Re: Loan and Security Agreement
Exhibit 10.33
By
Email and US Mail
April 7,
2009
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Xx.
Xxxxxx Xxxxxxxxx, CEO
Xx.
Xxxxx Xxxxxxx, CFO
0000
Xxxxxxxxx Xxxxxx
Xxxxxxxxx,
XX 00000
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|
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Marquette Healthcare Finance
(“Marquette”) is providing written notice to Zynex, Inc., and Zynex Medical,
Inc. (“Zynex”) of default under the Loan and Security Agreement entered into
between Zynex and Marquette on September 23, 2008.
Zynex is
in default as follows:
Financial
Covenants
The
financial covenants contained in the Loan and Security Agreement are important
because they show the financial condition of Zynex. Under Section 9.1
of the amended Loan and Security Agreement, Zynex is to maintain the following
financial covenants:
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1.
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TTM
EBITDA: $6,500,000 at the end of fourth quarter,
2008.
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2.
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Debt
Service Coverage Ratio: 3.00 at the end of fourth quarter,
2008.
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3.
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TTM
EBITDA: $7,500,000 at the end of first quarter, March 31,
2009
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The
Covenant Certificate provided by Zynex to Marquette for the quarter ending
December 31, 2008 shows that Xxxxx has failed to meet the minimum financial
covenant for the TTM EBITDA as follows:
000 XX
Xxxxx Xxxxxx, Xxxxx 0000
Portland,
OR 97204
xxx.xxxxxxxxxxx.xxx
503.525.5402
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1.
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TTM
EBITDA: $826,661
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The
Covenant Certificate provided by Zynex to Marquette for the quarter ending
December 31, 2008 shows that Xxxxx has failed to meet the minimum financial
covenant for the minimum Debt Service Coverage Ratio as follows:
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2.
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Q4
2008 DSC: 1.59:1.00
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The
financial projections provided by Xxxxx to Marquette for the quarter ending
March 31, 2009 show that Zynex will fail to meet the minimum financial covenant
for the TTM EBITDA as follows:
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3.
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TTM
EBITDA: $1,239,000
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Opportunity
to Cure and Proposal
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1.
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The
default concerning Xxxxx’s failure to meet the TTM EBITDA covenant at the
quarter ending December 31, 2008 and the anticipated default regarding the
failure to meet the TTM EBITDA covenant at the quarter ending March 31,
2009 are not curable based on financial statements and projections for
these dates. Xxxxxxxxx
is willing to forbear taking action on the financial covenant defaults for
the quarters ending December 31, 2008 and March 31, 2009; specifically,
waiving a default fee and default interest
rate.
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Marquette
will re-set the TTM EBITDA covenant for the remainder of the year as
follows:
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000’s
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9/31/2008
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12/31/2008
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3/31/2009
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6/30/2009
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9/30/2009
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12/31/2009
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Orig.
TTM EBITDA Covenent
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Waived
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6,500
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7,500
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8,200
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11,500
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13,000
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XXX
XXXXXX Actual
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7,430
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827
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||||
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XXX
XXXXXX Projected
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1,239
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1,795
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4,065
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5,139
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||
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MHF
Proposed EBITDA Reset
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Waive
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Waive
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1,436
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3,252
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4,111
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When
available, financial projections for 2010 will be used to set future TTM EBITDA
covenant targets in Xxxxxxxxx’s sole discretion.
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2.
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The
default concerning Xxxxx’s failure to meet the Debt Service Coverage ratio
covenant at the quarter ending December 31, 2008 is not curable based on
financial statements for the same date. Xxxxxxxxx
is willing to forbear taking action on the financial covenant default for
the quarter ending December 31, 2008; specifically, waiving a default fee
and default interest rate.
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000 XX
Xxxxx Xxxxxx, Xxxxx 0000
Portland,
OR 97204
xxx.xxxxxxxxxxx.xxx
503.525.5402
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3.
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Zynex
has restated its unaudited financial statements for the quarters ended
March 31, June 30 and September 30, 2008. Marquette waives any
breach of a representation, warranty or covenant concerning the accuracy
of the original unaudited financial statements for these quarterly
periods. Notwithstanding the foregoing, Xxxxxxxxx expressly
reserves any right to declare a default, and any other claim, right or
remedy with respect to (a) the restated financial statements for these
quarterly periods; and (b) any fraud or intentional misrepresentation in
connection with the original financial statements for these quarterly
periods.
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4.
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Xxxxxxxxx
will amend the Loan and Security Agreement to reflect the following
pricing change:
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·
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Margin: 3.25%
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·
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Collateral
Monitoring fee: $1,750 per month, payable in arrears on the
first day of the month.
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Marquette
expressly reserves the right to take action for financial covenant defaults in
subsequent reporting periods or upon any other default under the Loan
Documents.
If the
above proposal is agreeable, please sign a copy of this letter and return it to
me.
Regards,
/s/
Xxxxxxxx X. Xxxx
Xxxxxxxx
X. Xxxx
Senior
Relationship Manage
Xxxxxxxxx’s
proposal detailed above is accepted:
/s/ Xxxxxx
Xxxxxxxxx
Xxxxxx
Xxxxxxxxx
Zynex, Inc.
and Zynex Medical, Inc.
cc: Xxxxx
Xxxxxx
Xxxxxxxx
Xxxxxxxxxx
000 XX
Xxxxx Xxxxxx, Xxxxx 0000
Portland,
OR 97204
xxx.xxxxxxxxxxx.xxx
503.525.5402
