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EXHIBIT 1.6
[MAXXIM MEDICAL LETTERHEAD]
March 13, 1998
Maxxim Medical, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Gentlemen:
This letter will serve as our agreement relating to certain issues
concerning the conversion by Xxxxxx Medical, Inc. a Delaware corporation
("Maxxim"), of a portion of the certain convertible subordinated promissory
note dated April 30, 1996, in the original principal amount of $7,000,000, as
amended by that certain note modification agreement dated September 20, 1997
(the "Convertible Note"), issued by Henley Healthcare, Inc., a Texas corporation
("Henley"), to Maxxim. For good and valuable consideration, the receipt of
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Pursuant to Section 4.1 of the Convertible Note, Maxxim gives notice
of the conversion of $2,000,000, of the principal amount of the
Convertible note into 1,000,000 shares of the common stock par value
$.01 per share ("Common Stock"), of Henley, based on the current
conversion price of $2.00 per share under the Convertible Note. The
date of such conversion is effective as of the date of this letter and
Henley hereby tenders to Maxxim a certificate representing the
1,000,000 shares of Common Stock. Notwithstanding the provisions of
Section 4.1 of the Convertible Note, the parties agree that the entire
$2,000,000 of the convertible Note so converted reduces the principal
amount of the Convertible Note and such sum shall be applied to
Xxxxxx'x full redemption obligation due in the year 2003 and 2002 and
partially to Xxxxxx'x redemption obligation due in the year 2001 as
provided in Section 2.3 of the convertible Note. All accrued and
unpaid interest on the convertible Note through March 31, 1998 in the
aggregate amount of $66,667 is hereby paid in cash by Xxxxxx.
2. As further consideration for the agreement of Maxxim to convert the
amount of Convertible Note set forth above, Xxxxxx hereby agrees to
use its commercially reasonable best efforts to file a shelf
registration statement on Form S-3, as amended from time to time, (the
"Registration Statement") with the U.S. Securities & Exchange
Commission ("SEC") to register resales of the Common Stock issued to
Maxxim hereby as soon as reasonably practicable after the date hereof,
provided, that, Maxxim hereby acknowledges and agrees that the
Registration Statement will not be filed until such time as Xxxxxx has
completed the audit of its consolidated financial statements at and as
of December 31, 1997, and filed its Annual Report on Form 10-K with
the SEC including the results of such audit which matters Xxxxxx
agrees to accomplish as soon as practicable. Henley shall use its
commercially reasonable best efforts to have the Registration
Statement declared effective as soon as possible after such filing,
and to keep such Registration Statement continuously effective until
the second anniversary of the initial date of effectiveness of such
Registration Statement subject to extension as herein provided;
provided, however, that Xxxxxx may voluntarily from time to time
suspend the effectiveness of the Registration Statement for a limited
time which in no event shall be longer than 90 days in any instance
and 150 days in the aggregate, if Henley has been
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advised in writing by its counsel or its underwriters that the offering
of shares of Common Stock pursuant to the Registration Statement would
materially and adversely affect, or would be improper in view of (or
improper without disclosure in a prospectus), a proposed financing,
public offering, reorganization, recapitalization, merger,
consolidation or similar transaction involving Henley, in which case
Henley shall be required to keep such Registration Statement effective
for an additional period of time beyond the second anniversary date
equal to the number of days the effectiveness thereof is suspended
pursuant to this provision. Upon the occurrence of any event that would
cause the Registration Statement to contain a material misstatement or
omission or not to be effective and usable during the period that such
Registration Statement is required to be effective and usable, Henley
shall promptly notify Maxxim in writing specifying the reasons that the
Registration Statement may not be used to sell Common Stock including a
copy of the written advice received by Xxxxxx from its counsel or
underwriters and Henley shall promptly file an amendment to the
Registration Statement and use its commercially reasonable best efforts
to cause such amendment to be declared effective as soon as practicable
thereafter. Xxxxxx will bear all costs and expenses related to the
Registration Statement other than the expenses incurred by Xxxxxx for
underwriters' commissions and discounts or legal fees incurred by
Xxxxxx. Maxxim shall furnish to Henley such information regarding its
holdings and the proposed manner of distribution of Common Stock as
Henley may reasonably request and as shall be required by the rules and
regulations of the SEC in connection with the Registration Statement.
Notwithstanding the foregoing, Xxxxxx hereby acknowledges and agrees
that Xxxxxx may include in the Registration Statement the offering for
resale of additional shares of its common stock issuable upon the
conversion of other securities of Henley to be issued in connection
with proposed private placement to be accomplished by Xxxxxx in the
next 30 days after the date of this letter, provided however, that such
inclusion will not reduce in any manner the number of Maxxim shares to
be included in the Registration Statement.
3. The Registration Rights Agreement entered by and between Maxxim and
Xxxxxx dated April 30, 1996 ("Registration Rights Agreement"), remains
in full force and effect, except that the shares of Common Stock
issued by Henley to Maxxim, as set forth in paragraph 1 above, shall
no longer be "Registerable Securities" as defined in such Registration
Statement as provided herein. Xxxxxx acknowledges and agrees that
registration of the Maxxim Common Stock does not constitute a Demand
Registration pursuant to the provisions of the Registration Rights
Agreement.
4. Xxxxxx and Xxxxxx agree that the indemnification and contribution
rights and obligations of the parties as provided in Section 5 of the
Registration Rights Agreement shall be applicable to the Transactions
herein described and are incorporated herein by this reference as if
fully set forth.
5. Each of Xxxxxx, Xxxxxxxx X. Xxxxx and Xxxxxxx X. Xxxxxxx hereby waive
and release in full their rights of first refusal granted under
Section 2 of that certain Voting Agreement dated April 20, 1996,
executed by such persons and Maxxim insofar as such rights apply to
the sale by Xxxxxx of the shares of Common Stock to be included in the
Registration Statement. Xxxxxx agrees that any legend on the Maxxim
Common Stock certificate shall be removed by Xxxxxx'x Registrar or
Transfer agent within 24 hours of notice to Xxxxxx, that Xxxxxx has
sold any of the Common Stock pursuant to the Registration Statement.
6. This letter may not be amended without the written approval of the
parties hereto, and shall be construed, interpreted and enforced under
the laws of the State of Texas.
Please acknowledge your acceptance and agreement of the above by
acknowledging this agreement in the space provided below.
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Very truly yours
HENLEY HEALTHCARE, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: President & CEO
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Acknowledged and agreed to by
MAXXIM MEDICAL, INC.
By: /s/ Xxxx Xxxxxx
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Title: V.P. & Controller
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Date: 3/13/98
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/s/ Xxxxxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxx
Date: 3/13/98
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/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Date: 3/13/98
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