EXHIBIT 10.5
FIRST AMENDMENT TO LOAN AGREEMENT
This FIRST AMENDMENT TO LOAN AGREEMENT (the "AMENDMENT"), dated effective
as of April 30, 1996, is made by and between LASERMEDICS, INC. ("BORROWER"), a
Texas corporation, and COMERICA BANK-TEXAS ("LENDER"), a Texas banking
association.
RECITALS:
A. Borrower and Lender entered into that certain Loan Agreement dated as
of April 30, 1996 (as the same may have heretofore been amended, modified,
restated or supplemented from time to time, the "LOAN AGREEMENT").
B. Borrower and Lender now desire to (1) modify certain financial
covenants, (2) waive defaults under certain covenants set forth in the Loan
Agreement, (3) modify, delete, and add certain definitions, and (4) make certain
other changes to the Loan Agreement, all of which is more fully described
hereinbelow, which such provisions contained below shall control over any
inconsistencies with the foregoing recitals.
AGREEMENTS:
In consideration of the premises and the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. CASH FLOW DEFINITION AMENDED. The definition of "Cash Flow" contained
in Section 1.1 of the Loan Agreement is hereby amended in its entirety to be and
read as follows:
"`CASH FLOW' shall mean (without duplication), as to any Person and
for any period, the sum of (a) Net Income AND (b) the sum of (1)
depreciation, amortization, depletion, obsolescence of property, and (2)
interest expense, all determined in accordance with GAAP."
2. FIXED CHARGE COVERAGE RATIO DEFINITION AMENDED. The definition of
"Fixed Charge Coverage Ratio" contained in Section 1.1 of the Loan Agreement is
hereby amended in its entirety to be and read as follows:
"`FIXED CHARGE COVERAGE RATIO' shall mean, as of any day and for any
Person, (a) if such day is prior to July 31, 1997, the RATIO OF (i) Cash
Flow for the period beginning on July 1, 1996 through and including the
most recently ended calendar month as of such day TO (ii) an amount equal
to the sum of (1) Current Maturities of Long Term Debt as of the end of
such period, (2) interest expense for such period, and (3) non-financed
Capital Expenditures
for such period, and (b) if such day is on or after July 31, 1997, the
RATIO OF (x) an amount equal to Cash Flow for the most recently ended 12
month period as of such day TO (y) an amount equal to the sum of (1)
Current Maturities of Long Term Debt as of the end of such period, (2)
interest expense for such period, and (3) non-financed Capital
Expenditures for such period."
3. INTEREST COVERAGE RATIO DEFINITION DELETED. Section 1.1 of the Loan
Agreement is hereby amended by deleting therefrom the definition of "Interest
Coverage Ratio" where it appears therein.
4. EFFECTIVE TANGIBLE NET WORTH DEFINITION ADDED. Section 1.1 of the Loan
Agreement is hereby amended by adding thereto a new definition for "Effective
Tangible Net Worth" which shall be and read as follows:
"`EFFECTIVE TANGIBLE NET WORTH' shall mean as of any day the
consolidated Tangible Net Worth of the Borrower as of such day PLUS the
Debt evidenced by the Subordinated Debt Documents as of such day."
5. TANGIBLE NET WORTH STEP-UP AMENDED. Section 1.1 of the Loan Agreement
is hereby amended in its entirety to be and read as follows:
"`TANGIBLE NET WORTH STEP-UP' shall mean, on any date it is
determined, an amount equal to seventy-five percent of the aggregate
amount of Net Income of the Companies earned during each calendar month
which has ended as of such date of determination, beginning with the
calendar month ending September 30, 1996.
6. TANGIBLE NET WORTH COVENANT AMENDED. Section 6.5 of the Loan Agreement
is hereby amended in its entirety to be and read as follows:
"6.5. MAINTAIN EFFECTIVE TANGIBLE NET WORTH. Maintain an Effective
Tangible Net Worth of not less than THE SUM OF (a)(i) $6,740,000 at all
times on or before June 30, 1996, (ii) $6,730,000 at all times from and
including July 1, 1996 through and including July 31, 1996, and (iii)
$6,820,000 from and including August 1, 1996 and at all times thereafter
PLUS (b) (beginning with the calendar month ending September, 1996) the
Tangible Net Worth Step-Up."
7. LEVERAGE RATIO AMENDED. Section 6.6 of the Loan Agreement is hereby
amended in its entirety to be and read as follows:
"6.6. MAINTAIN LEVERAGE RATIO. Have on a consolidated statement basis,
beginning with July 1, 1996, the ratio of (a) Debt less the Debt evidenced by
the
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Subordinated Debt Documents to (b) Effective Tangible Net Worth of not
more than 1.25 to 1.00 at all times."
8. WORKING CAPITAL COVENANT DELETED. The Working Capital Covenant
contained in Section 6.7 of the Loan Agreement is hereby deleted and the Section
is intentionally left blank so as to not affect the numbering of the
subsequently appearing sections of Section 6 of the Loan Agreement.
9. FIXED CHARGE COVERAGE RATIO AMENDED. Section 6.8 of the Loan Agreement
is hereby amended in its entirety to be and read as follows:
"6.8 FIXED CHARGE COVERAGE RATIO. Maintain a Fixed Charge Coverage
Ratio of not less than (a) 1.10 to 1.00 at all times on or after July 1,
1996 but before September 30, 1996, and (b) 1.20 to 1.00 on September 30,
1996 and at all times thereafter."
10. INTEREST COVERAGE RATIO COVENANT DELETED. The Interest Coverage Ratio
Covenant in Section 6.9 of the Loan Agreement is hereby deleted and the Section
is intentionally left blank so as to not affect the numbering of the
subsequently appearing sections of Section 6 of the Loan Agreement.
11. QUICK RATIO COVENANT DELETED. The Quick Ratio Covenant in Section 6.10
of the Loan Agreement is hereby deleted and the Section is intentionally left
blank so as to not affect the numbering of the subsequently appearing sections
of Section 6 of the Loan Agreement.
12. CURRENT RATIO COVENANT AMENDED. The Current Ratio Covenant in Section
6.11 of the Loan Agreement is hereby amended in its entirety to be and read as
follows:
"6.11.CURRENT RATIO. Maintain at all times on a consolidated
statement basis the ratio of (a) Current Assets to (b) Current Liabilities
(inclusive of outstanding Revolving Loans), of not less than 2.00 to 1.00
at all times."
13. WAIVER OF CERTAIN DEFAULTS. The Lender hereby waives the occurrence of
any Default or Event of Default which has occurred through the effective date
hereof (but not thereafter) and of which the Lender has received written notice
from the Borrower, under any or all of the provisions of Sections 6.5 through
6.11 of the Loan Agreement.
14. NEW EXHIBIT ATTACHED. Exhibit G to the Loan Agreement is hereby
deleted in its entirety and there is hereby substituted therefor a new Exhibit
G, which shall be in the form of EXHIBIT A attached hereto and incorporated
herein by reference.
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15. CERTAIN DEFINITIONS AND REFERENCES. Terms used but not defined herein,
but which are defined in the Loan Agreement or in the other Loan Documents,
shall have the meanings herein ascribed to them therein. The term "Agreement" as
used in the Loan Agreement and the term "Loan Agreement," as used in the other
Loan Documents or any other instrument, document or writing furnished to Lender
by any Borrower shall mean the Loan Agreement as hereby amended.
16. EXPENSES; INDEMNIFICATION. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW, BORROWERS WILL JOINTLY AND SEVERALLY PAY ALL COSTS AND EXPENSES AND
REIMBURSE LENDER FOR ANY AND ALL EXPENDITURES OF EVERY CHARACTER INCURRED OR
EXPENDED FROM TIME TO TIME, REGARDLESS OF WHETHER A DEFAULT HAS OCCURRED, IN
CONNECTION WITH THE PREPARATION, NEGOTIATION, DOCUMENTATION, RECORDING, CLOSING,
RENEWAL, REVISION, MODIFICATION, INCREASE, REVIEW OR RESTRUCTURING OF THIS
AMENDMENT.
17. NO USURY INTENDED; SPREADING. Notwithstanding any provision to the
contrary contained in this Amendment, the Notes or any of the other Loan
Documents, it is expressly provided that in no case or event shall the aggregate
of (i) all interest on the unpaid balance of the Notes, accrued or paid from the
date hereof and (ii) the aggregate of any other amounts accrued or paid pursuant
to the Notes or any of the other Loan Documents, which under applicable laws are
or may be deemed to constitute interest upon the indebtedness evidenced by the
Notes ever exceed the Maximum Legal Rate. In this connection, the parties hereto
expressly stipulate and agree that it is their common and overriding intent to
contract in strict compliance with the applicable usury laws. In furtherance
thereof, none of the terms of the Notes or any of the other Loan Documents shall
ever be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the Maximum
Legal Rate. No Borrower nor any other parties now or hereafter becoming liable
for payment of the indebtedness evidenced by the Notes shall ever be liable for
interest in excess of the Maximum Legal Rate. If, for any reason whatever, the
interest paid or received on the Notes during its full term produces a rate
which exceeds the Maximum Legal Rate, the holder of the Notes shall credit
against the principal of the Notes (or, if such indebtedness shall have been
paid in full, shall refund to the payor of such interest) such portion of said
interest as shall be necessary to cause the interest paid on the Notes to
produce a rate equal to the Maximum Legal Rate. All sums paid or agreed to be
paid to the holder of the Notes for the use, forbearance or detention of the
indebtedness evidenced thereby shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread in equal parts throughout the full
term of the Notes, so that the interest rate is uniform throughout the full term
of the Notes. The provisions of this paragraph shall control all agreements,
whether now or hereafter existing and whether written or oral, between Borrowers
and Lender.
18. BUSINESS LOANS. Each Borrower warrants and represents to Lender and
all other holders of the Notes that all loans evidenced by the Notes are and
will be for business,
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commercial, investment or other similar purpose and not primarily for personal,
family, household or agricultural use, as such terms are used in Chapter One.
19. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER HEREBY IRREVOCABLY
WAIVE THE RIGHT TO TRAIL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR
PROCEEDINGS AT ANY TIME IN WHICH THE BORROWER AND LENDER ARE PARTIES ARISING OUT
OF THIS AMENDMENT, THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
20. LIEN CONTINUATION; MISCELLANEOUS. Borrowers and Lender hereby
acknowledge, confirm and agree that the Security Documents secure and shall
continue to secure the obligations of Borrowers and any other party to any of
the Loan Documents (other than Lender) under the Loan Documents, including,
without limitation, this Amendment, the Notes, the Letter of Credit Liabilities
and the Security Documents are hereby deemed modified to the extent necessary to
evidence the foregoing acknowledgments, agreements and confirmations. Nothing
contained in this Amendment or the Notes or any other document, instrument or
other writing executed in connection with this Amendment shall be construed as a
release or impairment of any of the liens, assignments and security interests
created or granted pursuant to the Security Documents and such liens,
assignments and security interests are hereby ratified and confirmed. The Liens
are not waived. To the extent of any conflict between the Loan Agreement or any
of the other Loan Documents (or any earlier modification of any of them) and
this Amendment, this Amendment shall control. Except as hereby expressly
modified, all terms of the Loan Agreement and the other Loan Documents (as any
of them may have been previously modified by any written agreement) remain in
full force and effect. This Amendment (a) shall bind and benefit Borrowers and,
except as herein expressly limited, Lender, and their respective receivers,
trustees, successors and assigns (PROVIDED, that no Borrower may assign its
rights hereunder without the prior written consent of Lender); (b) may be
modified or amended only by a writing signed by each party; (c) SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF
TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT; (d) may be
executed in several counterparts, and by the parties hereto in separate
counterparts, and each counterpart, when executed and delivered, shall
constitute an original agreement enforceable against all who signed it without
production of or accounting for any other counterpart, and all separate
counterparts shall constitute the same agreement and (e) embodies the entire
agreement and understanding between the parties with respect to modifications of
instruments provided for herein and supersedes all prior conflicting or
inconsistent agreements, consents and understandings relating to such subject
matter. Each Borrower acknowledges and agrees that there are no oral agreements
among any of them with respect to the transactions contemplated by the Loan
Documents which have not been incorporated in this Amendment or in the Loan
Documents. If any provision of this Amendment should be determined by any court
of competent jurisdiction to be illegal, invalid or unenforceable under present
or future laws, the legality, validity and enforceability of the remaining
provisions of this Amendment shall not be affected thereby. Each waiver in this
Amendment is subject to the overriding and controlling
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rule that it shall be effective only if and to the extent that (a) it is not
prohibited by applicable law and (b) applicable law neither provides for nor
allows any material sanctions to be imposed against Lender for having bargained
for and obtained it. Wherever the term "including" or a similar term is used in
this Amendment, it shall be read as if it were "including by way of example only
and without in any way limiting the generality of the clause or concept referred
to." Any exhibits, appendices and annexes described in this Amendment as being
attached to it are hereby incorporated into it. The headings in this Amendment
shall be accorded no significance in interpreting it. EACH BORROWER HEREBY
RELEASES, DISCHARGES AND ACQUITS FOREVER LENDER AND ITS OFFICERS, DIRECTORS,
TRUSTEES, AGENTS, EMPLOYEES AND COUNSEL (IN EACH CASE, PAST, PRESENT AND FUTURE)
FROM ANY AND ALL CLAIMS EXISTING AS OF THE DATE HEREOF (OR THE DATE OF ACTUAL
EXECUTION HEREOF BY THE APPLICABLE PERSON OR ENTITY, IF LATER). AS USED HEREIN,
THE TERM "CLAIM" SHALL MEAN ANY AND ALL LIABILITIES, CLAIMS, DEFENSES, DEMANDS,
ACTIONS, CAUSES OF ACTION, JUDGMENTS, DEFICIENCIES, INTEREST, LIENS, COSTS OR
EXPENSES (INCLUDING BUT NOT LIMITED TO COURT COSTS, PENALTIES, ATTORNEYS' FEES
AND DISBURSEMENTS, AND AMOUNTS PAID IN SETTLEMENT) OF ANY KIND AND CHARACTER
WHATSOEVER, INCLUDING BUT NOT LIMITED TO CLAIMS FOR USURY, BREACH OF CONTRACT,
BREACH OF COMMITMENT, NEGLIGENT MISREPRESENTATION OR FAILURE TO ACT IN GOOD
FAITH, IN EACH CASE WHETHER NOW KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED,
ASSERTED OR UNASSERTED OR PRIMARY OR CONTINGENT, AND WHETHER ARISING OUT OF
WRITTEN DOCUMENTS, UNWRITTEN UNDERTAKINGS, COURSE OF CONDUCT, TORT, VIOLATIONS
OF LAWS OR REGULATIONS OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EACH BORROWER HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS AND
DEFENSES BASED UPON OR RELATED TO SECTIONS 51.003, 51.004 AND 51.005 OF THE
TEXAS PROPERTY CODE, TO THE EXTENT THE SAME PERTAIN OR MAY PERTAIN TO ANY
ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SS.26.02
THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES
BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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EXECUTED effective as of the date first set forth above.
LASERMEDICS, INC., a Texas corporation
By: /s/ XXXXX X. XXXXXXXXXX
Name: Xxxxx X. Xxxxxxxxxx
Title: Vice President
COMERICA BANK-TEXAS, a Texas banking
corporation
By: /s/ XXXXX X. XxXXXX
Name: Xxxxx X. XxXxxx
Title: Vice President
Attachments:
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COMPLIANCE CERTIFICATE
The undersigned hereby certifies that [he] [she] is the ______________
______________________________ of Lasermedics, Inc. ("BORROWER"), and that as
such is authorized to execute this certificate on behalf of the above-named
Borrower pursuant to the Loan Agreement (the "LOAN AGREEMENT") dated as of ,
1996 by and between the Borrower and Comerica Bank - Texas (the "BANK"); and
that a review of the Borrower has been made under [his] [her] supervision with a
view to determining whether the Borrower has fulfilled all of its obligations
under the Loan Agreement and the other Loan Documents; and on behalf of the
above-named Borrower further certifies, represents and warrants as follows (each
capitalized term used herein having the same meaning given to it in the Loan
Agreement unless otherwise specified):
(a) the Borrower has fulfilled its respective obligations under the Loan
Documents.
(b) The representations and warranties made in each Loan Document are true
and correct in all respects on and as of the time of delivery hereof, with the
same force and effect as if made on and as of the time of delivery hereof.
(c) The financial statements delivered to the Bank concurrently with this
Compliance Certificate have been prepared in accordance with GAAP consistently
followed throughout the period indicated and fairly present in all material
respects the financial condition and results of operations of the applicable
Persons as at the end of, and for, the period indicated.
(d) No Default has occurred and is continuing. In this regard, the
compliance with the provisions of SECTIONS 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11,
and 7.1 of the Loan Agreement is as follows:
SECTION 6.5 -- EFFECTIVE TANGIBLE NET WORTH
actual Effective Tangible Net Worth for the Borrower (on a consolidated
basis) as of the date hereof:
$___________________
EXHIBIT G
EXHIBIT A TO FIRST AMENDMENT TO LOAN AGREEMENT
PAGE 1 OF 4 PAGES
required Tangible Net Worth for the Borrower (on a consolidated basis) as
of the date hereof:
$___________________
SECTION 6.6 -- LEVERAGE RATIO
actual Debt LESS the Debt evidenced by the Subordinated Debt Documents to
Effective Tangible Net Worth for the Borrower (on a consolidated basis) as
of the date hereof:
__.____ : 1.00
required Debt LESS the Debt evidenced by the Subordinated Debt Documents
to Effective Tangible Net Worth Ratio for the Borrower (on a consolidated
basis) as of the date hereof:
1.25 : 1.00
SECTION 6.7 -- [INTENTIONALLY DELETED]
SECTION 6.8 -- FIXED CHARGE COVERAGE RATIO
actual Fixed Charge Coverage Ratio for the Borrower as of the date hereof:
__.____ : 1.00
required Fixed Charge Coverage Ratio for the Borrower (on a consolidated
basis) as of the date hereof:
__.____ : 1.00
SECTION 6.9 -- [INTENTIONALLY DELETED]
EXHIBIT G
EXHIBIT A TO FIRST AMENDMENT TO LOAN AGREEMENT
PAGE 2 OF 4 PAGES
SECTION 6.10 -- [INTENTIONALLY DELETED]
SECTION 6.11 -- CURRENT RATIO
actual ratio of (a) Current Assets to (b) Current Liabilities (inclusive
of outstanding Revolving Loans) as of the date hereof:
__.____ to 1.00
required ratio of (a) Current Assets to (b) Current Liabilities (inclusive
of outstanding Revolving Loans) as of the date hereof:
2.00 to 1.00
SECTION 7.1 -- CAPITAL EXPENDITURES
actual Capital Expenditures on a consolidated basis during the most
recently ended fiscal year of the Borrower as of the date hereof:
$_______________
maximum permitted Capital Expenditures on a consolidated basis for the
most recently ended fiscal year of the Borrower as of the date hereof:
$500,000
SECTION 7.1 -- FDA EXPENDITURES
actual FDA Expenditures on a consolidated basis during the most recently
ended fiscal year of the Borrower as of the date hereof:
$________________
maximum permitted FDA Expenditures on a consolidated basis for the most
recently ended fiscal year of the Borrower as of the date hereof:
$200,000
EXHIBIT G
EXHIBIT A TO FIRST AMENDMENT TO LOAN AGREEMENT
PAGE 3 OF 4 PAGES
DATED as of ________________________________.
[ADD SIGNATURE LINE FOR
INDIVIDUAL EXECUTING
CERTIFICATE]
EXHIBIT G
EXHIBIT A TO FIRST AMENDMENT TO LOAN AGREEMENT
PAGE 4 OF 4 PAGES
