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EXHIBIT 10.23
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (herein called this
"Amendment") made as of February 9, 1999 by and among Pentegra Dental Group,
Inc., a Delaware corporation (herein called "Borrower"), and Bank One, Texas,
N.A., as Agent and Lender (herein called "Bank One").
W I T N E S S E T H:
WHEREAS, Borrower and Lenders have entered into that certain Credit
Agreement dated as of June 1, 1998, as amended by an amendment letter dated as
of September 9, 1998 (as amended to the date hereof, the "Original Agreement"),
for the purposes and consideration therein expressed, pursuant to which Lenders
became obligated to make loans to Borrower as therein provided; and
WHEREAS, Borrower and Lenders desire to amend the Original Agreement
to modify certain terms and provisions thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Original Agreement, in
consideration of the loans which may hereafter be made by Lender to Borrower,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
Definitions and References
Section 1.1. Terms Defined in the Original Agreement. Unless the
context otherwise requires or unless otherwise expressly defined herein, the
terms defined in the Original Agreement shall have the same meanings whenever
used in this Amendment.
Section 1.2. Other Defined Terms. Unless the context otherwise
requires, the following terms when used in this Amendment shall have the
meanings assigned to them in this Section 1.2.
"Amendment" means this First Amendment to Credit
Agreement.
"Credit Agreement" means the Original Agreement as
amended hereby.
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ARTICLE II.
Amendments to Original Agreement
Section 2.1. The definition of "Base Rate," "Default Rate" and
"Eurodollar Margin" in Section 1.1. of the Original Agreement are hereby
amended in their entirety to read as follows:
"Base Rate" means, for each day, the Prime Rate in effect on
such day; provided that if the aggregate principal balance of the
Loans outstanding on such day exceeds Tier I, "Base Rate" shall mean
for such day with respect to all Base Rate Loans that are included in
Tier II, the per annum rate of interest which is two percent (2.0%)
above the Prime Rate. If the Prime Rate changes after the date hereof
the Base Rate shall be automatically increased or decreased, as the
case may be, without notice to Borrower from time to time as of the
effective time of each change in Agent's Prime Rate. The Base Rate
shall in no event, however, exceed the Highest Lawful Rate.
"Default Rate" means, at the time in question (i) with respect
to any Base Rate Loan, the per annum rate of interest which is two
percent (2.0%) above the Base Rate then in effect for such Base Rate
Loan, (ii) with respect to any Eurodollar Loan, the per annum rate of
interest which is two percent (2.0%) above the Adjusted Eurodollar
Rate then in effect for such Eurodollar Loan; and (iii) if the
aggregate principal balance of the Loans on any day exceeds Tier I,
"Default Rate" shall mean for such day with respect to all Loans that
are included in Tier II, the per annum rate of interest which is two
percent (2.0%) above the Base Rate in effect for the Loans. The
Default Rate shall in no event however, exceed the Highest Lawful
Rate.
"Eurodollar Margin" for each day during any Fiscal Quarter
shall be determined based on the Total Senior Funded Debt to EBITDA
Ratio as set forth below calculated as of the end of the Fiscal
Quarter immediately preceding the Fiscal Quarter during which such day
occurred:
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TOTAL SENIOR FUNDED DEBT PERCENTAGE
TO EBITDA RATIO
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less than = 1.00 to 1 1.5% per annum
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greater than = 2.00 to 1 2.0% per annum
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greater than = 2.01 to 1 2.5% per annum
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Notwithstanding the foregoing, if the aggregate principal
balance of the Loans outstanding on any day during any Fiscal Quarter
exceeds Tier I, "Eurodollar Margin" shall mean for such day with
respect to all Eurodollar Loans that are included in Tier II, two
percent (2.0%) above the percentage set forth above in this definition
calculated for such Fiscal Quarter.
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Section 2.2. The following definition of "Short Term Acquisition
Notes" is hereby added to Section 1.1 of the Original Agreement immediately
after the definition of "Security Schedule" to read as follows:
"Short Term Acquisition Notes" means those notes payable of
Borrower in the aggregate amount of $2,300,000 described on Schedule 5.
The following definitions of "Tier I and "Tier II" are hereby added to
Section 1.1 of the Original Agreement immediately after the definition of
"Termination Event" to read as follows:
"Tier I" means, on any day, the first $8,000,000 of the
aggregate outstanding principal balance of the Loans; provided that in
calculating Tier I, the Base Rate Loans shall be counted first.
"Tier II" means, on any day, the aggregate outstanding
principal balance of the Loans which is in excess of Tier I.
Section 2.3. Section 7.15 Total Funded Debt to Capitalization Ratio
is hereby amended to add the following proviso at the end of such section:
"; provided, however, for the Fiscal Quarter of Borrower ending
December 31, 1998, "Total Funded Debt" shall not include the Short
Term Acquisition Notes."
Section 2.4. Section 7.16 Total Funded Debt to EBITDA Ratio is hereby
amended to add the following proviso at the end of such section:
"; provided, however, for the Fiscal Quarter of Borrower ending
December 31, 1998, "Total Funded Debt" shall not include the Short
Term Acquisition Notes."
Section 2.5. The Original Agreement is hereby amended by adding a
Schedule 5 thereto in the form attached hereto and labeled Schedule 5.
ARTICLE III.
Conditions of Effectiveness
Section 3.1. Effective Date. This Amendment shall become effective
as of the date first above written when and only when Bank One shall have
received, at Bank One's office and, if applicable, executed by Borrower or
Guarantor:
(a) this Amendment;
(b) a Consent of Guarantor in the form attached hereto;
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(c) a certificate of the President and Secretary of Borrower dated
the date of this Amendment certifying as to certain corporate
matters and that all of the representations and warranties set
forth in Article IV hereof are true and correct at and as of
the time of such effectiveness;
(d) an amendment fee in the amount of $10,000.
ARTICLE IV.
Representations and Warranties
Section 4.1. Representations and Warranties of Borrower. In order to
induce Bank One to enter into this Amendment, Borrower represents and warrants
to Bank One that:
(a) The representations and warranties contained in
Article V of the Original Agreement, are true and correct at and as of
the time of the effectiveness hereof except to the extent that the
facts upon which such representations are based have been changed by
transactions and events expressly permitted by the Credit Agreement.
(b) Borrower is duly authorized to execute and deliver
this Amendment and will continue to be duly authorized to borrow and
to perform its obligations under the Credit Agreement. Borrower has
duly taken all corporate action necessary to authorize the execution
and delivery of this Amendment and to authorize the performance of its
obligations hereunder and thereunder.
(c) The execution and delivery by Borrower of this Amendment,
the performance by Borrower of its obligations hereunder and the
consummation of the transactions contemplated hereby do not and will
not conflict with any provision of law, statute, rule or any of its
organizational documents, or of any material agreement, judgment,
license, order or permit applicable to or binding upon it, or result
in the creation of any lien, charge or encumbrance upon any assets or
properties or any of its assets. Except for those which have been
duly obtained, no consent, approval, authorization or order of any
court or governmental authority or third party is required in
connection with the execution and delivery by Borrower of this
Amendment or to consummate the transactions contemplated hereby.
(d) When duly executed and delivered, each of this
Amendment and the Credit Agreement will be a legal and binding
obligation of Borrower, enforceable in accordance with its terms,
except as limited by bankruptcy, insolvency and similar laws applying
to creditors' rights generally and by principles of equity applying to
creditors' rights generally.
(e) The Consolidated financial statements of Borrower dated as
of December 31, 1998 fairly present the Consolidated financial
position at such date and the Consolidated statement of operations and
the changes in Consolidated financial position for the periods ending
on such date for Borrower. Copies of such financial statements have
heretofore been
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delivered to Bank One. Since December 31, 1998, no Material Adverse
Change has occurred.
ARTICLE V.
Miscellaneous
Section 5.1. Ratification of Agreements. The Original Agreement as
hereby amended is hereby ratified and confirmed in all respects. The Loan
Documents, as they may be amended or affected by this Amendment are hereby
ratified and confirmed in all respects. Any reference to the Credit Agreement
in any Loan Document shall be deemed to refer to this Amendment also. The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
Bank One under the Credit Agreement or any other Loan Document nor constitute a
waiver of any provision of the Credit Agreement or any other Loan Document.
Section 5.2. Survival of Agreements. All representations,
warranties, covenants and agreements of Borrower herein shall survive the
execution and delivery of this Amendment and the performance hereof, including
without limitation the making or granting of the Loan, and shall further
survive until all of the Obligations are paid in full. All statements and
agreements contained in any certificate or instrument delivered by Guarantor or
Borrower hereunder or under the Credit Agreement to Bank One shall be deemed to
constitute representations and warranties by, or agreements and covenants of,
such Person under this Amendment and under the Credit Agreement.
Section 5.3. Loan Documents. This Amendment is a Loan Document,
and all provisions in the Credit Agreement pertaining to Loan Documents apply
hereto and thereto.
Section 5.4. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of Texas and any
applicable laws of the United States of America in all respects, including
construction, validity and performance.
Section 5.5. Counterparts. This Amendment may be separately
executed in counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Amendment.
THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.
PENTEGRA DENTAL GROUP, INC.
Borrower
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
BANK ONE, TEXAS, N.A.
Agent and Lender
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Assistant Vice President,
Health Care Services
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CONSENT AND AGREEMENT
Pentegra Investments, Inc., a Delaware corporation, hereby (i)
consents to the provisions of this Amendment and the transactions contemplated
herein and (ii) ratifies and confirms the Guaranty dated as of June 1, 1998
made by it for the benefit of Bank One Texas, N.A. and any other Lenders that
become parties to the Credit Agreement ("Guaranty") and (iii) agrees that all
of its respective obligations and covenants thereunder (to the extent it is a
party thereto) shall remain unimpaired by the execution and delivery of the
Amendment and the other documents and instruments executed in connection
therewith and that the Guaranty shall remain in full force and effect.
THIS CONSENT AND AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.
IN WITNESS WHEREOF, this Consent and Agreement is executed by the
undersigned as of February 9, 1999.
PENTEGRA INVESTMENTS, INC.
By: /s/ Xxx X. Xxxx
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Name: Xxx X. Xxxx
Title: Senior Vice President
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Schedule 5
Schedule of Short Term Acquisition Notes
1. Promissory Note dated December 11, 1998 made by Pentegra Dental Group,
Inc. in favor of Family Dental Care of Pocahontas, Xxxx & Xxxxx, Inc.
in the original principal amount of $232,726.
2. Promissory Note dated December 15, 1998 made by Pentegra Dental Group,
Inc. in favor of Xxxxxxx X. Xxxxxx, D.D.S. in the original principal
amount of $197,773.
3. Promissory Note dated December 15, 1998 made by Pentegra Dental Group,
Inc. in favor of Xxxxxxx X. Xxxxxxx, D.D.S., Inc. in the original
principal amount of $97,628.
4. Promissory Note dated December 15, 1998 made by Pentegra Dental Group,
Inc. in favor of Xxxxxx X. Xxxxxx, D.D.S. in the original principal
amount of $187,997.
5. Promissory Note dated December 15, 1998 made by Pentegra Dental Group,
Inc. in favor of Xxx X. Xxxxxxxxx, D.D.S. in the original principal
amount of $307,728.
6. Promissory Note dated December 30, 1998 made by Pentegra Dental Group,
Inc. in favor of Xxxx X. Xxxxxx, D.D.S. in the original principal
amount of $905,137.
7. Promissory Note dated December 30, 1998 made by Pentegra Dental Group,
Inc. in favor of Xxxxx Dental Implant Institute, P.C. in the original
principal amount of $408,402.
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