EXHIBIT 10.2
AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT AND CONSENT AND WAIVER
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THIS AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT AND CONSENT AND WAIVER (the
"Amendment") is made as of this 29th day of March, 2004, by and between/among
"Borrower" (as defined below) and "Lender" (as defined below).
RECITALS
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A. As used herein, the term "Borrower" shall mean the following
collectively: New York Health Care, Inc., a New York corporation ("New York
Health Care"); and NYHC Newco Paxxon, Inc., a New York corporation.
B. As used herein, the term "Lender" shall mean GE HFS Holdings, Inc., a
Delaware corporation, f/k/a Xxxxxx Healthcare Finance, Inc.
C. One or more of the entities designated above as "Borrower" are the
existing borrowers under a certain Loan and Security Agreement dated as of
November 28, 2000, by and between such existing borrowers and Lender (as the
same may have been amended, restated or modified from time to time, including by
that certain Amendment No. 1 to Loan and Security Agreement and Consent and
Waiver dated as of November 26, 2002 by and among Borrower and Lender (the
"Amendment No. 1"), and as the same may be amended by this Amendment, the "Loan
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Agreement"). All capitalized terms not otherwise defined herein shall have the
meanings given them in the Loan Agreement.
D. Borrower and Lender desire hereby to amend the Loan Agreement as
hereinafter provided.
E. In addition, Borrower has informed Lender that New York Health Care
desires to make cash distributions to, investments in and/or loans to The
BioBalance Corporation ("BioBalance"), a wholly owned subsidiary of New York
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Health Care (the "Proposed Transaction").
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F. Sections 7.7 and 7.9 of the Loan Agreement prohibit Borrower from making
loans or advances to, or investments in, any Person (except as otherwise
permitted thereby) and Section 8.iii.C(iv) of Amendment No. 1 prohibits Borrower
from making any cash distributions to, investments in or loans to BioBalance.
In connection with the Proposed Transaction, Borrower has requested that Lender
(a) agree to permit New York Health Care to consummate the Proposed Transaction
and (b) waive the prohibitions set forth in Sections 7.7 and 7.9 of the Loan
Agreement and Section 8.iii.C(iv) of the Amendment No. 1 in connection with the
Proposed Transaction.
NOW, THEREFORE, in consideration of the premises set forth above, the terms and
conditions contained in this Amendment, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Lender and Borrower have agreed to the following amendments to the Loan
Agreement:
1. Recitals. The foregoing recitals, including all terms defined therein,
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are incorporated herein and made a part hereof.
2. Loans. Section 7.7 of the Loan Agreement is hereby deleted in its
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entirety, and in its place there is hereby inserted the following:
"SECTION 7.7. LOANS. Except for loans or advances to any Person that
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do not exceed (a) $10,000.00 individually or (b) $100,000.00 in the
aggregate, Borrower shall not make loans or advances to any Person, other
than (x) trade credit extended in the ordinary course of its business, (y)
advances for business travel and similar temporary advances made in the
ordinary course of business to officers, stockholders, directors and
employees and (z) loans or advances permitted by that certain Amendment No.
2 to Loan and Security Agreement and Consent and Waiver dated as of
November 26, 2002 by and among Borrower and Lender ("Amendment No. 2")."
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3. Subsidiaries. Section 7.9 of the Loan Agreement is hereby deleted in its
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entirety, and in its place there is hereby inserted the following:
"SECTION 7.9. SUBSIDIARIES. Borrower shall not form any subsidiary,
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or make any investment in or any loan in the nature of an investment to,
any other Person, other than any such investment or loan permitted by
Amendment No. 2."
4. Consent and Waiver. Lender hereby (a) agrees to permit New York Health
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Care to consummate the Proposed Transaction and (b) waives the prohibitions set
forth in Sections 7.7 and 7.9 of the Loan Agreement and Section 8.iii.C(iv) of
Amendment No.1 in connection with the Proposed Transaction, in each case on the
terms and subject to the conditions set forth below:
i. the aggregate amount of proceeds that New York Health Care shall be
permitted to receive from the issuance or sale of its capital stock to
fund the Proposed Transaction shall not exceed Fifteen Million Dollars
($15,000,000);
ii. Borrower shall not request, and Lender shall not be required to make,
any advances of Loans to the Borrower under the Loan Agreement until
all loans to BioBalance have been repaid in full in cash and Lender
has received satisfactory evidence of such repayment from Borrower;
iii. as a result of the consummation of the Proposed Transaction and after
giving effect thereto, no Event of Default shall have occurred or be
continuing; and
iv. without limiting any other rights and remedies of Lender under the
Loan Agreement or any other Loan Document, any advances of Loans to
the Borrower under the Loan Agreement (after the condition set forth
in clause (ii) above has been satisfied) shall be subject to Lender's
continuing right to withhold from the Borrowing Base reserves, and to
increase and decrease such reserves from time to time.
5. Miscellaneous.
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(a) References. Upon the effectiveness of this Amendment, each
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reference in the Loan Agreement to "this Agreement," "hereunder," "hereof,"
"herein" or words of similar import shall mean and be a reference to the Loan
Agreement as amended by this Amendment.
(b) Affirmation. Except as specifically amended above, the Loan
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Agreement, and all other Loan Documents (and all covenants, terms, conditions
and agreements therein), shall remain in full force and effect, and are hereby
ratified and confirmed in all respects by Borrower. Borrower covenants and
agrees to comply with all of the terms, covenants and conditions of the Loan
Agreement, as amended hereby, notwithstanding any prior course of conduct,
waivers, releases or other actions or inactions on Lender's part which might
otherwise constitute or be construed as a waiver of or amendment to such terms,
covenants and conditions.
(c) No Waiver. The execution, delivery and effectiveness of this
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Amendment shall not, except as expressly provided in this Amendment, operate as
a waiver of any right, power or remedy of Lender, nor constitute a waiver of any
provision of the Loan Agreement, the Loan Documents or any other documents,
instruments and agreements executed or delivered in connection with any of the
foregoing. Nothing herein is intended or shall be construed as a waiver of any
existing defaults or Events of Default under the Loan Agreement or other Loan
Documents or any of Lender's rights and remedies in respect of such defaults or
Events of Default.
(d) No Novation. This Amendment (together with any other document
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executed in connection herewith) is not intended to be, nor shall it be
construed as, a novation of the Loan Agreement.
(e) Governing Law. This Amendment shall be governed by and construed
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in accordance with the laws of the State of Maryland, without regard to any
otherwise applicable conflicts of law principles.
(f) Headings. Section headings in this Amendment are included for
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convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
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(g) Counterparts. This Amendment may be executed in counterparts, and
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both counterparts taken together shall be deemed to constitute one and the same
instrument.
(h) Release. Borrower hereby fully, finally, and absolutely and
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forever releases and discharges Lender and its present and former directors,
shareholders, officers, employees, agents, representatives, successors and
assigns, and their separate and respective heirs, personal representatives,
successors and assigns, from any and all actions, causes of action, claims,
debts, damages, demands, liabilities, obligations, and suits, of whatever kind
or nature, in law or equity of Borrower, whether now known or unknown to
Borrower, and whether contingent or matured (collectively, "Claims"): (i) in
respect of the Loan Agreement, the Loan Documents, or the actions or omissions
of Lender in respect of the Loan Agreement and the Loan Documents; and (ii)
arising from events occurring prior to the date of this Amendment. The
foregoing release and discharge shall, automatically and without further action
of the Borrower, be deemed renewed as of the date of each advance of Loan
proceeds with respect to all Claims in respect of the Loan Agreement, the Loan
Documents, or the actions or omissions of Lender in respect of the Loan
Agreement and the Loan Documents and arising from events occurring prior to the
date of such advance.
(i) Indemnity. Borrower hereby indemnifies and covenants and agrees to
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defend and hold Lender and its Affiliates harmless from and against all losses,
costs and expenses, including reasonable attorneys' fees (including both
in-house and outside counsel), incurred by reason of any action, suit,
proceeding, hearing, motion, subpoena or application before any court or
administrative body in which Lender or its Affiliates may be or become involved,
whether as parties, witnesses or otherwise, by reason of this Amendment, the
Loan Agreement or any of the other Loan Documents or the transactions
contemplated thereby.
IN WITNESS WHEREOF, intending to be legally bound, and intending that this
instrument constitute an instrument executed under seal, the parties have caused
this Amendment to be executed as of the date first written above.
LENDER:
GE HFS HOLDINGS, INC.
F/K/A XXXXXX HEALTHCARE FINANCE, INC.
a Delaware corporation
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Whiteley
Title: Vice President
BORROWER:
NEW YORK HEALTH CARE, INC.
a New York corporation
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Title: Chief Operating Officer
NYHC NEWCO PAXXON, INC.
a New York corporation
By: /s/ Xxxxx Xxxxxxxxx
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Name: Xxxxx Xxxxxxxxx
Title: Chief Operating Officer
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