WAIVER AND NINTH AMENDMENT DATED AS OF OCTOBER 13, 2010 IN RESPECT OF AMENDED AND RESTATED LOAN AGREEMENT BY AND AMONG CFWH (Delaware), LLC, CFWH (Massachusetts), LLC, CFWH (New Jersey) LLC, CFWH (New York) LLC, New York Hyperbaric And Wound Care...
Exhibit 10.18
WAIVER
AND NINTH AMENDMENT
DATED
AS OF OCTOBER 13, 2010
IN
RESPECT OF
AMENDED
AND RESTATED LOAN AGREEMENT
BY
AND AMONG
CFWH
(Delaware), LLC, CFWH (Massachusetts), LLC, CFWH (New Jersey) LLC,
CFWH
(New York) LLC, New York Hyperbaric And Wound Care Centers, L.L.C.,
The
Square
Hyperbaric LLC, CFWH (Pennsylvania), LLC, and THE CENTER FOR WOUND
HEALING,
INC.
AND
SIGNATURE
BANK
THIS
WAIVER AND NINTH AMENDMENT (the “Waiver-Amendment”) made as of the 13th day of
October, 2010 by and among CFWH (Delaware), LLC, CFWH (Massachusetts), LLC, CFWH
(New Jersey) LLC, CFWH (New York) LLC, New York Hyperbaric And Wound Care
Centers, L.L.C., The Square Hyperbaric LLC, CFWH (Pennsylvania), LLC, and THE
CENTER FOR WOUND HEALING, INC., each with a place of business at 000 Xxxxx
Xxxxxx Xxxx, Xxxxxxxxx, XX 00000 (the foregoing Persons, individually
and collectively, the “Borrower”), and SIGNATURE BANK, a New York bank having an
office at 0000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxx Xxxx 00000 (the
“Bank”).
WITNESSETH:
WHEREAS,
certain of the entities comprising the Borrower and the Bank entered into a
Amended and Restated Loan Agreement dated as of June 17, 2005 as amended by a
First Amendment dated as of April 7, 2006, a Second Amendment dated as of
February 1, 2007, a Third Amendment and Waiver dated as of May 29, 2007, a
Fourth Amendment and Waiver dated as of July 31, 2007, a Fifth Amendment dated
as of October 11, 2007, a Sixth Amendment dated as of March 19, 2008, a Seventh
Amendment dated as of June 30, 2008 and an Eighth Amendment dated as of December
18, 2008 (collectively, the “Agreement”), providing for certain financial
accommodations to the Borrower and which Agreement is now in full force and
effect;
WHEREAS, the Borrower has failed to
comply with the provisions of Sections 6.1, 6.3 and 6.5 of the Agreement, and
the Borrower has informed the Bank that it will in the future fail to comply
with the provisions of Section 6.4 of the Agreement, all as described
below;
WHEREAS,
the Borrower and the Bank desire that the Bank waives the Borrowers’
non-compliance with such provisions of the Agreement on the terms and conditions
hereinafter set forth; and
WHEREAS,
the Borrower and the Bank desire to extend the Termination Date on the terms and
conditions hereinafter set forth;
NOW,
THEREFORE, in consideration of the premises and the agreements hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto agree as
follows:
1. As
used in this Waiver-Amendment, capitalized terms, unless otherwise defined,
shall have the meanings ascribed thereto in the Agreement.
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2. The
Borrower failed to comply with the provisions of Section 6.1 of the Agreement
for the four fiscal quarter period of the Borrower ended June 30, 2010, as the
ratio which is the subject of such section was 0.26:1.00 for such
period. Such non-compliance is hereby waived, for the four fiscal
quarter period of the Borrower ended June 30, 2010, for each of the four fiscal
quarter periods ending subsequent to June 30, 2010 through and including the
four fiscal quarter period ending June 30, 2011, and for July 1, 2011, provided
that (a) such ratio was not less than 0.26:1.00 for the four fiscal quarter
period of the Borrower ended June 30, 2010, and (b) such ratio will not be, for
the four fiscal quarter period ending: (i) September 30, 2010, less than
0.45:1.00; (ii) December 31, 2010, less than 0.20:1.00; (iii) March 31, 2011,
less than 0.35:1.00; or (iv) June 30, 2011, or for July 1, 2011, less than
0.50:1.00. Notwithstanding anything contained in this
Waiver-Amendment or in the Agreement to the contrary, solely for purposes of
determining the Borrower’s compliance with the provisions of the section of the
Agreement which is the subject of this paragraph, and solely for the periods or
date(s) which are the subject of this paragraph, there shall be added to EBITDA
of the Borrower, without duplication, the following items for the periods or
date(s) to which such items relate (as determined in accordance with
GAAP): (1) $228,000 relating solely to and comprised solely of
litigation expenses and 2009 10-K restatement expenses incurred during the
fiscal quarter ended September 30, 2009; (2) $276,000 relating solely to and
comprised solely of litigation expenses, 2009 10-K restatement expenses and
expenses relating solely and directly to the sale of the Borrower incurred
during the fiscal quarter ended December 31, 2009; (3) $2,131,000 relating
solely to and comprised solely of bad debt write-offs taken during the fiscal
quarter ended March 31, 2010, litigation expenses and expenses relating solely
and directly to the sale of the Borrower incurred during the fiscal quarter
ended March 31, 2010, and the Borrower’s correction of the Apligraph billing
error by refunding the applicable amount during the fiscal quarter ended March
31, 2010; and (4) $132,000 relating solely to litigation expenses and expenses
relating solely and directly to the sale of the Borrower incurred during the
fiscal quarter ended June 30, 2010.
3. The
Borrower failed to comply with the provisions of Section 6.3 of the Agreement as
of the last day of the fiscal quarter of the Borrower ended June 30, 2010, as
the Effective Tangible Net Worth as the Borrower as of June 30, 2010 was
$12,035,342. Such non-compliance is hereby waived, as of the last day
of the fiscal quarter of the Borrower ended June 30, 2010, as of the last day of
each fiscal quarter of the Borrower occurring subsequent to June 30, 2010
through and including June 30, 2011, and as of July 1, 2011, provided that (a)
the Effective Tangible Net Worth of the Borrower as of June 30, 2010 was not
less than $12,035,342, and (b) the Effective Tangible Net Worth of the Borrower
will not be, as of: (i) September 30, 2010, less than $12,000,000; (ii) December
31, 2010, less than $11,300,000; (iii) March 31, 2011, less than $8,500,000; or
(iv) June 30, 2011 or July 1, 2011, less than $8,800,000.
4. The
Borrower has informed the Bank that it is in compliance with the provisions of
Section 6.4 of the Agreement for the four fiscal quarter period of the Borrower
ended June 30, 2010, as the ratio which is the subject of such section was
0.24:1.00 for such period and as of such date, but that the Borrower will fail
to be in compliance with the provisions of such section for the four fiscal
quarter periods ending March 31, 2011 and June 30, 2011 (and as of such
dates). Such non-compliance is hereby waived, provided that such
ratio will not be, for the four fiscal quarter period ending: (i) March 31, 2011
(or as of such date), more than 1.50:1.00; or (ii) June 30, 2011 (or as of such
date), or for July 1, 2011 (or as of such date), more than
1.25:1.00. Notwithstanding anything contained in this
Waiver-Amendment or in the Agreement to the contrary, solely for purposes of
determining the Borrower’s compliance with the provisions of the section of the
Agreement which is the subject of this paragraph, and solely for the periods or
date(s) which are the subject of this paragraph, there shall be added to EBITDA
of the Borrower, without duplication, the following items for the periods or
date(s) to which such items relate (as determined in accordance with
GAAP): (1) $228,000 relating solely to and comprised solely of
litigation expenses and 2009 10-K restatement expenses incurred during the
fiscal quarter ended September 30, 2009; (2) $276,000 relating solely to and
comprised solely of litigation expenses, 2009 10-K restatement expenses and
expenses relating solely and directly to the sale of the Borrower incurred
during the fiscal quarter ended December 31, 2009; (3) $2,131,000 relating
solely to and comprised solely of bad debt write-offs taken during the fiscal
quarter ended March 31, 2010, litigation expenses and expenses relating solely
and directly to the sale of the Borrower incurred during the fiscal quarter
ended March 31, 2010, and the Borrower’s correction of the Apligraph billing
error by refunding the applicable amount during the fiscal quarter ended March
31, 2010; and (4) $132,000 relating solely to litigation expenses and expenses
relating solely and directly to the sale of the Borrower incurred during the
fiscal quarter ended June 30, 2010.
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5. The
Borrower failed to comply with the provisions of Section 6.5 of the Agreement
for the four fiscal quarter period of the Borrower ended June 30, 2010, as the
ratio which is the subject of such section was 6.97:1.00 for such period and as
of such date. Such non-compliance is hereby waived, for the four
fiscal quarter period of the Borrower ended June 30, 2010 (and as of such date),
for each of the four fiscal quarter periods ending subsequent to June 30, 2010
(and as of such dates) through and including the four fiscal quarter period
ending June 30, 2011 (and as of such date), and for July 1, 2011 (and as of such
date), provided that (a) the ratio which is the subject of such section was not
more than 6.97:1.00 for the four fiscal quarter period of the Borrower ended
June 30, 2010 (or as of such date), and (b) such ratio will not be, for the four
fiscal quarter period ending: (i) September 30, 2010 (or as of such date), more
than 3.85:1.00; (ii) December 31, 2010 (or as of such date), more than
5.25:1.00; (iii) March 31, 2011 (or as of such date), more than 4.50:1.00; or
(iv) June 30, 2011 (or as of such date), or for July 1, 2011 (or as of such
date), more than 4.00:1.00. Notwithstanding anything contained in
this Waiver-Amendment or in the Agreement to the contrary, solely for purposes
of determining the Borrower’s compliance with the provisions of the section of
the Agreement which is the subject of this paragraph, and solely for the periods
or date(s) which are the subject of this paragraph, there shall be added to
EBITDA of the Borrower, without duplication, the following items for the periods
or date(s) to which such items relate (as determined in accordance with
GAAP): (1) $228,000 relating solely to and comprised solely of
litigation expenses and 2009 10-K restatement expenses incurred during the
fiscal quarter ended September 30, 2009; (2) $276,000 relating solely to and
comprised solely of litigation expenses, 2009 10-K restatement expenses and
expenses relating solely and directly to the sale of the Borrower incurred
during the fiscal quarter ended December 31, 2009; (3) $2,131,000 relating
solely to and comprised solely of bad debt write-offs taken during the fiscal
quarter ended March 31, 2010, litigation expenses and expenses relating solely
and directly to the sale of the Borrower incurred during the fiscal quarter
ended March 31, 2010, and the Borrower’s correction of the Apligraph billing
error by refunding the applicable amount during the fiscal quarter ended March
31, 2010; and (4) $132,000 relating solely to litigation expenses and expenses
relating solely and directly to the sale of the Borrower incurred during the
fiscal quarter ended June 30, 2010.
6. Notwithstanding
anything contained in this Waiver-Amendment to the contrary, the Borrowers’
non-compliance with Section 6, for all fiscal quarters and financial covenant
testing dates ending/occurring subsequent to June 30, 2010 and ending/occurring
on or prior to July 1, 2011, is hereby waived to the extent and solely to the
extent resulting from the required adoption by the Borrower of changes in GAAP
(relating to GAAP Codification of Accounting Standards Codification Topic
470:Debt) from and after June 30, 2009 and through and including July 1,
2011.
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7. The
definition of the term “Termination Date” shall be deleted, and in lieu thereof,
the following shall be inserted:
“Termination Date”
shall mean the earlier of (a) July 1, 2011, or if such date is not a Business
Day, the Business Day next succeeding such date; or (b) the date the Commitment
is terminated pursuant to Section 8 hereof.
8. As
an inducement for the Bank to enter into this Waiver-Amendment, the Borrower
hereby represents and warrants as follows:
(A) There
are no defenses or offsets to its obligations under the Agreement, the Note or
any of the other agreements in favor of the Bank referred to in the Agreement,
and if any such defenses or offsets exist without the knowledge of the Borrower,
the same are hereby waived.
(B) All
the representations and warranties made by the Borrower in the Agreement are
true and correct in all material respects as if made on the date
hereof.
8. It
is expressly understood and agreed that all collateral security for the Loans
set forth in the Agreement prior to the waiver provided for herein, is and shall
continue to be collateral security for the Loans and other extensions of credit
provided under the Agreement as herein modified. Without limiting the
generality of the foregoing, the Borrower hereby absolutely and unconditionally
confirms that each document and instrument executed by the Borrower pursuant to
the Agreement continues in full force and effect, is ratified and confirmed and
is and shall continue to be applicable to the Agreement (both before and after
giving effect to this Waiver-Amendment).
9. By
their execution of this letter in the space provided below, the Guarantors (if
any) hereby consent to this Waiver-Amendment and reaffirm their continuing
liability under their guarantees in respect of the Agreement, as amended hereby,
and all documents, instruments and agreements executed pursuant thereto or in
connection therewith, without offset, defense or counterclaim (any such offset,
defense or counterclaim as may exist being hereby irrevocably waived by any such
Guarantors).
10. The
Waiver-Amendment set forth herein is limited precisely as written and shall not
be deemed (except as the Agreement is modified by this Waiver-Amendment) to (a)
be a consent to or a waiver of any term or condition of the Agreement (i.e.,
only non-compliance with the above-referenced sections of the Agreement, but not
with any other sections of the Agreement is waived hereby or any of the
documents referred to therein, or (b) prejudice any right or rights which the
Bank may now have or may have in the future under or in connection with the
Agreement or any documents referred to therein. Whenever the
Agreement is referred to in the Agreement or any of the instruments, agreements
or other documents or papers executed and delivered in connection therewith, it
shall be deemed to mean the Agreement as modified by this
Waiver-Amendment. This Waiver-Amendment may be signed in one or more
counterparts which, when taken together, shall constitute one and the same
document. The parties to this Waiver-Amendment agree that, for
purposes of the execution of this Waiver-Amendment, facsimile signatures and
scanned signatures through email will constitute original
signatures.
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11. This
Waiver-Amendment shall become effective on such date as all of the following
conditions have been satisfied:
(A) Waiver-Amendment
Fee. The Borrower shall have paid to the Bank a
waiver-amendment fee in the amount of $10,000.00; and
(B) Fees and
Expenses. The Bank shall have received evidence of payment of
the fees and disbursements of the Bank’s counsel (if invoiced by the Bank’s
counsel on or prior to the date hereof).
12. This
Waiver-Amendment is dated of October 13, 2010 and shall be effective on the date
of execution by the Bank. Except as modified by this
Waiver-Amendment, the Agreement is in all respects ratified and
confirmed.
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IN
WITNESS WHEREOF, the parties hereto have caused this Waiver-Amendment to be
executed by their duly authorized officers as of the date first written
above.
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Borrower:
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CFWH
(Delaware), LLC
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CFWH
(Massachusetts), LLC
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CFWH
(New Jersey) LLC
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CFWH
(New York) LLC
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New
York Hyperbaric And Wound Care Centers, L.L.C.
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The
Square Hyperbaric LLC
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CFWH
(Pennsylvania), LLC
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Each
by its manager/member,
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By:
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxxxx
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Chief
Executive Officer
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By:
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/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx
X. Xxxxxxx
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Chief
Executive Officer
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Bank:
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SIGNATURE
BANK
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By:
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/s/ Xxxx Xxxxxx
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Xxxx
Xxxxxx
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Vice
President and Lender
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