mod2.doc
MODIFICATION AGREEMENT
DATE: December 31, 1997
PARTIES: Borrower: Zevex, Inc.
Bank: Bank One, Utah, NA, a national banking association
RECITALS:
A. Bank has extended to Borrower credit ("Loan") in the principal amount of
$1,000,000.00 pursuant to the Line of Credit Loan Agreement dated September 29,
1997 ("Loan Agreement"). The unpaid principal of the Loan as of the date hereof
is $-0-.
B. The Loan and/or guaranty of Loan is secured by, among other things, the
Security Agreement - Accounts Receivable and Inventory, dated September 29, 1997
by Borrower for the benefit of Bank (the agreements, documents, and instruments
securing the Loan are referred to individually and collectively as the
("Security Documents").
C. The Loan Agreement, the Security Documents, any arbitration resolution,
and all other agreements, documents, and instruments evidencing, securing, or
otherwise relating to the Loan are sometimes referred to individually and
collectively as the "Loan Documents".
D. Borrower has requested that Bank modify the Loan and the Loan Documents
as provided herein. Bank is willing to so modify the Loan and the Loan
Documents, subject to the terms and conditions herein.
AGREEMENT:
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Borrower and Bank agree as follows:
1. ACCURACY OF RECITALS.
Borrower acknowledges the accuracy of the Recitals.
2. MODIFICATION OF LOAN DOCUMENTS.
2.1 The Loan Documents are modified as follows:
2.1.1. The defined terms contained in Section 2.A. of the Loan Agreement
are hereby amended and restated to read as follows:
A Borrowing Base Certificate@ means the certificate in the form and
substance satisfactory to Bank, attached hereto as Exhibit AA@.
"Eligible Accounts Receivable" means an Account owing to Borrower, as
determined by Bank in its sole and absolute discretion, which has arisen from
the delivery and/or shipment of products previously made and/or from services
rendered for which an invoice has been issued by Borrower to its customer
("Customer") and (a) which amount is not subject to any offset, counterclaim or
defense asserted by the Customer, (b) which amount is subject to a perfected
security interest in favor of Bank and is not subject to any other security
interest, lien, claim or encumbrance, and (c) which amount has not remained
unpaid for more than 59 days after the due date of the related invoice, (d)
where not more than fifteen percent (15%) of the total amount owing from a
Customer accounting for 5% or more of the total amount owing to Borrower has
remained unpaid for more than 89 days after the due date of the related
invoice(s), excepting amounts due from Allergan, Mentor, Alaris and Paradigm,
(e) amounts due from Allergan, Mentor, Alaris and Paradigm which have not
remained unpaid for more than 30 days after the due date of the related invoice
and do not exceed 25% of the total accounts owing to Borrower, (f) which amount
is not an uninsured amount owing from a customer located in a foreign country,
(g) which amount is not owing from the United States of America or any agency,
department of subdivision thereof, unless a properly executed assignment of
claims has been received by Bank, (h) which amount is not the subject of any
threatened or actual litigation, (I) which amount is not owing from a Customer
who is also a supplier or creditor of the Borrower, (j) which amount is not
owing from a Subsidiary, Affiliate, officer or employee of the Borrower or an
intercompany transaction, (k) which amounts are not cash, C.O.D. accounts or
deposit payments for future products, and (l) which amounts are not consignment
accounts, manufacturer representative accounts, buy/sell accounts, or xxxx and
hold accounts.
"Eligible Inventory" means the Inventory (valued at the lower of cost or
market) of Borrower as determined by Bank in its sole and absolute discretion,
to be (a) in good condition and salable in the ordinary course of Borrower's
business, (b) owned by Borrower free and clear of any mortgages, liens, security
interests, claims, encumbrances or rights of others, excepting only the security
interest in favor of Bank, subject to a perfected security interest in favor of
bank, (d) not subject to any consignment to any Customer, (e) not acquired by
Borrower in or as part of a bulk transfer of sale or assets unless Borrower has
complied with all applicable bulk sales or bulk transfer laws, and (f) Work in
progress and unsaleable raw materials.
XXxxx of Credit Limit@ means Five Million and 00/100 Dollars
($5,000,000.00).
2.1.2. There shall be added a new paragraph J. to Section 12 bearing the
heading NEGATIVE COVENANTS which shall read as follows:
J. Acquisitions. Enter into any acquisitions over $5,000,000.00 per fiscal
year without prior written approval of Bank.
2.1.3. Section 13.A. bearing the heading FINANCIAL COVENANTS of the Loan
Agreement is modified to read in its entirety as follows:
A. Debt Coverage. The Borrower will maintain on a consolidated basis as of
the end of each fiscal year a ratio of (earnings before interest expense +
depreciation + amortization) less unrealized gains/(losses) on securities,
divided by the sum of (current maturities of long term debt and capital lease
payments and interest expense) of not less than 1.4 to 1.0.
2.1.4. Section 13.B. bearing the heading FINANCIAL COVENANTS of the Loan
Agreement is modified to read in its entirety as follows:
B. Tangible Net Worth. At each date as set forth below the Borrower will
achieve and maintain a consolidated tangible net worth of not less than:
Date: Tangible Net Worth:
December 31, 1997 $10,000,000.00
December 31, 1998 $15,000,000.00
2.1.5. The additional percentage points (AMargin@) to be added to the Loan
Index Rate are 0.0 percentage points. The Loan Interest Rate payable on Advances
made under the Line of Credit as of the date of this agreement is 8.5% per
annum.
2.2 Each of the Loan Documents is modified to provide that it shall be a
default or an event of default thereunder if Borrower shall fail to comply with
any of the covenants of Borrower herein or if any representation or warranty by
Borrower herein is materially incomplete, incorrect, or misleading as of the
date hereof.
2.3 Each reference in the Loan Documents to any of the Loan Documents shall
be a reference to such document as modified herein.
3. RATIFICATION OF LOAN DOCUMENTS AND COLLATERAL.
The Loan Documents are ratified and affirmed by Borrower and shall remain in
full force and effect as modified herein. Any property or rights to or interests
in property granted as security in the Loan Documents shall remain as security
for the Loan and the obligations of Borrower in the Loan Documents.
4. BORROWER REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants to Bank:
4.1 No default or event of default under any of the Loan Documents as
modified herein, nor any event, that, with the giving of notice or the passage
of time or both, would be a default or an event of default under the Loan
Documents as modified herein has occurred and is continuing.
4.2 There has been no material adverse change in the financial condition of
Borrower or any other person whose financial statement has been delivered to
Bank in connection with the Loan from the most recent financial statement
received by Bank.
4.3 Each and all representations and warranties of Borrower in the Loan
Documents are accurate on the date hereof.
4.4 Borrower has no claims, counterclaims, defenses, or set-offs with
respect to the Loan or the Loan Documents as modified herein.
4.5 The Loan Documents as modified herein are the legal, valid, and binding
obligations of Borrower, enforceable against Borrower in accordance with their
terms.
4.6 Borrower is validly existing under the laws of the State of its
formation or organization and has the requisite power and authority to execute
and deliver this Agreement and to perform the Loan Documents as modified herein.
The execution and delivery of this Agreement and the performance of the Loan
Documents as modified herein have been duly authorized by all requisite action
by or on behalf of Borrower. This Agreement has been duly executed and delivered
on behalf of Borrower.
5. BORROWER COVENANTS.
Borrower covenants with Bank:
5.1 Borrower shall execute, deliver, and provide to Bank such additional
agreements, documents, and instruments as reasonably required by Bank to
effectuate the intent of this Agreement.
5.2 Borrower fully, finally, and forever releases and discharges Bank and
its successors, assigns, directors, officers, employees, agents, and
representatives from any and all actions, causes of action, claims, debts,
demands, liabilities, obligations, and suits, of whatever kind or nature, in law
or equity of Borrower, whether now known or unknown to Borrower, (I) in respect
of the Loan, the Loan Documents, or the actions or omissions of Bank in respect
of the Loan or the Loan Documents and (ii) arising from events occurring prior
to the date of this Agreement.
5.3 Contemporaneously with the execution and delivery of this Agreement,
Borrower has paid to Bank:
5.3.1 All accrued and unpaid interest under the Loan Agreement and all
amounts, other than interest and principal, due and payable by Borrower under
the Loan Documents as of the date hereof.
5.3.2 All the internal and external costs and expenses incurred by Bank in
connection with this Agreement (including, without limitation, inside and
outside attorneys, title, filing, and recording costs, expenses, and fees).
5.3.3 A commitment fee of $4,170.00.
6. EXECUTION AND DELIVERY OF AGREEMENT BY BANK.
Bank shall not be bound by this Agreement until (I) Bank has executed and
delivered this Agreement, (ii) Borrower has performed all of the obligations of
Borrower under this Agreement to be performed contemporaneously with the
execution and delivery of this Agreement, (iii) if required by Bank, Borrower
and any guarantor(s) of the Loan have executed and delivered to Bank an
arbitration resolution, and (iv) each guarantor of the Loan has executed the
Consent of Guarantor(s) below.
7. INTEGRATION, ENTIRE AGREEMENT, CHANGE, DISCHARGE, TERMINATION, OR WAIVER.
The Loan Documents as modified herein contain the complete understanding
and agreement of Borrower and Bank in respect of the Loan and supersede all
prior representations, warranties, agreements, arrangements, understandings, and
negotiations. No provision of the Loan Documents as modified herein may be
changed, discharged, supplemented, terminated, or waived except in a writing
signed by the parties thereto.
8. BINDING EFFECT.
The Loan Documents as modified herein shall be binding upon and shall inure
to the benefit of Borrower and Bank and their respective successors and assigns.
9. CHOICE OF LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Arizona, without giving effect to conflicts of law
principles.
10. COUNTERPART EXECUTION.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same document. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to physically form one document.
DATED as of the date first above stated.
BANK: BORROWER::
BANK ONE, UTAH, NA, ZEVEX, INC.
a national banking association
BY: /s/ Xxxxx X. Xxxxxxx BY: /s/ Xxxxxxx X. XxXxxxxx
Xxxxx X. Xxxxxxx Xxxxxxx X. XxXxxxxx
Its: Sr. Vice President Its: CFO
CONSENT OF GUARANTOR(S)
The undersigned (i) consent to the modification of the Loan Documents and
all other matters in the foregoing Agreement, (ii) reaffirm the Continuing
Guaranty, dated September 29, 1997 and any other agreements, documents and
instruments securing or otherwise relating thereto ("Guarantor Documents"),
(iii) acknowledge that the Guarantor Documents continue in full force and
effect, remain unchanged, except as specifically modified hereby, and are valid,
binding and enforceable in accordance with their respective terms, (iv) agree
that all references, if any, in the Guarantor Documents to any of the Loan
Documents are modified to refer to those documents as modified by the Agreement,
and (v) agree to be bound by the release of Bank set forth in the Agreement.
Dated as of the date of the Agreement.
ZEVEX INTERNATIONAL, INC.
BY:/s/ Xxxxxxx X. XxXxxxxx
Xxxxxxx X. XxXxxxxx, Secretary/Treasurer
