EXHIBIT 4.2
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
This FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT (the
"AMENDMENT"), dated effective as of September 30, 1997, is made by and between
▇▇▇▇▇▇ HEALTHCARE, INC. ("BORROWER"), a Texas corporation formerly known as
Lasermedics, Inc., and COMERICA BANK-TEXAS ("LENDER"), a Texas banking
association.
RECITALS:
A. Borrower and Lender entered into that certain Amended and Restated Loan
Agreement dated as of June 30, 1997 (as the same may have heretofore been
amended, modified, restated or supplemented from time to time, the "LOAN
AGREEMENT").
B. Borrower and Lender now desire to (1) increase the Commitment Amount to
$8,000,000, (2) evidence the execution and delivery of new promissory notes in
replacement of the Revolving Note and Term Note A, (3) modify certain financial
covenants, (4) modify, delete, and add certain definitions, and (5) make certain
other changes to the Loan Agreement, all of which is more fully described
hereinbelow, which such provisions contained below shall control over any
inconsistencies with the foregoing recitals.
AGREEMENTS:
In consideration of the premises and the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. DEFINITION OF BORROWING BASE AMENDED. The definition of "Borrowing
Base" contained in Section 1.1 of the Loan Agreement is hereby amended in its
entirety to be and read as follows:
"'BORROWING BASE' shall mean, on any day the sum of:
(a) eighty percent (80%) of the aggregate outstanding principal
balance of the Obligors' Eligible Accounts (other than Home Care
Receivables) PLUS
(b) sixty percent (60%) of the aggregate outstanding principal
balance of the Obligors' Home Care Receivables; PROVIDED, that in no
event may the Medicare Receivables component of Home Care
Receivables exceed $500,000, PLUS
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(c) (i) prior to April 1, 1998, fifty percent (50%) of the book
value of the Obligors' Eligible Inventory (exclusive of Tens Units),
and (ii) on April 1, 1997 and at all times thereafter, forty percent
(40%) of the book value of the Obligors' Eligible Inventory
(exclusive of Tens Units) PLUS
(d) the lesser of (i) twenty-five percent (25%) of the Tens Units
which qualify as Eligible Inventory, and (ii) $500,000 PLUS
(e) the Permitted Overage, if any, as of the day of any
determination of the Borrowing Base.
Notwithstanding the foregoing, in no event may the aggregate of the
Obligors' Eligible Inventory component of the Borrowing Base exceed (y) at
any time prior to January 1, 1998, seventy-five percent (75%) of the
Borrowing Base, and (z) on January 1, 1998 and at all times thereafter,
fifty (50%) of the Borrowing Base."
2. PERMITTED OVERAGE DEFINITION ADDED. Section 1.1 of the Loan Agreement
is hereby amended by adding thereto in the appropriate alphabetical order, a new
definition of "Permitted Overage," which shall be and read as follows:
"'PERMITTED OVERAGE' shall mean (a) from September 30, 1997 through
and including December 31, 1997, $900,000, and (b) on January 1, 1998
through and including March 31, 1998, $400,000. After March 31, 1998, the
"Permitted Overage" shall be $-0-."
3. REVOLVING NOTE DEFINITION AMENDED. The definition of "Revolving Note"
is hereby amended in its entirety to be and read as follows:
"'REVOLVING NOTE' shall mean a promissory note, in the original
principal sum of $8,000,000, dated as of September 30, 1997, and otherwise
in the form of EXHIBIT B to this Agreement, and any and all renewals,
extensions, modifications, rearrangements and/or replacements thereof."
4. REVOLVING NOTE MATURITY DATE AMENDED. The definition of Revolving Note
Maturity Date contained in Section 1.1 of the Loan Agreement is hereby amended
in its entirety to be and read as follows:
"'REVOLVING NOTE MATURITY DATE' shall mean February 1, 1999, or such
earlier date as may be designated by the Bank pursuant to SECTION 8.2
hereof."
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5. TERM NOTE A DEFINITION AMENDED. The definition of "Term Note A"
contained in Section 1.1 of the Loan Agreement is hereby amended in its entirety
to be and read as follows:
"'TERM NOTE A' shall mean a promissory note, in the original
principal sum of $1,430,000, dated as of September 30, 1997, and otherwise
in the form of EXHIBIT C to this Agreement, and any and all renewals,
extensions, modifications, rearrangements and/or replacements thereof."
6. TERM NOTE A MATURITY DATE AMENDED. The definition of Term Note A
Maturity Date contained in Section 1.1 of the Loan Agreement is hereby amended
in its entirety to be and read as follows:
"'TERM NOTE A MATURITY DATE' shall mean September 30, 2002, or such
earlier date as may be designated by the Bank pursuant to SECTION 8.2
hereof."
7. TERM NOTE A PAYMENTS AMENDED. The second sentence of Section 2.4.2 of
the Loan Agreement is hereby amended in its entirety to be and read as follows:
"Term Note A shall be payable in monthly installments of $23,833
each, one each due and payable on the first day of each succeeding
calendar month after its date until Term Note A (including all accrued
interest thereon) has been fully paid and satisfied; PROVIDED that on the
Term Note A Maturity Date, all principal of Term Note A and accrued and
unpaid interest thereon shall be finally due and payable."
8. ELIGIBLE ACCOUNT REQUIREMENTS AMENDED. Section 5.17.1(h)(iv) of the
Loan Agreement is hereby deleted in its entirety and the succeeding clauses in
subsection (h) are renumbered accordingly.
9. EFFECTIVE TANGIBLE NET WORTH COVENANT AMENDED. Section 6.5 of the Loan
Agreement is hereby amended in its entirety to be and read as follows:
"6.5. MAINTAIN EFFECTIVE TANGIBLE NET WORTH. Maintain on a
consolidated statement basis, an Effective Tangible Net Worth at all times
of not less than THE SUM OF (a) $6,950,000 PLUS (b) (beginning with the
calendar month ending April, 1997) the Tangible Net Worth Step-Up."
10. LEVERAGE RATIO AMENDED. Section 6.6 of the Loan Agreement is hereby
amended in its entirety to be and read as follows:
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"6.6. MAINTAIN LEVERAGE RATIO. Have on a consolidated statement
basis, the ratio of (a) Debt less the Debt evidenced by the Subordinated
Debt Documents to (b) Effective Tangible Net Worth of not more than 2.00
to 1.00 at all times."
11. CURRENT RATIO COVENANT AMENDED. The Current Ratio Covenant in Section
6.8 of the Loan Agreement is hereby amended in its entirety to be and read as
follows:
"6.8. CURRENT RATIO. Maintain at all times on a consolidated
statement basis the ratio of (a) Current Assets to (b) Current Liabilities
(inclusive of outstanding Revolving Loans), of not less than 1.25 to 1.00
at all times."
12. WAIVER OF CERTAIN DEFAULTS. The Lender hereby waives the occurrence of
any Default or Event of Default which has occurred through the effective date
hereof (but not thereafter) and of which the Lender has received written notice
from the Borrower, under any or all of the provisions of Sections 6.5 through
6.8 of the Loan Agreement.
13. NEW EXHIBITS ATTACHED. Exhibit B to the Loan Agreement (which is the
form of Revolving Note) is hereby deleted in its entirety and there is hereby
substituted therefor a new Exhibit B, which shall be in the form of EXHIBIT A
attached hereto and incorporated herein by reference. Exhibit C to the Loan
Agreement (which is the form of Term Note A) is hereby deleted in its entirety
and there is hereby substituted therefor a new Exhibit C, which shall be in the
form of EXHIBIT B attached hereto and incorporated herein by reference. Exhibit
G to the Loan Agreement (which is the Compliance Certificate) is hereby deleted
in its entirety and there is hereby substituted therefor a new Exhibit G, which
shall be in the form of EXHIBIT F attached hereto and incorporated herein by
reference.
14. CONDITIONS. No part of this Amendment shall become effective until the
Borrower shall have delivered (or shall have caused to be delivered) to Bank
(unless otherwise waived or deferred by Bank) each of the following, in Proper
Form:
(1) certificates dated as of the date hereof of the Secretary or any
Assistant Secretary of Borrower and each Guarantor authorizing the
execution, delivery and performance of this Amendment, and such
other related documents and information as Lender may request;
(2) a Notice of Entire Agreement executed by Borrower and Lender as of
the date hereof;
(3) Lender's facility fee in the amount of $25,000;
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(4) evidence of the payment of any and all legal fees and expenses
incurred to date by Lender in connection with this Amendment
(including, without limitation, the negotiation and preparation of
this Amendment and the related Loan Documents).
(5) the replacement Revolving Note in the form attached hereto as
EXHIBIT A, duly executed by Borrower;
(6) the replacement Term Note A in the form attached hereto as EXHIBIT
B, duly executed by Borrower;
(7) a Second Supplemental Deed of Trust in the form attached hereto as
EXHIBIT C attached hereto and incorporated herein by reference for
all purposes, duly executed by Borrower;
(8) a Trademark Security Agreement covering the trademarks being
acquired from Cybex International, Inc. pursuant to the terms and
conditions of the Asset Purchase Agreement dated as of , 1997,
between Borrower and Cybex International, Inc.;
(9) a First Amendment to Subordination Agreement dated as of , 1997, by
and among the Borrower, Maxxim and Lender, in the form attached
hereto as EXHIBIT D attached hereto and incorporated herein by
reference for all purposes;
(10) Financing Statements executed by Borrower for filing in the offices
of the appropriate Governmental Authorities in the States of New
York and Minnesota;
(11) a new Borrowing Base Certificate duly executed by Borrower and
Guarantors;
(12) A landlord's consent executed by Cybex International, Inc. in favor
of Lender, covering the New York and Minnesota locations where any
assets of Borrower or any Guarantor are located;
(13) a legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel for the
Obligors, in Proper Form;
(14) certificates of existence, good standing and qualification to do
business with respect to the Borrower and each Guarantor in each
jurisdiction where the applicable Obligor does business;
(15) UCC record and copy searches for each of Borrower and Guarantors,
disclosing no notice of any liens or encumbrances filed against any
of the Collateral in any relevant
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jurisdiction other than as relate to Permitted Liens (but exclusive
of the Subordinated Liens);
(16) searches of the records of the United States Patent & Trademark
Office reflecting title to the patents and trademarks covered by
said Trademark Security Agreement is in the Borrower (or, where an
express assignment of such patents and trademarks pursuant to the
Asset Purchase Agreement, in Cybex International, Inc.) and
disclosing no notice of any liens or encumbrances filed against any
of such Collateral in any relevant jurisdiction other than said
Trademark Security Agreement and other than as relate to Permitted
Liens.
(17) evidence of hazard insurance policies naming the Bank as
"loss/payee", and relating to the assets and properties of the
Borrower (including, but not limited to, the new Collateral being
acquired from Cybex International, Inc.), in form and amounts and
with companies satisfactory to Bank;
(18) a fully executed copy of the Purchase Agreement, together with all
schedules, annexes and other attachments contemplated therein and
together with the financial statements generated by Cybex
International, Inc. and delivered to Borrower in connection with the
pending asset acquisition, and, further, together with all financial
statements required by Bank relating to said acquisition.
(19) a Certificate in the form attached hereto as EXHIBIT E and
incorporated herein by reference for all purposes, signed by an
authorized officer of Borrower and of Cybex International, Inc.,
certifying that the transactions contemplated in said Asset Purchase
Agreement have been consummated accompanied by a copy of the duly
executed and delivered ▇▇▇▇ of sale and other conveyance documents
contemplated in said Purchase Agreement.
(20) All actions, proceedings, instruments and documents required to
carry out the transactions contemplated by this Amendment or
incidental thereto and all other related legal matters shall have
been satisfactory to and approved by Liddell, Sapp, Zivley, Hill &
▇▇▇▇▇▇, L.L.P., legal counsel for Bank.
(21) copies of consolidated (if applicable) annual audited financial
statements for the Borrower and for Maxxim for their respective most
recently ended fiscal year.
15. CERTAIN DEFINITIONS AND REFERENCES. Terms used but not defined herein,
but which are defined in the Loan Agreement or in the other Loan Documents,
shall have the meanings herein ascribed to them therein. The term "Agreement" as
used in the Loan Agreement and the term "Loan Agreement," as used in the other
Loan Documents or any other instrument, document or writing
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furnished to Lender by Borrower shall mean the Loan Agreement as hereby amended.
The term "Revolving Note" as used in the Loan Agreement and the other Loan
Documents or any other instrument, document or writing furnished to Lender by
Borrower shall mean the Revolving Note as substituted for pursuant to this
Amendment. The term "Term Note A" as used in the Loan Agreement and the other
Loan Documents or any other instrument, document or writing furnished to Lender
by Borrower shall mean Term Note A as substituted for pursuant to this
Amendment.
16. EXPENSES; INDEMNIFICATION. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW, BORROWER WILL PAY ALL COSTS AND EXPENSES AND REIMBURSE LENDER FOR ANY AND
ALL EXPENDITURES OF EVERY CHARACTER INCURRED OR EXPENDED FROM TIME TO TIME,
REGARDLESS OF WHETHER A DEFAULT HAS OCCURRED, IN CONNECTION WITH THE
PREPARATION, NEGOTIATION, DOCUMENTATION, RECORDING, CLOSING, RENEWAL, REVISION,
MODIFICATION, INCREASE, REVIEW OR RESTRUCTURING OF THIS AMENDMENT.
17. NO USURY INTENDED; SPREADING. Notwithstanding any provision to the
contrary contained in this Amendment, the Notes or any of the other Loan
Documents, it is expressly provided that in no case or event shall the aggregate
of (i) all interest on the unpaid balance of the Notes, accrued or paid from the
date hereof and (ii) the aggregate of any other amounts accrued or paid pursuant
to the Notes or any of the other Loan Documents, which under applicable laws are
or may be deemed to constitute interest upon the indebtedness evidenced by the
Notes ever exceed the Maximum Legal Rate. In this connection, the parties hereto
expressly stipulate and agree that it is their common and overriding intent to
contract in strict compliance with the applicable usury laws. In furtherance
thereof, none of the terms of the Notes or any of the other Loan Documents shall
ever be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the Maximum
Legal Rate. No Borrower nor any other parties now or hereafter becoming liable
for payment of the indebtedness evidenced by the Notes shall ever be liable for
interest in excess of the Maximum Legal Rate. If, for any reason whatever, the
interest paid or received on the Notes during its full term produces a rate
which exceeds the Maximum Legal Rate, the holder of the Notes shall credit
against the principal of the Notes (or, if such indebtedness shall have been
paid in full, shall refund to the payor of such interest) such portion of said
interest as shall be necessary to cause the interest paid on the Notes to
produce a rate equal to the Maximum Legal Rate. All sums paid or agreed to be
paid to the holder of the Notes for the use, forbearance or detention of the
indebtedness evidenced thereby shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread in equal parts throughout the full
term of the Notes, so that the interest rate is uniform throughout the full term
of the Notes. The provisions of this paragraph shall control all agreements,
whether now or hereafter existing and whether written or oral, between Borrower
and Lender.
18. BUSINESS LOANS. Borrower warrants and represents to Lender and all
other holders of the Notes that all loans evidenced by the Notes are and will be
for business, commercial, investment or other similar purpose and not primarily
for personal, family, household or agricultural use, as such terms are used in
Chapter One.
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19. WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY IRREVOCABLY WAIVE THE
RIGHT TO TRAIL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS AT ANY
TIME IN WHICH THE BORROWER AND LENDER ARE PARTIES ARISING OUT OF THIS AMENDMENT,
THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
20. LIEN CONTINUATION; MISCELLANEOUS. Borrower and Lender hereby
acknowledge, confirm and agree that the Security Documents secure and shall
continue to secure the obligations of Borrower and any other party to any of the
Loan Documents (other than Lender) under the Loan Documents, including, without
limitation, this Amendment, the Notes, the Letter of Credit Liabilities and the
Security Documents are hereby deemed modified to the extent necessary to
evidence the foregoing acknowledgments, agreements and confirmations. Nothing
contained in this Amendment or the Notes or any other document, instrument or
other writing executed in connection with this Amendment shall be construed as a
release or impairment of any of the liens, assignments and security interests
created or granted pursuant to the Security Documents and such liens,
assignments and security interests are hereby ratified and confirmed. The Liens
are not waived. To the extent of any conflict between the Loan Agreement or any
of the other Loan Documents (or any earlier modification of any of them) and
this Amendment, this Amendment shall control. Except as hereby expressly
modified, all terms of the Loan Agreement and the other Loan Documents (as any
of them may have been previously modified by any written agreement) remain in
full force and effect. This Amendment (a) shall bind and benefit Borrower and,
except as herein expressly limited, Lender, and their respective receivers,
trustees, successors and assigns (PROVIDED, that Borrower may not assign its
rights hereunder without the prior written consent of Lender); (b) may be
modified or amended only by a writing signed by each party; (c) SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF
TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT; (d) may be
executed in several counterparts, and by the parties hereto in separate
counterparts, and each counterpart, when executed and delivered, shall
constitute an original agreement enforceable against all who signed it without
production of or accounting for any other counterpart, and all separate
counterparts shall constitute the same agreement and (e) embodies the entire
agreement and understanding between the parties with respect to modifications of
instruments provided for herein and supersedes all prior conflicting or
inconsistent agreements, consents and understandings relating to such subject
matter. Borrower acknowledges and agrees that there are no oral agreements among
the parties with respect to the transactions contemplated by the Loan Documents
which have not been incorporated in this Amendment or in the Loan Documents. If
any provision of this Amendment should be determined by any court of competent
jurisdiction to be illegal, invalid or unenforceable under present or future
laws, the legality, validity and enforceability of the remaining provisions of
this Amendment shall not be affected thereby. Each waiver in this Amendment is
subject to the overriding and controlling rule that it shall be effective only
if and to the extent that (a) it is not prohibited by applicable law and (b)
applicable law neither provides for nor allows any material sanctions to be
imposed against Lender for having bargained for and obtained it. Wherever
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the term "including" or a similar term is used in this Amendment, it shall be
read as if it were "including by way of example only and without in any way
limiting the generality of the clause or concept referred to." Any exhibits,
appendices and annexes described in this Amendment as being attached to it are
hereby incorporated into it. The headings in this Amendment shall be accorded no
significance in interpreting it. BORROWER HEREBY RELEASES, DISCHARGES AND
ACQUITS FOREVER LENDER AND ITS OFFICERS, DIRECTORS, TRUSTEES, AGENTS, EMPLOYEES
AND COUNSEL (IN EACH CASE, PAST, PRESENT AND FUTURE) FROM ANY AND ALL CLAIMS
EXISTING AS OF THE DATE HEREOF (OR THE DATE OF ACTUAL EXECUTION HEREOF BY THE
APPLICABLE PERSON OR ENTITY, IF LATER). AS USED HEREIN, THE TERM "CLAIM" SHALL
MEAN ANY AND ALL LIABILITIES, CLAIMS, DEFENSES, DEMANDS, ACTIONS, CAUSES OF
ACTION, JUDGMENTS, DEFICIENCIES, INTEREST, LIENS, COSTS OR EXPENSES (INCLUDING
BUT NOT LIMITED TO COURT COSTS, PENALTIES, ATTORNEYS' FEES AND DISBURSEMENTS,
AND AMOUNTS PAID IN SETTLEMENT) OF ANY KIND AND CHARACTER WHATSOEVER, INCLUDING
BUT NOT LIMITED TO CLAIMS FOR USURY, BREACH OF CONTRACT, BREACH OF COMMITMENT,
NEGLIGENT MISREPRESENTATION OR FAILURE TO ACT IN GOOD FAITH, IN EACH CASE
WHETHER NOW KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED
OR PRIMARY OR CONTINGENT, AND WHETHER ARISING OUT OF WRITTEN DOCUMENTS,
UNWRITTEN UNDERTAKINGS, COURSE OF CONDUCT, TORT, VIOLATIONS OF LAWS OR
REGULATIONS OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS AND DEFENSES BASED UPON OR
RELATED TO SECTIONS 51.003, 51.004 AND 51.005 OF THE TEXAS PROPERTY CODE, TO THE
EXTENT THE SAME PERTAIN OR MAY PERTAIN TO ANY ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS.
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NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SS.26.02
THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES
BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS 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 BETWEEN THE PARTIES.
EXECUTED effective as of the date first set forth above.
▇▇▇▇▇▇ HEALTHCARE, INC., a Texas corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: PRESIDENT
COMERICA BANK-TEXAS, a Texas banking
association
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: VICE PRESIDENT
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