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EXHIBIT 2
LOAN DOCUMENT PURCHASE AND ASSIGNMENT AGREEMENT
THIS LOAN DOCUMENT PURCHASE AND ASSIGNMENT AGREEMENT (the "Agreement")
is made as of this 30th day of June, 2000 (the "Effective Date") by and between
Silicon Valley Bank ("Assignor") and those certain other parties executing this
Agreement as shown on the signature page hereto (collectively the "Assignees").
RECITALS
A. Assignor is a party to certain loan documents which evidence certain
loans by Assignor to SafeGuard Health Enterprises, Inc., a Delaware corporation
("Borrower"), which are listed on Exhibit "A" attached hereto and incorporated
herein by this reference and collectively referred to herein as the "Loan
Documents." Copies of the Loan Documents are attached hereto as Exhibit "A-1"
and incorporated herein by this reference.
B. Assignees and Assignor desire for Assignees to purchase all of
Assignor's right, title, and interest in and to the Loan Documents and all the
indebtedness of Borrower to Assignor evidenced thereby for an aggregate purchase
price of $5,000,000 FIVE MILLION DOLLARS ($5,000,000).
C. Assignor desires to transfer to Assignees all of Assignor's right,
title, and interest in and to the Loan Documents and all the indebtedness of
Borrower to Assignor evidenced thereby on the terms and conditions set forth
herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Payment of Purchase Price. At the Closing (hereinafter defined), the
Assignees shall pay to Assignor the aggregate sum of $5,000,000 (FIVE MILLION
DOLLARS) by wire transfer, cashier's check, or other readily available funds
(the "Purchase Price"). The obligations of the Assignees shall be several and
not joint under this Agreement. Each Assignee shall be only obligated to pay the
respective portion of the aggregate $5,000,000 Purchase Price reflected under
the respective signature of the Assignee on the signature page hereto.
2. Conditions to Obligations of the Assignor. The obligations of the
Assignor hereunder shall be subject to and conditioned upon the receipt of the
entire $5,000,000 Purchase Price by the Assignees collectively. The Assignor
shall not be obligated to close the transaction contemplated by this Agreement
unless the total aggregate Purchase Price is paid by the Assignees The
obligations of the Assignor hereunder shall not be subject to or conditioned
upon any other conditions precedent.
3. Conditions to Obligations of the Assignees. The obligations of the
Assignees hereunder shall be subject to and conditioned upon the receipt of all
required regulatory approvals necessary to consummate
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the change of control of the Borrower resulting from the transactions
contemplated by the Term Sheet Agreement (referenced as Item 1 on Exhibit A
hereto) and contemplated by this Agreement which results in a change of the
acquiring parties as such term is defined under the governmental regulations
applicable to the change of control of Borrower. Other than receipt of such
required regulatory approvals and the accuracy of the representations and
warranties of the Assignor on the date of Closing, the obligations of the
Assignees hereunder shall not be subject to or conditioned upon any other
conditions precedent.
4. Closing. The closing (the "Closing") under this Agreement shall
occur simultaneously with the closing of the sale of the Preferred Stock
pursuant to the Term Sheet Agreement.
5. Assignment of Loan Documents. In consideration of the receipt of the
Purchase Price, Assignor shall grant, assign, convey, transfer, and set over to
Assignees (i) all of the Loan Documents, including, without limitation, the
promissory notes included therein, (ii) all sums payable thereunder, and (iii)
all of Assignor's rights, title and interest in the collateral securing the Loan
as described in the Loan Documents and all rights to enforce any guaranties
contained therein, together with all its rights, remedies and powers, benefits,
fees and revenues pertaining thereto, with good right to collect, enforce,
release and discharge the same, as well as any and all liens, security
interests, assignments and financing statements existing and securing the
obligation, in and under the Loan Documents thereunder, to have and hold each of
the Loan Documents, together with all right, title, interest, liens, privileges,
claims, demands and equities existing and to exist in connection thereunder or
as security therefor unto Assignees, their respective successors and assigns.
Simultaneously with the Closing under this Agreement and receipt of the Purchase
Price by Assignor, Assignor shall endorse to Leslie B. Daniels as Agent for
Assignees those Loan Documents consisting of negotiable promissory notes and
Assignor shall deliver to Assignees the original Loan Documents. In addition,
simultaneously with the Closing under this Agreement and receipt of the Purchase
Price by Assignor, Assignor shall execute and deliver to Assignees such UCC
financing statement change forms as may be reasonably requested by Assignees to
reflect the assignment herein. Except as expressly set forth in Section 7 of
this Agreement, the sale and assignment pursuant to this Agreement is made
without recourse to Assignor and without any representation and warranty by
Assignor.
6. Acceptance of Assignment. Effective as of the Closing hereunder,
Assignees shall accept the assignment set forth in Section 5 of this Agreement.
7. Assignor's Representations. As of the Effective Date and as of the
date of the Closing, Assignor represents, warrants, and covenants to Assignees
that Exhibit A sets forth a true and complete list of all the agreements,
documents, and instruments entered into in connection with the transactions
contemplated by the Loan Documents; that the copies of the Loan Documents
attached as Exhibit A-1 are true, accurate and complete copies of the originals
of such documents; that the Loan Documents have not been amended, modified,
supplemented or released except as reflected in copies of the Loan Documents
attached as Exhibit A-1; that Assignor is the present legal and equitable owner
and holder of each of the Loan Documents described herein, the indebtedness
evidenced thereby, and all pledges, liens and security interests existing in
connection therewith and securing payments thereof; that Assignor has the full
right and authority to transfer and convey each of the Loan Documents described
herein, the indebtedness evidenced thereby and all security therefor, and to
execute this Agreement; that the Assignor has not assigned, mortgaged,
hypothecated, granted a security interest in, or otherwise encumbered, any of
the Loan Documents, the indebtedness evidenced thereby or any of said liens or
security to any other parties; that, as of the Effective Date $7,044,824.68 is
the outstanding principal amount of the Loan Documents; that, as
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of June 15, 2000, interest due under the Loan Documents has been paid through
December 31, 1999; that, to the best of Assignor's knowledge, no defense,
counterclaim or right of setoff exists with respect to the indebtedness
evidenced by the Loan Documents and that the Borrower has not asserted to
Assignor that any exist; that Assignor has not subordinated the indebtedness
represented by the Loan Documents to any other indebtedness of Borrower; that,
to the Assignor's knowledge, the liens evidenced by the Loan Documents are valid
against the collateral described therein; and that Assignor has not released any
of its rights of security for payment of any indebtedness evidenced by the Loan
Documents. Assignor expressly waives and releases any and all rights that
Assignor may now have or hereafter have to establish or enforce any lien or
security interest existing under any of the Loan Documents as security for the
payment of any other or future indebtedness of Borrower to Assignor.
Assignor further represents, warrants and covenants that, in
the event it receives any payments from Borrower on the indebtedness evidenced
by the Loan Documents from and after the Effective Date, Assignor shall remit
all such payments to Leslie B. Daniels as Agent for Assignees on the date of
Closing and, in the event it receives any such payments after the date of the
Closing, Assignor shall promptly remit all such payments to Leslie B. Daniels as
Agent for the Assignees.
8. Assignees' Representations. Assignees jointly and severally
represent, warrant and covenant to Assignor the following:
(a) Except with respect to a breach of the representations and warranties
specifically made by Assignor in Section 7 of this Agreement or an action for
specific performance if Assignor improperly fails or refuses to consummate the
Closing under this Agreement, that, to the extent Assignees have or may have any
claims, rights or recourse against Assignor relating to the indebtedness of the
Borrower, or this Agreement, Assignees fully release Assignor from and against
any and all such liability, intend this Agreement to be a full and final accord
and satisfaction of any such claims, rights, or recourse, known or unknown, and
acknowledge that they are familiar with Section 1542 of the California Civil
Code, and hereby waive and relinquish any right or benefit they have or may have
under Section 1542 of the California Civil Code, which provides:
A general release does not extend to claims which the creditor does not
know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
(b) That Assignees have conducted their own investigation and analysis of
the Borrower and the Loan Documents and are not relying on any representations
or warranties of Assignor, except for those representations and warranties
specifically made by Assignor in Section 7 of this Agreement.
(c) If Assignor must disgorge the payment of the Purchase Price, or any
portion thereof, Assignor receives from Assignees, Assignees shall immediately
reconvey, assign and transfer to Assignor all right, title and interest in the
Loan Documents, or the respective portion thereof, and take all further
necessary actions to ensure and protect the rights of Assignor. If Assignor must
disgorge any amounts received from Borrower prior to the Closing, Assignees
shall assign to Assignor such rights in the Loan Documents as Assignor
reasonably requests to enforce the Loan Documents with respect to such disgorged
amount.
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9. Further Assurances. Assignor and Assignees shall at their own cost
and expense execute, acknowledge, file, and record such further documents and
instruments and shall take such other actions as may be reasonably required or
appropriate to carry out the intent and purposes of this Agreement.
10. Attorneys' Fees. Should any party hereto reasonably retain counsel
for the purposes of enforcing or preventing the breach of any provision hereof,
including, but not limited to, the instituting of any action or proceeding to
enforce any provision hereof, for damages for reason of any alleged breach of
any provision hereof, for declaration of such party's rights or obligations
hereunder, or for any other judicial or equitable remedy, then, if said matter
is settled by judicial determination (which term includes arbitration), the
prevailing party, whether at trial or on appeal, shall be entitled to
reimbursement by the losing party to the prevailing party for all costs and
expenses incurred thereby, including, but not limited to reasonable attorneys',
accountants' and appraisers' fees.
11. Binding on Heirs and Successors. This Agreement shall be binding on
and shall inure to the benefit of the heirs, executors, administrators,
successors and assigns of the parties hereto.
12. Entire Agreement, Modification, Waiver. This Agreement contains the
entire agreement of the parties and supersedes any prior agreements or
understandings, whether written or oral, relating to the subject matter hereof.
Any oral representations, supplements or modifications concerning this Agreement
shall be of no force or effect unless contained in a subsequent written
modification signed by the party to be charged. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No delay or failure to assert rights hereunder shall be
deemed, or shall constitute, a waiver of such rights. No waiver shall be binding
unless executed in writing by the party making the waiver.
13. Governing Law and Venue. This Agreement shall be governed by the
laws of the State of California without regard to its principles of conflicts of
law. The parties hereto each submit to the exclusive jurisdiction of the state
and federal courts in Santa Clara County, California for the purposes of any
legal actions between Assignor and Assignees arising out of this Agreement.
14. Captions. The captions and section headings used herein are for
convenience and for ease of reference only and constitute no part of this
Agreement or understanding between the parties hereto, and no reference shall be
made thereto for the purpose of construing or interpreting any of the provisions
hereof.
15. Survival of Warranties. The warranties and representations, and
covenants of the parties hereunder shall survive the transactions contemplated
herein.
16. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
17. Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties hereto and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over or against any party to this Agreement.
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18. Singular, Plural, etc. Whenever the singular number is used herein
and when required by the context, the same shall include the plural, and the
masculine gender shall include the feminine and neuter genders, and the word
"person" shall include corporation, firm, partnership, joint venture, trust,
estate, or other association.
19. Invalidity. In the event that any condition, covenant, promise, or
other provision herein contained is held to be invalid or void by any court of
competent jurisdiction, the same shall be deemed severable from the remainder of
this Agreement and shall in no way affect any other covenant, promise,
condition, or other provision herein contained. If such condition, covenant,
promise, or other provision shall be deemed invalid due to its scope or breadth,
such provision shall be deemed valid to the extent of the scope or breadth
permitted by law.
20. Exhibits. All Exhibits referred to herein are hereby attached
hereto and incorporated herein by this reference with the same force and effect
as if fully set forth herein.
21. Agency. Nothing contained in this Agreement shall be deemed or
construed by the parties hereto or by any third person to create the
relationship of principal and agent or of partnership or of joint venture or of
any other association. Each of the parties hereto expressly disclaims any
intention to create a partnership, joint venture, or principal-agent
relationship.
22. Execution. This Agreement shall be executed in duplicate original.
Transmittal of fully-executed signature pages to the other party by facsimile
shall be deemed to constitute execution, provided original signature pages are
simultaneously transmitted to that party by overnight mail.
23. Waiver of Jury Trial. THE PARTIES HERETO EACH WAIVE THEIR RIGHT TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS
AGREEMENT, THE LOAN DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CLAIMS
BASED ON CONTRACT, TORT, BREACH OF DUTY AND ANY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
IN WITNESS WHEREOF, the parties have executed this Agreement as set
forth below.
ASSIGNOR:
SILICON VALLEY BANK
By /s/ Nido L. Paras
---------------------------------
Name: Nido L. Paras
Title: Senior Vice President
ASSIGNEES:
CAI PARTNERS AND COMPANY II, L.P.
By: CAI PARTNERS G.P. AND COMPANY,
L.P., GENERAL PARTNER
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By: /s/ Leslie B. Daniels
---------------------------
Leslie B. Daniels
$886,296
CAI CAPITAL PARTNERS AND COMPANY
II, L.P.
By: CAI CAPITAL PARTNERS G.P. AND
COMPANY, L.P., GENERAL PARTNER
By: /s/ Leslie B. Daniels
----------------------------
Leslie B. Daniels
$1,800,551
CAI CAPITAL PARTNERS AND COMPANY
II-C, L.P.
By: /s/ Manfred W. Yu
--------------------------------
Its: Assistant Secretary
-------------------------------
$221,486
THE BAILEYS FAMILY TRUST
By: /s/ Steven J. Baileys
--------------------------------
Steven J. Baileys, D.D.S.,
Trustee
$290,833
/s/ Jack R. Anderson
-----------------------------------
Jack R. Anderson
$919,389
The Burton Partnership, Limited
Partnership
By: /s/ Donald W. Burton
--------------------------------
Donald W. Burton, General
Partner
$534,778
/s/ James E. Buncher
-----------------------------------
James E. Buncher
$173,333
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/s/ Ronald I. Brendzel
-----------------------------------
Ronald I. Brendzel
$86,667
/s/ Dennis L. Gates
-----------------------------------
Dennis L. Gates
$86,667
The Borrower hereby consents to the transactions contemplated herein,
acknowledges that, effective as of the date of the Closing, the Loan Documents,
including, without limitation, all sums payable thereunder shall have been
acquired by Assignees and acknowledges that future payments thereafter should be
sent to Leslie B. Daniels, 767 Fifth Avenue, 5th Floor, New York, New York
10153, as Agent for Assignees.
BORROWER:
SAFEGUARD HEALTH ENTERPRISES, INC.,
a Delaware corporation
By: /s/ James E. Buncher
--------------------------------
Name: James E. Buncher
Title: President
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EXHIBIT A
LIST OF LOAN DOCUMENTS
1. Term Sheet Agreement dated March 1, 2000, among SafeGuard Health
Enterprises, Inc., CAI Partners and Company II, L.P., CAI Capital
Partners and Company II, L.P., Jack R. Anderson, Steven J. Baileys,
Silicon Valley Bank and the holders of 7.91% Senior Notes of SafeGuard
Health Enterprises due September 30, 2005.
2. $500,000 Straight Note, dated May 24, 1999, payable to SafeGuard Health
Enterprises, Inc. by Anaheim Place Partners, L.P. with Allonge, dated
June 21, 1999, payable to the order of Silicon Valley Bank, as
Collateral Agent
3. Amended and Restated Loan and Security Agreement, dated May 27, 1999,
between Silicon Valley Bank, Lender, and SafeGuard Health Enterprises,
Inc., Borrower
4. Deed of Trust, Absolute Assignment of Leases and Rents, Security
Agreement, Fixture Filing and Subordination Agreement, dated May 28,
1999, among SafeGuard Health Enterprises, Inc., Trustor, Chicago Title
Company, Trustee and Silicon Valley Bank, Collateral Agent
5. Negative Pledge Agreement, dated May 28, 1999, between SafeGuard Health
Enterprises, Inc., Borrower, and Silicon Valley Bank, Lender
6. Pledge Agreement, dated May 28, 1999, by SafeGuard Health Enterprises,
Inc., Pledgor, and Silicon Valley Bank, Pledgee
7. Collateral Agency and Intercreditor Agreement, dated May 28, 1999,
among SafeGuard Health Enterprises, Inc., Silicon Valley Bank, as
Collateral Agent, and the Senior Noteholders
8. Collateral Assignment of Deed of Trust, dated June 22, 1999, from
SafeGuard Health Enterprises, Inc., Assignor, to Silicon Valley Bank as
Collateral Agent, Assignee
9. $200,000 Credit Note and Security Interest, dated September 12, 1997,
payable to SafeGuard Health Enterprises, Inc., by Associated Dental
Services, Inc.
10. $300,000 Credit Note and Security Interest, dated October 13, 1997,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
11. $150,000 Credit Note and Security Interest, dated November 14, 1997,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
12. $200,000 Credit Note and Security Interest, dated December 10, 1997,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
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13. $150,000 Credit Note and Security Interest, dated January 13, 1998,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
14. $50,000 Credit Note and Security Interest, dated March 16, 1998,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
15. $200,000 Credit Note and Security Interest, dated April 29, 1998,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
16. $150,000 Credit Note and Security Interest, dated June 16, 1998,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
17. $50,000 Credit Note and Security Interest, dated July 23, 1998, payable
to SafeGuard Health Enterprises, Inc. by Associated Dental Services,
Inc.
18. $150,000 Credit Note and Security Interest, dated August 12, 1998,
payable to SafeGuard Health Enterprises, Inc. by Associated Dental
Services, Inc.
19. Opinion Letter, dated May 28, 1999, to Silicon Valley Bank from Ronald
I. Brendzel, Senior Vice President and General Counsel of SafeGuard
Health Enterprises, Inc., regarding First Waiver, Pledge, Intercreditor
Agreement and Warrant
20. UCC-1, Financing Statement #9915960576 filed June 4, 1999, with
California Secretary of State between SafeGuard Health Enterprises,
Inc., Debtor, and Silicon Valley Bank, as Collateral Agent, Secured
Party
21. UCC-1, Financing Statement #9805560634 filed February 18, 1998, with
California Secretary of State between SafeGuard Health Enterprises,
Inc., Debtor, and Silicon Valley Bank, Secured Party
22. UCC-1, Financing Statement #033613 filed February 18, 1998, with Texas
Secretary of State between SafeGuard Health Enterprises, Inc., Debtor,
and Silicon Valley Bank, Secured Party
23. UCC-1, Financing Statement #2152 filed February 24, 1998, with St.
Louis County, Missouri Recorder of Deeds, between SafeGuard Health
Enterprises, Inc., Debtor, and Silicon Valley Bank, Secured Party
24. UCC-1, Financing Statement #2880806 filed February 18, 1998, with
Missouri Secretary of State, between SafeGuard Health Enterprises,
Inc., Debtor, and Silicon Valley Bank, Secured Party.
25. UCC-1, Financing Statement #01004984 filed February 18, 1998, with
Arizona Secretary of State between SafeGuard Health Enterprises, Inc.,
Debtor, and Silicon Valley Bank, Secured Party
26. UCC-1, Financing Statement #980000036413 filed February 18, 1998, with
Florida Secretary of State between SafeGuard Health Enterprises, Inc.,
Debtor, and Silicon Valley Bank, Secured Party
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27. UCC-1, Financing Statement #19982011158 filed February 18, 1998, with
Colorado Secretary of State between SafeGuard Health Enterprises, Inc.,
Debtor, and Silicon Valley Bank, Secured Party
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