Case 12-32924-sgj11

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EXHIBIT A

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EXHIBIT A SUMMARY OF TERMS AND CONDITIONS OF ALL SMILES DENTAL CENTER DIP FINANCING
This draft term sheet outlines certain basic terms of a proposed Debtor-in-Possession Facility for All Smiles Dental Center, Inc. and its affiliated debtors (as further described below, the DIP Facility). THIS IS A DRAFT FOR DISCUSSION PURPOSES ONLY AND HAS NOT BEEN APPROVED BY ANY CLIENTS.

Borrowers/Debtors:

All Smiles Dental Center, Inc. and each affiliate or subsidiary of All Smiles Dental Center, Inc. that files for relief under Chapter 11 of the Bankruptcy Code. To the extent that any affiliate or subsidiary does not file on the Petition Date, that affiliate or subsidiary will join the DIP Facility after its filing. ASDC Holdings, LLC Debtors will file voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court"). The "Petition Date" shall be the first date on which any of the Debtors files a petition for relief under Chapter 11 of the Bankruptcy Code. Upon entry of an interim order of the Bankruptcy Court authorizing the Debtors, among other things, to obtain the DIP Facility on terms and conditions consistent with this Term Sheet and otherwise satisfactory to the Post-Petition Lender in its respective sole discretion (an Interim Order), the Post-Petition Lender will provide the Debtors post-petition term loans (the DIP Loans) in an aggregate principal amount not to exceed $1,000,000 during the funding period covered by the Interim Order and $3,000,000 during the entire funding period from the Petition Date through and including the Maturity Date (the DIP Commitment). Advances under the DIP Facility shall be made on a periodic basis during the DIP Facility term to fund the disbursements set forth in the Budget (as defined below) and in amounts of not less than $250,000. Amounts advanced and repaid under the DIP Facility may be reborrowed during the term of the DIP Facility. All of the Debtors obligations in connection with the DIP Facility are referred to herein as the DIP Obligations. During the interim funding period covered by the Interim Order, the Debtors and Post-Petition Lenders respective rights and obligations in connection with the DIP Facility will be memorialized and governed by the Interim Order and this Term

Post-Petition Lender: Venue/Petition Date:

DIP Facility:

DIP Documentation:

This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 1 of 8 Pages

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Sheet. During any subsequent funding period covered by a final, non-appealable order of the Bankruptcy Court that, among other things, approves the DIP Facility and grants the liens and security interests described herein, on terms and conditions substantially similar to the Interim Order and otherwise satisfactory to the PostPetition Lender (the Final Order, and together with the Interim Order, the Financing Orders), the DIP Facility shall be subject to the negotiation, execution and delivery of loan documents, guarantees, pledges, security documents and other supporting instruments and agreements reasonably requested by the PostPetition Lender, in each case on terms and conditions consistent with this Term Sheet and otherwise satisfactory to the Post-Petition Lender in its sole discretion (all such documents, agreements and instruments, collectively, the Post-Petition Credit Documents). The Post-Petition Credit Documents shall contain terms and conditions customary in debtor-in-possession financing agreements, consistent with this Term Sheet and the Debtors rights and obligations as debtors-in-possession. The DIP Facility shall not become effective until an Interim Order has been entered by the Bankruptcy Court. Maturity Date: Interest Rate: Reimbursement of Post-Petition Expenses: The first business day that is 125 days after the Petition Date (the Outside DIP Termination Date). 15% (the "Pre-Default Rate") accrued month to month, and fully due and payable on Maturity Date or upon acceleration. The Post-Petition Lender shall be entitled to reimbursement of its reasonable out-of-pocket expenses (including fees) incurred in connection with the DIP Facility. All amounts, liabilities and other obligations owed by the Debtors, as pre-petition borrowers, under their various pre-petition notes and related loan documents with the Post-Petition Lender (collectively, the "Pre-Petition Credit Agreements"). Without prejudice to the rights of the Post-Petition Lender under Section 506(b) of the Bankruptcy Code, the Debtors will not be required to pay current interest on the outstanding balance of the Pre-Petition Indebtedness as part of, or during the term of, the DIP Facility. The Post-Petition Lenders indebtedness under the DIP Facility and all other DIP Obligations will be secured by security interests and liens granted pursuant to Section 364(c)(2) and (d)(1) of the

Pre-Petition Indebtedness:

Pre-Petition Interest:

Collateral:

This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 2 of 8 Pages

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Bankruptcy Code (the "DIP Liens") in and on all of the Debtors and the Debtors' bankruptcy estates real and personal property, tangible or intangible, whether now existing or hereafter acquired and all proceeds, products, rents, revenues and profits thereof (the Collateral) that are senior to (priming) all other liens and security interests in the Collateral, including without limitation, the liens and security interests securing the Post-Petition Lenders prepetition indebtedness; the DIP Liens shall be subject only to valid and unavoidable liens existing on the Petition Date that are senior to any of the liens and security interest securing the Post-Petition Lenders pre-petition indebtedness. The DIP Liens shall be valid and enforceable and of senior priority notwithstanding any infirmity, avoidance, or other issue making any of the Post-Petition Lender's pre-petition liens unenforceable. Superpriority: The Post-Petition Lenders indebtedness under the DIP Facility shall have a superpriority under the provisions of section 364(c)(1) of the Bankruptcy Code over all administrative expenses incurred in the Debtors' bankruptcy cases. In the Final Order and/or Post-Petition Credit Documents, no costs or expenses of administration shall be imposed against the PostPetition Lenders pre-petition or post-petition collateral under Section 506(c) of the Bankruptcy Code. No proceeds of the DIP Facility or Cash Collateral shall be used to prosecute investigation of or proceedings to contest the post-petition or pre-petition liens or debt of the Post-Petition Lender. The Interim Order and the Final Order shall authorize the Debtors to use the Post-Petition Lenders cash collateral (as defined in Section 363(a) of the Bankruptcy Code) as provided in the Budget. As a condition precedent to the DIP Facility, there shall be established a budget for the Debtors' disbursements. The Debtors shall only be permitted to use cash collateral, proceeds of DIP Loans and proceeds of the Collateral for the purposes and in the amounts set forth in the weekly operating budget attached hereto as Exhibit A (the Budget). The aggregate expenditures under the Budget will be tested weekly on a cumulative basis (i.e., the sum of all actual amounts expended for the current week and all previous weeks in the Budget cannot exceed the sum of all budgeted disbursements for such cumulative period). The Budget can be amended and/or extended from time to time without further order of the Bankruptcy Court upon the prior written agreement of the Debtors and the Post-Petition Lender. On or prior to noon

No Surcharge:

Cash Collateral:

Budget:

This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 3 of 8 Pages

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central time each Tuesday during the DIP Financing term, the Debtors shall prepare a deliver to the Post-Petition Lender a written reconciliation (by line item and on a cumulative basis) of the actual collections and disbursements for the immediately preceding week with the budgeted collection and disbursements for such week in the Approved Budget. Carve-Outs: The Post-Petition Lender will agree to a carve-out of its Collateral for: (a) court-approved administrative expense claims of (i) professionals retained by the Debtors (the DIP Professionals) for fees, expenses and other costs incurred from the Petition Date through the Carve-Out Termination Date (as defined below), as outlined and approved in the Budget; and (ii) an amount to be negotiated for fees and expenses of professionals retained by the Official Committee of Unsecured Creditors (the Committee Professionals); (b) unpaid fees payable pursuant to 28 U.S.C. 1930; and (c) unpaid fees payable to the Clerk of the Bankruptcy Court or the United States Trustee (all such carve-outs referenced above, collectively, the Carve Outs). After the Carve-Out Termination Date, proceeds of DIP Loans and the Collateral shall only be used to pay Committee Professionals and DIP Professionals for fees and expenses that (i) were incurred during the post-petition period ending on the Carve-Out Termination Date; and (ii) did not exceed the applicable Carve-Out amount set forth above. The aforementioned carve-out amounts shall be reduced dollar for dollar by the amount of any retainer balance held by such professionals as of the Petition Date. The Carve-Out Termination Date means the earliest of: (i) the occurrence of any Event of Default under any of this Term Sheet, the Post-Petition Credit Documents or any Interim Order or Final Order, and the delivery of written notice thereof to the Debtors, (ii) the Outside DIP Termination Date, or (iii) such later date to which the PostPetition Lender shall have agreed in writing in its sole discretion. The Debtors shall retain Neil Minihane as Chief Restructuring Officer with ultimate authority over day-to-day operations at all times while the DIP Facility is outstanding. In the Final Order and/or Post-Petition Credit Documents, Debtors shall provide the Post-Petition Lender a standard release of any and all claims and causes of action whether such claims and causes of action arise against it pre-petition or post-petition, subject only to a 60-day review and objection period.

CRO:

Releases:

This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 4 of 8 Pages

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Pre-Petition Liens:

In the Final Order and/or Post-Petition Credit Documents, Debtors shall stipulate that the Pre-Petition Indebtedness is valid and existing and that all liens, claims and interests held by the PostPetition Lender to secure the Pre-Petition Indebtedness are valid, existing and properly perfected, and this stipulation will be binding on all creditors and parties-in-interest, subject only to a 60-day review and objection period. Between entry of the Interim Order and entry of the Final Order, the Debtors are expressly authorized to "shop" the DIP Facility and seek financing from another lender; provided, however, that any amounts funded under the DIP Facility by Post-Petition Lender must be repaid in full through any alternative financing, if the Debtors locate and choose to utilize alternative financing. By agreeing to allow the Debtors to "shop" the DIP Facility, the PostPetition Lender is not agreeing to any priming of its lien position (including through subrogation) nor does it waive its ability to improve the terms of the DIP Facility in response to any competing financing. Customary for a facility of this type, including: 1. As to initial funding: (a) Receipt of satisfactory Budget;

Alternative DIP Loan:

General Conditions Precedent:

(b) Bankruptcy Court's entry of an Interim Order approving the DIP Facility and other arrangements described herein, in form and substance acceptable to the Post-Petition Lender; (c) Bankruptcy Court's entry of a cash collateral order in form and substance satisfactory to the Post-Petition Lender, which may be part of the Interim Order; and (d) The Post-Petition Lender shall have received such other documents and instruments as it may request. 2. The Post-Petition Credit Documents shall contain funding conditions customary for transactions of this type. Reps & Warranties: Customary representations and warranties for transactions of this type.

This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 5 of 8 Pages

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Affirmative Covenants:

Affirmative covenants customary for transactions of this type, including, without limitation, covenants that each of the Debtors shall: (a) (b) (c) Maintain its corporate existence; Permit inspections; Customary reporting requirements; and

(d) Maintain insurance in amounts, on terms and with specified insurers, all satisfactory to the Post-Petition Lender. NOTE: NOT INTENDED TO BE AN EXHAUSTIVE LIST OF COVENANTS FOR PURPOSES OF THE FINAL ORDER. Negative Covenants: Negative covenants customary for transactions of this type, including, without limitation, covenants that the Debtors shall not, and shall not permit any of their subsidiaries to: (a) Merge or consolidate with any other entity, transfer or otherwise dispose of any assets other than inventory in the ordinary course of business or make any fundamental changes in its corporate structure; (b) Create or permit to exist any consensual lien or encumbrance on any asset; (c) Incur or permit to exist any financing under section 364 of the Bankruptcy Code or any other indebtedness or contingent obligations except as specifically permitted by the Post-Petition Lender (other than with respect to the DIP Facility); (d) Create or permit to exist any superpriority administrative expense claim except as specifically permitted by the Post-Petition Lender (other than with respect to the DIP Facility); (e) Make investments except as specifically permitted by the Post-Petition Lender; (f) Declare or pay dividends or make any distributions to shareholders or pay amounts with respect to subordinated indebtedness or any other prepetition indebtedness except to the Pre-Petition Lender in accordance with the Financing Orders or as otherwise specifically permitted by the Post-Petition Lender;

This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 6 of 8 Pages

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(g) Use Cash Collateral or the proceeds of the DIP Facility except in accordance with the Budget; (h) Seek to obtain any stay on the exercise of the Post-Petition Lenders remedies permitted pursuant to this Term Sheet and any Financing Order; or (i) Change of key management.

NOTE: NOT INTENDED TO BE AN EXHAUSTIVE LIST OF COVENANTS FOR PURPOSES OF THE FINAL ORDER. Events of Default: Events of Default shall be material breaches of this Term Sheet, any Financing Order or the Post-Petition Credit Documents (once executed) by the Debtors, including, without limitation: (a) The failure of Borrowers to obtain the Final Order from the Bankruptcy Court by June 4, 2012; (b) The Debtors shall attempt to vacate or modify any of the Financing Orders over the objection of the Post-Petition Lender; (c) The Debtors shall institute any proceeding or investigation, or support same by any other person, challenging the status and/or validity of the pre-petition or post-petition debt or liens of the PostPetition Lender; (d) Weekly variances from the Budget in an amount of more than 10% for aggregate expenditures; (e) Within ten (10) days of the Petition Date, the Debtors have failed to file a Rule 9019 motion to approve a settlement with the State of Texas with terms acceptable to the Lender; (f) The Debtors file a plan of reorganization or liquidation or disclosure statement, or any amendment to such plan or disclosure statement without the consent of the Post-Petition Lender; (g) The entry of an order amending, supplementing, staying, vacating or otherwise modifying any Post-Petition Credit Document, the Interim Order or the Final Order, in each case without the consent of the Post-Petition Lender, or the filing of a motion for reconsideration with respect thereto; (h) Using cash collateral or advances under the DIP Facility for any purpose other than those set forth in the Budget; and This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 7 of 8 Pages

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(i) dismissal or conversion of the Debtors Bankruptcy Cases to cases under chapter 7 of the Bankruptcy Code. Upon the occurrence of an Event of Default, (i) the Post-Petition Lender may declare all outstanding principal and interest due and immediately payable and terminate any further commitment to extend credit under the DIP Facility, and (ii) upon three (3) days notice to the Debtor (which notice shall also be filed with the Bankruptcy Court), the automatic stay shall be deemed automatically lifted with respect to the Collateral, and the PostPetition Lender shall have the right to exercise any other remedies customary for secured lenders, including set-off and foreclosure. Indemnification: In the Final Order and/or Post-Petition Credit Documents, the Debtors will indemnify the Post-Petition Lender and its officers, directors, employees, affiliates, agents, attorneys, financial advisors, and controlling persons and hold them harmless from and against all costs, expenses (including fees, disbursements and other charges of counsel) and liabilities of any such indemnified person arising out of or relating to any claim arising out of or relating to any claim or litigation or other proceedings (regardless of whether any such indemnified person is a party thereto), that relate to the DIP Loans; provided that no indemnified party will be indemnified for its gross negligence or willful misconduct. Texas law shall govern the Post-Petition Credit Documents (provided that perfection of security interests in the Debtors' assets will be governed by the law of the state in which such assets are located to the extent reasonably determined by the Post-Petition Agent to be necessary). Debtors shall agree that all disputes between them and the Post-Petition Lender shall be heard by the Bankruptcy Court.

Governing Law:

THIS TERM SHEET IS PROVIDED FOR DISCUSSION PURPOSES ONLY. IT DOES NOT CONSTITUTE AN OFFER. ANY OFFER/COMMITMENT BY THE POST-PETITION LENDER IS SUBJECT TO APPROVAL OF THE POST-PETITION LENDER AND ITS CREDIT COMMITTEES.

Dallas_1 5839994v.7

This Term Sheet is neither a commitment nor an offer to commit to any transaction. The indicative terms and conditions are subject to modification at the discretion of the Lender. Page 8 of 8 Pages