$2,000,000.00 REVOLVING CREDIT LOAN
AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
originally dated as of December 26, 2000
by and between
XXXX BIOMEDICAL, INC.
("Borrower")
and
XXXXXX HEALTHCARE FINANCE, INC.
("Lender")
Amended as of February 9, 2002
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT
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THIS AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT (the "Amendment") is
made as of this 9th day of February, 2002, by and among XXXX BIOMEDICAL, INC., a
California corporation ("Borrower"), and XXXXXX HEALTHCARE FINANCE, INC., a
Delaware corporation ("Lender").
RECITALS
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A. Pursuant to that certain Loan and Security Agreement dated December 26,
2000 by and between Borrower and Lender (as amended hereby and as may be further
amended from time to time, the "Loan Agreement"), the parties have established
certain financing arrangements that allow Borrower to borrow funds from Lender
in accordance with the terms and conditions set forth in the Loan Agreement.
B. The parties now desire to amend the Loan Agreement in accordance with
the terms and conditions set forth below.
C. Capitalized terms used but not defined in this Amendment shall have the
meanings that are set forth in the Loan Agreement.
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. Amendments to Loan Agreement.
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(a) Section 1.17a of the Loan Agreement-Definition of "Foreign Account".
The following definition of "Foreign Account" shall be added as a new Section
1.17a:
"Section 1.17a Foreign Account. "Foreign Account" shall mean an Account
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to be paid by an Account Debtor whose principal place of business and/or
executive office is outside of the United States and which Account
is subject to a Guaranty from theExport-Import Bank of the United States
("Ex-Im Bank) of at least ninety-five percent (95%). Upon receipt of a
Borrowing Base Certificate from Borrower, Lender, together with EX-IM
Bank and the Trade Finance division of GE Capital Corporation, shall
determine, in their collective credit judgment, whether a Foreign
Account shall be deemed to be a Qualified Account, notwithstanding
and regardless of the exclusions set forth in the definition of
Qualified Account."
(b) Section 1.42(h) of the Loan Agreement - Definition of "Qualified
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Account". Section 1.42(h) shall be deleted and restated in its entirety as
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follows:
"(h) except for any Foreign Account, the Account is an Account of an
Account Debtor having its principal place of business or executive
office outside the United States;"
(c) Section 1.46 of the Loan Agreement- Definition of "Termination Fee".
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Section 1.46 shall be deleted and restated in its entirety as follows:
"Section 1.46 Termination Fee."Termination Fee" shall mean a fee payable
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upon termination of the Agreement, as yield maintenance for the loss of
bargain and not as a penalty, equal to either (a) if the date of notice
of a termination is on or before the third (3rd) anniversary of the
Closing Date, three percent (3%) of the Maximum Loan Amount, and (b) if
the date of a notice of termination is after the third (3rd) anniversary
of the Closing Date and on or before the fourth anniversary of the
Closing Date, two percent (2%)of the Maximum Loan Amount."
(d) Section 2.1(a) of the Loan Agreement - Maximum Loan Amount. Section
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2.1(a) shall be deleted and restated in its entirety as follows:
"(a) The maximum aggregate principal amount of credit extended by Lender
to Borrower under this Agreement (the "Loan") that will be outstanding
at any time is Four Million and No/100 Dollars ($4,000,000.00) (the
"Maximum Loan Amount"). Notwithstanding anything in this Loan Agreement
to the contrary, the Maximum Loan Amount will be subject to a sublimit
of Seven Hundred Fifty Thousand and No/100 Dollars ($750,000.00) for
Revolving Credit Loans advanced on Foreign Accounts, and any funding
above such sublimit shall in each instance be subject to the written
approval of Lender's credit committee, exercising its sole credit
judgment."
(e) Section 2.1(d) of the Loan Agreement - Advance Rate. The first
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sentence of Section 2.1(d) shall be deleted and restated in its entirety as
follows:
"Subject to the terms and conditions of this Agreement, advances under
the Loan shall be made against a borrowing base equal to eighty-five
percent (85%) of Qualified Accounts due and owing from any Account
Debtor (the "Borrowing Base")."
(f) Section 2.4(c) of the Loan Agreement - Loan Management Fee.The first
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sentence of Section 2.4(c) shall be deleted and restated in its entirety as
follows:
"For so long as the Loan is available to Borrower, Borrower shall
unconditionally pay to Lender a monthly loan management fee (the "Loan
Management Fee") equal to (i) one-fifth of one percent (0.20%) of the
average amount of the outstanding principal balance of the Revolving
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Credit Loans that are advanced during the preceding month against non-
Foreign Accounts,and (ii) one-tenth of one percent(0.10%) of the average
amount of the outstanding principal balance of the Revolving Credit
Loans that are advanced during the preceding month against Foreign
Accounts."
(g) Section 2.8(a) of the Loan Agreement - Extension of Term. Section
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2.8(a) shall be deleted and restated in its entirety as follows:
"(a) Subject to Lender's right to cease making Revolving Credit Loans to
Borrower upon or after any Event of Default, this Agreement shall be in
effect until February 1, 2005, unless terminated as provided in this
Section 2.8 (the"Term"),and this Agreement shall be renewed for one-year
periods thereafter upon the mutual written agreement of the parties."
(h) Section 6.23 of the Loan Agreement - Net Worth. Section 6.23 shall
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be deleted and restated in its entirety as follows:
"Section 6.23. Net Worth. Borrower will not at any time allow its net
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worth, as computed in accordance with GAAP, to fall below Seven Million
and No/100 Dollars ($7,000,000)."
(i) Section 6.24 of the Loan Agreement - Net Income. The following shall
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be added as a new Section 6.24 to the Agreement:
"Section 6.24. Net Income. Borrower shall achieve Net Income of at least
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One Dollar ($1.00) for the three (3) month period beginning on June 1,
2002 and ending on August 31, 2002. Thereafter, Borrower shall maintain
positive Net Income for each three (3) month period, as calculated on a
rolling basis. For purposes of this Agreement, the term "Net Income"
shall be computed in accordance with GAAP, but which computation shall
be subject to Lender's sole credit judgment. Notwithstanding the
provisions of Section 2.8, if Borrower fails to comply with this Section
6.24 and Lender determines to terminate the Loan solely as a result of
such non-compliance, Borrower shall not be obligated to pay the
Termination Fee to Lender."
(j) Section 6.25 of the Loan Agreement -EX-IM Bank Insurance Policy. The
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following shall be added as a new Section 6.25 to the Agreement:
"Section 6.25. Compliance with EX-IM Bank Insurance Policy. Borrower
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shall comply with all reporting and other requirements set forth in the
policy of insurance issued by EX-IM Bank and shall take all necessary
action to keep such policy in full force and effect."
(k) Section 9.1(b) of the Loan Agreement - Expenses and Fees. The
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following sentence shall be inserted after the first sentence of Section 9.1(b):
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"The fees described in the foregoing sentence shall include
fees incurred by the Trade Finance Division of GE Capital
Corporation to monitor and process information relating to
foreign Accounts, which fees shall include (i) a one-time
start-up fee equal to $3,500, (ii) an annual software
licensing fee of $6,000 per year, (iii) a quarterly actual
line use fee equal to .50% per annum, but of at least $1,000
per quarter, and (iv) any other similar fees of like kind
commensurate with the foregoing rates, subject, however, to
increases that are customary within the industry."
2. Fees and Costs. Borrower shall unconditionally pay to the Lender a
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commitment fee equal to one percent (1%) of the increase in the Maximum Loan
Amount, or Twenty Thousand Dollars ($20,000). In addition, Borrower shall be
responsible for the payment of all reasonable fees of Lender's in-house counsel
incurred in connection with the preparation of this Amendment and any related
documents. Borrower hereby authorizes Lender to deduct all of such fees set
forth in this Section from the proceeds of the next Revolving Credit Loan.
3. Confirmation of Representations and Warranties. Borrower hereby confirms
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that all of the representations and warranties set forth in Article IV of the
Loan Agreement are true and correct as of the date hereof, and specifically
represents and warrants to Lender that it has good and marketable title to all
of its respective Collateral, free and clear of any lien or security interest in
favor of any other person or entity.
4. Updated Schedules. As a condition precedent to Lender's agreement to
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enter into this Amendment, and in order for this Amendment to be effective,
Borrower shall revise, update and deliver to Lender all Schedules to the Loan
Agreement to update all information as necessary to make the Schedules
previously delivered correct. Borrower hereby represents and warrants that the
information set forth on the attached Schedules is true and correct as of the
date of this Amendment. The attached Schedules are hereby incorporated into the
Loan Agreement as if originally set forth therein.
5. Reference to the Effect on the Loan Agreement.
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(a) Upon the effectiveness of this Amendment, each 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) Except as specifically amended above, the Loan Agreement, and all
other Loan Documents, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this 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, or any other documents, instruments and agreements executed
or delivered in connection with the Loan Agreement.
6. Governing Law. This Amendment shall be governed by and construed in
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accordance with the laws of the State of Maryland.
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7. 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.
8. Counterparts. This Amendment may be executed in counterparts, and both
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counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as of the date first written above.
LENDER:
XXXXXX HEALTHCARE FINANCE, INC.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Vice President
BORROWER:
XXXX BIOMEDICAL, INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
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