Exhibit 10.1
SECOND AMENDMENT TO LOAN DOCUMENTS
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THIS SECOND AMENDMENT TO LOAN DOCUMENTS (this "Amendment"), dated
as of July 1, 2004, is among XXXXXXXXXX LABORATORIES, INC., a Texas
corporation (the "Borrower"), CARALOE, INC., a Texas corporation, and
XXXXXXX BIOTECHNOLOGIES, INC., a Delaware corporation (collectively, the
"Guarantors") and COMERICA BANK, successor by merger with Comerica Bank-
Texas (the "Bank").
RECITALS:
The Bank has extended various loans to Borrower, as more particularly
described in the Credit Agreement dated as of September 1, 2002 executed
between the Borrower and the Bank (as the same has been or may hereafter be
amended, restated, supplemented, or otherwise modified from time to time,
the "Agreement").
In connection with the Agreement, the Borrower, the Guarantors, and the
Bank have entered into that certain Advance Formula Agreement dated as of
September 1, 2002 (as the same has been or may hereafter be amended,
restated, supplemented, or otherwise modified from time to time, the
"Advance Formula Agreement").
The Bank, the Borrower, and the Guarantors now desire to amend the
Agreement and the Advance Formula Agreement as provided herein.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows (all provisions of
this Amendment being effective as of the date hereof unless otherwise stated
herein):
ARTICLE I
Definitions
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Section 1.1 Definitions. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the same meanings as in
the Agreement, as amended hereby.
ARTICLE II
Amendments
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Section 2.1 Amendment to Section 4.4.a. of the Agreement. Effective as
of July 1, 2004, Section 4.4.a. of the Agreement is amended and restated in
its entirety to read as follows:
a. Tangible Net Worth. Maintain a Tangible Net Worth as of the end
of each calendar month of not less than the amount set forth below at each
respective month end as set forth below:
Month End Amount
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At July 31, 2004 $ 10,800,000.00
At August 31, 2004 $ 10,900,000.00
At September 30, 2004 $ 11,300,000.00
At October 31, 2004 $ 11,500,000.00
At November 30, 2004 $ 11,800,000.00
At each successive month end after $ 12,200,000.00
November 30, 2004
Section 2.2 Amendment to Section 4.4.b. of the Agreement. Effective as
of July 1, 2004, Section 4.4.b. of the Agreement is amended and restated in
its entirety to read as follows:
b. Current Ratio. Maintain in a Current Ratio as of the end of each
calendar month of not less than 1.60 to 1.0, commencing July 31, 2004.
Section 2.3 Amendment to Section 4.4.c. of the Agreement. Effective as
of July 1, 2004, Section 4.4.c. of the Agreement is amended and restated in
its entirety to read as follows:
c. Liquidity Ratio. Maintain in a Liquidity Ratio as of the end of
each calendar month, of at least the ratio set forth below during the
corresponding period set forth below:
Period Amount
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From June 30, 2004 through the Revolving 1.75:1.00
Credit Maturity Date
Section 2.4 Amendment to Section 2 of the Advance Formula Agreement.
Section 2 of the Advance Formula Agreement is restated in its entirety to
read as follows:
ADVANCE FORMULA. Debtor warrants and agrees that Debtor's
indebtedness to Bank for the Formula Loans shall never exceed the
sum of:
(a) eighty percent (80%) of its Eligible Accounts, as defined
below, excluding Eligible Accounts attributable to Medline Industries,
Inc. ("Medline") as the Account Debtor; plus
(b) the lesser of (i) $350,000 or (ii) 80% of Permitted Medline
Accounts (as used herein, the term "Permitted Medline Accounts" means
fifty percent (50%) of Debtor's Eligible Accounts attributable to
Medline as the Account Debtor); plus
(c) fifty percent (50%) of its Eligible Inventory (as defined
below) classified as "raw materials" and fifty percent (50%) of its
Eligible Inventory classified as "finished goods" as such terms are
used in Section 5 below.
Notwithstanding the Medline exclusions of paragraph (a) above and the
limitations of paragraph (b) above of this Section 2, such limitations will
cease to apply to Eligible Accounts attributable to Medline as the Account
Debtor (and Medline Eligible Accounts will thereafter be included in the
computation provided for in paragraph (a) above) at the first to occur of
the following events:
(1) Medline has executed (and Bank is in receipt of) a written
irrevocable waiver of all of its present and future rights of offset or
other claims against Debtor, such waiver to be in form and content
satisfactory to Bank in its sole discretion, or
(2) Medline has executed (and Bank is in receipt of) a written
statement, in form and content satisfactory to Bank in its sole
discretion, evidencing payment in full of all obligations owed by
Debtor to Medline which in any way could result in a right of offset or
other claims that could reduce the amount of any accounts payable owed
by Medline to Debtor which are from time to time included in computing
the advance formula under this Section 2.
ARTICLE III
Ratifications; Representations
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Section 3.1 Ratifications. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions
set forth in the Agreement and the other Loan Documents and except
as expressly modified and superseded by this Amendment, the terms and
provisions of the Agreement and any notes relating thereto, the Loan
Documents, and all other documents executed in connection with the Agreement
are hereby ratified and confirmed and shall continue in full force and
effect. The Loan Parties and the Bank agree that the Agreement, as amended
hereby, and all other documents executed in connection with the Agreement or
this Amendment to which such Loan Party is a party, or becomes a party to
pursuant to this Amendment, shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
Section 3.2 Representations and Warranties. Each of the Borrower and the
Guarantors hereby represent and warrant to the Bank that the representations
and warranties contained in the Agreement, as amended hereby, and any other
documents executed in connection therewith or herewith are true and correct
on and as of the date hereof as though made on and as of the date hereof.
ARTICLE IV
Conditions Precedent
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Section 4.1 Conditions Precedent. The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent:
(a) The Bank shall have received each of the following, each dated
(unless otherwise indicated) the date of this Amendment, in form and
substance satisfactory to the Bank:
(a) Amendment. This Amendment properly executed by the
Borrower, the Bank and each Guarantor;
(b) Resolutions. Resolutions of each Loan Party certified by
its Secretary or an Assistant Secretary which authorize the
execution, delivery, and performance by such Loan Party of this
Amendment and the other Loan Documents to which such Loan Party is
or is to be a party hereunder;
(c) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of each Loan
Party certifying the names of the officers of such Loan Party
authorized to sign this Amendment and each of the other Loan
Documents to which such Loan Party is or is to be a party
hereunder (including the certificates contemplated herein)
together with specimen signatures of such officers;
(d) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation of
each Loan Party as to the existence and good standing of such Loan
Party, each dated within thirty (30) days prior to the date of
this Amendment;
(e) No Oral Agreements. No Oral Agreements document,
properly executed by each Loan Party; and
(f) Additional Information. The Bank shall have received
such additional documents, instruments and information as the Bank
or its legal counsel, Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., may
request.
(b) The representations and warranties contained herein and in all
other Loan Documents, as amended hereby, shall be true and correct as
of the date hereof as if made on the date hereof.
(c) No Event of Default shall have occurred and be continuing and
no event or condition shall have occurred that with the giving of
notice or lapse of time or both would be an Event of Default.
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be
satisfactory to the Bank and its legal counsel, Xxxxxxxx Xxxxxxxx &
Xxxxxx P.C.
ARTICLE V
Acknowledgment and Agreement of Guarantors
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Each of the Guarantors hereby (i) consents to the terms and execution
hereof; (ii) reaffirms its obligations to the Bank pursuant to the terms
of its Guaranty; (iii) reaffirms its obligations to the Bank pursuant to
the terms of each Guarantor's respective Security Agreement; and
(iv) acknowledges that the Bank may amend, restate, extend, renew or
otherwise modify the Agreement and any indebtedness or agreement of the
Borrower, or enter into any agreement or extend additional or other credit
accommodations, without notifying or obtaining the consent of any Guarantor
and without impairing the liability of any Guarantor under its Guaranty and
its Security Agreement for all of the Borrower's present and future
indebtedness to the Bank.
ARTICLE VI
Miscellaneous
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Section 6.1 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other document
executed in connection herewith shall survive the execution and delivery of
this Amendment, and no investigation by the Bank or any closing shall affect
the representations and warranties or the right of the Bank to rely upon
them.
Section 6.2 Reference to Agreement. Each of the Agreement and any and
all other agreements, documents, or instruments now or hereafter executed
and delivered pursuant to the terms hereof or pursuant to the terms of the
Agreement as amended hereby, are hereby amended so that any reference in
such documents to the Agreement shall mean a reference to the Agreement as
amended hereby.
Section 6.3 Expenses of Bank. As provided in the Agreement, the Borrower
agrees to pay on demand all reasonable costs and expenses incurred by the
Bank in connection with the preparation, negotiation, and execution of this
Amendment and any other documents executed pursuant hereto and any and all
amendments, modifications, and supplements thereto, including without
limitation the costs and reasonable fees of the Bank's legal counsel, and
all costs and expenses incurred by the Bank in connection with the
enforcement or preservation of any rights under the Agreement, as amended
hereby, or any other document executed in connection therewith, including
without limitation the costs and reasonable fees of the Bank's legal
counsel.
Section 6.4 Severability. Any provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 6.5 Applicable Law. This Amendment and all other documents
executed pursuant hereto shall be deemed to have been made and to be
performable in Dallas, Dallas County, Texas and shall be governed by and
construed in accordance with the laws of the State of Texas.
Section 6.6 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of the Bank, the Borrower and its successors
and assigns, except the Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of the
Bank.
Section 6.7 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an
original, but all of which when taken together shall constitute one and the
same instrument.
Section 6.8 Headings. The headings, captions, and arrangements used
in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 6.9 Release. In consideration for the execution by the Bank
of this Amendment, the Borrower does hereby release, acquit and forever
discharge the Bank, its officers, directors, agents, attorneys and
representatives, jointly and severally, from any and all claims, demands,
causes of action and liabilities whatsoever, both at law or in equity which
the Borrower had or now have whether known or unknown at the present time
from the beginning of time up to and including the date of this Amendment
and which are in any manner related to or which in any way concern the
Agreement, the Loan Documents, or any other agreements or dealings by or
between the Bank and the Borrower, and the Borrower hereby waives any and
all such claims, demands, and causes of action.
Section 6.10 ENTIRE AGREEMENT. THE AGREEMENT, THIS AMENDMENT AND ALL
OTHER INSTRUMENTS, DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN
CONNECTION WITH THE AGREEMENT OR THIS AMENDMENT EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN
OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
[Remainder of page intentionally left blank. Signature pages follow.]
Executed as of the date first written above.
BORROWER:
XXXXXXXXXX LABORATORIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: President and CEO
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GUARANTORS:
CARALOE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: President
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XXXXXXX BIOTECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
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Title: CEO
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BANK:
COMERICA BANK
(successor by merger with Comerica Bank-Texas)
By: /s/ Xxxxxxxxx Xxxxxx
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Name: Xxxxxxxxx Xxxxxx
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Title: Vice President - Texas Division
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