDMI, the "ISSUERS"), hereby jointly and severally
promise to pay to the order of LEVINE LEICHTMAN CAPITAL PARTNERS II, L.P., a
California limited partnership (the "PURCHASER"), or any registered assigns
(including the Purchaser, the "Holder"), the sum of TWENTY-FIVE MILLION FIVE
HUNDRED THOUSAND DOLLARS ($25,500,000.00) in immediately available funds and in
lawful money of the United States of America, together with interest thereon,
all as provided in this Senior Subordinated Note Due 2005 (this "NOTE"). This
Note is being issued in connection with the consummation of the transactions
contemplated by the Securities Purchase Agreement dated of even date herewith
among the Issuers, the Guarantors and the Purchaser (as it may be amended,
supplemented or otherwise modified and in effect from time to time, the
"SECURITIES PURCHASE AGREEMENT"). All capitalized terms used and not otherwise
defined in this Note shall have the meanings set forth in the Securities
Purchase Agreement.
1. PAYMENT OF INTEREST; DEFAULT RATE.
(a) So long as no Event of Default, Senior Financial Covenant
Violation (as such term is defined below) or Interest Rate Event (as such term
is defined below) shall have occurred and be continuing, the Issuers shall
jointly and severally pay interest in cash on the unpaid principal balance of,
premium, if any, and accrued and unpaid interest on this Note from the date
hereof until fully paid at a rate per annum equal to twelve and one-half percent
(12.50%) (the "BASE INTEREST RATE"); PROVIDED, HOWEVER, that interest due on any
Interest Payment Date (as such term is defined below) may, at the option of the
Issuers, be paid in additional senior subordinated notes of like tenor, valued
at 100.0% of the interest payment due on such Interest Payment Date and
including the same terms and other provisions contained in this Note, with the
principal amount of each such additional note equal to the amount of such
interest payment (each a "PIK NOTE"); PROVIDED FURTHER, HOWEVER, that if the
Issuers elect to pay interest due on any Interest Payment Date in the form of a
PIK Note, then (i) the interest payable on such Interest Payment Date only shall
be calculated at a rate per annum equal to fifteen percent (15.0%) and (ii) GDSC
shall pay interest due to the holders of the Convertible Subordinated Notes
which accrues during the period during which interest shall have accrued with
respect to such Interest Payment Date solely in the form of Additional Notes (as
defined in the Convertible Subordinated Notes) in accordance with Section 2
thereof.
(b) Interest on this Note shall be payable monthly in arrears
on the last Business Day of each calendar month (or portion thereof), commencing
on June 30, 2000 (each an "INTEREST PAYMENT DATE"). Interest shall be computed
on the basis of the actual number of days elapsed over a 360-day year, including
the first and the last day.
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(c) In the event that any Event of Default, Senior Financial
Covenant Violation or Interest Rate Event shall occur and be continuing, then,
in addition to the rights and remedies available to the Holder under the
Securities Purchase Agreement, this Note, the other Investment Documents and
Applicable Laws, the Issuers shall jointly and severally pay interest in cash
only on the unpaid principal balance of, premium, if any, and accrued and unpaid
interest on this Note at a rate per annum (the "DEFAULT RATE") equal to the Base
Interest Rate PLUS two percent (2.0%) during the first sixty (60) calendar days
(or portion thereof) until such Event of Default has been cured or has been
waived by the Holder, such Senior Financial Covenant Violation has been cured or
has been waived by the Senior Agent or such Interest Rate Event has been cured
or has been waived by the Holder, as applicable, and, thereafter, such rate of
interest shall further increase by one percent (1.0%) per annum over the rate in
effect during the first sixty (60) calendar days or applicable thirty (30) day
period thereafter, as the case may be, for each additional thirty (30) calendar
days (or portion thereof) until such Event of Default has been cured or has been
waived by the Holder, such Senior Financial Covenant Violation has been cured or
has been waived by the Senior Agent or such Interest Rate Event has been cured
or has been waived by the Holder, as applicable.
(d) The term "SENIOR FINANCIAL COVENANT VIOLATION" shall mean
the failure by any Company Party to perform, comply with or observe any Senior
Financial Covenant in accordance with its terms, and the term "INTEREST RATE
EVENT" shall mean the occurrence of one or both of the following events: (A)
Michael T. Fiore shall resign or be terminated as an officer and director of
Parent and, at the same time or within ninety (90) days after the effective date
of his resignation or termination, Steven R. Matzkin, D.D.S. shall resign or be
terminated as an officer and director of Parent, PROVIDED that no Interest Rate
Event shall be deemed to have occurred if Messrs. Fiore or Matzkin is replaced
on an interim basis within ninety (90) days after the effective date of Mr.
Fiore's resignation or termination, or (B) Steven R. Matzkin, D.D.S. shall
resign or be terminated as an officer and director of Parent and, at the same
time or within ninety (90) days after the effective date of his resignation or
termination, Michael T. Fiore shall resign or be terminated as an officer and
director of Parent 90 days cure, PROVIDED that no Interest Rate Event shall be
deemed to have occurred if Messrs. Matzkin or Fiore is replaced on an interim
basis within ninety (90) days after the effective date of Mr. Matzkin's
resignation or termination.
2. PAYMENT OF PRINCIPAL; MATURITY DATE. The Issuers jointly and
severally agree to pay in full the entire outstanding principal balance of this
Note, outstanding premium, if any, accrued and unpaid interest and all other
unpaid amounts owing under this Note on September 30, 2005 (the "MATURITY
DATE").
3. OPTIONAL PREPAYMENTS.
(a) The Issuers may voluntarily prepay the principal balance
of this Note at any time, in whole or in part, as follows:
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(i) at 107.0% of the principal balance being prepaid
at any time after the date hereof and on or before May 1, 2001;
(ii) at 106.0% of the principal balance being prepaid
at any time after May 1, 2001 and on or before May 1, 2002;
(iii) at 104.0% of the principal balance being
prepaid at any time after May 1, 2002 and on or before May 1, 2003;
(iv) at 102.0% of the principal balance being prepaid
at any time after May 1, 2003 and on or before May 1, 2004; and
(v) at 100.0% of the principal balance being prepaid
at any time after May 1, 2004 and on or before September 30, 2005.
Each percentage set forth above is referred to in this Note as the "PREPAYMENT
PERCENTAGE" applicable to any prepayment. Any prepayment of this Note made under
this SECTION 3 shall also include premium, if any, and all accrued and unpaid
interest on the then outstanding principal balance of this Note through the date
of prepayment.
(b) If the Issuers elect to prepay all or any portion of this
Note, the Issuers shall furnish written notice to the Holder with respect to
each voluntary prepayment not less than thirty (30) days prior to the date of
prepayment. Such notice shall specify the principal balance of this Note to be
prepaid on such date and shall be irrevocable. The amount of any voluntary
prepayment shall be an amount equal to (i) the Prepayment Percentage applicable
to such prepayment on such prepayment date, MULTIPLIED BY (ii) the principal
amount of this Note specified in such prepayment notice to be prepaid on such
prepayment date, together with premium, if any, and all accrued and unpaid
interest on the then outstanding principal balance of this Note through the date
of prepayment.
4. MANDATORY PREPAYMENTS. In addition to the mandatory prepayments
required to be made by the Issuers pursuant to SECTION 5:
(a) ASSET SALES. If, at any time after the Indebtedness under
the Senior Credit Documents shall have been paid in full and the commitments to
lend thereunder shall have terminated, any Company Party or Subsidiary intends
to consummate any Asset Sale and the aggregate net proceeds from such Asset Sale
exceeds $25,000, it shall, within ten (10) Business Days prior to the proposed
date of consummation of such Asset Sale, notify the Holder in writing of the
proposed Asset Sale (including, without limitation, the subject matter and the
material
<PAGE>
terms thereof and the proposed date of consummation) and the proposed use of the
proceeds to be derived from such Asset Sale. Within five (5) Business Days
following the Holder's receipt of such written notice, the Holder may, by
written notice furnished to the applicable Issuer, direct the applicable Issuer
to apply all Net Cash Proceeds derived from such Asset Sale to prepay principal
of, accrued and unpaid premium, if any, and accrued and unpaid interest on this
Note. If the Holder directs the applicable Issuer to make the mandatory
prepayment contemplated by this SECTION 4(a), the applicable Issuer shall make
such prepayment within one (1) Business Day following the date of consummation
of such Asset Sale. In addition, to the extent that the applicable Issuer
receives any cash or cash equivalents upon the sale, conversion, collection or
other liquidation of any non-cash proceeds from such Asset Sale, the applicable
Issuer shall notify the Holder in writing within one (1) Business Day of such
receipt. The Holder may, within five (5) Business Days after receipt of such
written notice, direct the applicable Issuer in writing to make a mandatory
prepayment under this SECTION 4(a) with such cash or cash equivalents and, if
the Holder so directs the applicable Issuer in writing, the applicable Issuer
shall make such mandatory prepayment within one (1) Business Day following its
receipt of such Holder's written notice.
(b) EXCESS CASH FLOW. For each Fiscal Year, commencing with
the Fiscal Year during which the Indebtedness under the Senior Credit Documents
shall have been paid in full and the commitments to lend thereunder shall have
terminated, the Issuers shall prepay the outstanding principal balance of this
Note in an amount equal to fifty percent (50.0%) of the Excess Cash Flow (as
such term is defined below) for such Fiscal Year. Such mandatory prepayment
shall be due and payable by the Issuers to the Holder not later than April 15th
of the following Fiscal Year (the date upon which such prepayment will be made
being referred to herein as the "EXCESS CASH FLOW PAYMENT DUE DATE"). Not later
than two (2) Business Days prior to each Excess Cash Flow Payment Due Date, the
Issuers shall deliver to the Holder an Excess Cash Flow Calculation Certificate,
in form and substance reasonably satisfactory to the Holder, signed by the Chief
Financial Officer of each Issuer, showing in reasonable detail the calculation
of the amount of any Excess Cash Flow payment due on such Excess Cash Flow
Payment Due Date. For purposes of this SECTION 4(b), the term "EXCESS CASH FLOW"
means, for any Fiscal Year, (i) consolidated EBITDA of Parent and its
Subsidiaries for such Fiscal Year, MINUS (ii) the sum of (A) interest expense
paid in cash during such Fiscal Year by Parent and its Subsidiaries; (B)
aggregate payments of principal on any Indebtedness of Parent and its
Subsidiaries during such Fiscal Year; (C) Taxes paid in cash by Parent and its
Subsidiaries during such Fiscal Year; and (D) Capital Expenditures made by
Parent or any of its Subsidiaries during such Fiscal Year.
The mandatory prepayments provided for in this SECTION 4 shall be paid
at 100.0% (I.E., without premium) of the principal amount required to be prepaid
and shall be accompanied by
<PAGE>
the payment of any accrued and unpaid interest on, and other amounts owing
under, this Note through the date of prepayment, all as provided for above.
5. CHANGE IN CONTROL. If a Change in Control shall occur at any time,
the Holder may, at its sole election, require the Issuers to prepay this Note,
in whole or in part, at any time during the one hundred and eighty (180) day
period following the occurrence of the Change in Control, at 103.0% of the
aggregate principal balance of this Note and the then outstanding PIK Notes,
PLUS all accrued and unpaid interest on, and other amounts owing under, this
Note and such PIK Notes through the date of prepayment. The Issuers shall notify
the Holder in writing, if possible, of any Change in Control at least five (5)
days prior to the date that such Change in Control is scheduled to occur. The
Issuers shall also notify the Holder of the date on which any Change in Control
shall have actually occurred within one (1) Business Day after such date and
shall inform the Holder in such notification of the Holder's right to require
the Issuers to prepay this Note as provided in this SECTION 5 and of the date on
which such right shall terminate. If the Holder elects to require the Issuers to
prepay this Note pursuant to this SECTION 5, it shall furnish a written notice
to the Issuers advising the Issuers of such election and the outstanding
principal balance hereof, premium, accrued and unpaid interest and all other
amounts to be prepaid. The Issuers jointly and severally agree to prepay this
Note in accordance with this SECTION 5, SECTION 7 and such written notice within
one (1) Business Day after its receipt of such written notice.
<PAGE>
6. HOLDER ENTITLED TO CERTAIN BENEFITS. This Note is the "Note"
referred to in, and the Holder is entitled to the rights and benefits under, the
Securities Purchase Agreement, including, without limitation, the right to
accelerate the outstanding principal balance of, premium, if any, accrued and
unpaid interest on, and all other amounts owing under this Note upon the
occurrence of an Event of Default. In addition, the payment and performance of
this Note is guaranteed by the Guarantors.
7. MANNER OF PAYMENT. Payments of principal, interest and other amounts
due under this Note shall be made no later than 12:00 p.m. (noon) (Los Angeles
time) on the date when due and in lawful money of the United States of America
and (by wire transfer in funds immediately available at the place of payment) to
such account as the Holder may designate in writing to the Issuers and, if to
the Purchaser, to: Bank of America, Century City, Private Banking, 2049 Century
Park East, Los Angeles, California 90067; ABA No. 121000358; Account No.
1154603239; Attention: Cheryl Stewart (or such other place of payment as the
Purchaser may designate in writing). All such payments shall be made without any
deduction whatsoever, including, without limitation, any deduction for set-off,
recoupment, counterclaim or taxes. Any payments received after 12:00 p.m. (noon)
(Los Angeles time) shall be deemed to have been received on the next succeeding
Business Day. Any payments due hereunder which are due on a day which is not a
Business Day shall be payable on the immediately preceding Business Day,
together with all accrued and unpaid interest through the actual due date of
payment.
8. MAXIMUM LAWFUL RATE OF INTEREST. The rate of interest payable under
this Note shall in no event exceed the maximum rate permissible under Applicable
Law. If the rate of interest payable on this Note is ever reduced as a result of
this SECTION 8 and at any time thereafter the maximum rate permitted under
Applicable Law exceeds the rate of interest provided for in this Note, then the
rate provided for in this Note shall be increased to the maximum rate provided
for under Applicable Law for such period as is required so that the total amount
of interest received by the Holder is that which would have been received by the
Holder but for the operation of the first sentence of this SECTION 8.
9. WAIVERS. Each Issuer hereby waives presentment for payment, demand,
protest, notice of protest and notice of dishonor, and all other notices of any
kind whatsoever to which it may be entitled under Applicable Law or otherwise,
except for notices to which the Issuers are expressly entitled under this Note.
10. REGISTRATION OF NOTE. Each Issuer shall maintain at its principal
executive office a register in which it shall register this Note, any
Assignments of this Note or any other notes issued hereunder and any other notes
issued upon surrender hereof and thereof. At the option of the Holder, this Note
may be exchanged for one or more new notes of like tenor in the principal
denominations requested by the Holder, and the Issuers shall, within five (5)
Business Days after
<PAGE>
the surrender of this Note at the Issuer's principal executive offices, deliver
to the Holder such new note or notes. In addition, each Assignment of this Note,
in whole or in part, shall be registered on the register immediately following
the surrender of this Note at the Issuers' principal executive offices. The
Issuers may require the Holder, as a condition to the registration of any
Assignment hereunder, to represent and warrant to the Issuers, and deliver an
opinion of counsel reasonably acceptable to the Issuers, that an Assignment
complies with applicable federal or state securities laws.
11. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due presentment for
registration of any Assignment, the Issuers may treat the Person in whose name
this Note or any PIK Note is registered as the owner and Holder thereof for all
purposes whatsoever, and the Issuers shall not be affected by notice to the
contrary. Subject to the preceding sentence, the Holder may grant to other
Persons without the Issuer's consent participations from time to time in all or
any part of this Note on such terms and conditions as may be determined by the
Holder in its sole and absolute discretion, subject to applicable federal and
state securities laws; PROVIDED, HOWEVER, that the Holder may not grant
participations to any Person who is engaged in any business which competes with
the business of the Company Parties. Notwithstanding anything to the contrary
contained herein or otherwise, nothing in this Note, the Securities Purchase
Agreement or any other Investment Document or otherwise shall confer upon the
participant any rights in the Securities Purchase Agreement or any other
Investment Document, and the Holder shall retain all rights with respect to the
administration, waiver, amendment, collection and enforcement of, compliance
with and consent to the terms and provisions of this Note, the Securities
Purchase Agreement and any other Investment Document.
In addition, the Holder may, without the consent of the participant,
give or withhold its consent or agreement to any amendments to or modifications
of this Note, the Securities Purchase Agreement or any other Investment
Document, waive any of the provisions hereof or thereof or exercise or refrain
from exercising any other rights or remedies which the Holder may have under
this Note, the Securities Purchase Agreement, any other Investment Document or
otherwise. Notwithstanding the foregoing, the Holder will not agree with the
Issuers, without the prior written consent of the participant (which consent
shall be given or affirmatively withheld not later than three (3) Business Days
after the Holder's written request therefor): (a) to reduce the principal of or
rate of interest on this Note or (b) to postpone the date fixed for payment of
principal of or interest on the Indebtedness evidenced by this Note. If the
participant does not reply within three (3) days to the Holder's request for
such consent, the participant shall be deemed to have consented to such
agreement and the Holder may take such action in such manner as the Holder
determines in the exercise of its independent business judgment.
<PAGE>
12. ASSIGNMENT AND TRANSFER. Subject to Applicable Law, the Holder may,
at any time and from time to time and without the consent of any Issuer or other
Company Party, assign or transfer to one or more Persons all or any portion of
this Note or any portion thereof (but not less than $500,000 in principal amount
in any single assignment (unless such lesser amount represents the entire
outstanding principal balance hereof)); PROVIDED, HOWEVER, that the Holder may
not assign or transfer all or any portion of this Note to any Person who is
engaged in any business which competes with the business of the Company Parties.
Upon surrender of this Note at the Issuers' principal executive office for
registration of any such assignment or transfer, accompanied by a duly executed
instrument of transfer, the Issuers shall, at their expense and within five (5)
Business Days of such surrender, execute and deliver one or more new notes of
like tenor in the requested principal denominations and in the name of the
assignee or assignees and bearing the legend set forth on the face of this Note,
and this Note shall promptly be canceled. If the entire outstanding principal
balance of this Note is not being assigned, the Issuers shall issue to the
Holder hereof, within five (5) Business Days of the date of surrender hereof, a
new note which evidences the portion of such outstanding principal balance not
being assigned. If this Note is divided into one or more notes and is held at
any time by more than one Holder, any payments of principal of, premium, if any,
and interest or other amounts on this Note which are not sufficient to pay all
interest or other amounts due thereunder, shall be made PRO RATA with respect to
all such notes in accordance with the outstanding principal amounts thereof,
respectively.
13. LOSS, THEFT, DESTRUCTION OR MUTILATION OF THIS NOTE. Upon receipt
of evidence reasonably satisfactory to the Issuers of the loss, theft,
destruction or mutilation of this Note and, in the case of any such loss, theft
or destruction, upon receipt of an indemnity agreement or other indemnity
reasonably satisfactory to the Issuers or, in the case of any such mutilation,
upon surrender and cancellation of such mutilated Note, the Issuers shall issue
and deliver within five (5) Business Days a new Note, of like tenor, in lieu of
the lost, stolen, destroyed or mutilated Note.
14. COSTS OF COLLECTION. The Issuers jointly and severally agree to pay
to the Purchaser on demand all costs and expenses of every type and nature
(including, without limitation, all fees and expenses of attorneys, accountants
and other experts and all due diligence, collateral review, appraisal, search,
filing and recording fees and expenses) which are expended or incurred by or on
behalf of the Purchaser in connection with (a) the administration of the
Investment Documents or the collection and enforcement of the Obligations,
whether or not any action, suit or other proceeding is commenced; (b) any
actions for declaratory relief in any way related to the Obligations; (c) the
protection or preservation of any rights, powers or remedies of the Purchaser
under this Agreement or any other Investment Document; (d) any actions taken by
the Purchaser in negotiating any amendment, waiver, consent or release of or
under this
<PAGE>
Agreement, this Note or any other Investment Document; (e) if the Holder
believes that a Default or Event of Default has occurred or is likely to occur,
any actions taken in reviewing the Company Parties' financial affairs, which
actions shall include, without limitation, (i) inspecting the facilities of any
Company Party or conducting audits or appraisals of the financial condition of
any Company Party; (ii) having an accounting or other firm selected by the
Purchaser review the books and records of any Company Party and perform a
thorough and complete examination thereof; (iii) interviewing the Company
Parties' employees, attorneys, accountants, customers and any other Persons
related to the Company Parties which the Purchaser believes may have relevant
information concerning the business, condition (financial or otherwise), results
of operations or prospects of any of the Company Parties; and (iv) undertaking
any other action which the Purchaser believes is necessary to assess accurately
the financial condition and prospects of the Company Parties; (f) any
refinancing, restructuring (whether in the nature of a "work out" or otherwise),
bankruptcy or insolvency proceeding involving any Company Party or Affiliate
thereof, including, without limitation, any refinancing or restructuring of this
Agreement, this Note or any other Investment Documents; (g) any actions taken to
verify, maintain, perfect and protect any Lien granted to the Purchaser by any
Company Party or any other Person under the Investment Documents; (h) any effort
by the Purchaser to protect, assemble, complete, collect, sell, liquidate or
otherwise dispose of any collateral, including in connection with any case under
Bankruptcy Laws; or (i) having counsel advise the Purchaser as to its rights and
responsibilities, the perfection, protection or preservation of rights or
interests under the Investment Documents, with respect to negotiations with any
Company Party or with other creditors of any Company Party or with respect to
any proceeding under any Bankruptcy Law. The Issuers hereby consent to the
taking of the foregoing actions by the Purchaser without conditions or
restrictions.
15. EXTENSION OF TIME. The Holder may, at its sole option, extend the
time for payment of this Note, postpone the enforcement hereof, or grant any
other indulgence without affecting or diminishing the Holder's right to full
recourse against the Issuers hereunder, which right is expressly reserved.
16. NOTATIONS. Before disposing of this Note or any portion thereof,
the Holder may make a notation thereon (or on a schedule attached thereto) of
the amount of all principal payments previously made by the Issuers with respect
thereto.
17. GOVERNING LAW. IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT
REGARD TO THE CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS THEREOF) AND
<PAGE>
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
18. CAPTIONS; CONSTRUCTION AND INTERPRETATION. The captions contained
in this Note are for convenience of reference only, do not constitute a part of
this Note and are not to be considered in construing or interpreting this Note.
The Issuers and the Holder have each been represented by counsel in the
negotiation and drafting of this Note, and neither the Issuers nor the Holder
nor their respective counsel shall be deemed the drafter of this Note for
purposes of construing the provisions of this Note. All provisions of this Note
shall be construed in accordance with their fair meaning, and not strictly for
or against the Issuers or the Holder.
<PAGE>
19.WAIVER OF JURY TRIAL. EACH ISSUER AND THE HOLDER (BY ACCEPTANCE
THEREOF) HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, SUIT OR OTHER
PROCEEDING BROUGHT TO RESOLVE ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR
RELATING TO THIS NOTE, ANY OTHER INVESTMENT DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, REGARDLESS OF WHICH PARTY INITIATES SUCH ACTION,
SUIT OR OTHER PROCEEDING.
IN WITNESS WHEREOF, the Issuers have caused this Note to be executed
and delivered by their duly authorized representatives on the date first above
written.
GENTLE DENTAL SERVICE CORPORATION, a
Washington corporation
By:
------------------------------------------
Michael T. Fiore
President and Chief Executive Officer
GENTLE DENTAL MANAGEMENT, INC., a
Delaware corporation
By:
------------------------------------------
Michael T. Fiore
President and Chief Executive Officer
DENTAL CARE ALLIANCE, INC., a California
corporation
By:
------------------------------------------
Steven R. Matzkin, D.D.S.
President and Chief Executive Officer
