Exhibit 99.1
FIRST AMENDMENT TO
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LOAN AGREEMENT AND LOAN DOCUMENTS
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THIS FIRST AMENDMENT TO LOAN AGREEMENT AND LOAN DOCUMENTS (this
"Amendment") is entered into as of June 21, 2002, by and between KATIE
PETROLEUM, INC., a Texas corporation ("Lender"), and RETRACTABLE TECHNOLOGIES,
INC., a Texas corporation ("Borrower").
RECITALS:
A. The parties hereto have entered into that certain Loan Agreement
dated as of November 12, 2001 (the "Loan Agreement"), pursuant to which Lender
(i) purchased that certain Commercial Variable Rate First Deed of Trust Note
dated February 18, 2000, executed by Borrower and originally payable to the
order of First International Bank in the original principal amount of
$1,500,000.00 (the "FIB Note"), (ii) made a working capital loan to Borrower in
the principal amount of $2,500,000 (the "Working Capital Loan"), and (iii)
agreed to make a construction loan in the amount of $1,000,000 (the
"Construction Loan") pursuant to that certain Construction Loan Agreement dated
November 12, 2001, between Borrower and Lender (the "Construction Loan
Agreement").
B. The Construction Loan was never advanced, and the parties wish to
terminate the Construction Loan Agreement and Lender's commitment to make the
Construction Loan.
C. The indebtedness of Borrower under the FIB Note is secured by,
among other things, that certain Commercial Deed of Trust dated February 18,
2000, executed by Borrower and filed for record in the Office of the County
Clerk of Xxxxxx County, Texas on February 24, 2000, under Instrument File Number
00-R0016390 (the "Deed of Trust").
D. The indebtedness of Borrower to Lender under the Working Capital
Loan is evidenced by that certain Note (Secured by Security Agreement) dated
November 12, 2001, executed by Borrower and payable to the order of Lender in
the original principal amount of $2,500,000 (the "Working Capital Note") and is
secured by that certain Security Agreement dated November 12, 2001, executed by
Borrower in favor of Lender (the "Security Agreement").
E. Concurrently herewith, Lender and Borrower are entering into a
Securities Purchase Agreement (herein so called) pursuant to which, among other
things, Borrower agrees to issue shares of its Series V Class B Convertible
Preferred Stock ("Series V Stock") to Lender in exchange for the cancellation
and settlement of a portion of the indebtedness of Borrower under the FIB Note
and the Working Capital Note, as hereinafter provided.
F. Borrower and Lender wish to amend the Loan Agreement and related
documents as provided herein and attach such amendments as exhibits to the Loan
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Lender and Borrower hereby agree
as follows:
1. Defined Terms. All capitalized terms used but not otherwise defined
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in this Amendment shall have the meanings ascribed to them in the Loan
Agreement.
2. FIB Note. (a) The parties hereto acknowledge and agree that (i) \
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immediately prior to the issuance of the Series V Stock pursuant to the
Securities Purchase Agreement, the outstanding principal balance of the FIB Note
is $1,429,286.77, (ii) effective as of the date hereof $1,179,284.00 of the
indebtedness evidenced by the FIB Note is hereby cancelled and discharged, and
(iii) the outstanding principal balance of the FIB Note after such cancellation
and discharge is $250,002.77 as of the date hereof.
(b) Borrower and Lender shall execute and deliver a Note Modification
Agreement of even date herewith ("Modification Agreement") to be filed of record
in the Office of the County Clerk of Xxxxxx County, Texas, to reflect the
cancellation and discharge under subsection (a) of this Section 2 and to modify
the payment terms of the FIB Note as follows: (i) accrued interest shall be
payable monthly on the dates specified in the Modification Agreement, and (ii)
all principal shall be payable at maturity on February 18, 2005. All other terms
and provisions of the FIB Note shall remain unchanged. Lender and Borrower agree
that the principal balance of the FIB Note shall not be paid or prepaid in whole
or in part by Borrower until all accrued dividends on all classes of Borrower's
preferred stock have been paid in full. If on the date of maturity of the FIB
Note, all accrued dividends on all classes of Borrower's preferred stock have
not been paid in full, Lender and Borrower agree that the maturity date of the
FIB Note shall be extended for one year periods on the same terms and conditions
until the accrued dividends on all classes of Borrower's preferred stock have
been paid in full. While the principal of the FIB Note is unpaid, Borrower
agrees that it will not pledge the collateral securing the FIB Note as security
for any other obligation of Borrower.
3. Working Capital Note. (a) The parties hereto acknowledge and agree
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that (i) immediately prior to the issuance of the Series V Stock pursuant to the
Securities Purchase Agreement, the outstanding principal balance of the Working
Capital Note is $2,500,000.00, and (ii) effective as of the date hereof,
$2,500,000 of the indebtedness evidenced by the Working Capital Note is hereby
cancelled and discharged.
(b) Borrower and Lender agree that the collateral pledged under the
Working Capital Note and subject to the Security Agreement will not be used as
collateral for any new debt until such time that all accrued dividends on all
classes of Borrower's preferred stock have been paid in full.
(c) The Lender shall xxxx the Working Capital Note and the Security
Agreement "cancelled" and return the Working Capital Note and the Security
Agreement to Borrower.
4. Construction Loan. Effective as of the date hereof, the commitment
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of the Lender to make the Construction Loan is hereby terminated. Accordingly,
effective as of the date hereof, (a) the Loan Agreement is hereby amended to
delete Sections 3 and 8 in their entirety, and (b) the Construction Loan
Agreement and all obligations of Borrower and Lender thereunder are hereby
terminated, discharged and released. The Lender shall xxxx that certain Real
Estate Lien Note dated November 12, 2001, executed by Borrower and payable to
Lender in the stated principal amount of $1,000,000.00 "cancelled" and return
such note to Borrower.
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5. Indemnification. Lender hereby agrees to indemnify Borrower from,
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and hold Borrower harmless against, any and all losses, liabilities, claims,
damages, penalties, judgments, disbursements, costs, interest, expenses
(including reasonable attorneys' fees) and amounts paid in settlement to which
Borrower may become subject which directly or indirectly arise from or relate to
any claim by any party that Borrower has any indebtedness, obligation or
liability under the FIB Note, the Working Capital Note, or the New Working
Capital Note in excess of the reduced amount of indebtedness of Borrower
existing after the cancellation and discharge of indebtedness pursuant to
Sections 2 and 3 hereof.
6. Continued Validity. Except as expressly provided in this Amendment,
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all terms, conditions, representations, warranties, and covenants contained in
the Loan Agreement and all documents and agreements executed in connection with
the Loan Agreement or evidencing, securing or otherwise relating to the
indebtedness evidenced by the FIB Note and the Working Capital Note
(collectively, the "Loan Documents") shall remain in full force and effect, and
are hereby ratified, confirmed and acknowledged by Borrower.
7. Representations and Warranties. Each party hereto hereby represents
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and warrants to the other party hereto that the execution, delivery and
performance of this Amendment and the documents executed pursuant hereto (i)
have been authorized by all requisite corporate action and (ii) do not and will
not violate or conflict with, result in a breach of or require any consent under
the articles of incorporation, bylaws or other organizational documents of such
party or any applicable laws.
8. CONSTRUCTION. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
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PARTIES HEREUNDER SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH AND
GOVERNED BY, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA.
9. Binding Effect. This Amendment shall be binding upon and inure to
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the benefit of and be enforceable by the parties hereto and their respective
successors and assigns.
10. Counterparts. This Amendment may be executed in several
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counterparts, each of which shall be fully effective as an original, and all of
which together shall constitute one and the same instrument.
11. NO ORAL AGREEMENTS. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
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REPRESENT 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 as of the date first above written.
KATIE PETROLEUM, INC.
By: /s/ Xxxx X Xxxxxxx
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Name: Xxxx X Xxxxxxx
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Title: President / CEO
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RETRACTABLE TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
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Title: CEO President
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Xxxxxx X. Xxxx ("Guarantor") hereby (a) consents and agrees to this
Amendment, and (b) agrees that the Guaranty dated November 12, 2002 in favor of
Lender and the Unlimited Continuing Guaranty dated February 18, 2000 in favor of
Lender, as assignee of First International Bank, shall continue to be legal,
valid and binding obligations of Guarantor enforceable against Guarantor in
accordance with their respective terms.
/s/ Xxxxxx X. Xxxx
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XXXXXX X. XXXX, Individually
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