CONSENT AND AMENDMENT NUMBER TWO TO
LOAN AND SECURITY AGREEMENT
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THIS CONSENT AND AMENDMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT
(this "Consent and Amendment") is entered into as of August 29, 1997 (but
effective only in accordance with the terms and conditions of Section 4 of this
Consent and Amendment), by and among FOOTHILL CAPITAL CORPORATION, a California
corporation ("Foothill"), LASERSIGHT INCORPORATED, a Delaware corporation
("LaserSight"), LASERSIGHT TECHNOLOGIES, INC., a Delaware corporation
("Technologies"), MEC HEALTH CARE, INC., a Maryland corporation ("MEC"), LSI
ACQUISITION, INC., a New Jersey corporation ("LSI"), LASERSIGHT CENTERS
INCORPORATED, a Delaware corporation ("Centers"), and MRF, INC., a Missouri
corporation ("MRF," together with LaserSight, Technologies, MEC, LSI, and
Centers, individually and collectively, jointly and severally, "Borrower"), with
reference to the following facts:
A. Foothill and Borrower heretofore have entered into that certain
Loan and Security Agreement, dated as of March 31, 1997, as amended
by that certain Consent and Amendment Number One to Loan and
Security Agreement, dated as of July 28, 1997 (as amended, the
"Loan Agreement");
B. Borrower has requested that Foothill consent to the following
transactions (collectively, the "Transactions") being contemplated
by Borrower and to the amendment of the Loan Agreement as required
thereby: (i) the sale of securities by LaserSight as contemplated
by that certain Securities Purchase Agreement, dated as of August
29, 1997, between LaserSight and the purchasers signatory thereto,
which agreement shall be in form and substance satisfactory to
Foothill, and (ii) the formation by LaserSight of its wholly-owned
Subsidiary, LaserSight Patents, Inc., a Delaware corporation, for
the purpose of acquiring the patents and related rights
contemplated under the IBM Option Agreement;
C. Borrower also has requested that Foothill amend Section 7.20 of the
Loan Agreement to modify certain financial covenants set forth
therein;
D. Foothill is willing to consent to the Transactions and to amend the
Loan Agreement in accordance with the terms and conditions hereof;
and
E. All capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Loan Agreement, as amended hereby.
NOW, THEREFORE, in consideration of the above recitals and the mutual
premises contained herein, Foothill and Borrower hereby agree as follows:
1. Amendments to the Loan Agreement.
a. Section 1.1 of the Loan Agreement hereby is amended to include
the following defined terms:
"Investor Intercreditor Agreement" means that certain Intercreditor
Agreement between Foothill as the Investors, dated as of August 29, 1997.
"Investors" means those Persons identified on Schedule P-2 attached
hereto.
"LPI" means LaserSight Patents, Inc., a Delaware corporation.
"Series B Certificate of Designation" means that certain Certificate
of Designations, Preferences and Rights of Series B Convertible
Participating Preferred Stock of LaserSight as filed with the Delaware
Secretary of State on August 29, 1997 and as attached hereto as Exhibit
S-1.
"Series B Preferred Stock" means the 1,600 shares of Series B
Convertible Participating Preferred Stock of LaserSight acquired by the
Investors pursuant to the Securities Purchase Agreement.
"Securities Purchase Agreement" means that certain Securities Purchase
Agreement, dated as of August 29, 1997, by and among LaserSight and the
Investors.
"Transactions" is defined in the recitals to this Consent and
Agreement.
"Utilization" means, on the date of any determination thereof, the sum
of: (a) the aggregate outstanding principle balance of the Advances made
pursuant to Section 2.1; plus (b) the aggregate amount of all reserves in
Borrower's Loan Account made by Foothill; plus (c) the aggregate amount of
all accrued and unpaid Consolidated Current Liabilities that Foothill
determines that, in accordance with its past practice, Borrower would
normally have paid by such date of determination.
b. Section 1.1 of the Loan Agreement is hereby amended to revise
the following defined term:
"Change of Contract" shall be deemed to have occurred at such time as
a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) other than an Investor becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities-Exchange
Act of 1934), directly or indirectly, of more than 20% (30% with respect to
the initial transferee of an Investor) of the total voting power of all
classes of stock then outstanding of any Borrower entitled to vote in the
election of directors.
c. Section 7.11 of the Loan Agreement hereby is amended in its
entirety to read as follows:
7.11 Distributions. Make any distribution or declare or pay any
dividends (in cash or other property, other than capital stock) on, or
purchase, acquire, redeem, or retire any of any Borrower's capital stock,
of any class, whether now or hereafter outstanding; provided, however,
that, so long as (a) no Default or Event of Default has occurred and is
continuing or would result therefrom and (b) after giving effect to the
payment of such dividends, the lesser of the Borrowing Base and the Maximum
Revolving Amount exceeds the Utilization by $1,000,000, LaserSight may
declare and pay dividends on the Series A Preferred Stock as required under
the Series A Certificate of Designation; and provided further, however,
Borrower may redeem shares of the Series B Preferred Stock out of the net
proceeds received by Borrower of the sale of any of the "Investor
Collateral" as defined in the Investor Intercreditor Agreement, provided
that any such sale does not adversely effect the rights of Foothill in the
IBM License Rights pursuant to the Investor Intercreditor Agreement and the
documents and agreements associated therewith.
d. Clauses (a), (b), and (c) of Section 7.20 of the Loan
Agreement hereby are amended in their entirety to read as follows:
(a) Current Ratio. A ratio of Consolidated Current Assets divided by
Consolidated Current Liabilities, as measured on a fiscal quarter-end
basis, of not less than the ratio set forth below for the period
corresponding thereto:
Fiscal Quarter Ended Ratio
-------------------- -----
September 30, 1997 1.40:1.00
December 31, 1997 1.30:1.00
March 31, 1997 1.10:1.00
June 30, 1998 1.30:1.00
September 30, 1998 1.50:1.00
(b) Unit and Revenue Volume. Minimum unit sales of ophthalmic laser
systems and consolidated revenue (after laser commissions) during the
following periods, as measured on a cumulative basis at the end of each
fiscal quarter:
Fiscal Quarter Minimum Consolidated
Ended Minimum Unit Net Revenue
----- ------------ -----------
September 30, 1997 7 $ 4,950,000
December 31, 1997 18 $10,750,000
March 31, 1998 34 $19,000,000
June 30, 1998 58 $30,000,000
September 30, 1998 84 $42,000,000
(c) Consolidated EBITDA. Minimum consolidated EBITDA during the
following periods, as measured on a cumulative basis at the end of each
fiscal quarter:
Fiscal Quarter Minimum Consolidated EBITDA
-------------- ---------------------------
September 30, 1997 -$1,500,000
December 31, 1997 -$2,250,000
March 31, 1998 -$1,350,000
June 30, 1998 $1,000,000
September 30, 1998 $3,800,000
e. Schedule 5.8 of the Loan Agreement hereby is deleted in its
entirety and the replacement Schedule 5.8 attached hereto as Exhibit A is
substituted in lieu therefor.
2. Foothill's Consent. Foothill hereby consents to the Transactions,
and agrees that the Transactions shall be deemed not to cause any Default or
Event of Default under the Loan Agreement, as amended by this Consent and
Amendment.
3. Representations and Warranties. Borrower hereby represents and
warrants to Foothill that (a) the execution, delivery, and performance of this
Consent and Amendment and of the Loan Agreement, as amended by this Consent and
Amendment, are within its corporate powers, have been duly authorized by all
necessary corporate action, and are not in contravention of any law, rule, or
regulation, or any order, judgment, decree, writ, injunction, or award of any
arbitrator, court, or governmental authority, or of the terms of its charter or
bylaws, or of any contract or undertaking to which it is a party or by which any
of its properties may be bound or affected, and (b) this Consent and Amendment
and the Loan Agreement, as amended by this Consent and Amendment, constitute
Borrower's legal, valid, and binding obligation, enforceable against Borrower in
accordance with its terms.
4. Conditions Precedent to the Effectiveness of this Consent and
Amendment. The effectiveness of this Consent and Amendment is subject to the
fulfillment, to the satisfaction of Foothill and its counsel, of each of the
following conditions:
a. Foothill shall have received each of the following documents,
duly executed, and each such document shall be in full force and effect:
(1) a General Continuing Guaranty, in form and substance
satisfactory to Foothill, executed and delivered by LPI in favor of
Foothill (the "LPI Guaranty");
(2) a Security Agreement, in form and substance satisfactory
to Foothill, executed and delivered by LPI and Foothill;
(3) a Patent Security Agreement, in form and substance
satisfactory to Foothill, executed and delivered by LPI and Foothill;
(4) a Pledge Amendment in the form of Exhibit B attached
hereto;
(5) an Intercreditor Agreement, in form and substance
satisfactory to Foothill, executed and delivered by the Investors and
Foothill; and
(6) an amendment to the Warrants, in form and substance
satisfactory to Foothill, executed and delivered by Foothill and
LaserSight.
b. Foothill shall have received the original certificates
representing or evidencing all of the Pledged Shares (as defined in the Stock
Pledge Agreement) of LPI, together with stock powers or equivalent assignments
with respect thereto duly endorsed in blank;
c. Foothill shall have received a certificate from the Secretary
or other officer acceptable to Foothill of LPI attesting to the resolutions of
LPI's Board of Directors authorizing its execution, delivery, and performance of
the LPI Guaranty and the other Loan Documents to which LPI is a party and
authorizing specific officers of LPI to execute the same;
d. Foothill shall have received copies of LPI's Governing
Documents, as amended, modified, or supplemented to the date hereof, certified
by the Secretary or other officer acceptable to Foothill of LPI;
e. Foothill shall have received a certificate of status with
respect to LPI, dated within 30 days of the date hereof, such certificate to be
issued by the appropriate officer of the State of Delaware, which certificate
shall indicate that LPI is in good standing in such jurisdiction;
f. Foothill shall have received certificates of status with
respect to LPI, each dated within 30 days of the date hereof, such certificates
to be issued by the appropriate officer of the jurisdictions in which its
failure to be duly qualified or licensed would constitute a Material Adverse
Change, which certificates shall indicate that LPI is in good standing in such
jurisdictions;
g. LPI shall have executed and delivered to Foothill such UCC-1
Financing Statements as Foothill may require;
h. Foothill shall have received copies, certified by an
appropriate officer of LaserSight, as being true, complete, and correct, of the
Securities Purchase Agreement and any other documents or agreement executed
and/or delivered in connection therewith, each of which shall be in form and
substance satisfactory to Foothill;
i. The Licensing Condition as defined in the Investor
Intercreditor Agreement shall have been completed to the satisfaction of
Foothill;
j. No Material Adverse Change in the financial condition of
Borrower or in the value of the Collateral shall have occurred;
k. The representations and warranties in this Consent and
Amendment, the Loan Agreement as amended by this Consent and Amendment, and the
other Loan Documents shall be true and correct in all respects on and as of the
date hereof, as though made on such date (except to the extent that such
representations and warranties relate solely to an earlier date);
l. No Event of Default or event which with the giving of notice
or passage of time would constitute an Event of Default shall have occurred and
be continuing on the date hereof, nor shall result from the consummation of the
transactions contemplated herein; and
m. No injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
governmental authority against Borrower, Foothill, or any of their Affiliates.
5. Effect on Loan Agreement. The Loan Agreement, as amended hereby,
shall be and remain in full force and effect in accordance with its respective
terms and hereby is ratified and confirmed in all respects. The execution,
delivery, and performance of this Consent and Amendment shall not operate as a
waiver of or, except as expressly set forth herein, as an amendment, of any
right, power, or remedy of Foothill under the Loan Agreement, as in effect prior
to the date hereof.
6. Further Assurances. Borrower shall execute and deliver all
agreements, documents, and instruments, in form and substance satisfactory to
Foothill, and take all actions as Foothill may reasonably request from time to
time, to perfect and maintain the perfection and priority of Foothill's security
interests in the Collateral and to fully consummate the transactions
contemplated under this Consent and Amendment and the Loan Agreement, as amended
by this Consent and Amendment.
7. Miscellaneous.
a. Upon the effectiveness of this Consent and Amendment, each
reference in the Loan Agreement to "this Agreement," "hereunder," "herein,"
"hereof," or words of like import referring to the Loan Agreement shall mean and
refer to the Loan Agreement as amended by this Consent and Amendment.
b. Upon the effectiveness of this Consent and Amendment, each
reference in the Loan Documents to the "Loan Agreement," "thereunder,"
"therein," "thereof," or words of like import referring to the Loan Agreement
shall mean and refer to the Loan Agreement as amended by this Consent and
Amendment.
c. This Consent and Amendment shall be governed by and construed
in accordance with the laws of the State of California.
d. This Consent and Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Consent and Amendment
by signing any such counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Consent and
Amendment to be duly executed as of the date first written above.
FOOTHILL CAPITAL CORPORATION,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Vice President
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LASERSIGHT INCORPORATED,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: President
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LASERSIGHT TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
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MEC HEALTH CARE, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
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LSI ACQUISITION, INC.,
a New Jersey corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
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LASERSIGHT CENTERS INCORPORATED,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
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MRF, INC.,
a Missouri corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title:
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