Exhibit 10.29
SECOND AMENDMENT TO LOAN DOCUMENTS
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THIS SECOND AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), made as of the
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19th day of November, 1997, is between ▇▇▇▇▇▇ DENTAL MANAGEMENT SERVICES, INC.,
a Colorado corporation ("Borrower") and KEYBANK NATIONAL ASSOCIATION, a
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national banking association ("Lender").
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R E C I T A L S:
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A. Lender has made a loan (the "Revolving Loan") to Borrower, which
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Revolving Loan is evidenced and/or secured by (1) a Promissory Note (the "Note")
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dated as of October 31, 1996 in the stated principal amount of $800,000.00
executed by Borrower and payable to the order of Lender, and (2) a Guaranty (the
"Guaranty") dated as of October 31, 1996, executed by ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇
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and ▇▇▇▇▇▇ ▇▇▇▇▇ (collectively, the "Guarantors") securing payment of the Note,
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and (3) by a Security Agreement (the "Security Agreement") dated as of October
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31, 1996 from Borrower for the benefit of Lender also securing payment of the
Note, and (4) by a Credit Agreement (the "Credit Agreement") dated as of October
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31, 1996 between Borrower and Lender, and (5) by certain other documents or
instruments (the Note, the Security Agreement, the Credit Agreement and such
other documents and instruments, as same may from time to time be amended or
replaced, are sometimes collectively referred to herein as the "Loan
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Documents").
B. Lender has also made a loan to Borrower in the principal amount of Two
Million and No/100 Dollars ($2,000,000.00) (the "Term Loan"), as evidenced by
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that certain Promissory Note dated September 3, 1997 (the "Term Note") executed
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and delivered to Lender by Borrower, together with that certain First Amendment
to Loan Documents dated September 3, 1997 (the "First Amendment") amending the
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terms and conditions of the Loan Documents to incorporate the Term Loan.
C. Borrower and Lender desire to further amend the terms and conditions
contained in the Credit Agreement, Security Agreement, and other Loan Documents
to increase the amount of the Revolving Loan and to set forth certain additional
terms and conditions regarding the Revolving Loan.
NOW, THEREFORE, in consideration of the foregoing premises and other good
and valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto hereby covenant and agree as follows:
1. CERTAIN DEFINITIONS. Capitalized terms used in this Amendment which
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are not defined herein shall have the meanings ascribed to such terms in the
Loan Documents.
2. CREDIT AGREEMENT AMENDMENTS. The Credit Agreement is amended as of
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the Closing Date as follows:
a. The amount of the Revolving Loan shall be increased from $800,000
to $10,000,000.
b. The following definitions set forth in Article I of the Credit
Agreement shall be revised as follows:
"CLOSING DATE" shall mean the date that Lender notifies Borrower that the
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conditions set forth in Paragraph 7 hereof are completed to Lender's reasonable
satisfaction, which date shall in no event be later than December 31, 1997 and
shall be further confirmed in a certificate substantially in the form attached
hereto as Exhibit A to be executed by both Borrower and Lender.
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"MATURITY DATE" shall mean three (3) years following the Closing Date.
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c. The following definitions shall be added to Article I of the
Credit Agreement:
"ADJUSTED LIBOR RATE" means a rate per annum (rounded upwards, if
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necessary, to the nearest 1/16/th/ of 1%) equal to the sum of the
applicable LIBOR Rate plus 2.25%, subject to adjustment of the Reserve
Percentage as defined hereinafter.
"BASE RATE ADVANCE" means any Advance evidenced by the Note during any
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period in which the Interest Rate is determined with reference to the Base
Rate.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
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Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"INTEREST RATE" means, as to each Advance, a rate per annum equal to (i)
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for Base Rate Advances, the Base Rate and (ii) for LIBOR Advances, the
Adjusted LIBOR Rate.
"LIBOR ADVANCE" means any Advance evidenced by the Note during any period
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in which the Interest Rate is determined with reference to the Adjusted
LIBOR Rate.
"LIBOR RATE" means the offered rate for deposits in Dollars (rounded
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upwards, if necessary, to the nearest 1/16 of 1%), of the respective rates
of interest per annum determined by Lender based on London interbank market
rates published in the Wall Street Journal for periods of thirty (30),
sixty (60) or ninety (90) days only, two (2) business days prior to the
LIBOR Advance; provided, that if one (1) or more LIBOR Rates for particular
interest periods are not published in the Wall Street Journal, and Borrower
desires to use such interest period, then the LIBOR Rate shall be
determined with reference to the REUTERS Monitor Money Rates Service LIBO
Page, or other comparable rate service selected by Lender.
"LONDON BANKING DAY" means a day on which banks are open for business in
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London, England, and quoting deposit rates for dollar deposits.
"RESERVE PERCENTAGE" shall mean for any day that percentage (expressed as a
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decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal
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Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, all basic, supplemental,
marginal and other reserves and taking into account any transitional
adjustments or other scheduled changes in reserve requirements) for a
member bank of the Federal Reserve System in Denver, Colorado, in respect
of "Eurocurrency Liabilities." The Adjusted LIBOR Rate shall be adjusted
automatically on and as of the effective date of any change in the Reserve
Percentage by dividing the Adjusted LIBOR Rate by 1.00 minus the Reserve
Percentage.
d. The Guaranty executed in connection with the Revolving Loan shall
terminate and be of no further effect as of the Closing Date.
e. The Facility Fee described in Section 2.5(a) of the Credit
Agreement shall be .25% per annum and shall be based upon the average
unused amount of the Commitment during the previous full calendar quarter.
f. The Origination Fee described in Section 2.5(b) of the Credit
Agreement shall be as set forth in that certain Commitment Letter between
Borrower and Lender dated November 4, 1997.
g. Section 2.1 of the Credit Agreement shall be deleted and revised
in its entirety as follows:
Commitment. Subject to the terms and conditions and relying upon the
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representations and warranties herein set forth, Lender agrees to make
Loans to the Borrower, at any time and from time to time and until the
earlier of the Maturity Date and the termination of the Commitment in
accordance with the terms hereof, in an aggregate principal amount at any
time outstanding not to exceed the lesser of: (1) $10,000,000 or (2) an
amount equal to a multiple of three times the Borrower's Consolidated
EBITDA, based on a rolling four calendar quarter basis, subject to
reductions in the maximum amount of the Commitment from time to time
pursuant to Section 2.8. If the cumulative amount of the Loans at any time
exceeds the lesser of the foregoing amounts, Borrower shall immediately pay
down the Loan to the extent of such excess amount, upon demand of the
Lender. The Borrower may borrow, pay or prepay and reborrow Loans on or
after the Closing Date and prior to the Maturity Date, subject to the
terms, conditions and limitations set forth herein.
h. Section 2.6(a) of the Credit Agreement shall be deleted and
revised in its entirety as follows:
(a) Subject to the provisions of Section 2.7, the Loan shall bear
interest (computed on the basis of the actual number of days elapsed over a
year of 360 days) at a rate per annum equal to the Base Rate or Adjusted
LIBOR Rate.
Each Advance shall be made under the Note as either a Base Rate
Advance or a LIBOR Advance, as selected by the Borrower. Borrower may
convert any
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Base Rate Advances aggregating at least $100,000 in principal amount into a
LIBOR Advance during a calendar month. If Borrower fails to renew any LIBOR
Advance or if Borrower shall receive any new Advance without designating
whether such Advance is a LIBOR Advance or a Base Rate Advance, such
Advance shall automatically be deemed to be a 30 day LIBOR Advance. At any
time that Borrower desires a LIBOR Advance or intends to renew a LIBOR
Advance or convert a Base Rate Advance into a LIBOR Advance, Borrower must
notify Lender in writing (a "LIBOR Notice") at least two (2) London Banking
Days prior to the day of the calendar month on which Borrower desires such
Advance, renewal or conversion to be effective. The LIBOR Notice must
specify the period of days, desired by Borrower for the applicable LIBOR
Rate.
If Lender shall determine, after the date hereof, that the adoption of
any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central Lender or
comparable agency charged with the interpretation or administration
thereof, or compliance by Lender (or its lending office) with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central Lender or comparable agency (any of the
foregoing shall be referred to herein as a "Regulatory Change"), has or
would have the effect of reducing the rate of return on Lender's capital
(or on the capital of Lender's holding company) as a consequence of the
loan evidenced by this Note to a level below that which Lender (or its
holding company) could have achieved but for such adoption, change or
compliance (taking into consideration Lender's policies or the policies of
its holding company with respect to capital adequacy) by an amount deemed
by Lender to be material, then from time to time, within fifteen (15) days
after demand by Lender, the Borrower shall pay to Lender such additional
amount or amounts as will compensate Lender (or its holding company) for
such reduction. Lender will designate a different lending office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of Lender, be otherwise
disadvantageous to Lender. A certificate of Lender claiming compensation
under this section and setting forth the additional amount or amounts to be
paid to it hereunder shall be conclusive in the absence of manifest error.
In determining such amount, Lender may use any reasonable averaging and
attribution methods. The protection of this section regardless of any
possible contention of the invalidity of the law, regulation or other
condition which shall have been imposed.
If any LIBOR Advance becomes due and payable or is prepaid prior to
the last day of the applicable interest period, Borrower shall reimburse
Lender on demand for any resulting loss, cost, or expense incurred by
Lender as a result thereof including, without limitation, any loss incurred
in obtaining, liquidating, or employing deposits from third parties, but
excluding loss of margin for the period after any such payment. If,
because of the introduction of or any change in, or because of any
judicial, administrative, or other governmental interpretation of, any
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law or regulation, there shall be any increase in the cost to Lender of
making, funding, maintaining, or allocating capital to LIBOR Advances, then
Borrower shall, from time to time upon demand by Lender, pay to Lender
additional amounts sufficient to compensate Lender for such increased cost
(the costs in this and the preceding sentence shall be referred to herein
as "Additional LIBOR Costs"). If, because of the introduction of or any
change in, or because of any judicial, administrative, or other
governmental interpretation of, any law or regulation, it becomes unlawful
for Lender to make, fund, or maintain any LIBOR Advance, then Lender's
obligation to make, fund, or maintain any LIBOR Advance shall terminate.
i. The ratio set forth in Section 6.9 of the Credit Agreement shall
be revised to 1.5 to 1.
j. The ratios set forth in Section 6.11 shall be revised to 1.5 at
all times during the term of the Revolving Loan.
k. All financial covenants set forth in Article VI shall be
calculated during the term of the Revolving Loan on a rolling four quarter
basis commencing on December 31, 1997.
l. Section 6.14 of the Credit Agreement shall be revised as follows:
Consolidated Acquisition Expenditures. If, during the term of
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the Revolving Loan, Borrower desires to make Consolidated
Acquisition Expenditures in excess of an aggregate of $2,500,000
in any calendar year, Borrower shall only be required to first
notify Lender of same (by delivery to Lender of a form
substantially similar to that attached hereto as Exhibit B),
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provided there is no outstanding principal balance under the
Revolving Loan at the time of such proposed acquisition. If,
however, Borrower desires to make Consolidated Acquisition
Expenditures in excess of an aggregate of $2,500,000 in any
calendar year and there is an outstanding principal balance under
the Revolving Loan at the time of such proposed acquisition,
Borrower shall first obtain Lender's prior written consent to such
expenditures and shall provide Lender with those items referenced
on Exhibit B. Notwithstanding the foregoing, Borrower shall not
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be required to obtain Lender's prior written consent as set forth
above, if (i) the outstanding principal balance under the
Revolving Loan is solely for working capital purposes and is in an
amount which will be paid in full by Borrower within sixty (60)
consecutive days following the date of such borrowing or (ii) the
contemplated Consolidated Acquisition Expenditure is being funded
entirely from proceeds received through a secondary public
offering of Borrower's equity securities.
m. For purposes of Article 6 of the Credit Agreement, the term
"Subsidiary" or "Subsidiaries" shall not include, and for purposes
of Section 6.4 of the
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Credit Agreement only, shall include as subsection (d), those
professional corporations organized for the practice of dentistry
(the"PCs") of which Borrower initially acquires the stock, but
thereafter transfers the entirety of such stock to an individual
licensed dentist within thirty (30) days following the date of
acquisition and with which Borrower has entered into a management
agreement in the standard form which has been previously approved
by Lender.
3. AMENDMENTS OF THE PROMISSORY NOTE. The first sentence of Paragraph 2
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of the Revolving Note shall be revised as follows:
"The outstanding principal balance of this Note shall bear interest,
from the date of each Advance made by Lender until repaid in full, at the
Base Rate or Adjusted LIBOR Rate as specified in the Credit Agreement,
which interest shall be due and payable in arrears, as provided in the
Credit Agreement."
(b) The third sentence of Paragraph 2 shall be deleted in its entirety
and replaced with the following:
"Borrower may prepay the principal amount of any Base Rate Advance in
whole or in part from time to time without any prepayment penalty, upon two
(2) business days written notice to Lender; provided, however, that each
prepayment shall be applied to the principal installments in the reverse
order of maturity. Borrower may not prepay any LIBOR Advance before the
expiration of the LIBOR interest period applicable to such LIBOR Advance,
except upon payment of the Additional LIBOR Costs, as defined in the Credit
Agreement."
4. OTHER LOAN DOCUMENT AMENDMENTS. Each of the other Loan Documents are
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amended as of the Closing Date to reflect the additional indebtedness of
Borrower to Lender, as set forth herein, and to incorporate the amendments to
the Credit Agreement and Revolving Note as set forth in Paragraphs 2 and 3
above.
5. GUARANTY AMENDMENTS. The Guaranty shall be terminated and of no
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further force and effect as of the Closing Date.
6. DOCUMENT RATIFICATION. Except as set forth in Paragraphs 1 through 5
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above, all of the terms and conditions contained in the Credit Agreement, the
Security Agreement and other Loan Documents shall remain the same and in full
force and effect, and are ratified, reaffirmed and republished as of the Closing
Date.
7. PAYMENT OF COSTS AND FEES; CONDITIONS PRECEDENT TO DISBURSEMENTS.
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Notwithstanding anything to the contrary set forth herein, in the Revolving
Note, the Credit Agreement, the Security Agreement, or the other Loan Documents,
Lender shall not be required to make any further disbursements of proceeds of
the Revolving Loan until the following shall have occurred:
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a. Borrower shall have paid to Lender the Origination Fee set forth
herein and shall have paid all closing costs and expenses of Lender
incurred in connection with this Amendment and all legal fees of Lender's
counsel relating to this Amendment.
b. Borrower shall have delivered to Lender a certificate of good
standing issued by the Secretary of State of the State of Colorado
confirming that the Borrower remains a corporation duly formed and in good
standing in the State of Colorado.
c. Lender shall have received UCC searches confirming that no liens,
claims or encumbrances exist upon any of Borrower's assets, except as
expressly permitted by the Credit Agreement.
d. Borrower shall have delivered to Lender borrowing resolutions
confirming the authority of the individual executing this Amendment on
behalf of the Borrower.
e. Borrower shall have provided Lender with satisfactory evidence
confirming that an initial public offering providing net proceeds to
Borrower (after deduction of underwriting discount and offering expenses)
in excess of $10,000,000 has been successfully completed.
f. Borrower shall have provided Lender with satisfactory evidence
confirming that a minimum of 50% of the Convertible Subordinated
Debtentures of Borrower have been converted.
g. The Term Loan shall have been paid in full by Borrower and the
Term Note cancelled.
8. REPRESENTATION OF BORROWER. Borrower hereby confirms that, as of the
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date hereof, (i) Borrower is in compliance with each of the representations,
warranties and covenants of Borrower set forth in the Loan Documents, (ii) no
Event of Default exists under the Loan Documents and (iii) no fact or condition
exists, which with the passage of time and/or giving of notice, would constitute
an Event of Default under the Loan Documents.
9. ACKNOWLEDGEMENT OF PARTIES. Borrower and Lender acknowledge and agree
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that as of the date hereof, there are no known claims or defaults by either
party against the other, nor are there any existing covenant violations arising
from or under the Credit Agreement.
10. CONTROLLING LAW. The terms and provisions of this Amendment shall be
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construed in accordance with and governed by the laws of the State of Colorado.
11. BINDING EFFECT. This Amendment shall be binding upon and inure to the
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benefit of the parties hereto, their successors and assigns.
12. CAPTIONS. The paragraph captions utilized herein are in no way
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intended to interpret or limit the terms and conditions hereof, rather, they are
intended for purposes of convenience only.
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13. COUNTERPARTS. This Amendment may be executed in any number of
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counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and al of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Amendment may be detached from
any counterpart of this Amendment without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Amendment
identical in form hereto but having attached to it one or more additional
signature pages.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
LENDER:
KEYBANK NATIONAL ASSOCIATION
By: /s/ signature illegible
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Title:__________________________________
BORROWER:
▇▇▇▇▇▇ DENTAL MANAGEMENT SERVICES, INC.,
a Colorado corporation
By: /s/ signature illegible
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Title:__________________________________
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EXHIBIT A
CLOSING CERTIFICATE
This Closing Certificate is attached to and made a part of the Second
Amendment to Loan Documents (the "Agreement") dated as of the 19th day of
November, 1997, by and between ▇▇▇▇▇▇ Dental Management Services, Inc., as
Borrower, and KeyBank National Association, as Lender. By this Closing
Certificate dated as of the ___ day of _____, 19__, the parties agree as
follows:
1. The conditions set forth in paragraph 7 of the Agreement have been
satisfied by Borrower and accepted by Lender.
2. In accordance with the provisions of the Agreement, the Closing Date
defined in the Agreement shall be the date of this Closing Certificate
as set forth above and the Maturity Date shall be ______________,
______.
IN WITNESS WHEREOF, the parties hereto have caused this Closing Certificate
to be executed the day and year first above written.
LENDER:
KEYBANK NATIONAL ASSOCIATION
By: ________________________________________
Title:__________________________________
BORROWER:
▇▇▇▇▇▇ DENTAL MANAGEMENT SERVICES, INC.,
a Colorado corporation
By: ________________________________________
Title:__________________________________
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