EXHIBIT 4.2
SEVENTH AMENDMENT AND WAIVER AGREEMENT
SEVENTH AMENDMENT AND WAIVER AGREEMENT, dated as of March 4, 2004 (this
"Amendment Agreement"), to the Amended and Restated Credit Agreement, dated as
of May 14, 2001, as amended to date (and as the same may be further amended,
supplemented or modified from time to time in accordance with its terms, the
"Credit Agreement"), among Microtek Medical Holdings, Inc. (formerly known as
Isolyser Company, Inc.), a Georgia corporation ("MMH") and Microtek Medical,
Inc., a Delaware corporation ("Microtek", together with MMH, each a "Borrower"
and, jointly and severally, the "Borrowers"), the lenders named therein (the
"Lenders"), the guarantors named therein (the "Guarantors") and JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), as agent (the "Agent") for
the Lenders. Terms used herein and not otherwise defined herein shall have the
meanings attributed thereto in the Credit Agreement.
WHEREAS, the Borrowers have informed the Agent of their desire that
Microtek enter into that certain Asset Purchase Agreement (the "Purchase
Agreement") made the fourth day of March, 2004, by and between Microtek and
Ortho/Plast, Inc. ("Seller"), pursuant to which Microtek will acquire
substantially all of the assets used or held for use in connection with the
orthopedic product line of Seller (the "Acquired Assets") for cash and
additional amounts payable under that certain Earn Out Agreement made as of the
fourth day of March, 2004 by and among Microtek and the Seller (the "Earn Out
Agreement"); and
WHEREAS, Section 7.03 of the Credit Agreement restricts the creation of
Indebtedness; and
WHEREAS, Section 7.05 of the Credit Agreement prohibits any Borrower or any
subsidiary of any Borrower from, among other things, acquiring all or
substantially all of the capital stock or assets of any other person; and
WHEREAS, Section 7.06 of the Credit Agreement prohibits any Borrower or any
subsidiary of any Borrower from, among other things, owning, purchasing or
acquiring any stock, obligations, assets or securities of, or any interest in,
or making any capital contribution or loan or advance to, any other person; and
WHEREAS, the Borrowers have requested that the Lenders (i) amend the Credit
Agreement to permit Microtek to enter into the Earn Out Agreement and (ii) waive
the provisions of Sections 7.05 and 7.06 of the Credit Agreement to permit
Microtek to purchase the Acquired Assets.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, and subject to the fulfillment of the conditions
set forth below, the parties hereto agree as follows:
1. AMENDMENT TO CREDIT AGREEMENT
1.1 Section 7.03 of the Credit Agreement is hereby amended by adding a
new clause (xv) to the end thereof that reads as follows:
"(xv) the deferred purchase price payable under that certain Earn Out
Agreement made as of the fourth day of March, 2004 by and among
Microtek and Ortho/Plast, Inc. in connection with acquisition by
Microtek of assets pursuant to the Asset Purchase Agreement made as of
the fourth day of March, 2004 by and among Microtek and Ortho/Plast,
Inc., provided that such deferred purchase price (including any
prepayment thereof set forth in such Asset Purchase Agreement) will
not exceed $800,000."
2. AMENDMENTS TO SECURITY DOCUMENTS
2.1 The Security Agreement is hereby amended as follows: The
definition of "General Intangibles" in Section 1(e) thereof is hereby modified
to add the following sentence: "In addition, all indemnification rights of
Microtek under the Asset Purchase Agreement made as of the fourth day of March,
2004, by and between Microtek Medical, Inc., a Delaware corporation, and
Ortho/Plast, Inc., a Georgia corporation."
3. WAIVER, CONSENT AND RELEASE UNDER LOAN DOCUMENTS
3.1 The Lenders hereby waive the provisions of Sections 7.05 and 7.06
of the Credit Agreement solely for the purposes of permitting Microtek to
purchase the Acquired Assets in accordance with the Purchase Agreement.
4. CONFIRMATION OF SECURITY DOCUMENTS
Each Loan Party, by its execution and delivery of this Amendment
Agreement, irrevocably and unconditionally ratifies and confirms in favor of the
Agent that it consents to the terms and conditions of the Credit Agreement as it
has been amended by this Amendment Agreement and that notwithstanding this
Amendment Agreement, each Security Document to which such Loan Party is a party
shall continue in full force and effect in accordance with its terms and is and
shall continue to be applicable to all of the Obligations.
5. CONDITIONS PRECEDENT
This Amendment Agreement shall become effective upon the execution and
delivery of counterparts hereof by the parties listed below and the fulfillment
of the following conditions:
(a) All representations and warranties contained in this Amendment
Agreement or otherwise made in writing to the Agent in connection herewith shall
be true and correct.
(b) No unwaived event has occurred and is continuing which constitutes
an Event of Default under the Credit Agreement or would constitute such an Event
of Default but for the requirement that notice be given or time elapse or both.
(c) The Agent shall have received a true and complete copy of the
fully executed Purchase Agreement and the Earn Out Agreement, all of which shall
be in form and substance satisfactory to the Agent.
(d) The Agent, for the benefit of the Lenders, shall have obtained a
legal, valid and perfected first (except as permitted pursuant to Section 7.01
of the Credit Agreement) priority security interest in the Acquired Assets.
(e) The Agent shall have received an amendment fee in the amount of
$7,500.00.
(f) The Agent shall have received such other documents as the Lenders
or the Agent or the Agent's counsel shall reasonably deem necessary.
6. MISCELLANEOUS
6.1 Each Borrower and each Guarantor reaffirms and restates the
representations and warranties set forth in Article IV of the Credit Agreement
and all such representations and warranties shall be true and correct on the
date hereof with the same force and effect as if made on such date, except as
they may specifically refer to an earlier date. Each Borrower and each Guarantor
represents and warrants (which representations and warranties shall survive the
execution and delivery hereof) to the Agent that:
(a) it has the corporate power and authority to execute, deliver and
carry out the terms and provisions of this Amendment Agreement and the
transactions contemplated hereby and has taken or caused to be taken all
necessary corporate action to authorize the execution, delivery and performance
of this Amendment Agreement and the transactions contemplated hereby;
(b) no consent of any other person (including, without limitation,
shareholders or creditors of any Borrower or any Guarantor), and no action of,
or filing with any governmental or public body or authority is required to
authorize, or is otherwise required in connection with the execution, delivery
and performance of this Amendment Agreement;
(c) this Amendment Agreement has been duly executed and delivered on
behalf of each Borrower and each Guarantor by a duly authorized officer, and
constitutes a legal, valid and binding obligation of each Borrower and each
Guarantor enforceable in accordance with its terms, subject to bankruptcy,
reorganization, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and the exercise of judicial
discretion in accordance with general principles of equity;
(d) the execution, delivery and performance of this Amendment
Agreement will not violate any law, statute or regulation, or any order or
decree of any court or governmental instrumentality, or conflict with, or result
in the breach of, or constitute a default under any contractual obligation of
any Borrower or any Guarantor; and
(e) as of the date hereof (after giving effect to the consummation of
the transactions contemplated under this Amendment Agreement) there exists no
Default or Event of Default.
By its signature below, each Borrower and each Guarantor agree that it
shall constitute an Event of Default if any representation or warranty made
above should be false or misleading in any material respect.
6.2 Each Borrower and each Guarantor confirms in favor of the Agent
and each Lender that it agrees that it has no defense, offset, claim,
counterclaim or recoupment with respect to any of its obligations or liabilities
under the Credit Agreement or any other Loan Document and that, except for the
specific waiver provided for herein, nothing herein shall be deemed to be a
waiver of any covenant or agreement contained in the Credit Agreement, and
except as herein expressly amended, the Credit Agreement and other Loan
Documents are each ratified and confirmed in all respects and shall remain in
full force and effect in accordance with their respective terms.
6.3 Except for the specific waivers provided for in Section 3 of this
Amendment Agreement, nothing herein shall be deemed to be a waiver of any
covenant or agreement contained in the Credit Agreement, and the Borrowers and
the Loan Parties hereby agree that the Credit Agreement and other Loan Documents
are each ratified and confirmed in all respects and shall remain in full force
and effect in accordance with their respective terms.
6.4 Upon presentation of its invoice, the Borrowers covenant and agree
to pay in full all legal fees charged, and all costs and expenses incurred, by
Kaye Scholer LLP, counsel to the Agent, in connection with the transactions
contemplated under this Agreement and the other Loan Documents and instruments
in connection herewith and therewith. 1.1
6.5 All references to the Credit Agreement and the other Loan
Documents in the Credit Agreement, the Loan Documents and the other documents
and instruments delivered pursuant to or in connection therewith shall mean such
agreements as amended hereby and as each may in the future be amended, restated,
supplemented or modified from time to time.
6.6 This Amendment Agreement may be executed by the parties hereto
individually or in combination, in one or more counterparts, each of which shall
be an original and all of which shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page by telecopier shall be
effective as delivery of a manually executed counterpart.
6.7 THIS AMENDMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6.8 The parties hereto shall, at any time and from time to time
following the execution of this Amendment Agreement, execute and deliver all
such further instruments and take all such further action as may be reasonably
necessary or appropriate in order to carry out the provisions of this Amendment
Agreement.
MICROTEK MEDICAL HOLDINGS, INC. (f/k/a
ISOLYSER COMPANY, INC.)
By:______________________________
Name:
Title:
MICROTEK MEDICAL, INC.
By:______________________________
Name:
Title:
JPMORGAN CHASE BANK (f/k/a THE CHASE
MANHATTAN BANK), as Agent and as Lender
By:______________________________
Name:
Title:
1763881