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EXHIBIT 4.3
MODIFICATION AGREEMENT
THIS MODIFICATION AGREEMENT ("MODIFICATION") is made as of August 6, 1999 by
and between PHOENIX MEDICAL TECHNOLOGY, INC., a Delaware corporation
("BORROWER") and LASALLE BUSINESS CREDIT, INC., a Delaware corporation
("LASALLE").
RECITALS
Pursuant to the terms and provisions of a Loan And Security Agreement dated
June 21, 1999 by and between the BORROWER and LASALLE ("LOAN AGREEMENT"),
LASALLE is providing to the BORROWER certain credit accommodations
(collectively, "LOANS"), including, but not limited to, a revolving line of
credit in the maximum principal amount of Three Million Eight Hundred Thousand
Dollars ($3,800,000.00) ("REVOLVER").
The BORROWER has requested that LASALLE modify the terms of the LOAN AGREEMENT
to provide that under the REVOLVER the BORROWER shall have the availability to
obtain the issuance of letters of credit for the account of the BORROWER.
LASALLE is willing to consent to the request of the BORROWER subject to, and
pursuant to the terms and provisions of, this MODIFICATION.
NOW, THEREFORE, in consideration of the premises, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
Section 1. Recitals. The parties acknowledge the accuracy of
the above Recitals and hereby incorporate the Recitals into this MODIFICATION.
Section 2. Amendment To Loan Agreement. The LOAN AGREEMENT is
hereby amended as follows:
a. Paragraph 1.(a). Paragraph 1.(a) of the LOAN AGREEMENT is
hereby amended by inserting the following new definitions:
"LETTERS OF CREDIT" shall mean those documentary or standby
letters of credit issued for Borrower's account in accordance with the
terms of paragraph 2.A hereof.
"LETTER OF CREDIT OBLIGATIONS" shall mean, as of any date of
determination, the sum of: (i) the aggregate undrawn face amount of
all Letters of Credit; and (ii) the aggregate unreimbursed amount of
all drawn Letters of Credit not already converted to a Loan hereunder.
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b. Paragraph 2. Paragraph 2 of the LOAN AGREEMENT is hereby
amended by deleting its present language in its entirety and substituting in
lieu thereof:
2. REVOLVING LOANS. Subject to the terms and conditions
of this Agreement and the Other Agreements, during the Original Term and any
Renewal Term, absent the existence of an Event of Default:
(a) LaSalle shall make such revolving loans and
advances (the "Revolving Loans") to Borrower as Borrower shall from time to
time request, in accordance with the terms of paragraph 2(b) hereof. The
aggregate unpaid principal amount of all Revolving Loans outstanding at any one
time made to Borrower shall not exceed the lesser of: (i) the Borrowing Base
minus one hundred percent (100%) of the Letter of Credit Obligations for
standby Letters of Credit and minus forty percent (40%) of the Letter of Credit
Obligations for documentary Letters of Credit; or (ii) the Revolving Loan
Commitment minus the outstanding Letter of Credit Obligations. All Revolving
Loans shall be repaid in full upon the earlier to occur of (A) the end of the
Original Term or any Renewal Term, if either LaSalle or Borrower elects to
terminate this Agreement as of the end of any such term and (B) the
acceleration of the Liabilities pursuant to paragraph 17 of this Agreement. If
at any time the outstanding principal balance of the Revolving Loans made to
Borrower exceeds: (1) the Borrowing Base minus one hundred percent (100%) of
the Letter of Credit Obligations for standby Letters of Credit and minus forty
percent (40%) of the Letter of Credit Obligations for documentary Letters of
Credit; or (2) the Revolving Loan Commitment minus the outstanding Letter of
Credit Obligations, Borrower shall immediately, and upon the request of
LaSalle, pay to LaSalle such amount as may be necessary to eliminate such
excess, and LaSalle shall apply such payment against the outstanding principal
balance of the Revolving Loans. In addition, if at any time the sum of (A) the
outstanding principal balance of the Loans and (B) the outstanding Letter of
Credit Obligations exceeds the Total Credit Facility, Borrower shall
immediately upon the request of LaSalle pay to LaSalle such amount as may be
necessary to eliminate such excess, and LaSalle shall apply such payment
against the outstanding principal balance of the Loans in such order as LaSalle
shall determine in its sole discretion. Borrower hereby authorizes LaSalle to
charge any of Borrower's accounts to make any payments of principal or interest
required by this Agreement. All Revolving Loans shall, in LaSalle's sole
discretion, be evidenced by one or more promissory notes in form and substance
satisfactory to LaSalle. However, if such Revolving Loans are not so evidenced,
such Revolving Loans may be evidenced solely by entries upon the books and
records maintained by LaSalle.
(b) LaSalle shall make Revolving Loans to
Borrower up to the lesser of the following amounts:
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(i) an amount equal to (1) the sum
(such sum being herein referred to as the "Borrowing Base") of: (A) up
to eighty-five percent (85%) of the face amount of Eligible Accounts
plus, (B) the lesser of (x) up to sixty percent (60%) of the value of
Eligible Inventory, calculated on the basis of the lower of cost or
market value on a first-in, first-out basis, and (y) One Million Five
Hundred Thousand Dollars ($1,500,000.00), in each case, less such
reserves as LaSalle elects to establish from time to time in the
exercise of its reasonable discretion (to establish a reserve, LaSalle
shall provide written notice to Borrower of the amount of, and reason
for, such reserve) including, without limitation, a Dilution reserve
if Dilution exceeds five percent (5%); minus (2) the sum of one
hundred percent (100%) of Letter of Credit Obligations for standby
Letters of Credit plus forty percent (40%) of Letter of Credit
Obligations for documentary Letters of Credit; or
(ii) the Revolving Loan Commitment, minus
the outstanding amount of all Letter of Credit Obligations.
2A. LETTERS OF CREDIT. Subject to the terms and
conditions of this Agreement, and the Other Agreements, during the Original
Term or any Renewal Term, LaSalle shall, absent the existence of an Event of
Default, from time to time cause the issuance of and co- sign for, upon
Borrower's request, Letters of Credit; provided, that the Letters of Credit
shall be in form and substance acceptable to LaSalle in its sole discretion and
that the aggregate undrawn face amount of all such Letters of Credit shall at
no time exceed Two Hundred Fifty Thousand Dollars ($250,000.00); and provided
further, that no Letter of Credit shall have an expiry date: (a) more than 365
days from the date of issuance; or (b) beyond five (5) days prior to the
expiration of the Original Term or the Renewal Term, as the case may be.
Borrower's reimbursement obligation in respect of the Letters of Credit shall
automatically reduce, dollar for dollar, the amount which Borrower may borrow
based upon the Revolving Loan Commitment and the Borrowing Base. Any payment
made by LaSalle to any Person on account of any Letter of Credit shall
constitute a Revolving Loan hereunder. At no time shall the aggregate sum of
direct Revolving Loans by LaSalle to Borrower plus the contingent liability of
LaSalle under the outstanding Letters of Credit be in excess of the Revolving
Loan Commitment, and at no time shall the aggregate sum of direct Revolving
Loans plus one hundred percent (100%) of the contingent liability of LaSalle
under outstanding standby Letters of Credit plus forty percent (40%) of the
contingent liability of LaSalle under outstanding documentary Letters of Credit
be in excess of the Borrowing Base.
c. Paragraph 5.(e). Paragraph 5.(e) of the LOAN AGREEMENT is
hereby amended by deleting the first sentence thereof in its entirety and
substituting in lieu thereof the following: "Borrower shall pay to LaSalle at
the end of each month, in arrears, an
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Unused Line Fee equal to one-half of one percent (.5%) per annum on the daily
average amount by which the Revolving Loan Commitment exceeds the sum of: (i)
the outstanding principal balance of the Revolving Loans; and (ii) the
outstanding Letter of Credit Obligations.
d. Paragraph 5. Paragraph 5 of the LOAN AGREEMENT is hereby
amended by inserting at the end thereof, immediately after the presently
existing paragraph 5.(g), the following new paragraph:
(h) Letter of Credit Fees. Borrower shall remit
to LaSalle a Letter of Credit fee equal to two percent (2%) per annum
on the aggregate undrawn face amount of all outstanding Letters of
Credit issued for the account of Borrower, which fees shall be payable
monthly in arrears on each day that interest is payable hereunder.
Borrower shall also pay on demand the normal and customary
administrative charges for issuance, amendment, negotiation, renewal,
or extension of any Letter of Credit imposed by the bank issuing such
Letter of Credit. Upon the occurrence and during the continuance of an
Event of Default, all Letter of Credit fees shall be payable on demand
at a rate equal to four percent (4%) per annum on the aggregate
undrawn face amount thereof.
e. Paragraph 13. The last paragraph of Paragraph 13 of the LOAN
AGREEMENT (i.e., the paragraph immediately preceding Paragraph 14) is hereby
amended by deleting the words "shall be remade by Borrower at the time each
Revolving Loan is made and each Capital Expenditure Loan is issued pursuant to
this Agreement" and substituting in lieu thereof the phrase "shall be remade by
Borrower at the time each Revolving Loan is made, at the time each Capital
Expenditure Loan is made, and at the time each Letter of Credit is issued
pursuant to this Agreement."
f. Paragraph 15.(b). Paragraph 15.(b) of the LOAN AGREEMENT is
hereby amended by deleting its present language in its entirety and
substituting in lieu thereof the following:
(b) After the Closing Date, the obligation of LaSalle to
make any requested Revolving Loan or any Capital Expenditure Loan, or
to co-sign as applicant for any requested Letter of Credit is subject
to the satisfaction of the conditions precedent set forth below. Each
such request shall constitute a representation and warranty that such
conditions are satisfied:
(i) All representations and warranties
contained in this Agreement and the Other Agreements shall be true and
correct on and as of the date of such request, as if then made, other
than representations and warranties that relate solely to an earlier
date;
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(ii) No Default or Event of Default shall have
occurred, or would result from the making of the requested Revolving
Loan, the making of the requested Capital Expenditure Loan, or the
issuance of the requested Letter of Credit, which has not been waived;
and
(iii) Since April 4, 1999, no event has occurred
which has had or could reasonably be expected to have a Material
Adverse Effect.
g. Paragraph 18. Paragraph 18 of the LOAN AGREEMENT is hereby
amended by deleting its present language in its entirety and substituting in
lieu thereof the following:
18. INDEMNIFICATION. Borrower agrees to defend (with
counsel reasonably satisfactory to LaSalle), protect, indemnify and
hold harmless LaSalle, each affiliate or subsidiary of LaSalle, and
each of their respective officers, directors, employees, attorneys and
agents (each an "Indemnified Party") from and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, reasonable costs, reasonable expenses and
reasonable disbursements of any kind or nature (including, without
limitation, the disbursements and the reasonable fees of counsel for
each Indemnified Party in connection with any investigative,
administrative or judicial proceeding, whether or not the Indemnified
Party shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against, any Indemnified Party by any third
party (whether direct, indirect or consequential and whether based on
any federal, state or local laws or regulations including, without
limitation, securities, environmental and commercial laws and
regulations, under common law or in equity, or based on contract or
otherwise) in any manner relating to or arising out of this Agreement
or any Other Agreement, or any act, event or transaction related or
attendant thereto, the making and the management of the Loans or any
Letters of Credit or the use or intended use of the proceeds of the
Loans or any Letters of Credit; provided, however, that Borrower shall
not have any obligation hereunder to any Indemnified Party with
respect to matters caused by or resulting from the willful misconduct
or gross negligence of such Indemnified Party. To the extent that the
undertaking to indemnify set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy,
Borrower shall satisfy such undertaking to the maximum extent
permitted by applicable law. Any liability, obligation, loss, damage,
penalty, cost or expense covered by this indemnity shall be paid to
each Indemnified Party on demand, and, failing prompt payment, shall,
together with interest thereon at the highest rate then applicable to
Revolving Loans hereunder from the date incurred by each Indemnified
Party until paid by Borrower, be added to the
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Liabilities of Borrower and be secured by the Collateral. The
provisions of this paragraph 18 shall survive the satisfaction and
payment of the other Liabilities and the termination of this
Agreement.
Section 3. Other Terms. Other than as specifically modified herein, all
other terms and provisions of the LOAN AGREEMENT and all other documents
evidencing, securing or otherwise documenting the terms and provisions of the
LOANS (collectively, "LOAN DOCUMENTS") remain in full force and effect and are
hereby ratified and confirmed.
Section 4. Final Agreement. This MODIFICATION and the other LOAN
DOCUMENTS, as modified herein, constitute the entire agreement between the
parties hereto with respect to the LOANS, and may not be altered, modified or
amended except by a writing executed by LASALLE and any other party against
whom any such modification or amendment is to be enforced against.
Section 5. Fees And Expenses. The BORROWER shall pay all costs and
expenses incurred by LASALLE in connection with this MODIFICATION, including,
but not limited to, all attorneys' fees.
Section 6. Binding Effect. This MODIFICATION shall inure to the benefit
of the parties hereto, and shall be binding upon, their respective personal
representatives, successors and assigns.
Section 7. Choice Of Law. The laws of the State of Maryland (excluding,
however, conflicts of law principles) shall govern and be applied to determine
all issues relating to this MODIFICATION and the rights and obligations of the
parties hereto, including the validity, construction, interpretation, and
enforceability of this MODIFICATION and its various provisions and the
consequences and legal effect of all transactions and events which resulted in
the execution of this MODIFICATION or which occurred or were to occur as a
direct or indirect result of this MODIFICATION having been executed.
Section 8. Consent To Jurisdiction; Agreement As To Venue. The BORROWER
irrevocably consents to the non-exclusive jurisdiction of the courts of the
State of Maryland and of the United States District Court for the District of
Maryland, if a basis for federal jurisdiction exists. In addition, the BORROWER
agrees that venue shall be proper in any circuit court of the State of Maryland
selected by LASALLE or in the United States District Court for the District of
Maryland if a basis for federal jurisdiction exists, and the BORROWER waives
any right to object to the maintenance of a suit in any of the state or federal
courts of the State of Maryland on the basis of improper venue or of
inconvenience of forum.
Section 9. Tense, Gender, Defined Terms, Captions. As used herein, the
plural shall refer to and include the singular, and the singular shall refer to
and include the plural. The use of any
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gender shall include and refer to any other gender. All defined terms are
completely capitalized throughout this MODIFICATION. All captions are for the
purpose of convenience only.
Section 10. Time. Time is of the essence with respect to this
MODIFICATION and all terms and conditions described herein.
Section 11. Waiver Of Jury Trial. The BORROWER and LASALLE each agree
that any suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by the BORROWER or LASALLE, or any successor or assign of the
BORROWER or LASALLE, on or with respect to this MODIFICATION or any of the LOAN
DOCUMENTS, as amended pursuant to this MODIFICATION, or which in any way
relates, directly or indirectly, to the obligations of the BORROWER to LASALLE
under this MODIFICATION or any of the LOAN DOCUMENTS, as amended pursuant to
this MODIFICATION, or the dealings of the parties with respect thereto, shall
be tried only by a court and not by a jury. THE BORROWER AND LASALLE EACH
HEREBY EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION,
OR PROCEEDING. The BORROWER and LASALLE acknowledge and agree that this
provision is a specific and material aspect of the agreement between the
parties and that LASALLE would not enter into this transaction with the
BORROWER if this provision were not part of their agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this MODIFICATION as
of the 6th day of August, 1999.
WITNESS/ATTEST: PHOENIX MEDICAL TECHNOLOGY, INC.,
A Delaware Corporation
By:
/s/ Xxxxxx X. Xxxxxxxx, Xx. (SEAL)
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Name: Xxxxxx X. Xxxxxxxx, Xx.
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Title: President
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LASALLE BUSINESS CREDIT, INC.
By: /s/ Xxxxxx X. Xxxxxxxx, Xx. (SEAL)
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Name: Xxxxxx X. Xxxxxxxx, Xx.
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Title: First Vice President
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