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EXHIBIT 1.2
FIRST MODIFICATION TO CONVERTIBLE
SUBORDINATED PROMISSORY NOTE
THIS FIRST MODIFICATION TO CONVERTIBLE SUBORDINATED PROMISSORY NOTE (this
"Modification") dated as of September 30, 1997, between Xxxxxx Healthcare,
Inc., a Texas corporation (the "Company"), and Maxxim Medical, Inc., a Delaware
corporation (the "Holder"). Hereinafter, capitalized words and phrases used
herein which are defined in the Note (as such term is hereinafter defined) are
used herein as therein defined, unless otherwise indicated.
WITNESSETH:
WHEREAS, the Company issued to the Holder a $7,000,000 Convertible
Subordinated Promissory Note dated as of April 30, 1996 (the "Note");
WHEREAS, the Company intends to enter into that certain Asset Purchase
Agreement on September 30, 1997, between the Company and CYBEX International,
Inc., a New York corporation ("CYBEX"), whereby the Company will acquire
certain of the assets of CYBEX;
WHEREAS, in connection with the CYBEX acquisition, the Company has
requested that the Holder execute an amendment (the "Subordination Amendment")
to that certain Subordination Amendment, dated as of April 30, 1996, by and
among the Holder, the Company and Comerica Bank - Texas (the "Subordination
Agreement") increasing the amount of allowable indebtedness under the Senior
Loan Documents (as defined in the Subordination Agreement) from $10,000,000 to
12,000,000;
WHEREAS, the Holder has agreed to execute the Subordination Amendment in
exchange for the reduction of its Conversion Price (as defined in the Note)
from $3.00 to $2.00; and
WHEREAS, the parties hereto desire to modify the applicable provisions of
the Note.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. MODIFICATION OF THE NOTE.
1.1 Section 4.1 of the Note is hereby deleted and the following
section is substituted therefor:
"4.1 Conversion Privilege and Conversion Price. Subject to and upon
compliance with the provisions of this Article IV, at the option of the
Holder, all or any portion of the amounts owed and outstanding under this
Note may be converted at any time and from time to time into fully paid and
nonassessable shares of Common Stock (the "Shares"), calculated as to each
conversion to the nearest 1/100 of a share at the Conversion Price,
determined as hereinafter provided, in effect at the time of conversion.
Unless and until the occurrence of an Event of Default, the Conversion
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Price shall be $2.00 per share of Common Stock, subject to adjustment in
accordance with Article 5 hereof. Upon the occurrence of an Event of
Default, the Conversion Price shall be automatically adjusted to an amount
equal to the lesser of (i) the Conversion Price in effect as of the date
of the Event of Default and (ii) 80% of the average Market Price for the
30 trading days immediately preceding the date of the Event of Default,
which amount shall be subject to further adjustment in accordance with
Article 5 hereof. All amounts so converted shall be applied first to pay
any accrued and unpaid interest and second to reduce the principal amount
of this Note as of the date of such conversion as if payment or prepayment
in such amount has occurred, with any reduction in principal to be applied
to satisfy the Company's redemption obligations under Section 2.3.2 hereof
in accordance with Section 2.3.4 hereof. This right of conversion must be
exercised by delivery of a written notice to the Company setting forth the
amount to be converted to be effective upon the Company's receipt of such
notice (the "Conversion Notice"). Notwithstanding the foregoing, in the
event the Company provides notice to the Holder of its intention to redeem
all or any portion of the outstanding principal balance of this Note
pursuant to Section 2.3.1 hereof, the Company must receive the Conversion
Notice on or before the last Business Day prior to the effective date of
such redemption to the extent that the Holder desires to convert all or
any portion of the amount to be redeemed by the Company."
1.2 Section 6.7(b) of the Note is hereby deleted and the following
section is substituted therefor:
"(b) Funded Debt of the Company under the Senior Indebtedness
not exceeding $12,000,000 in aggregate principal amount at any one time
outstanding;"
2. NO FURTHER EFFECT. Except as expressly modified hereby, the Note
shall remain in full force and effect.
3. GOVERNING LAW. This Modification shall be governed by and construed
in accordance with the laws of the State of Texas.
4. COUNTERPARTS; EFFECTIVENESS. This Modification may be signed in any
number of counterparts, each of which shall be an original, and with the effect
as if the signatures thereto and hereto were upon the same instrument. This
Modification shall be effective as of the date hereof when each of the parties
hereto shall have executed counterparts hereof.
5. ORAL AGREEMENTS. This Modification represents the final expression
between the parties with respect to the subject matter hereof, and may not be
contradicted by evidence of prior or contemporaneous oral agreement of the
parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Modification to be
executed as of the first written above.
XXXXXX HEALTHCARE, INC.
a Texas corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx,
President and Chief Executive Officer
MAXXIM MEDICAL, INC.
a Delaware corporation
By: /s/ Xxx Xxxxxxxx
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Name: Xxx Xxxxxxxx
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Title: President
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