EXHIBIT 4.2
EIGHTH AMENDMENT AND WAIVER AGREEMENT
EIGHTH AMENDMENT AND WAIVER AGREEMENT, dated as of May 28th, 2004 (this
"Amendment Agreement"), to the Amended and Restated Credit Agreement, dated as
of May 14, 2001, as amended to date (and as the same may be further amended,
supplemented or modified from time to time in accordance with its terms, the
"Credit Agreement"), among Microtek Medical Holdings, Inc. (formerly known as
Isolyser Company, Inc.), a Georgia corporation ("MMH") and Microtek Medical,
Inc., a Delaware corporation ("Microtek", together with MMH, each a "Borrower"
and, jointly and severally, the "Borrowers"), the lenders named therein (the
"Lenders"), the guarantors named therein (the "Guarantors") and JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), as agent (the "Agent") for
the Lenders. Terms used herein and not otherwise defined herein shall have the
meanings attributed thereto in the Credit Agreement.
WHEREAS, the Borrowers have informed the Agent of their desire that a newly
formed subsidiary, Microtek Medical B.V., incorporated under the laws of the
Netherlands ("Microtek BV") which is wholly-owned by a newly formed entity,
Microtek Medical Holding B.V. incorporated under the laws of the Netherlands
("Holdings BV") which is owned 100% by Microtek enter into that certain Asset
Purchase Agreement (the "Purchase Agreement") made the 28th day of May, 2004, by
and between Microtek BV and International Medical Products B.V., Cardinal Health
Netherlands 214 B.V. and Cardinal Health Germany 206 GMBH (collectively,
"Seller"), pursuant to which (i) Microtek BV will acquire certain assets, and
assume certain liabilities, from the Seller (the "Acquired Assets") for cash
which will be advanced to Holdings BV by the Borrowers, (ii) lease or sublease
certain premises in the Netherlands (the "Foreign Leases"), the obligations
under the Purchase Agreement to be guaranteed by Microtek and the obligations
under the Foreign Leases to be guaranteed by MMH and (iii) subsequent thereto,
the ownership of Microtek Medical Europe Limited will be transferred to Holdings
BV; and
WHEREAS, in connection with consummating the Purchase Agreement, the
Borrowers have requested that the Lenders increase the Revolving Credit
Commitment to $23,500,000; and
WHEREAS, Section 6.12 of the Credit Agreement requires that the stock and
assets of any newly formed direct or indirect subsidiary be pledged to the
Agent; and
WHEREAS, Section 7.03 of the Credit Agreement restricts the creation of
Indebtedness, including Guarantees; and
WHEREAS, Section 7.05 of the Credit Agreement prohibits any Borrower or any
subsidiary of any Borrower from, among other things, acquiring all or
substantially all of the capital stock or assets of any other person; and
WHEREAS, Section 7.06 of the Credit Agreement prohibits any Borrower or any
subsidiary of any Borrower from, among other things, owning, purchasing or
acquiring any stock, obligations, assets or securities of, or any interest in,
or making any capital contribution or loan or advance to, any other person; and
WHEREAS, the Borrowers have requested that the Lenders (i) amend the Credit
Agreement to increase the Revolving Credit Commitment and (ii) amend and waive
the provisions of Sections 6.12, 7.03 7.05 and 7.06 of the Credit Agreement to
permit Microtek BV to purchase the Acquired Assets and to consummate certain
related transactions.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT
1.1 The preamble to the Credit Agreement is hereby amended by deleting
the reference to "$17,500,000" and substituting a reference to "$23,500,000;"
and in connection therewith, Schedule 2.01(b) annexed to the Credit Agreement is
hereby amended in its entirety to read as Schedule 2.01(b) annexed to this
Amendment Agreement.
1.2 Section 2.01(b) of the Credit Agreement is hereby amended by
amending the Eligible Inventory component of the Borrowing Base definition to
read in its entirety as follows:
"plus (ii) the lesser of (a) $11,500,000 and (b) up to fifty percent
(50%) of the Net Amount of Eligible Inventory minus such reserves
against inventory in amounts as the Agent may establish and revise
from time to time at the Agent's sole discretion."
1.3 Section 7.03 of the Credit Agreement is hereby amended by adding a
new clause (xvi) to the end thereof that reads as follows:
"(xvi) Guarantee by Microtek of the obligations of Microtek
Medical B.V. under the Asset Purchase Agreement made May 28, 2004
between Microtek Medical B.V. and the sellers named therein and
Guarantee by MMH of the obligations of Microtek Medical B.V. under
leases or subleases of its premises in the Netherlands, provided that
in each case, such obligations are not increased or otherwise
materially modified."
1.4 Section 7.06 of the Credit Agreement is hereby amended by adding a
new subsection (n) to the end thereof that reads as follows:
(n) loans and advances from time to time outstanding and made by
the Borrowers to Microtek Medical Holding B.V. to be utilized for the
working capital needs of Microtek Medical B.V. and in connection with
the purchase by Microtek Medical B.V. of certain assets pursuant to
the Asset Purchase Agreement made May 28, 2004 between Microtek
Medical B.V. and the Sellers named therein, provided that the
aggregate of such loans and advances shall not exceed $14,500,000 at
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one time outstanding and are evidenced by an intercompany note pledged
to the Agent."
2. WAIVER, CONSENT AND RELEASE UNDER LOAN DOCUMENTS
2.1 The Lenders hereby waive the provisions of Sections 7.05 and 7.06
of the Credit Agreement for the purposes of (a) forming Microtek BV and Holdings
BV and permitting Microtek BV to purchase the Acquired Assets in accordance with
the Purchase Agreement and (b) permitting the release of 65% of the stock of
Microtek Medical Europe Limited, provided that such release is solely for the
purpose of transferring 100% of the ownership of Microtek Medical Europe Limited
to Holdings BV and that at the time thereof, the Agent has a valid and perfected
pledge of 65% of the stock of Holdings BV.
2.2 The Lenders hereby waive the provisions of Section 6.12 of the
Credit Agreement solely for the purpose of not requiring a Guarantee from either
Microtek BV or Holdings BV or a pledge of the assets or stock of either except
for a pledge of 65% of the stock of Holdings BV.
3. AMENDMENTS TO SECURITY DOCUMENTS
3.1 The Pledge Agreement is hereby amended by adding the following to
Schedule I thereto:
Stock Issuer Class of Stock Stock Par Value Number of Shares Percentage of
Certificate Outstanding
Number Shares
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
Microtek Holding Ordinary Registry Numbers Eur 100 117 65%
B.V. 1-117
--------------------- ------------------ ------------------ ------------------ ------------------ ------------------
3.2 The Security Agreement is hereby amended by adding the following
sentence to the definition of "Documents:"
"For purposes of this Amended and Restated Security Agreement,
Documents shall specifically include the Intercompany Demand
Promissory Note of Microtek Medical Holding B.V. dated May 28, 2004 to
the order of the Borrowers in the face amount of $14,500,000 and
endorsed to the Agent."
4. CONFIRMATION OF SECURITY DOCUMENTS
Each Loan Party, by its execution and delivery of this Amendment
Agreement, irrevocably and unconditionally ratifies and confirms in favor of the
Agent that it consents to the terms and conditions of the Credit Agreement as it
has been amended by this Amendment Agreement and that notwithstanding this
Amendment Agreement, each Security Document to which such Loan Party is a party
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shall continue in full force and effect in accordance with its terms and is and
shall continue to be applicable to all of the Obligations.
SECTION 5A. CONDITIONS PRECEDENT
This Amendment Agreement shall become effective upon the execution and
delivery of counterparts hereof by the parties listed below and the fulfillment
of the following conditions:
(a) All representations and warranties contained in this Amendment
Agreement or otherwise made in writing to the Agent in connection herewith shall
be true and correct.
(b) No unwaived event has occurred and is continuing which constitutes an
Event of Default under the Credit Agreement or would constitute such an Event of
Default but for the requirement that notice be given or time elapse or both.
(c) The Agent shall have received a true and complete copy of the fully
executed Purchase Agreement and related documents, all of which shall be in form
and substance satisfactory to the Agent.
(d) The Agent shall have received an amendment fee in the amount of
$30,000.
(e) The Agent shall have received a replacement Revolving Credit Note.
(f) The Agent shall have received such other documents as the Lenders or
the Agent or the Agent's counsel shall reasonably deem necessary.
SECTION 5B. CONDITIONS SUBSEQUENT
(a) No later than June 4, 2004, the Agent, for the benefit of the Lenders,
shall have obtained a legal, valid and perfected first (except as permitted
pursuant to Section 7.01 of the Credit Agreement) priority security interest in
65% of the stock of Holdings BV and the intercompany note between Holdings BV
and the Borrowers.
SECTION 6. MISCELLANEOUS
6.1 Each Borrower and each Guarantor reaffirms and restates the
representations and warranties set forth in Article IV of the Credit Agreement
and all such representations and warranties shall be true and correct on the
date hereof with the same force and effect as if made on such date, except as
they may specifically refer to an earlier date. Each Borrower and each Guarantor
represents and warrants (which representations and warranties shall survive the
execution and delivery hereof) to the Agent that:
(a) it has the corporate power and authority to execute, deliver and
carry out the terms and provisions of this Amendment Agreement and the
transactions contemplated hereby and has taken or caused to be taken all
necessary corporate action to authorize the execution, delivery and performance
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of this Amendment Agreement and the transactions contemplated hereby;
(b) no consent of any other person (including, without limitation,
shareholders or creditors of any Borrower or any Guarantor), and no action of,
or filing with any governmental or public body or authority is required to
authorize, or is otherwise required in connection with the execution, delivery
and performance of this Amendment Agreement;
(c) this Amendment Agreement has been duly executed and delivered on
behalf of each Borrower and each Guarantor by a duly authorized officer, and
constitutes a legal, valid and binding obligation of each Borrower and each
Guarantor enforceable in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and the exercise of judicial
discretion in accordance with general principles of equity;
(d) the execution, delivery and performance of this Amendment
Agreement will not violate any law, statute or regulation, or any order or
decree of any court or governmental instrumentality, or conflict with, or result
in the breach of, or constitute a default under any contractual obligation of
any Borrower or any Guarantor; and
(e) as of the date hereof (after giving effect to the consummation of
the transactions contemplated under this Amendment Agreement) there exists no
Default or Event of Default.
By its signature below, each Borrower and each Guarantor agree that it
shall constitute an Event of Default if any representation or warranty made
above should be false or misleading in any material respect.
6.2 Each Borrower and each Guarantor confirms in favor of the Agent and
each Lender that it agrees that it has no defense, offset, claim, counterclaim
or recoupment with respect to any of its obligations or liabilities under the
Credit Agreement or any other Loan Document and that, except for the specific
waiver provided for herein, nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and except as herein
expressly amended, the Credit Agreement and other Loan Documents are each
ratified and confirmed in all respects and shall remain in full force and effect
in accordance with their respective terms.
6.3. Except for the specific waivers provided for in Section 2 of this
Amendment Agreement, nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and the Borrowers and
the Loan Parties hereby agree that the Credit Agreement and other Loan Documents
are each ratified and confirmed in all respects and shall remain in full force
and effect in accordance with their respective terms.
6.4 Upon presentation of its invoice, the Borrowers covenant and agree to
pay in full all legal fees charged, and all costs and expenses incurred, by Xxxx
Xxxxxxx LLP, counsel to the Agent, in connection with the transactions
contemplated under this Agreement and the other Loan Documents and instruments
in connection herewith and therewith.
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6.5 All references to the Credit Agreement and the other Loan Documents in
the Credit Agreement, the Loan Documents and the other documents and instruments
delivered pursuant to or in connection therewith shall mean such agreements as
amended hereby and as each may in the future be amended, restated, supplemented
or modified from time to time.
6.6 This Amendment Agreement may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page by telecopier shall be
effective as delivery of a manually executed counterpart.
6.7 THIS AMENDMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6.8 The parties hereto shall, at any time and from time to time following
the execution of this Amendment Agreement, execute and deliver all such further
instruments and take all such further action as may be reasonably necessary or
appropriate in order to carry out the provisions of this Amendment Agreement.
MICROTEK MEDICAL HOLDINGS, INC.
(f/k/a ISOLYSER COMPANY, INC.)
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
MICROTEK MEDICAL, INC.
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
JPMORGAN CHASE BANK (f/k/a THE CHASE
MANHATTAN BANK), as Agent and as Lender
By: __________________________________________
Name: ________________________________________
Title: _______________________________________
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SCHEDULE 2.01(B)
REVOLVING CREDIT COMMITMENTS
----------------------------- ---------------------------- ------------------------------
Approximate Percentage of
Revolving Credit Total Revolving Credit
Lenders Commitment Commitment
----------------------------- ---------------------------- ------------------------------
JPMorgan Chase Bank $23,500,000 100%
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
----------------------------- ---------------------------- ------------------------------
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