AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT
AMENDMENT
NO. 2 TO LOAN AND SECURITY AGREEMENT
This
Amendment No. 2 to Loan and Security Agreement (“Amendment No. 2”) is executed
by and between Marquette Business Credit, Inc., d/b/a/ Marquette Healthcare
Finance, Standard Insurance Center, 000 XX Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxx,
Xxxxxx 00000, (“Lender”)
and Zynex, Inc. and Zynex Medical, Inc., f/d/b/a Stroke Recovery Systems, 0000
Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000 (collectively, “Borrower”), as of April 8,
2009, regardless of the date of signing. Lender and Borrower wish to
amend certain terms in the Loan and Security Agreement dated September 22, 2008
and Amendment No. 1 to Loan and Security Agreement dated December 1, 2008 as
follows (the Loan and Security Agreement and Amendment No. 1 are referred to
herein collectively as the “Agreement”):
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Section
1.
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Lender
expressly waives any Event of Default that would otherwise arise under the
Agreement without this Amendment No. 2 resulting from Borrower’s failure
to meet the following financial
covenants:
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(a) Minimum
EBITDA financial covenant as set forth in Section 9.1 of the
Agreement for the quarter ending December 31, 2008; and
(b)
Debt Service Coverage Ratio financial covenant as set forth in Section 9.1 of the
Agreement for the quarter ending December 31, 2008.
Further,
Lender expressly waives any Event of Default that would otherwise arise under
the Agreement without this Amendment No. 2 resulting from Borrower’s anticipated
failure to meet the following financial covenant:
(c) Minimum
EBITDA financial covenant as set forth in Section 9.1 of the
Agreement for the quarter ending March 31, 2009.
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Section
2.
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Borrower
has restated its unaudited financial statements for the quarters ended
March 31, 2008, June 30, 2008, and September 30, 2008. Lender
waives any breach of a representation, warranty or covenant concerning the
accuracy of the original unaudited financial statements for these
quarterly periods. Notwithstanding the foregoing, Lender
expressly reserves any right to declare an Event of Default, and any other
claim, right or remedy with respect to (a) the restated financial
statements for these quarterly periods; and (b) any fraud or intentional
misrepresentation in connection with the original financial statements for
these quarterly periods.
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Page
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Section
3.
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Existing
Schedule A is deleted and replaced in its entirety with the attached
Schedule A, which is expressly incorporated into the
Agreement.
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Section
4.
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Except as expressly amended by
this Amendment, all other terms of the Agreement are unamended and in full
force and effect.
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The
waivers in this Amendment No. 2 shall be effective only for the specific Events
of Default referenced herein, and not for any other existing or future defaults,
potential defaults or Events of Default on the part of the Borrower, whether
known or unknown Lender. Under no circumstances shall the waivers
entitle the Borrower to any other or further waiver in any similar or other
circumstances.
ZYNEX,
INC.
By: /s/
Xxxxxx
Xxxxxxxxx
Name: Xxxxxx
Xxxxxxxxx
Title: Chief
Executive Officer and President
ZYNEX
MEDICAL, INC., f/d/b/a Stroke Recovery Systems
By: /s/
Xxxxxx
Xxxxxxxxx
Name: Xxxxxx
Xxxxxxxxx
Title: President
MARQUETTE
BUSINESS CREDIT, INC., d/b/a MARQUETTE HEALTHCARE FINANCE
By: /s/
Xxxxxxxx
Xxxxxxxxxx
Name: Xxxxxxxx
Xxxxxxxxxx
Title: Senior
Vice President
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Schedule
A
(Revised
by Amendment No. 2)
Supplemental
Terms and Conditions
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Facility
Limit:
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$3,000,000
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Margin:
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3.25%
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Default
Rate:
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3.0%
above the Interest Rate (i.e., Base Rate plus Margin).
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Concentration
Limit*:
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N/A
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Advance
Rate on Eligible Accounts*:
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85%
of Eligible Accounts less than 120 days from the invoice
date;
Account
debtors with 50% or more of their total Account balance aged beyond 120
days are ineligible, except for Medicare and Anthem Blue
Cross.
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NCV
(by Account Debtor type)*
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Medicare
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26%
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Commercial
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36%
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Unlitigated
Workers Compensation
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36%
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Self-pay
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0%
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Reserve
(initial amount)*:
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$0.00
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Origination
Fee:
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1.5%
of the Facility Limit ($45,000) (already paid on the date of execution of
the Loan and Security Agreement).
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Termination
Date:
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3
years from the Closing Date
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Minimum
Facility Availability as of the Closing Date after giving effect to the
first Advance of the Loan and the Reserve established by
Lender:
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$150,000
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Minimum
EBITDA
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Borrower’s
Minimum EBITDA (on a trailing twelve-month basis) as of each quarterly
reporting period shall be as set forth below:
9/30/08: Default
Waived by Lender
12/31/08: Default
Waived by Lender
3/31/09: Default
Waived by Lender
6/30/09: $1,436,000
9/30/09: $3,252,000
12/31/09: $4,111,000
Thereafter:
To be determined in Lender’s sole discretion
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Page
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Schedule
A (continued)
Supplemental
Terms and Conditions
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Minimum
Debt Service Coverage Ratio
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From
9/30/08 and thereafter, Borrower’s Minimum Debt Service Coverage Ratio
shall be at least 3.0 to 1.0, measured on a quarterly basis.
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Minimum
Current Ratio
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From
9/30/08 and thereafter, Borrower’s Minimum Current Ratio shall be at least
1.5 to 1.0, measured on a quarterly basis.
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Capital
Expenditures:
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Borrower
shall not, directly or indirectly, make or incur (i) unfinanced Capital
Expenditures which exceed, in the aggregate, $600,000 in any fiscal year,
or (ii) financed Capital Expenditures which exceed, in the aggregate,
$800,000 in any fiscal year, exclusive of amounts Borrower expends for
rental units that are rented to patients by Borrower.
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Maximum
outstanding principal purchase money Indebtedness to finance, or provide
the funds for, the acquisition of assets (used for the calculation of
Permitted Indebtedness):
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Total
purchase money Indebtedness is limited in all respects in accordance with
the provisions of the Agreement related to Capital
Expenditures. Purchase money Indebtedness other than Capital
Expenditures without the prior consent of Lender is
prohibited.
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Threshold
for notice for amounts in dispute as set forth in Section 6.3(a).
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$5,000
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Threshold
for notice with respect to returns and credits as set forth in Section 6.3(b).
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$25,000
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Account
reduction limit as set forth in Section
6.3(c).
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$5,000
with respect to a single account
$25,000
in the aggregate in any fiscal year
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Cut-Off
Date:
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120
days after the date of invoice.
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Cross-Age
Percentage*:
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50%
of total balance due from any insurance company that is aged beyond 120
days with the exception of Medicare and Anthem Blue Cross.
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Annual
Facility Fee:
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None
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Page
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Schedule
A (continued)
Supplemental
Terms and Conditions
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Early
Termination Fee:
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3%
of the Facility Limit prior to the first annual anniversary of the Closing
Date; 2% of the Facility Limit at anytime from the first anniversary to
the second annual anniversary of the Closing Date: and 1% at anytime from
the second anniversary to the day prior to the Termination Date of the
Loan.
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Unused
Line Fee:
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0.5%
per annum payable monthly in arrears on the first day of each month,
calculated on the difference between the average daily balance and the
total Facility Limit
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Collateral
Monitoring Fee:
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$1,750
per month, payable monthly in arrears on the first day of each
month.
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Collection
Clearance Days:
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3
business days clearance on all items deposited into all Lockbox
Accounts.
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Over
Advance Fee:
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TBD
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Irregular
Advance Request Fee:
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1%
of the amount of Borrower’s Advance Request not submitted in conformance
with the requirements of this Agreement.
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Closing
and legal fees:
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All
closing and legal fees incurred by Lender in connection with the Loan and
the Agreement.
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Audit
Fee:
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In
the event third-party auditors conduct the audit: actual audit fees
incurred plus all out of pocket expenses.
In
the event Lender’s auditors conduct the audit: $1,000 per day, per
auditor, plus all out of pocket expenses.
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Mailing
Charges:
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All
costs and expenses of Lender.
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Wire
Transfer Fees:
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$20.00
per wire
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Waiver
Fee:
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TBD
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Termination
Reserve
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$10,000
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* Subject
to change from time to time in Lender’s sole discretion.
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