SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 1998 (May 29, 1998)
Henley Healthcare, Inc.
(Exact name of registrant as specified in its charter)
Texas
(State or other jurisdiction of incorporation)
0-21054 76-0511324
(Commission File Numb (IRS Employer Identification No.)
120 Industrial Boulevard, Sugar Land, Texas 77478
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (281) 276-7000
Not Applicable
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired.
See the Financial Statements included herein on page F-1.
(b) Pro Forma Financial Information.
None.
(c) Exhibits.
The following exhibits, from which schedules and exhibits have been omitted
and will be furnished to the Commission upon its request, are filed with
this report on Form 8-K.
2.1 Agreement for the Sale and Purchase of the Enraf-Nonius Companies, dated
March 6, 1998, by and between Henley Healthcare, Inc. on behalf of
Henley Healthcare B.V. and Delft Instruments Nederland B.V., Delft
Instruments International B.V., Beheermaatschappij Elektroptik B.V.,
Delft Instruments France S.A., B.V. Industriele Houdstermaatschappij
Odelca, Enraf-Nonius Technology B.V., Beheermaatschappij Oldelft B.V.,
Dimeq Verwaltungs GMBH Berlin and N.V. Verenigde
InstrumentenfabriekenEnraf-Nonius.
2.2 Amendment to the Agreement Regarding the Sale and Purchase of the
Enraf-Nonius Companies, dated May 29, 1998, by and between Henley
Healthcare B.V. and Delft Instruments Nederland B.V., Delft Instruments
International B.V., Beheermaatschappij Elektroptik B.V., Delft
Instruments France S.A., B.V. Industriele Houdstermaatschappij Odelft,
Enraf-Nonius Technology B.V., Beheermaatschappij Oldelca B.V., Dimeq
Verwaltungs GMBH Berlin and N.V. Verenigde Instrumentenfabrieken
Enraf-Nonius.
10.1 Subordinated Loan Agreement dated as of May 29, 1998, by and between
Delft Instruments Nederland B.V., Henley Healthcare B.V., and Henley
Healthcare Inc.
10.2 Fourth Amendment to Amended and Restated Loan Agreement, dated effective
May 29, 1998, by and between Henley Healthcare, Inc. and Comerica
Bank-Texas.
10.3 Amendment to Subordination Agreement dated as of May 29, 1998 by and
between Maxxim Medical, Inc., Henley Healthcare, Inc. and Comerica
Bank-Texas.
10.4 Joinder Agreement dated effective as of May 29, 1998, executed by Henley
Healthcare, B.V.
10.5 Second Modification to Convertible Subordinated Promissory Note, dated
as of June5, 1998, between Henley Healthcare, Inc. and Maxxim Medical,
Inc.
10.6 Revolving Loan Agreement with Bank of Artesia.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HENLEY HEALTHCARE, INC.
By: /s/ MICHAEL M. BARBOUR
Michael M. Barbour,
President and Chief Executive Officer
3
<PAGE>
1997 COMBINED FINANCIAL STATEMENTS
OF
THE ENRAF-NONIUS COMPANIES
<PAGE>
The Board of Directors
The Enraf-Nonius Companies
REPORT OF THE INDEPENDENT AUDITORS
We have audited the accompanying combined balance sheet of the Enraf-Nonius
Companies (comprised of Enraf-Nonius B.V, Enraf-Nonius N.V, Enraf-Nonius S.A.,
and Enraf-Nonius Medizintechnik GmbH, (collectively the Group) as of December
31, 1997 and the accompanying combined statements of operations and
comprehensive loss, stockholder's equity/(deficiency) and cash flows for the two
years ended December 31, 1997 and 1996.
These financial statements are the responsibility of the Group's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the Group
at December 31, 1997 and the combined results of their operations and their cash
flows for the two years ended December 31, 1997 and 1996, in conformity with
United States generally accepted accounting principles.
The interim financial statements at June 30, 1998 and 1997 have not been
audited by us. Consequently, we do not express an opinion thereon.
The Hague, July 31, 1998
MORET ERNST & YOUNG ACCOUNTANTS
F-1
<PAGE>
COMBINED BALANCE SHEETS
ASSETS
UNAUDITED
(NLG 000'S) DECEMBER 31, 1997 JUNE 30, 1998
------------------ --------------
CURRENT ASSETS
Cash and cash equivalents............ 6,369 1,894
Receivables..........................
Trade, less allowance for doubtful
accounts as of December 31, 1997
and June 30, 1998 of 3,185 and
3,375, respectively............. 10,581 10,942
Other.............................. 744 634
Inventories.......................... 10,411 6,461
Due from related companies........... 4,266 1,469
Prepaid expenses................... 887 1,054
-------- --------------
Total current assets....... 33,258 22,454
PROPERTY, PLANT AND EQUIPMENT AT
COST, LESS ACCUMULATED
DEPRECIATION....................... 8,547 3,692
INTANGIBLE ASSETS, LESS ACCUMULATED
AMORTIZATION AS OF DECEMBER 31,
1997 AND JUNE 30, 1998 OF 213 AND
320, RESPECTIVELY.................. 427 320
INVESTMENTS IN AFFILIATES............ 186 186
-------- --------------
TOTAL ASSETS............... 42,418 26,652
======== ==============
F-2
<PAGE>
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
UNAUDITED
DECEMBER 31, 1997 JUNE 30, 1998
-------------------- --------------------
(NLG 000'S)
CURRENT LIABILITIES
Bank overdraft....................... 1,129 13,928
Accounts payable..................... 8,831 6,595
Accrued expenses and other
payables........................... 4,150 5,370
Due to related companies............. 32,010 --
--------- ---------
Total current liabilities............ 46,120 25,893
LONG-TERM DEBTS...................... -- 7,320
PENSION OBLIGATIONS.................. 1,824 1,824
OTHER PROVISIONS..................... 145 145
OBLIGATIONS UNDER CAPITAL LEASES
Non-current portion................ 1,939 1,874
STOCKHOLDER'S DEFICIENCY
Enraf-Nonius B.V.: Common stock:
NLG 1,000 par value; authorized
20,000 shares; issued and
outstanding 19,183 shares....... 19,183 19,183
Additional paid-in capital......... 1,000 1,000
Enraf-Nonius S.A.: Common Stock:
FF 100 par value; authorized 30,500
shares; issued and outstanding
30,500 shares................... 999 999
Additional paid-in capital......... 8,188 8,188
Enraf-Nonius Medizintechnik GmbH:
Common stock: DEM 1,000 par value,
authorized 750 shares; issued
and outstanding 750 shares......... 842 842
Additional paid-in capital........... -- 90
Enraf-Nonius N.V.: Common Stock:
BEF 0 par value; authorized 2,500
shares; issued and outstanding
2,500 shares.................... 2,861 2,861
Additional paid-in capital........... -- 1,635
Translation adjustment............... 22 12
Accumulated deficit.................. (40,705) (45,214)
--------- ---------
Total stockholder's deficiency....... (7,610) (10,404)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S
DEFICIENCY........................... 42,418 26,652
========= =========
SEE ACCOMPANYING NOTES.
F-3
<PAGE>
COMBINED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
UNAUDITED
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------- --------------------
(NLG 000'S) 1997 1996 1998 1997
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Net sales............................... 64,159 66,286 29,129 31,739
Cost of sales........................... 33,917 39,617 15,874 16,951
---------- ---------- --------- ---------
Gross profit............................ 30,242 26,669 13,255 14,788
Selling, general, and administrative
expenses.............................. (36,849) (36,915) 16,874 18,078
---------- ---------- --------- ---------
LOSS FROM OPERATIONS.................... (6,607) (10,246) (3,619) 3,290
Other income (expense):
o Interest expense, net............. (448) (639) (890) (66)
o Other financial
income/(expense)...................... (78) 27 -- 78
---------- ---------- --------- ---------
Other income (expense), net............. (526) (612) (890) 12
---------- ---------- --------- ---------
LOSS BEFORE INCOME TAXES................ (7,133) (10,858) (4,509) (3,278)
Income tax benefits..................... 1,244 3,085 -- 428
---------- ---------- --------- ---------
NET LOSS................................ (5,889) (7,773) (4,509) (2,850)
OTHER COMPREHENSIVE INCOME, NET OF
TAX...................................
Foreign Currency translation
adjustment............................ 8 12 (10) 1
---------- ---------- --------- ---------
COMPREHENSIVE INCOME.................... (5,881) (7,761) (4,519) (2,849)
========== ========== ========= =========
</TABLE>
SEE ACCOMPANYING NOTES.
F-4
<PAGE>
COMBINED STATEMENTS OF STOCKHOLDER'S EQUITY/(DEFICIENCY)
<TABLE>
<CAPTION>
ACCUMULATED TOTAL
ADDITIONAL OTHER STOCKHOLDER'S
COMMON PAID-IN COMPREHENSIVE ACCUMULATED EQUITY/
NNLG 000'S) STOCK CAPITAL INCOME DEFICIT (DEFICIENCY)
------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995......... 20,250 9,188 2 (27,043) 2,397
Capital contributed upon
incorporation (Germany)............ 842 842
Capital increase (Belgium)........... 2,793 2,793
Other comprehensive income........... 12 12
Net loss............................. (7,773) (7,773)
------- ----------- --- ------------ ---------------
Balance at December 31, 1996......... 23,885 9,188 14 (34,816) (1,729)
Other comprehensive income........... 8 8
Net loss............................. (5,889) (5,889)
------- ----------- --- ------------ ---------------
Balance at December, 1997............ 23,885 9,188 22 (40,705) 7,610)
Additional paid-in capital........... 1,725 1,725
Net loss (unaudited) 1998............ (4,509) (4,509)
Other comprehensive income
(unaudited)........................ (10) (10
------- ----------- --- ------------ ---------------
Balance at June 30, 1998
(unaudited)........................ 23,885 10,913 12 (45,214) (10,404)
======= =========== === ============ ===============
</TABLE>
SEE ACCOMPANYING NOTES.
F-5
<PAGE>
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
UNAUDITED
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
-------------------- --------------------
(NLG 000'S) 1997 1996 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................ (5,889) (7,773) (4,509) (2,850)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities
o Depreciation...................... 2,044 1,944 437 1,062
o Amortization...................... 213 -- 107 107
o Equity in earnings non-combined
companies............................. (36) (19) -- --
o Net changes in operating assets
and liabilities:
-- Receivables...................... 6,666 (3,003) (251) 2,544
-- Inventories...................... 4,745 2,391 3,950 (237)
-- Due from related companies....... (1,804) 1,947 2,797 117
-- Prepaid expenses................. 93 230 (167) (382)
-- Bank overdraft................... (9,217) (2,292) 12,799 (9,153)
-- Accounts payable................. (419) 1,375 (2,236) 800
-- Accrued expenses and other
payables.......................... 1,097 (254) 1,220 (71)
-- Due to related companies......... 5,739 (1,567) (2,910) 320
-- Increase in other obligations.... 334 701 -- 2,555
--------- --------- --------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................ 3,566 (6,320) 11,237 (5,188)
INVESTING ACTIVITIES.................... 1,282 (2,285) 4,418 1,793
Decrease in capital leases (incl.
current portion)...................... (125) (110) (65) (60)
--------- --------- --------- ---------
NET CASH FROM (USED IN) INVESTING
ACTIVITIES............................ 1,157 (2,395) 4,353 1,733
FINANCING ACTIVITIES....................
Increase in share capital............... -- 3,635 -- --
Increase in paid-in capital............. -- -- 1,725 --
Increase related companies (internal
bank)................................. 240 4,498 (29,100) 7,091
Proceeds from long term debts........... -- -- 7,320 --
Translation of foreign currencies....... 8 12 (10) 1
--------- --------- --------- ---------
NET CASH FROM FINANCING ACTIVITIES...... 248 8,145 (20,065) 7,092
Net increase (decrease) in cash and cash
equivalents........................... 4,971 (570) (4,475) 3,637
Cash and cash equivalents at beginning
of period............................. 1,398 1,968 6,369 1,398
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF
PERIOD................................ 6,369 1,398 1,894 5,035
========= ========= ========= =========
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CERTAIN CASH FLOW INFORMATION
Interest and corporate taxes are settled between group entities and the
parent without the exchange of cash (December 31, 1997 and 1996 and June 30,
1997).
Cash paid for interest during the six months ended June 30, 1998 amounted
to 791 (unaudited).
SEE ACCOMPANYING NOTES.
F-6
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS
The combined balance sheet as of December 31, 1997 and the accompanying
combined statements of operations and comprehensive loss, stockholder's
equity/(deficiency) and cash flows for the two years ended December 31, 1997 and
1996 have been audited by Moret Ernst & Young Accountants, The Hague, The
Netherlands.
The interim financial statements at June 30, 1998 and 1997 have not been
audited.
1. ORGANIZATION
The Enraf-Nonius Companies (the Group) are comprised of Enraf-Nonius B.V.
(the Company), Enraf-Nonius N.V., Enraf-Nonius S.A. and Enraf-Nonius
Medizintechnik GmbH. They are engaged in the development, manufacture and
marketing of medical products, including ultrasound and electronic stimulation
used in pain management, physical therapy and rehabilitation.
As more fully described in Note 16 -- Subsequent Event, the Enraf-Nonius
Companies were sold as a group subsequent to December 31, 1997 by their common
ultimate parent, Delft Instruments NV.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING PRINCIPLES BASIS AND COMBINATION
The accompanying combined financial statements have been prepared on the
basis of generally accepted accounting principles as promulgated in the United
States of America. They present the financial position, results of operations,
cash flows and changes in stockholder's deficiency of the Enraf-Nonius Companies
as though they comprised one, consolidated entry. The combined financial
statements include the financial information of the following entities:
<TABLE>
<CAPTION>
ISSUED AND OUTSTANDING
NAME LEGAL SEAT COMMON STOCK
- ------------------------------------- ------------------------------ ---------------------------
<S> <C>
Enraf-Nonius B.V..................... Delft, The Netherlands NLG 19,183,000
Enraf-Nonius N.V..................... Oudenaarde, Belgium BEF 52,500,000
Enraf-Nonius S.A..................... Sevran, France FF 3,050,000
Enraf-Nonius Medizintechnik GmbH..... Solingen, Germany DEM 750,000
</TABLE>
Investments are accounted for using the equity method.
The principal currency of operations and that of the Group's common parent
is Dutch guilders. Accordingly, Dutch guilders have been used as the reporting
currency for this presentation. The functional currency of each of the Group's
entities is its respective local currency. Consequently, all differences arising
from the translation of Group entity financial statements have been included in
"Accumulated Other Comprehensive Income' in the Statements of Changes in
Stockholder's Equity/(Deficiency).
All significant intercompany balances and transactions have been eliminated
in the combinations.
REVENUE RECOGNITION
Revenue is recognized upon shipment of products to customers, at which time
the ownership of the products transfers to the buyer.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist principally of demand deposits with
financial institutions having maturities of less than three months from the
balance sheet date.
INVENTORIES
Inventories are stated at the lower of cost determined by the first-in,
first-out (FIFO) method or market. Market is based on net realizable value. Cost
includes the acquisition of materials and components, direct labor and overhead.
F-7
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
FINANCIAL INSTRUMENTS
The Group's financial instruments consist of cash equivalents, accounts
receivable, notes receivable, investments and accounts payable. The fair values
of these instruments approximate their carrying values.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost and depreciated using
the straight-line method over their estimated useful lives (ranging from 3 to 33
years). Maintenance and expenses are charged to expense as incurred. Major
renewals and improvements are capitalized.
INTANGIBLES
The excess of cost over the fair value of net assets acquired is amortized
on a straight-line basis over period of 3 years. This is based upon the
estimated future demand for particular physio-therapy equipment and activities,
the production and marketing rights of which were acquired from third parties.
The carrying value of intangible assets is periodically reviewed by
management. Based upon analyses, management believes that no material impairment
of intangible assets exists as of December 31, 1997 and the estimated useful
life continues to approximate its useful life.
INVESTMENT IN AFFILIATES
Investments in affiliates are valued at their respective net asset values.
ADVERTISING COSTS
Advertising costs are expensed as incurred and amounted to approximately
NLG 2.6 million and NLG 2.7 million for the years ended December 31, 1997 and
1996, respectively. These expenses were NLG 0.7 million and NLG 1.2 million for
the six months periods ended June 30, 1998 and 1997, respectively (unaudited).
INCOME TAXES
The Group records income taxes using the asset and liability method.
Deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities are measured using
the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. Valuation allowances are established when necessary to
reduce deferred tax assets to the amounts expected to be realized.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are expensed as incurred and amounted to
approximately NLG 5.2 million and NLG 6.4 million for the years ended December
31, 1997 and December 31, 1996, respectively. Such expense was NLG 2.4 million
and NLG 2.6 million for the six months periods ended June 30, 1998 and 1997,
respectively (unaudited).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions such as allowances for doubtful accounts and depreciation and
amortization rates that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
PENSIONS
In addition to State Pension Plans in the Group's respective countries, all
of the Dutch company's employees of 25 years and older are insured under the
industrial pension fund for the Metal Industry, which is a multi-employer plan.
The plan is funded by way of an annual average premium contribution. Pension
F-8
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
expense represents amounts assessed by the plan. Certain personnel of the Dutch
Company and of the German Company are covered under defined benefit plans, the
obligations for prior and future years of which are provided for on the basis of
actuarial calculations. The funding of the Dutch Company's plan is made by way
of annual premiums to an insurance company.
FOREIGN CURRENCY TRANSACTIONS
Assets, liabilities, revenue, expenses, gains or losses arising from
foreign currency transactions are recorded in the functional currency of the
recording entity at the exchange rate in effect at the date of the transaction.
At each balance sheet date, recorded balances denominated in a currency other
than the recording entity's functional currency are translated at the
approximate exchange rate prevailing at that date. The resulting exchange gains
and losses are recorded in the results of operations.
TRANSLATION OF FOREIGN COMPANIES' FINANCIAL STATEMENTS
Financial statements of the non-Dutch group entities are translated into
Dutch Guilder equivalents as follows:
o Balance sheet items are translated at the approximate exchange rate
prevailing at the balance sheet date.
o Income statement items are translated at the average exchange rate for
the year.
Translation results therefrom are recorded in "Other Comprehensive Income'.
3. INVENTORIES
Inventories consist of the following:
UNAUDITED
DECEMBER 31, JUNE 30,
(NLG 000'S) 1997 1998
------------- ----------
Work in process and semi-manufactured
goods................................ 6,744 2,784
Finished goods....................... 8,467 8,721
------------- ----------
15,211 11,505
Less: reserve for slow-moving and
obsolete products.................... (4,800) (5,044)
------------- ----------
Total................................ 10,411 6,461
============= ==========
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (NLG 000's):
UNAUDITED
DECEMBER 31, JUNE 30,
1997 1998
------------- ----------
Land and buildings................... 12,200 2,613
Machinery and equipment.............. 280 --
Other................................ 7,134 4,480
------------- ----------
19,614 7,093
Less: accumulated depreciation....... (11,067) (3,401)
------------- ----------
Net property, plant and equipment.... 8,547 3,692
============= ==========
Depreciation expense amounts to 2,044 for the year ended December 31, 1997
and 437 for the period ended June 30, 1998 (unaudited).
F-9
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Land and buildings include a building in France under capital lease. At
December 31, 1997, the cost value amounted to 2,613 and accumulated depreciation
to 395. Depreciation expenses are included in total depreciation expense.
The production plant and related fixed assets of Enraf-Nonius' location at
Brunssum (with a book value at December 31, 1997 of 4.5 million) have been
transferred during 1998 to a Delft Instruments Company.
5. INVESTMENTS IN AFFILIATES
Investments in affiliates represents 40,000 shares (40%) of the issued and
outstanding shares of Enraf-Nonius Medical Equipment Co. Ltd., Thailand, and 600
shares (25%) of Stas Doyer Hydrotherapie S.A., France. Both are sales companies.
The Group's equity in the results of operations of these affiliates is not
material and has been included in other financial income and expense.
6. BANK OVERDRAFT
As at June 30, 1998 the bank overdraft is secured by a pledge of accounts
receivable (December 31, 1997 unsecured).
7. LONG-TERM DEBTS
The long-term debts consist of an interest bearing 7-year debt of NLG
3,320,000 and a non-interest bearing 7-year debt of NLG 4,000,000, both payable
to Delft Instruments group companies.
The repayment of the interest bearing debt is dependent on the payment of
certain pension obligations of a German Delft Instruments group company. The
interest rate is equal to the interest rate used by the German Pension Insurance
Authority.
The repayment of the non-interest bearing debt is dependent on the payment
of certain restructuring costs of two Dutch Delft Instruments group companies.
Aforementioned long-term debts are secured by a first right of pledge on
the Enraf-Nonius intellectual property rights (trade marks, patent rights and
related copyrights).
8. PENSION OBLIGATIONS
The Group's entities are assessed pension contributions by their respective
countries' State pension funds. All obligations under these plans are paid by
the employees.
All of the Dutch entity's employees over the age of 25 are participants in
that country's Pension Fund for the Dutch Metal Industry. This is a
multi-employer plan. Pension contributions assessed by this plan and expensed
during 1996 and 1997 were approximately NLG 232,000 and NLG 260,000,
respectively. Pension expense accrued for anticipated assessments for the six
months periods ended June 30, 1998 and 1997 are NLG 135,000 and NLG 130,000,
respectively (unaudited).
F-10
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
Approximately, 10% respectively 80% of the employees of the Dutch and
German entities participate in a defined benefit plan. The following table sets
forth the funded status and net pension expense of these plans as of and for the
year ended December 31, 1997. Pension expense recognized under these plans for
the six months periods ended June 30, 1998 and 1997 was NLG 66,000 and NLG
100,000, respectively (unaudited).
NLG '000
----------
ABO -- Accumulated Benefit
Obligations.......................... 1,550
----------
PBO -- Projected Benefit
Obligations.......................... 1,870
MVA -- Marketable Value of Assets.... (123)
----------
Funded status........................ 1,747
Unrecognized loss.................... 77
Prepaid pension costs................ NA
----------
UTA -- Unfunded transitional
amount............................... 1,824
==========
Service costs for 1997 were some NLG 100,000. The individual components
thereof were not material.
Below is a summary of significant actuarial assumptions used:
o Discount rates................. 6%
-----------
o Rates of increase in
compensation levels -- general
increase............................. 1.75-2%
-----------
o Rates of increase in
compensation levels -- specific
increase............................. 0-2%
-----------
o Mortality tables............... 1982/1990
-----------
o Withdrawal..................... 10-50%
===========
9. INCOME TAXES
Through December 31, 1997, Enraf-Nonius B.V. was included in the
consolidated tax return of Delft Instruments NV. All deferred tax assets and
liabilities were accounted for by the parent and current tax assets and
liabilities were settled through intercompany accounts at a nominal tax rate of
35%.
Through December 31, 1997, Enraf-Nonius S.A. was included in the
consolidated tax return of Delft Instruments S.A., a subsidiary of Delft
Instruments N.V.
German and Belgian companies each operated as separate tax paying entities.
As a result of the transaction described in Note 16 -- Subsequent Event,
the Dutch and French entities in the Group ceased participating in their
parent's tax returns effective from January 1, 1998.
The companies in the Group have substantial deferred tax assets arising
primarily from net operating costs carry-forwards which were not utilized in
their tax returns or those of their parent companies. As of December 31, 1997,
such unutilized carry-forwards were approximately NLG 10 million. As of June 30,
1998, such amounts approximated NLG 14 million (unaudited). All deferred tax
assets of the Group have been fully offset by a valuation allowance due to the
uncertainty of their realization.
F-11
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
10. COMMITMENTS
LEASES
Leases are generally for buildings, cars, computers and office equipment.
As of December 31, 1997, future minimum lease commitments to which Group
entities are committed consisted of the following:
CAPITAL OPERATING
(NLG 000'S) LEASE LEASE
- ---------------------------------------- --------- ---------
1998.................................... 354 1,030
1999.................................... 354 892
2000.................................... 354 687
2001.................................... 354 517
2002.................................... 354 458
Thereafter.............................. 1,420 867
--------- ---------
Total, including interest............... 3,190 4,451
=========
Amount representing interest............ (1,104)
---------
Net amount (long-term and short-term
portions)............................. 2,086
=========
The interest rate of the capital lease of the French building amounts to
10% approximately.
Total rental expense was approximately NLG 0.9 million and NLG 0.9 million
for the years ended December 31, 1997 and 1996. Rental expense was NLG 0.8
million and NLG 0.4 million for the six months periods ended June 30, 1998 and
1997, respectively (unaudited).
UNRECORDED PURCHASE OBLIGATIONS
In a 50/50 partnership with the Dutch Government the Company entered into a
five year contract in 1997 with three local university research partners to
perform research and development activities in the physiotherapy field. The
total obligation to the Company and the government under the contract amounts to
approximately NLG 2.4 million. Of this amount at December 31, 1997, NLG 103,000
has been fulfilled and invoiced to the Company. The remaining amount is to be
spent over the remaining 4 years of which NLG 100,000 has been fulfilled at June
30, 1998 (unaudited).
11. CONTINGENCIES
LITIGATIONS AND CLAIMS
At December 31, 1997, the Group is subject to legal proceedings and claims
arising in the ordinary course of business. According to management, the
ultimate outcome thereof will not have a material adverse effect upon the
combined financial position and combined statements of deficiency of the Group.
12. CREDIT FACILITIES
On a yearly basis, the parent of the Enraf-Nonius companies, Delft
Instruments NV renegotiates credit agreements with various banks for the Delft
Instruments Companies, including the Group. Delft Instruments (internal bank)
provides loans to its various subsidiaries under the total credit facility and
allows overdraft facilities. The extent thereof is monitored by Delft
Instruments NV. At December 31, 1997, these short-term loans to the Company
amounted to NLG 29 million. In 1997, the interest rate amounted to some 4%.
At December 31, 1997, the Company had guarantees outstanding provided by
banks of NLG 1.3 million for performance and bid bonds.
F-12
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
13. RELATED PARTY TRANSACTIONS
AMOUNTS DUE TO AND FROM RELATED COMPANIES.
Delft Instruments Group Companies were related Companies up to May 29,
1998. From that date Henley Healthcare Group Companies are related Companies.
Receivables due to and from affiliates consist of the following at:
UNAUDITED
DECEMBER 31, JUNE 30,
(NLG 000'S) 1997 1998
- ---------------------------------------- ------------- ----------
Due to related companies................ 32,010 --
Less: due from related companies....... (4,266) (1,469)
------------- ----------
Total................................... 27,744 (1,469)
============= ==========
The amounts due to and from Delft Instruments Group Companies were settled
at May 29, 1998.
INCOME AND EXPENDITURES
UNAUDITED
DECEMBER 31, JUNE 30,
(NLG 000'S) 1997 1998
- ---------------------------------------- ------------- ----------
Net sales............................... 6,300 --
============= ==========
Interest expense........................ 1,110 740
Leverage interest received.............. (1,041) --
Group's share in holding costs.......... 2,233 --
Rent (net) and services................. 912 784
------------- ----------
Total................................... 3,214 1,524
============= ==========
14. NONMONETARY TRANSACTIONS
In 1996, the Company decided to ensure a consistent flow of components for
one of its cardio products by entering into an agreement with an Italian
manufacturer of small turbines. Agreed was, that the Company would trade for
each finished product in exchange for 3.3 turbines (the major component of the
finished product). The turbines were valued at cost, based on the calculated
cost price of the finished product. The Company was not as successful as
expected in the cardio segment, and components with a value of some NLG 900,000
have now been fully provided for.
15. YEAR 2000 ISSUE -- UNAUDITED
The Company's computer system has been reviewed with regard to the year
2000 issue. The findings of this review resulted in a plan of action and
financial systems are presently being updated by in-house staff. Total cost in
this regard is expected to be between NLG 20,000 and NLG 30,000 (unaudited) and
the project is expected to be finished in October 1998. The review showed, that
the impact of the year 2000 issue on the Company's order processing system is
likely to be minimal and no additional actions have been taken.
The embedded software in the Company's products has also been reviewed and
this showed that the products currently being sold or still being serviced will
not be effected by the year 2000 issue.
16. SUBSEQUENT EVENT
Per agreements dated March 6, 1998 and May 29, 1998, Delft Instruments NV
has sold the Enraf-Nonius companies to Henley Healthcare, Inc., of Sugar Land,
Texas, USA, a company traded on the NASDAQ SmallCap Market.
F-13
<PAGE>
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
The production plant, machinery (with a book value at December 31, 1997 of
NLG 4.5 million) and personnel of Enraf-Nonius B.V.'s location at Brunssum were
not take over, but transferred to another Delft Instruments company, with whom
an OEM contract was concluded. This deal is partly financed by a subordinated
loan of NLG 9 million, granted by Delft Instruments to Henley Healthcare B.V., a
newly established Dutch holding company.
In the first quarter 1998, as a pilot project for the Company's former
holding company Delft Instruments, the Company entered into an agreement with a
warehousing company in order to outsource the logistics department. After the
acquisition by Henley Healthcare, the strategic decision was made to keep the
logistic activities in house. The exit cost for this contract are still being
negotiated, but are likely to be between NLG 500,000 and NLG 1,500,000
(unaudited).
F-14
<PAGE>
EXHIBITS
Exhibit
No.
-------
2.1 Agreement for the Sale and Purchase of the Enraf-Nonius Companies, dated
March 6, 1998, by and between Henley Healthcare, Inc. on behalf of
Henley Healthcare B.V. and Delft Instruments Nederland B.V., Delft
Instruments International B.V., Beheermaatschappij Elektroptik B.V.,
Delft Instruments France S.A., B.V. Industriele Houdstermaatschappij
Odelca, Enraf-Nonius Technology B.V., Beheermaatschappij Oldelft B.V.,
Dimeq Verwaltungs GMBH Berlin and N.V. Verenigde
InstrumentenfabriekenEnraf-Nonius.
2.2 Amendment to the Agreement Regarding the Sale and Purchase of the
Enraf-Nonius Companies, dated May 29, 1998, by and between Henley
Healthcare B.V. and Delft Instruments Nederland B.V., Delft Instruments
International B.V., Beheermaatschappij Elektroptik B.V., Delft
Instruments France S.A., B.V. Industriele Houdstermaatschappij Odelca,
Enraf-Nonius Technology B.V., Beheermaatschappij Oldelft B.V., Dimeq
Verwaltungs GMBH Berlin and N.V. Verenigde Instrumentenfabrieken
Enraf-Nonius.
10.1 Subordinated Loan Agreement dated as of May 29, 1998, by and between
Delft Instruments Nederland B.V., Henley Healthcare B.V., and Henley
Healthcare Inc.
10.2 Fourth Amendment to Amended and Restated Loan Agreement, dated effective
May 29, 1998, by and between Henley Healthcare, Inc. and Comerica
Bank-Texas.
10.3 Amendment to Subordination Agreement dated as of May 29, 1998 by and
between Maxxim Medical, Inc., Henley Healthcare, Inc. and Comerica
Bank-Texas.
10.4 Joinder Agreement dated effective as of May 29, 1998, executed by Henley
Healthcare, B.V.
10.5 Second Modification to Convertible Subordinated Promissory Note, dated
as of June5, 1998, between Henley Healthcare, Inc. and Maxxim Medical,
Inc.
10.6 Revolving Loan Agreement with Bank of Artesia.
EXHIBIT 2.1
AGREEMENT FOR THE SALE AND PURCHASE OF
THE ENRAF-NONIUS COMPANIES
BY AND BETWEEN
HENLEY HEALTHCARE INC.
ON BEHALF OF
HENLEY HEALTHCARE B.V. I.O.
AND
DELFT INSTRUMENTS NEDERLAND B.V.
DELFT INSTRUMENTS INTERNATIONAL B.V.
BEHERMAATSCHAPPIJ ELEKTROPTIK B.V.
DELFT INSTRUMENTS FRANCE S.A.
B.V. INDUSTRIELE HOUDSTERMAATSCHAPPIJ ODELCA
ENRAF-NONIUS TECHNOLOGY B.V.
BEHEERMAATSCHAPPIJ OLDELFT B.V.
DIMEQ MEDIZINELEKTRONIK GMBH BERLIN
N.V. VERENIGDE INSTRUMENTENFABRIEKEN ENRAF-NONIUS
<PAGE>
AGREEMENT FOR THE SALE AND PURCHASE OF
THE ENRAF - NONIUS COMPANIES
This Agreement is made this ____ day of March 1998;
by and between
1. HENLEY HEALTHCARE Inc., having its registered office at Sugar Land, Texas,
United States of America, herein duly represented by its President Mr.
Mike Barbour this company acting for the benefits of the close corporation
in the process of being formed according to the laws of the Netherlands,
Henley Healthcare B.V. i.o., hereinafter referred to as "Purchaser";
and
2. DELFT INSTRUMENTS NEDERLAND B.V.
having its registered office at Mercuriusweg 1, (2624 BC) Delft, the
Netherlands, herein represented by R.V. Kingma and J.P. Verhaar,
3. DELFT INSTRUMENTS INTERNATIONAL B.V.
having its registered office at Mercuriusweg 1, (2624 BC) Delft, the
Netherlands, herein represented by R.V. Kingma and J.P. Verhaar,
4. BEHEERMAATSCHAPPIJ ELEKTROPTIK B.V.
having its registered office at Mercuriusweg 1, (2624 BC) Delft, the
Netherlands, herein represented by J.P. Verhaar,
5. DELFT INSTRUMENTS FRANCE S.A.
having its registered office at 15, Rue Paul Langevin, ZAC Les Beaudottes,
93270 Sevran, France herein represented by E. van 't Hooft,
6. B.V. INDUSTRIELE HOUDSTERMAATSCHAPPIJ ODELCA
having its registered office at Mercuriusweg 1, (2624 BC) Delft, the
Netherlands, herein represented by J.P. Verhaar,
7. ENRAF-NONIUS TECHNOLOGY B.V.
having its registered office at Mercuriusweg 1, (2624 BC) Delft, the
Netherlands, herein represented by R.V. Kingma,
<PAGE>
8. BEHEERMAATSCHAPPIJ OLDELFT B.V.
having its registered office at Mercuriusweg 1, (2624 BC) Delft, the
Netherlands, herein represented by J.P. Verhaar,
9. DIMEQ MEDIZINELEKTRONIK GMBH BERLIN
having its registered office at Obere Dammstrasse 8-10, 42653 Solingen,
Germany, herein represented by J.P. Verhaar,
10. N.V. VERENIGDE INSTRUMENTENFABRIEKEN ENRAF-NONIUS
having its registered office at Mercuriusweg 1, (2624 BC) Delft, the
Netherlands, herein represented by J.P. Verhaar,
2 up to and including 9 hereinafter jointly and/or individually referred to as:
the "Seller":
WHEREAS:
(A) The Seller is the legal and beneficial owner of the entire issued and
outstanding-share capital (the "Shares") of:
(i) ENRAF - NONIUS B.V. ("EN"), a private company with limited liability
whose registered office is at Delft, the Netherlands, and whose
share capital is divided into 19,183 ordinary shares, with a nominal
value of NLG 1,000 each;
(ii) ENRAF - NONIUS N.V., a company duly organized and existing under the
law of Belgium, whose registered office is at Oudenaarde, Belgium,
and whose share capital is divided into 52,500 ordinary shares, with
a nominal value of BFR 1,000 each;
(iii) ENRAF - NONIUS S.A., a company duly organized and existing under the
law of France, whose registered office is at Sevran, France, and
whose share capital is divided into 30,500 ordinary shares, with a
nominal value of FF 100 each;
(iv) ENRAF - NONIUS MEDIZINTECHNIK GMBH, a company duly organized and
existing under the law of Germany, whose registered office is at
Solingen, Germany, and whose capital is DM 750,000;
(B) Delft instruments International B.V. is directly or indirectly legal and
beneficial owner of the following interests:
(i) 11,975 shares in the entire issued and outstanding share capital of
ENRAF -NONIUS IBERICA S.A., numbered B181 up to and including B360
and B 12,205 up to and including B 24,000 a company duly organized
and existing under the laws of Spain, whose registered office is at
Madrid, Spain, and whose share capital is divided into 24,000
ordinary shares, with a nominal value of ESP 1,000 each;
2
<PAGE>
(ii) 40,000 shares being 40 percent of the entire issued and outstanding
share capital of ENRAF - NONIUS MEDICAL EQUIPMENT CO. LTD., a
company duly organized and existing under the law of Thailand, whose
registered office is at Bangkok, Thailand, and whose share capital
is divided into 100,000 ordinary shares, with a nominal value of
BAHT 100 each;
(iii) 600 shares being 25 percent of the entire issued and outstanding
share capital of STAS DOYER HYDROTHERAPIE S.A., a company duly
organized and existing under the laws of France, whose registered
office is at Muret, France, and whose share capital is divided into
2,400 ordinary shares, with a nominal value of FF 225 each;
the companies referred to under (i) through (iii) above hereinafter
collectively referred to as; the "Subsidiaries".
(C) The Seller and the Purchaser have agreed to comply with the provisions of
the Merger Code ("SER FUSLEGEDRAGSREGELS 1975", as amended), the
Competitive Act ("MEDEDINGINGSWER"), US and Dutch Stock Exchange
Regulations and the Works Council Act ("WET OP DE ONDERNEMINGRADEN").
(D) The Seller wishes to sell and to transfer, in reliance upon, INTER ALIA,
the representations, warranties and undertakings in this Agreement and the
Purchaser wishes to purchase the Shares on the terms and conditions set
out in this Agreement.
(E) The Purchaser was given access to a dataroom organized by the Seller
between 16 February 1998 and 5 March 1998 and has reviewed to its
satisfaction the documents provided in such dataroom a list of which is
attached as SCHEDULE 2.
IT IS HEREBY AGREED AS FOLLOWS:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the meanings ascribed to
them in SCHEDULE 1 attached hereto, except as to the content may otherwise
require. Words importing the singular shall include the plural and vice versa.
ARTICLE 2
SALE, PURCHASE, PURCHASE PRICE
2.1 Subject to the terms of this Agreement, the Seller hereby sells the Shares
to the Purchaser and the Purchaser hereby purchases with economic effect
as per 1 January 1998 (the "Effective
3
<PAGE>
Date"), the Shares from the Seller free from any and all liens, charges,
claims, third party rights and encumbrances and together with all rights
attaching to them.
2.2 The total Purchase Price to be paid by the Purchaser to the Seller for the
Shares is NLG 10,900,000 (in words: ten million nine hundred thousand
Dutch Guilders) (the "Purchase Price"), excluding V.A.T.
2.3 In addition to the Purchase Price the Purchaser shall pay to the Seller
during a period of seven years as of the Effective Date (the "Period") as
additional goodwill an annual amount which is based on the sales volume of
the Products bearing the name "Enraf-Nonius" sold by the Purchaser or its
subsidiaries during those years. During this Period the Purchaser will
annually be due to the Seller an amount in Dutch Guilders equal to 1.5%
(one and a half percent) of the net Sales Volume, always with a minimum of
NLG 1,000,000, - (in words: one million Dutch Guilders) per year. Of this
annual amount a first instalment of NLG 500,000, - will be paid on July
1st of each applicable year whereby the second instalments of at least NLG
500,000.- will be paid ultimately on January 1st of each following year.
2.4 The Purchase Price shall further be increased with an amount equal to the
amount needed to adjust the net equity of ENRAF-NONIUS N.V., and
ENRAF-NONIUS Medizintechnik GmbH and ENRAF-NONIUS Medical Equipment (Co.
Ltd.) as will be required in accordance with Article 3.8.
ARTICLE 3
SIGNING OF THIS AGREEMENT, CONDITIONS PRECEDENT AND COVENANTS TO COMPLETION
3.1 This Agreement has been signed in Rotterdam, on the date first above
written (the "SIGNING DATE").
3.2 Completion shall take place as soon as possible on the Completion Date and
is conditional on the following conditions being satisfied or waived by
the Purchaser on or before the Completion Date:
3.2.1 the board of the Purchaser having approved the transactions
contemplated by this Agreement.
3.2.2 the Purchaser having received the resignations in writing, effective
as of the Completion Date, of Mr. R.V. Kingma, Mr. J.P. Verhaar and
Mr. E. van 't Hooft as supervisory director of the Companies and
board members of the Subsidiaries, whereby each respective
supervisory director and board member shall grant a full and final
discharge to the respective Company and Subsidiary in respect of
their directorship and the Companies and Subsidiaries having fully
and finally discharged all said board members;
4
<PAGE>
3.2.3 the relevant Works Council(s) of the Seller having positively
advised with respect to the transactions contemplated by the
Agreement or, if negatively advised, not having filed for appeal
(and having waived or forfeited through lapse of time its right to
so appeal) or, if having filed an appeal, this appeal having been
dismissed, with respect to the decision of the Seller to proceed
with the transactions contemplated by the Agreement, as the case may
be.
3.2.4 The Seller and the Purchaser having complied with the provisions of
the Merger Code ("SER FUSLEGEDRAGSREGELS 1975"), as amended), the
Competition Act ("MEDEDINGINGSWET"), US and Dutch Stock Exchange
Regulations.
3.2.5 The incorporation of Purchaser as limited liability company
(besloten vennootschap met beparkte aansprakelijkheld);
3.2.6 EN having acquired the unencumbered legal and beneficial title to
the shares in the Subsidiaries as referred to in this Agreement
under "WHEREAS" sub B.
3.2.7 The Seller having designated the company mentioned in Article 11.1.
3.2.8 Delft Instruments Intellectual Property B.V. having sold and
transferred to EN the patents and trademarks, specified in SCHEDULE
15. The consideration for this transfer is included in the Purchase
Price.
3.2.9 The Purchaser having received within two weeks after the Signing
Date, all written consents and/or no objections of third parties the
Purchaser deems necessary.
3.2.10The transfer referred to in Article 11.5 having been executed.
3.2.11The further due diligence investigations which the Purchaser will be
allowed to conduct between the Signing Date and the Completion Date,
having been concluded, but only with respect to:
a) the files on the joint venture in Thailand;
b) the "cluster subside" information;
c) the other provisions in the balance sheets of ENRAF-NONIUS BV
and ENRAF-NONIUS Medizintechnik GmbH;
d) the review of the inventory and Account Receivables subledgers
of ENRAF-NONIUS IBERICA S.A. to the satisfaction of the
Purchaser.
3.3 Completion is further conditional on the following conditions being
satisfied or waived by the Seller on or before the Completion Date:
5
<PAGE>
3.3.1 the board of supervisory directors of Delft Instruments N.V.
("DI") having approved the transactions contemplated by this
Agreement.
3.4 Each of the Parties hereto agrees to make all reasonable efforts to
ensure that each of the conditions in Article 3.2 and 3.3 is
satisfied as soon as possible before the Completion Date. If at any
time either Party becomes aware of anything that may prevent any
condition being satisfied, it shall immediately inform the other
Party and they shall cooperate to ensure the condition is satisfied
so far as it is capable of satisfaction.
3.5 In the event that one or more of the conditions precedent set out in
Article 3.2 and 3.3 can not be fulfilled or waived, in all material
respects, the Purchaser and Seller shall in mutual consultation
decide whether to rescind this Agreement or modify its terms.
Rescission on the basis of non fulfilment or non-waiver of the above
mentioned conditions precedent shall be without any liability
whatsoever to the Purchaser respective the Seller.
3.6 The Seller shall procure, from the Signing Date until the Completion
Date, that none of the Companies or the Subsidiaries shall, without
prior written approval of the Purchaser before any action is taken:
3.6.1 incur any expenditure exceeding NLG 100,000 (in words: one
hundred thousand Dutch Guilders) equivalent with the exception
only of (a) normal operating expenses including but not
limited to payments (consistent with past practice) of wages,
social security charges, offices leases or insurance claims,
insurance premiums taxes, and (b) capital expenditures,
provided these are within existing budgets for the current
financial year; or
3.6.2 dispose of or grant an option to purchase or right of
pre-emption in respect of any part of their respective assets
(including, without limitation, in respect of the shares in
any of its Subsidiaries) that are material to the business of
the Companies except in the ordinary course of business; or
3.6.3 borrow any money (other than routine amounts as provided for
in the budget), or make any payments other than payments
mentioned in this Agreement, out of or though drawings on
their respective bank accounts (except routine payments,
consistent with past practice in the ordinary course of
business); or
3.6.4 thousand Dutch Guilders) equivalent in the aggregate.
6
<PAGE>
3.7 The Seller shall procure that, from the Signing Date until the
Completion Date, the Companies and their Subsidiaries will run their
respective businesses in the ordinary course, as their respective
businesses are being run at the Signing Date.
3.8 The Seller undertakes that, as from the Effective Date there shall
not be any distribution of dividend by the Companies or their
Subsidiaries. The Seller furthermore shall prior to the Completion
Date adjust the net equity of ENRAF-NONIUS N.V. and ENRAF-NONIUS
Medizintechnik GmbH and ENRAF-NONIUS Medical Equipment (Co. Ltd.)
insofar as it will be required to bring the net equity above the
statutory limits on the basis of the applicable legislation in their
respective countries where they are seated.
ARTICLE 4
COMPLETION, PAYMENT
4.1 Completion will take place at the Rotterdam offices of Loeff Claeys
Verbeke on the Completion Date.
4.2 The transfer of the Shares shall be effected by means of a notarial
deed, in accordance with the form attached hereto as SCHEDULE A to
be executed by Mr. D.F.M.M. Zaman, civil law notary in Rotterdam.
Mr. Zaman is a civil law notary of Loeff Claeys Verbeke, the firm of
the external legal advisors of the Purchaser. The Seller hereby
acknowledges that it is aware of the provisions of Articles 9 and 10
of the "Guidelines concerning associations between civil law
notaries ("NOTARISSEN") and barristers/solicitors ("ADVOCATEN")" as
established by the Board of the Royal Fraternity of Civil Law
Notaries ("KENINDIJKE NOTARIEIS BROEDERSCHAP"). The Seller hereby
explicitly agrees that Loeff Claeys Verbeke shall advise and act on
behalf of the Purchaser with respect to this Agreement, any
agreements resulting from this Agreement and/or any disputes
resulting therefrom.
4.3 The Purchaser agrees to pay to the Seller at the Completion Date NLG
1,900,000 (in words: one million nine hundred thousand Dutch
Guilders) in cash (the "CASH AMOUNT") which amount shall be
transferred by the Purchaser on the Completion Date prior to 10.00
a.m. Dutch Time, by wire transfer in immediately available funds, to
the Loeff Claeys Verbeke third party account, bank account number
25.44.25.674 in the name of "Stichting Beheer Derden-geiden LCV" at
MeesPierson Bank in Rotterdam.
4.4 The balance of the Purchase Price, being NLG 9,000,000 (in words:
nine million Dutch Guilders), will be paid by the Purchaser to the
Seller, subject to and in accordance with the Subordinated Loan
Agreement attached hereto as SCHEDULE 4.
7
<PAGE>
4.5 In addition to the Purchase Price the Purchaser shall assume and
take over by way of assignment as of the Completion Date from the
affiliates of DI, including the Seller, all intercompany claims on
and debit to the Companies and their Subsidiaries (the "INTERCOMPANY
PAYABLES") which may exist on the Completion Date and Purchaser and
the affiliates of DI, including Seller, shall settle the balance of
the Intercompany Payables (the "BALANCE"), as known on the
Completion Date, as summarized in SCHEDULE 5 and, in as far as the
Intercompany Payables (the "BALANCE") can not exactly be calculated
on the Completion Date, ultimately within 30 days as of the
Completion Date. Any amount due in this respect to the affiliates of
DI, including the Seller shall be paid by Purchaser to Delft
Instruments Nederland B.V. and any amount due by DI and/or the
Seller to Purchaser shall be paid by Delft Instruments Nederland
B.V. to Purchaser within 10 days as of the day of the said
calculation.
4.6 The Purchaser shall pay on and as of the Completion Date the banks
(the "BANKS") all outstanding debts (the "DEBTS") of the Companies,
which Debts were in total the amount as summarized in and on the day
first mentioned in SCHEDULE 7.
4.7 In addition to the Purchase Price the Purchaser shall take over on
the Completion Date by way of assigning the rights and obligations
of DI and its affiliates as specified in SCHEDULE 8 resulting from
the (bank) guarantees ("GUARANTEES") as specified in SCHEDULE 8.
ARTICLE 5
ACTIONS AT COMPLETION
5.1 At Completion, once the Cash Amount shall have been received in the
bank account indicated in Article 4.3, the following actions shall
take place, which actions shall be deemed to take place
simultaneously, and each such action being conditional upon all such
actions being effected:
5.1.1 The Seller shall deliver to the Purchaser the Certificate as
attached hereto as SCHEDULE 9;
5.1.2 The Purchaser shall have received from counsel to the Seller
legal opinions but only relating to ENRAF-NONIUS Iberica S.A.,
STAS DOYER Hydrotherapie S.A. and ENRAF-NONIUS Medical
Equipment Co. Ltd., satisfactory to the Purchaser in form and
substance as set forth in SCHEDULE 10 attached hereto,
addressed to the Purchaser, and dated as of the Completion
Date;
5.1.3 The Seller shall transfer the Shares to the Purchaser;
8
<PAGE>
5.1.4 Delft Instruments Nederland B.V., the Purchaser and Henley
Health Care, Inc. will sign and enter into the Subordinated
Loan Agreement attached hereto as Schedule 4;
5.1.5 The Purchaser shall irrevocably instruct the Notary in writing
to arrange for the payment of the Cash Amount received from
the Purchaser pursuant to Article 4.3 to the Seller in a bank
account to be designated by the Seller, receipt of the Cash
Amount in such bank account, for value on the Completion Date
and the signing of the Subordinated Loan Agreement pursuant to
Article 5.1.4 shall constitute final discharge of payment of
the Purchase Price.
5.1.6 The Seller shall hand over to the Purchaser a copy of the
shareholders' register(s) of the Company(/ies) in which the
transfer of Shares will have been registered; as well as a
copy of the shareholders registers or their local equivalents
of the Subsidiaries on which the transfer of the shares in
these Subsidiaries to EN will have been registered together
with a copy of the purchase and/or transfer documentation
relating to the Purchase and transfer of these shares.
5.1.7 The Seller will present the Purchaser with the written
resignations pursuant to Article 3.2.2 and in the form of
SCHEDULE 11.
5.1.8 The deposits and outstanding monthly tenancy payments as
defined in the Tenancy and Service Agreement will be settled
between the Parties mentioned in these agreements.
5.1.9 Rontgenweg Beheer B.V. and EN and Mercuriusweg B.V. and EN
shall sign and enter into the Tenancy and Service Agreement,
attached hereto as SCHEDULE 12.
5.1.10The DI affiliates and the Companies as referred to in SCHEDULE
14 shall sign and enter into the Tenancy and Service
Agreements attached hereto as SCHEDULE 14.
5.1.11DI shall revoke the 2:403-declaration which has been deposited
for EN as of the Completion Date. The Purchaser shall
indemnify and hold DI harmless for any claims on DI that may
arise on the basis of article 2:403 Dutch Civil Code after the
Completion Date as a result of events which occurred in the
Companies after the Completion Date but before the date that
the revocation of the 2:403 declaration will have effect
towards third parties.
9
<PAGE>
5.1.12The Parties will assign the Intercompany Payables and the
Balance will be settled in accordance with Article 4.5.
5.1.13
5.1.14DI and the affiliates as referred to in Article 4.7 will
assign the Guarantees to the Purchaser.
5.1.15The Banks and DI and the remaining affiliates of DI will
release the Companies and their Subsidiaries from any (joint
and several) liability under any and all arrangements with the
Banks.
5.1.16The Transfer will be executed against payment by the
designated company mentioned in Article 11.1 to EN of NLG
4,500,000 (in words: four million five hundred Dutch Guilders)
on a bank account to be designated by EN.
If for any reason the provisions of this Article 5.1 are not fully
complied with, the Parties shall in mutual consultation decide
whether to rescind this Agreement, or modify its terms, without any
liability whatsoever to any Party.
5.2 A Party will at the reasonable request of an other Party execute all
documents and do all other acts and things as may reasonably be
deemed necessary to give full effect to this Agreement and to the
transfer the Shares.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
6.1 The Seller represents and warrants to the Purchaser that on the
Signing Date and the Completion Date each and every statement set
out in SCHEDULE 16 under the heading "Warranties" (the "WARRANTIES
SCHEDULE") is true, complete, accurate and not misleading in all
respects, except to the extent that the Seller has informed
Purchaser or its advisors to the contrary in the due diligence
conducted. All the disclosed information is attached as SCHEDULE 12.
Each of the Warranties set out in the several paragraphs of the
Warranties Schedule is separate and independent and is not limited
by reference to any other paragraphs of the Warranties Schedule
which is not expressly referenced to the Warranty concerned.
6.2 All information relating to the Companies and the Subsidiaries or to
their respective assets or affairs which would be material to a
purchaser for value of the Shares, undertakings or assets of the
Companies and/or the Subsidiaries or which would have influenced the
amount paid for the Shares and the provisions, conditions and
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<PAGE>
Warranties set out in this Agreement is contained in this Agreement
or in the schedules hereto and is true, accurate and fairly
presented. All financial information has been prepared in accordance
with the Delft Instruments accounting principles which are entirely
in accordance with the generally accepted accounting principles in
the Netherlands.
6.3 acknowledges that the warranties are material and the accuracy of
the Warranties in all respects is essential for the Purchaser's
decision to enter into this Agreement.
6.4 The Warranties are only qualified by matters fully, fairly and
specifically disclosed in this Agreement and/or schedules to this
Agreement.
ARTICLE 7
BREACH OF WARRANTIES, NON-FULFILMENT
7.1 In the event of breach of any of the Warranties by the Seller
("BREACH") or non-fulfilment by the Seller of any other obligation
contemplated by this Agreement ("NON-FULFILMENT"), the Seller shall
indemnify the Purchaser and hold the Purchaser harmless from and
against any and all damages and/or liabilities, without prejudice to
any other remedies available to the Purchaser under Netherlands law.
7.2 The liability of the Seller for damages in connection with a Breach
and/or any Non-fulfilment shall be fixed at the amount required to
put the Purchaser - or, at the Purchaser's sole option, any of the
Companies or the Subsidiaries - in the position in which they (it)
would have been if the relevant Breach and/or the relevant
Non-fulfilment had not occurred in as far as such is practicable and
can reasonably be expected.
For the avoidance of doubt, it is hereby expressly agreed that the
liability of the Seller shall include liability for all costs
incurred by the Purchaser relating to the prevention or limitation
of any loss or damage resulting from or arising as a result of any
Breach and/or Non-fulfilment and in particular but without
limitation shall include all legal and other similar costs incurred
in instructing and using professional advisors.
7.3 The indemnification paid by the Seller to the Purchaser shall be
deducted with:
7.3.1 the amount of any indemnification or other recovery, including
without limitation insurance proceeds, payable to the
Purchaser or Companies or the Subsidiaries from any other
third party with respect to the indemnification and/or
11
<PAGE>
7.3.2 an amount equal to any tax benefit (including any tax
reduction) attributable to indemnification which will be
available to the Companies and/or their Subsidiaries for any
taxable period.
In the event that the amount of any deduction which shall be applied
pursuant to this Article 7.3 is determined after payment by the
Seller of the amount otherwise required pursuant to Article 7, the
Purchaser shall repay the balance between the two amounts to the
Seller promptly after such determination.
7.4 The liability of the Seller in respect of the Warranties shall
continue indefinitely in respect of those Warranties set out in
sections 4.1 through 4.3 and 5.1 through 5.5 of the Warranties
Schedule (concerning the Companies, the Shares and the Subsidiaries)
but shall otherwise terminate:
7.4.1 on the sixth anniversary of the Completion Date or such other
later date being six months after the expiry of the periods
allowed by law for the assessment of the liability of the
Companies to tax claims (including additional assessments,
levies and/or penalties) in respect of those Warranties set
out in sections 8.1 through 8.5 of the Warranties Schedule
(concerning Taxes);
7.4.2 on the day one year and two months after the Completion Date
in respect of all other Warranties set out in the Warranties
Schedule;
except in respect of any claim made by the Purchaser of which notice
in writing is given to the Seller before the relevant date;
7.5 The liability of the Seller in respect of the Warranties:
7.5.1 shall not arise unless the amount of all claims (excluding
costs of legal assistance) made in respect of the Warranties
and indemnities exceeds NLG 100,000-- (in words one hundred
thousand Dutch Guilders). In the event that the said amount is
exceeded the Seller shall be liable for the full amount of all
such damages, costs and expenses;
7.5.2 shall, with the exception of liability for Tax claims from the
tax authorities arising with respect to the period before the
Effective Date for which claims the Seller will be fully
liable, not exceed the maximum amount of NLG 5,450,000 (in
words: five million four hundred fifty thousand Dutch
Guilders);
7.5.3 shall not arise if Purchaser does not give a written notice to
the Seller of the claim within 45 days after the Purchaser
having become aware of the fact underlying the claim.
12
<PAGE>
7.6 Notwithstanding anything to the contrary herein, to the extent that
any Breach or Non-fulfilment contained herein is capable of remedy,
the Purchaser shall then prior to making a claim for indemnification
afford the Seller a reasonable opportunity to remedy the Breach
within one month after the notification of the Breach by the
Purchaser to the Seller. In the event of any Breach giving rise to
an indemnity obligation of the Seller, the Purchaser shall take or
shall agree to take or to cooperate with the Seller. If so requested
by the Seller, all reasonable measures to mitigate the consequences
of the related Breach.
ARTICLE 8
FURTHER INDEMNIFICATION
8.1 The Seller shall indemnify the Purchaser and the Companies and shall
hold the Purchaser and the Companies harmless against:
8.1.1 any and all liabilities, claims and costs incurred by the
Companies in connection with any guarantees, sureties,
warranties and/or statements of (several) liability issued by
the Companies on behalf or in favor of third parties and any
legal ("WETTELIJKE") or contractual liability for obligations
(including tax obligations) of third parties, to the extent
that no sufficient provision has been included in the Annual
Accounts.
8.1.2 rights of recourse of third parties against the Companies, to
the extent that no sufficient provision has been included in
the Annual Accounts.
8.1.3 any and all liabilities, claims and costs incurred by the
Companies in connection with the transfer pursuant to Article
11.1.
Article 7.4 and article 7.5 will mutatis mutandis apply to this
Article 8.1
8.2 The Seller shall indemnify the Purchaser, the Companies and the
Subsidiaries and shall hold the Purchaser, the Companies and the
Subsidiaries harmless against any and all liabilities, claims and
costs incurred or to incur by EN in connection with the Gymna claim.
The Seller shall litigate the matter in the name of EN but entirely
for Seller's account and for Seller's risk and EN shall cooperate
with Seller in as far as may be necessary and in as far as can be
reasonably expected from EN.
13
<PAGE>
ARTICLE 9
NON-COMPETITION
9.1 The Seller covenants and agrees with the Purchaser, the Companies
and the Subsidiaries that, for a period of 5 (five) years after the
Completion Date, they shall not directly or indirectly
9.1.1 engage in and/or be concerned with activities which are
similar to or competitive with the activities or the products
of the Companies and/or the Subsidiaries as of the Completion
Date;
9.1.2 engage, employ, solicit or contact with a view to hiring or
engaging Employees of the Companies and/or the Subsidiaries
for a period of one year after Completion. (For the purpose of
this clause, Employees shall mean persons employed by the
Companies.)
ARTICLE 10
SECRECY
The Seller covenants and agrees that it shall not (and shall procure
that its respective officers and members of their respective boards
of managing directors and supervisory directors shall not), at any
time divulge, furnish or make accessible to anyone:
10.1 any confidential or secret knowledge or information with
respect to any aspect of the business of the Companies and/or
the Subsidiaries; or
10.2 any customer or suppliers list or other information relating
to the customers or suppliers of the Companies and/or the
Subsidiaries or persons who have dealings with any of the
Companies and/or the Subsidiaries whether or not confidential.
The Purchaser covenants and agrees that it shall not (and shall
procure that its respective officers and members of their respective
boards of managing directors and supervisory directors shall not),
at any time divulge, furnish or make accessible to anyone any
confidential or secret knowledge or information with respect to any
aspect of the business of Delft Instruments N.V. and its affiliates
other than the Companies and/or the Subsidiaries.
14
<PAGE>
ARTICLE 11
OTHER COVENANTS AND ARRANGEMENTS
11.1 On Completion Date after the transfer of the Shares, EN will sell
and transfer the assets and it will transfer the persons described
in SCHEDULE 17 (the "Transfer") to a company to be designated by the
Seller prior to the Completion Date, for a total consideration of
NLG 4,500,000 (in words: four million five hundred thousand Dutch
Guilders) to be paid by the designated company to EN. The company to
be designated will either be affiliated to Seller or a company
approved by EN. The Seller guarantees and procures that the
designated company will pay the total consideration of NLG 4,500,000
(in words: four million five hundred thousand Dutch Guilders). The
designated company and the Seller shall indemnify EN, and shall hold
EN harmless against any and all liabilities, claims and costs
incurred by EN in connection with the Transfer. As of the day after
the Completion Date EN and the designated company will enter into an
Original Equipment Manufacturer Agreement on the terms set out in
Schedule 17.
11.2 The Companies will be insured under the current insurance policies
until the Completion Date.
11.3 Purchaser and the Companies shall have the sole right to use for all
their activities, services and products, for an indefinite period of
time after Completion Date without any compensation being due for
this use, the tradename "Enraf-Nonius". It is expressly understood
that Purchaser and the Companies shall refrain from the single use
of the tradenames "ENRAF" or "Enraf" and/or "NONIUS" or "Nonius". It
is explicitly acknowledged that N.V. Veranigde Instrumenten
Fabrieken Enraf Nonius may continue to use its current tradename for
its current activities.
11.4 The Seller procures and guarantees to transfer, before the
Completion Date, the Rontgenwegcomplex and MDC, as both described in
SCHEDULE 18 to an affiliate of DI, not being a Company or
Subsidiary.
11.5 The Seller, with the exception of Delft Instruments France S.A.,
will sign this Agreement on behalf of Delft Instruments France S.A.,
since last mentioned company could not be legally and binding
represented on the Signing Date. The Seller procures and guarantees
that Delft Instruments France S.A. will countersign this Agreement
within fourteen days after the Signing Date, by failure of which the
Purchaser may rescind this Agreement, without any liability
whatsoever to any Party. By signing this Agreement Delft Instruments
France S.A., within fourteen days after the Signing Date, will enter
into this Agreement as of the Signing Date.
11.6 Henley Healthcare Inc. represents and warrants to the Seller that as
at the Signing Date and the Completion Date:
15
<PAGE>
- It is duly incorporated and validly existing under the laws of
the jurisdiction where it is having its registered seat;
- It has the corporate power to execute and deliver the
Agreement and to perform its obligations thereunder.
11.7 The Seller and the Purchaser guarantee and procure that the parties
mentioned in SCHEDULE 17A will enter to a transition agreement of
which the main terms are set out in Schedule 17a.
ARTICLE 12
MISCELLANEOUS
12.1 This Agreement represents the entire understanding and agreement
between the Parties with respect to the purchase and sale and
supersedes all previous agreements, both in writing and oral,
including correspondence.
12.2 PURCHASER:
Name : Henley Healthcare Inc.
Address : 120 Industrial Boulevard
Sugar Land Texas
TX77478-3128
United States
Fax : 1-281 276 7038 or 7176
12.3 SELLER:
Name : Delft Instruments Nederland B.V.
Address : Mercuriusweg 1
2624 BC DELFT
Fax : 31 15 260 1282
12.4 Each Party will bear its own costs and expenses in relation to the
entry into, execution and performance of this Agreement, including
all negotiations, preparations and investigation.
12.5 No Party shall make or permit any person connected with him to make
announcement concerning this sale and purchase or any matter in
connection with this Agreement before on or after the Completion
Date (i) except as required by law, stock-exchange or other rules
but not before the Party has given prior written notice to the other
Parties, or (ii) with the written approval of the other Parties.
12.6 This Agreement may not be amended, supplemented or changed, nor may
any provision hereof be waived, except by a written instrument
making specific reference to this Agreement signed by each of the
Parties.
16
<PAGE>
12.7 If any provision of this Agreement shall be held by any court of
competent jurisdiction to be illegal, void or unenforceable, such
provision shall be of no force and effect, but the illegality or
unenforceability of such provision shall have no effect upon and
shall not impair the enforceability of any other provision of this
Agreement.
12.8 The representations, warranties and other covenants and undertakings
made by the Parties in this Agreement shall be deemed to be
continuing and shall survive Completion.
12.9 No Party shall be entitled to assign or transfer its rights and
obligations hereunder to any third party save with the prior written
consent of the other Party which will not be unreasonably withheld.
This Agreement shall be binding upon the Parties, their successors
in title and permitted assignees.
12.10 This Agreement shall be binding an enforceable between Parties as of
the moment that each of the Parties has signed this Agreement.
12.11 The deed of transfer of the Shares will provide that the Parties
thereto waive the right to demand rescission ("ontbinding") thereof.
The Parties hereto, except for the Purchaser with regard to Article
11.5, also waive the right to demand rescission ("ontbinding") of
this Agreement.
12.12 This Agreement shall be governed by and construed in accordance with
the laws of the Netherlands.
12.13 All disputes between the parties hereto arising under or in
connection with this Agreement or further agreements resulting from
this Agreement including all disputed claims for breach by either
party or any representation, warranty, undertaking or covenant on
its part under this Agreement, shall be resolved by arbitration in
accordance with the rules of the Netherlands Arbitration Institute
in Rotterdam, provided always that the parties have the right to
settle any such dispute in summary proceedings and the right to
obtain seizure. The arbitrators shall decide according to the rules
of the law. The arbitral proceedings shall be conducted in the
English language. The place of arbitration shall be Rotterdam.
17
<PAGE>
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto in
cate on the date set out on page one.
Henley Healthcare Inc.
on behalf of
/s/ Michael M. Barbour /s/ R. Veenenga Kingma
Henley Healthcare, B.V. i.o. Delft Instruments Nederland B.V.
By: Michael M. Barbour By: R. Veenenga Kingma
Its: President Its:
/s/ R. Veenenga Kingma /s/ R. Veenenga Kingma
Delft Instruments N.V. Delft Instruments International B.V.
By: R. Veenenga Kingma By: R. Veenenga Kingma
Its: Its:
/s/ J. P. Verhaar
Beheermaatschappij Elektroptik B.V. Delft Instruments France S.A.
By: J. P. Verhaar By:
Its: Its:
/s/ J. P. Verhaar /s/ R. Veenenga Kingma
B.V. Industriele Houdstermaatschappij Enraf-Nonius Technology B.V.
Odelca By: R. Veenenga Kingma
By: J. P. Verhaar Its:
Its:
/s/ J. P. Verhaar /s/ J. P. Verhaar
Beheermaatschappij Oldelft B.V. Dimeq Medizinelektronik GmbH Berlin
By: J. P. Verhaar By: J. P. Verhaar
Its: Its:
<PAGE>
/s/ J. P. Verhaar
N.V. Verenigde Instrumentenfabrieken
Enraf-Nonius
By: J. P. Verhaar
Its:
EXHIBIT 2.2
AMENDMENT TO AGREEMENT REGARDING THE SALE AND PURCHASE
OF THE ENRAF-NONIUS COMPANIES
(THE "DEED")
by and between
HENLEY HEALTHCARE B.V.
and
DELFT INSTRUMENTS NEDERLAND B.V.
DELFT INSTRUMENTS INTERNATIONAL B.V.
BEHEERMMTSCHAPPIJ ELEKTROPTIK B.V.
DELFT INSTRUMENTS FRANCE S.A.
B.V. INDUSTRIELE HOUDSTERMAATSCHAPPIJ ODELCA
ENRAF-NONIUS TECHNOLOGY B.V.
BEHEERMAATSCHAPPIJ OLDELFT B.V.
DIMEQ VERWALTUNGS GMBH
N.V. VERENIGDE INSTRUMENTENFABRIEKEN ENRAF-NONIUS
<PAGE>
This Deed is made this 29th day of May 1998;
by and between
1. HENLEY HEALTHCARE B.V., having its registered office at Delft,
Rontgenweg 1, hereinafter referred to as the "Purchaser";
and
2. DELFT INSTRUMENTS NEDERLAND B.V. ("DIN") having its registered office at
Mercuriusweg 1, (2624 BC) Delft, the Netherlands, herein represented by
R.V. Kingma and E.H. de Groot,
3. DELFT INSTRUMENTS INTERNATIONAL B.V. having its registered office at
Mercuriusweg 1, (2624 BC) Delft, the Netherlands, herein represented by
R.V. Kingma and J.P. Verhaar,
4. BEHEERMAATSCHAPPIJ ELEKIROPTIK B.V. having its registered office at
Mercuriusweg 1(2624 BC) Delft, the Netherlands, herein represented by J.P.
Verhaar,
5. DELFT INSTRUMENTS FRANCE S.A. having its registered office at 15, Rue
Paul Langevin, ZAC Les Beaudottes, 93270 Sevran, France herein represented
by E. van 't Hooft,
6. B.V. INDUSTRIELE HOUDSTERMAATSCHAPPIJ ODELCA having its registered
office at Mercuriusweg 1, (2624 BC) Delft, the Netherlands, herein
represented by J.P. Verhaar,
7. ENRAF-NONIUS TECHNOLOGY B.V. having its registered office at
Mercuriusweg 1, (2624 BC) Delft, the Netherlands, herein represented by
R.V. Kingma,
8. BEHEERMMTSCHAPPIJ OLDELFT B.V. having its registered office at
Mercuriusweg 1, (2624 BC) Delft, the Netherlands, herein represented by
J.P. Verhaar,
9. DIMEQ VERWALTUNGS GMBH having its registered office at Obere Dammstrasse
8-10, 42653 Solingen, Germany, herein represented by J.P. Verhaar,
10. N.V. VERENIGDE INSTRUMENTENFABRIEKEN ENRAF-NONIUS herein represented by
J.P. Verhaar,
<PAGE>
2 up to and including 10 hereinafter jointly and/or individually referred
to as: the "SELLER";
WHEREAS:
(A) The Parties signed on 6 March 1998 an agreement with respect to the
sale and purchase of the Enraf-Nonius companies (the "PURCHASE AGREEMENT"),
which was deposited with mr. D.F.M.M. Zaman, notary public at Rotterdam, on
6 March 1998;
(B) The Parties wish to amend the Purchase Agreement as is set out
hereinafter:
HAVE AGREED AS FOLLOWS:
ARTICLE 1
DEFINITIONS
1.1 Capitalised terms used in this Deed shall have the meanings ascribed to
them in Schedule 1 attached to the Purchase Agreement, except as the
context may otherwise require.
ARTICLE 2
APPLICABLE TERMS AND CONDITIONS
2.1 The terms and conditions of
the Purchase Agreement apply to this Deed. In case of any conflict between
the terms of these agreements, the terms of this Deed will prevail.
ARTICLE 3
SCHEDULES AND AMENDMENTS
3.1 The Parties herewith amend the Schedules to the Purchase Agreement as is
set out in
EXHIBIT 1.
3.2 The Parties herewith amend the Annexes to the Purchase Agreement as is set
out in
EXHIBIT 2.
ARTICLE 4
PROPERTY, ENVIRONMENTAL AND PURSUIT MATTERS
4.1 The Parties wish to replace articles 15, 16 and 17 of Schedule 16 with the
following articles:
15. BUSINESS PREMISES AND REAL ESTATE
15.1 The Companies have held and hold, at the latest at the
Completion Date, good, valid and enforceable title to the
premises (i.e. land and buildings to carry out their Business
(the "BUSINESS PREMISES"). In particular, these Business
Premises are
<PAGE>
- free from attachments ("BESLAGEN") and/or registrations
thereof;
- free from personal ("KWALITATIEVE") obligations,
easements ("ERF-DIENSTBAARHEDEN") and other right IN REM,
special charges, perpetual clauses and other encumbrances,
except as set out in the relevant title deeds or public
registers.
The movable property ("ROERENDE ZAKEN") intended to
permanently serve the - within the meaning of Article 254 of
Book 3 of the Dutch Civil Code - is free from any encumbrances
or third party rights.
15.2 The warranty set forth in Article 15.1 above also applies to
the real estate owned EN in Brunssum (the "BRUNSSUM REAL
ESTATE")
15.3 None of the Companies will, at Completion Date, hold any
ownership title or rights to real estate, hold any right IN
REM ("beperkte rechten") to real estate or be under an option
or contractual obligation to purchase or lease any real
estate.
All leases and other contractual agreements entitling the
Companies to use, occupy or hold the Business Premises upon
which they conduct their business at the Signing Date are set
out in Annexes 13 and 14. All Tenancy and Service Agreements
referred to in Article 5 of the Agreement are set out in
Schedules 13 and 14.
15.4 The Companies do not hold any title or right, whether "in
rem", personal or contractual, to real estate other than the
Business Premises.
15.5 None of the Companies is under any obligation to carry out
improvements or repairs of (part of) the Business Premises or
Brunssum Real Estate, nor has any of the Companies received
any orders or instructions with respect to any improvements or
repairs other than those related to the pending environmental
permit application with respect to the Rontgenweg-site.
15.6 None of the Companies has made any renovation or alteration of
the Business Premises and/or Brunssum Real Estate other than
on the basis of and in conformity with the prior permission or
consent from the relevant landlords and/or - to the extent
applicable and with the exception of the renovation and
alternation of the Rontgenweg-site as a result of which an
environmental permit application has been filed - the relevant
governmental or quasi-governmental entities.
15.7 The development, use and construction at or of the Business
Premises applicable laws, regulations, permits, plans,
approvals or consents - or exemptions therefrom - in respect
to zoning, planning and building with the
<PAGE>
exception of the use and construction of the Rontgenweg-site
with respect to the Wet Milieubeheer.
15.8 In connection with the Business Premises and/or the Brunssum
Real Estate no subsidies or other types of financial aid have
been granted or applied for in respect of which any of the
Companies are required to fulfil any conditions or are
otherwise subject to any other obligations or restrictions.
16. ENVIRONMENTAL MATTERS
16.1 Each of the Companies has at all times conducted and conducts
its operations and business in compliance with the applicable,
environmental, health, workers safety and working conditions
laws, regulations, rules and orders. EN has not yet complied
with the ARBO-legislation. None of the Companies has received
any notice, report or other communication claiming, stating or
alleging violation of or non-compliance with any such law,
regulation, rule or order.
16.2 None of the Companies is party to or otherwise required to
comply with any environmental agreement ("MILIEUCONVENANT",
"MILIEUBELEIDSOVEREENKOMST").
16.3 None of the Companies has generated, handled, used, stored,
treated, discarded or disposed of a dangerous substance or
waste substance whether at the Business Premises or at any
other location - in a manner which materially and adversely
affected or affects human health, workers safety or the
environment or which would render any of the Companies liable
for substance removal costs, for health care expenses or for
environment restoration expenses.
16.4 The soil or soil water at or underneath the Business Premises,
except for the Rontgenweg-site and the Brunssum Real Estate
and the air at or above these premises are not contaminated or
polluted.
None of the Companies is under any obligation to investigate,
survey or to research on the soil or soil water at or
underneath the Business Premises and Brunssum Real Estate or
to take safety measures, preventative or corrective action or
clean-up measures with respect to such soil and soil water.
The condition of the soil or soil water at or underneath the
aforementioned premises will not in any way hinder or
complicate the obtaining of building, zoning, or planning
permits for construction or
<PAGE>
16.5 None of the Companies is liable to any third party (including
but not limited to a public or semi-public authority,
governmental or semi-governmental body) for the condition of
the soil, soil water or the air, whether on the basis of civil
law, administrative law or a specific law or regulation, such
as the Dutch Soil Protection Act ("WET BODEMBESCHERMING") or
the Flemish Soil Sanitation Act ("DECREET BODEMSANERING").
17. PERMITS
17.1 The Companies have obtained all licenses, permits, consents,
approvals and filed all notifications, forms and documents -
including these required under environmental law - necessary
for the current operations and business and the unhindered
continuation thereof (hereafter "the PERMITS") with the
exception of the pending environmental permit with respect to
the Rontgenweg-site. Each of the Permits is in full force and
effect and not subject to any administrative or judicial
review.
17.2 The Companies have conducted and conduct their operations and
business in accordance with these Permits and their terms and
conditions.
17.3 There are no facts or circumstances likely to give rise to an
amendment, cancellation, revocation, non-prolongation or
non-renewal of a Permit or likely to give rise to a permit
refusal or the grant of an unreasonably burdensome permit for
any Permit application that is pending at the Agreement Date
or Completion Date.
ARTICLE 5
DUE DILIGENCE
5.1 Purchaser has conducted further due diligence with respect to the
Companies (excl. Enraf-Nonius Iberica S.A.). All the further disclosed
information is attached as EXHIBIT 3.This further disclosed information
provided by or on behalf of the Seller to the Purchaser or its advisors
shall, in as far as the subject of the disclosed information relates to
the content of representations and warranties in Schedule 16 of the
Purchase Agreement, discharge the Seller from its obligation with respect
to the representations and warranties set out in the Warranties Schedule
referred to in Article 6.1 of the Purchase Agreement and the obligations
referred to in Article 7 and 8 of the Purchase Agreement.
ARTICLE 6
INDEMNIFICATION
6.1 The Seller shall indemnify EN for and hold EN harmless against any and all
liabilities, damages and expenses, of whichever nature, which arise for EN
on account of the following matters:
<PAGE>
* the lack of a valid and effective Permit for the premises and
operations at the Rontgenweg-site in Delft (environmental permit
application is pending) in as far as EN is not obliged to pay these
expenses under the Rontgenweg Tenancy and Services Agreement, and;
* the soil and soil water contamination in as far as existing at the
Completion Date at the Rontgenweg-site in Delft and the Brunssum
Real Estate;
6.2 The Seller's duty to indemnify and hold harmless is not subject to any of
the conditions stated in articles 7.4, 7.5, 7.6 or 8.1 of the Purchase
Agreement, it being understood that the total amount of indemnities to be
paid by the Seller will not exceed an amount of NLG 5,450,000 (in words:
five million four hundred and fifty thousand Dutch Guilders).
ARTICLE 7
TAX MATTERS
The Seller shall be responsible for any tax liabilities arising at the
level of the acquired Companies from recaptures relating to tax positions
taken prior to the acquisition date. These tax positions may have been
taken by the Seller or one of its affiliates. In order to avoid
miscommunications, Seller will send the 1997 Dutch corporate income tax
returns, as far as they are relevant for the tax position of the
Companies, for review to the Purchaser before they shall be send to the
tax authorities.
ARTICLE 8
MISCELLANEOUS
8.1 EN will not acquire the shares in Enraf-Nonius Iberica S.A. as referred to
in whereas (B) under (i) and Article 3.2.6 of the Purchase Agreement.
Delft Instruments International B.V. will sell and transfer these shares
to Prim S.A. prior to the Completion Date and the Seller guarantees and
procures that the Purchaser will receive the amounts of this sale and
transfer as mentioned in article 2 of the Shares Purchase and Sale
Agreement between Prim S.A. and Delft Instruments International B.V.
8.2 "Article 11.5" in Article 3.2.10 of the Purchase Agreement should read
"Article 11.4"
8.3 "(the "Balance ")"in the seventh line of Article 4.5 of the Purchase
Agreement should be deleted.
8.4 On Completion Date:
8.4.1 AIM B.V. and EN will enter into transition agreement B
8.4.2 DIN and Enraf-Nonius B.V. will enter into an agreement with
respect to Medi Lease Finans B.V.
<PAGE>
8.4.3 DIN and EN will enter into a services agreement.
8.4.4 Henley Healthcare Inc will sign a Guaranty.
8.4.5 The Companies and DIN will enter into a release agreement.
8.4.6 The Purchaser and DIN will enter into a deed of assignment with
respect to the claim known to parties as the "French Claim".
8.4.7 EN, DIN and Henley Healthcare Inc will enter into a reimbursement
agreement.
8.4.8 DIN will provide the Purchaser with a bankguarantee amounting to
NLG 7,000,000 (in words: seven million dutch guilders).
8.4.9 EN, DIN and AIM will enter into agreement and deed of pledge.
8.5 The Purchaser will not acquire all shares in Enraf-Nonius S.A. (France)
since it will not acquire the 100 shares currently held by mr L. de Jong.
8.6 'Net Sales Volume" in the sixth line of Article 2.3 of the Purchase
Agreement should be replaced with the following: "Volume of the net third
party sales of the Companies minus the sales to Enraf-Nonius Iberica S.A.
plus the annual net sales (with deduction of VAT, indirect taxes, custom
duties and discounts applied on the said sales) of Products made by
Enraf-Nonius Iberica S.A. or by Companies of the PRIM group, parties, not
including sales made between Enraf-Nonius Iberica S.A. and the companies
of the PRIM group."
8.7 DIN procures and guarantees that the option rights granted by Delft
Instruments N.V. to Enraf-Nonius employees shall be honoured in accordance
with the terms set out in the individual option agreements.
8.8 The liability of Enraf-Nonius Medizintechnik GmbH with respect to the
pensions referred to in the reimbursement agreement mentioned 8.4.7 (the
"PENSION LIABILITY") shall never exceed NLG 3,320,000 (in words: three
million three hundred and twenty thousand Dutch Guilders) plus accumulated
compounded interest thereover. DIN shall indemnify Enraf-Nonius
Medizintechnik GmbH for and hold it harmless against any and all
liabilities, damages and expenses, of whichever nature, which arise for
Enraf-Nonius Medizintechnik GmbH on account of the Pension Liability of
Dimeq Verwaltung GmbH and which exceed NLG 3,320,000 (in words: three
million three hundred and twenty thousand Dutch Guilders) plus accumulated
interest thereover.
<PAGE>
IN WITNESS WHEREOF this Deed has been executed by the Parties hereto in 10
copies on the date set out on page one.
/S/ DAN SUDDUTH /S/ R. VEENENGA KINGMA
Healthcare B.V. Delft Instruments Nederland B.V.
By: Dan Sudduth By: R. Veenenga Kingma
Its: Managing Director Its:
/S/ RONTGENWEG BEHEER B.V. /S/ R. VEENENGA KINGMA
N.V. Verenigde Instrumentenfabrieken Delft Instruments International
B.V.
Enraf-Nonius By: R. Veenenga Kingma
By: Rontgenweg Beheer B.V. Its:
Its:
/S/ RONTGENWEG BEHEER B.V. /S/ RONTGENWEG BEHEER B.V.
Beheermaatschappij Elektroptik B.V. Delft Instruments France S.A.
By: Rontgenweg Beheer B.V. By: Rontgenweg Beheer B.V.
Its: Its:
/S/ RONTGENWEG BEHEER B.V. /S/ R. VEENENGA KINGMA
B.V. Industriele houdstermaatschappij Enraf-Nonius Technology B.V.
Odelca By: R. Veenenga Kingma
By: Rontgenweg Beheer B.V. Its:
Its:
/S/ RONTGENWEG BEHEER B.V. /S/ RONTGENWEG BEHEER B.V.
Beheermaatschappij Oldelft B.V. Dimeq Verwaltungs GmbH
By: Rontgenweg Beheer B.V. By: Rontgenweg Beheer B.V.
Its: Its:
EXHIBIT 10.1
SUBORDINATED LOAN AGREEMENT
This subordinated loan agreement (the "AGREEMENT") is made and entered
into as of 29 May 1998.
The undersigned:
1. DELFT INSTRUMENTS NEDERLAND B.V.,
having its registered office at Delft
herein represented by R.V. Kingma and E.H. de Groot,
hereinafter referred to as "LENDER";
and
2. HENLEY HEALTHCARE B.V., having its registered office at Delft herein
represented by Dan D. Sudduth, hereinafter referred to as
"BORROWER";
3. HENLEY HEALTHCARE INC.
having its registered office at Sugar Land, Texas, United States of
America, herein represented by its President and CEO Mike Barbour,
hereinafter referred to as "GUARANTOR";
The Lender, the Borrower and the Guarantor are hereinafter jointly
referred to as the "PARTIES" and each individually, but indiscriminately
as a "PARTY".
WHEREAS
a. the Lender and certain of its affiliates on the one hand (the
"Seller') and the Borrower on the other hand have by an Agreement
for the Sale and Purchase of Shares dated March, 1998 (the "PURCHASE
AGREEMENT") (to which Purchase Agreement a copy of this Loan
Agreement will be attached as Schedule 4) agreed to sell and
transfer the full and unencumbered ownership of the Shares in the so
called Enraf-Nonius Companies;
b. the Seller has sold and transferred and the Borrower has purchased
and accepted the transfer of the Shares;
<PAGE>
c. in accordance with Article 4.4 of the Purchase Agreement, the
balance of the Purchase Price, being NLG 9,000,000.-- (in words nine
million Dutch Guilders) will be paid by the Borrower to the Lender,
subject to and in accordance with this Agreement.
d. In furtherance of Article 4 of the Purchase Agreement, Parties now
wish to lay down the terms and conditions of the Loan in this
Agreement.
THEREFORE PARTIES HERETO AGREE AS FOLLOWS
ARTICLE 1
CAPITALIZED TERMS
1.1 Capitalized terms used herein shall have the same meaning as set out in
the Purchase Agreement, unless expressly stipulated otherwise herein.
ARTICLE 2
THE LOAN
2.1 The Borrower and the Lender agree, subject to the terms and conditions of
this Agreement and further conditional upon the transfer of the Shares on
the Completion Date, to convert on the Completion Date the balance of the
Purchase Price, being NLG 9,000,000. (in words: nine million Dutch
guilders) due by Purchaser to the Seller for the purchase of the Shares
into a 7 (seven) year subordinated loan in the amount of NLG 9,000,000.--
(in words: nine million Dutch Guilders) (the "PRINCIPAL AMOUNT") of the
Lender to the Borrower (the "LOAN").
ARTICLE 3
SUBORDINATION
3.1 Lender agrees that the obligations of the Borrower under this Agreement,
amongst which the payment of the Repayment and the Interest, are expressly
subordinated and junior in right of payment only to the obligations which
Borrower has towards Comerica Bank or any other bank that Borrower may
designate (the "BANK").
3.2 "Subordination" and "subordinated" as set out in article 3.1 of this
Agreement means that in case of an Event of Default as set out in article
8, paragraph a up to and including e of this Agreement, Lender shall not
receive any payment under this Agreement, unless and until the obligations
of Borrower towards the bank(s), as indicated in article 3.1 of this
Agreement, shall have been fully fulfilled. In all other events Borrower
shall fully and timely pay to Lender any amount due in accordance with the
provisions of this Agreement.
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3.3 Borrower agrees not to prepay any amount due under the Maxxim Medical Inc.
note, dated 30 April 1996 in the amount of seven million US Dollars before
the entire Loan has been repaid.
3.4 Borrower furthermore agrees that no new subordinated indebtedness of
Borrower shall be senior or equal in rank to the Loan.
ARTICLE 4
INTEREST
4.1 The Borrower shall pay interest on the Principal Amount, outstanding under
the Loan (the "INTEREST"), at a rate and on the terms as described in this
article 4.
4.2 The Interest shall be calculated at a rate per annum of 4% (four percent)
for the first calendar year starting at the Completion Date, and at a rate
of 5% (five percent) for each year following the first anniversary of the
Completion Date until full repayment of the Loan.
4.3 The Borrower shall pay the Interest to the Lender annually for the first
time on the first anniversary of the Completion Date.
4.4 For the purposes of calculating the interest a year shall be set at 360
(three hundred and sixty) days.
ARTICLE 5
REPAYMENT OF THE LOAN
5.1 The Borrower shall repay the Principal Amount ("Repayment") to the Lender
in 10 (ten) subsequent semi-annual instalments of NLG 900,000.= (in words
nine hundred thousand Dutch Guilders) for the first time on the second
anniversary of the Completion Date.
5.2 The Borrower may, at its option, repay the Principal Amount to the Lender
in whole or in part ("PREPAYMENT") as of the third anniversary of the
Completion Date or, after prior written approval of the Bank, any other
business day the Borrower prefers. Any Prepayment as mentioned above will
only be allowed upon a three business days' prior written notice by the
Borrower to the Lender. Such notice will be irrevocable and will oblige
the Borrower to make the Prepayments so announced.
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<PAGE>
ARTICLE 6
PAYMENTS
6.1 All amounts becoming due and payable under this Agreement, shall be made
by telephonic bank transfer to the Lender's bank account as the Lender may
designate from time to time.
6.2 If any date on which an amount that is due and payable under this
Agreement is to be paid on a day which is not a business day, then the due
date for payment for such amount will be the next business day.
6.3 Any and all payments made by the Borrower pursuant to Article 4 and 5 of
this Agreement will be first applied to any costs and/or interest then due
after which the balance of the payment will be applied to repayment of the
outstanding amount Full payment shall be made in Dutch Guilders in same
day funds.
6.4 Without prejudice to the remedies available to Lender under this Agreement
or otherwise, if the Borrower fails to pay within fifteen business days
after the day the Lender has summoned the Borrower by registered mail to
pay any payment not made on or before its due date as specified in this
Agreement, the Borrower shall pay, by way of liquidated damages, in
respect of the amount of such payment due and unpaid, interest at a rate
of 11% per annum from the date any such amount became due until the date
of actual payment
ARTICLE 7
NO SET-OFF
All payments of interest and costs and any repayments of the outstanding
amounts must be remitted without any discount, reduction, set of,
counterclaim or compensation.
ARTICLE 8
DEFAULT
8.1 The entire amount of the Loan or the unpaid part thereof, including the
accrued Interest due and payable, shall be due and payable at once,
without any notice or default by way of a writ or similar instrument being
required, in the following ("EVENT OF DEFAULT"):
a. in the case of a petition being filed by third parties or by the
Borrower for bankruptcy, the Borrower being declared bankrupt,
offering a composition with creditors or applying for a moratorium
on its debts, or a voluntary arrangement having been made or an
administration order or petition thereof or any distress, execution
or other process having been levied to the same effect, or in the
case of a trustee, receiver or other encumberer being appointed for
the Borrower's affairs and if the Borrower ceases, or threatens to
cease, to continue the business;
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<PAGE>
b. in case any resolution is taken to dissolve and/or to wind up the
Borrower, or in case of amendments to the articles of association or
changes in the Borrower's management;
c. the Borrower transfers, sells or alienates in any way all or
substantial part of its business and/or business assets;
d. failure to pay interest, cost or outstanding amount, fifteen
business days after the day the Lender has summoned the Borrower by
registered mail to pay the interest, cost or outstanding amount due,
as the case may be;
e. in case the Guarantor loses control over the Borrower or Enraf-Nonius
B.V.;
ARTICLE 9
INTRODUCTION OF A NEW CURRENCY
9.1 The Parties agree that, except as provided in Article 9.3, the occurrence
or nonoccurrence of an event associated with economic and monetary union
in the European Community will not itself result in the nullification,
dissolution, termination or modification (whether by unforeseen
circumstances ("ONVOORZIENE OMSTANDIGHEDEN") or otherwise), in whole or in
part, of this Agreement, or give a Party the unilateral right to nullify,
dissolve, terminate or modify, in whole or in part, this Agreement.
9.2 "An event associated with economic and monetary union in the European
Community" as referred to in Article 9.1, includes, without limitation,
each (and any combination) of the following:
9.2.1 in the introduction of, changeover to or operation of a single
or unified European currency (whether known as Euro or
otherwise);
9.2.2 the fixing of conversion rates between a member state's
currency and the new currency or between the currencies of
member states;
9.2.3 the substitution of that new currency for the ECU as the unit
of account of the European Community;
9.2.4 the introduction of that new currency as lawful currency
("WETTIG BETAALMIDDEL") in a member state (whether at the
earliest possible date or subsequently and whether in parallel
with, or as a replacement for, the currency which, before the
introduction of the new currency, was lawful currency in that
member state);
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<PAGE>
9.2.5 the withdrawal as lawful currency of any currency that before
the introduction of the new currency, was lawful currency in
one of the member states;
9.2.6 the disappearance or replacement of a relevant price source
for the ECU or the national currency of any member state or
applicable interest rate; or
9.2.7 any event in furtherance of any of the foregoing.
9.3 Any agreement between the Parties that amends or overrides the provisions
of this Article 9 will be effective if it is in writing and expressly
refers to this Article 9 or to European monetary union or to an event
associated with economic and monetary union in the European Community.
9.4 Each Party represents to the other Party that it is responsible for
assessing, and accepts, for itself the risks and consequences of the
occurrence or non-occurrence of any event associated with economic and
monetary union in the European Community.
ARTICLE 10
GUARANTEE
10.1 The Guarantor guarantees it will pay in case of an Event of Default all
amounts due by the Borrower to the Lender under this Agreement to the
Lender.
ARTICLE 11
MISCELLANEOUS
11.1 This Agreement constitutes the entire Agreement between the Parties in
connection with the Loan.
11.2 Headings are for ease of reference only and shall not affect the
interpretation of this Agreement.
11.3 Any notice or other communication in connection with this Agreement shall
be sufficiently given if in writing and personally delivered or sent by
airmail or by international air courier or by telefax addressed as follows
or to such other address as the parties shall have given notice of
pursuant to this clause:
LENDER:
Name : Delft Instruments Nederland B.V.
Address : Mercuriusweg 1
2624 BC DELFT
Fax : 31 15 260 1282
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<PAGE>
BORROWER:
Name : Henley Healthcare B.V.
Address: c/o 120 Industrial Boulevard
Sugar Land Texas
TX 77478-3128
Fax : 1-281 276 7038
11.4 No Party shall make or permit any person connected with him to make any
announcement concerning this Agreement or any matter in connection with
this Agreement before, on or after the Completion Date except as required
by law or with the written approval of the other Party.
11.5 This Agreement may not be amended, supplemented or changed, nor may any
provision hereof be waived, except by a written instrument making specific
reference to this Agreement signed by each of the Parties.
11.6 If any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be
of no force and effect, but the illegality or unenforceability of such
provision shall have no effect upon and shall not impair the
enforceability of any other provision of this Agreement.
11.7 No Party shall be entitled to assign or transfer its rights and
obligations hereunder to any third party save (i) with the prior written
consent of the other Party or (ii) in case of transfer or assignment by
the Lender to a company affiliated to the Lender. This Agreement shall be
binding upon the Parties, their successors in title and permitted
assignees.
11.8 This Agreement shall be binding and enforceable between Parties as of the
moment that each of the Parties has signed this Agreement.
11.9 The Parties waive their respective rights to rescind or cancel this
Agreement on the basis of sections 6:265 or 6:268 of the Dutch Civil Code.
11.10 This Agreement shall be governed by and construed in accordance with the
laws of the Netherlands.
11.11 All disputes between the parties hereto arising under or in connection
with this Agreement or further agreements resulting from this Agreement
including all disputed claims for breach by either Party under this
Agreement, shall be resolved by arbitration in accordance with the rules
of the Netherlands Arbitration Institute in Rotterdam, provided always
that the Parties have the right to settle any such dispute in summary
proceedings and the right to obtain seizure The arbitrators shall decide
according to the rules of the law. The arbitral proceedings shall be
conducted in the English language. The place of arbitration shall be
Rotterdam.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto in 3
copies on 29th May 1998.
BORROWER LENDER
Henley Healthcare B.V. Delft Instruments Nederland B.V.,
duly represented by: duly represented by:
/S/ DAN D. SUDDUTH /S/ R. VEENENGA KINGMA
GUARANTOR Henley Healthcare Inc duly represented by:
/S/ MICHAEL M. BARBOUR
__________________(bank) hereby confirms its consent with this Agreement.
(BANK)
duly represented by:
__________________________
8
EXHIBIT 10.2
FOURTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
This FOURTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
(the "AMENDMENT"), dated June , 1998 but effective as of May 29, 1998, is made
by and between HENLEY HEALTHCARE, INC. ("BORROWER"), a Texas corporation
formerly known as Lasermedics, Inc., and COMERICA BANK-TEXAS ("LENDER"), a Texas
banking association.
RECITALS:
A. Borrower and Lender entered into that certain Amended and Restated Loan
Agreement dated as of June 30, 1997 (as the same may have heretofore been
amended, modified, restated or supplemented from time to time, the "Loan
Agreement").
B. Borrower and Lender now desire to make certain changes to the Loan
Agreement, all of which is more fully described hereinbelow, which such
provisions contained below shall control over any inconsistencies with the
foregoing recitals.
AGREEMENTS:
In consideration of the premises and the mutual agreements herein set
forth, the parties hereto hereby agree as follows:
1. BORROWING BASE DEFINITION AMENDED. CLAUSE (C) of the definition of
"Borrowing Base" contained in Section 1.1 of the Loan Agreement is hereby
amended in its entirety to be and read as follows:
(c) (i) prior to June 30, 1998, forty percent (40%) of the book
value of the Obligors' Eligible Inventory (exclusive of Tens Units), and
(ii) on June 30, 1998 and at all times thereafter, thirty percent (30%) of
the book value of the Obligors' Eligible Inventory (exclusive of Tens
Units) plus
2. PERMITTED OVERAGE DEFINITION AMENDED. The definition of "Permitted
Overage" contained in Section 1.1 of the Loan Agreement is hereby amended in its
entirety to be and read as follows:
"'PERMITTED OVERAGE' shall mean from May 29, 1998 through and
including June 29, 1998, $1,000,000. After June 29, 1998, the "Permitted
Overage" shall be $-0-."
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<PAGE>
3. REVOLVING NOTE DEFINITION AMENDED. The definition of "Revolving Note"
is hereby amended in its entirety to be and read as follows:
"'REVOLVING NOTE' shall mean a promissory note, in the original
principal sum of $9,000,000, dated as of May 29, 1998, and otherwise in
the form of EXHIBIT B to this Agreement, and any and all renewals,
extensions, modifications, rearrangements and/or replacements thereof."
4. TANGIBLE NET WORTH STEP-UP DEFINITION AMENDED. The definition of
"Tangible Net Worth Step-Up" contained in Section 1.1 of the Loan Agreement is
hereby amended in its entirety to be and read as follows:
"TANGIBLE NET WORTH STEP-UP" shall mean, on any date it is
determined, an amount equal to the sum of (a) the greater of (x) the pro
rata portion of the minimum quarterly Net Income requirement (if any) set
forth in Section 6.20 hereof with respect to the applicable quarter or (y)
seventy-five percent of the aggregate amount of Net Income of the
Companies earned during each calendar month which has ended as of such
date of determination, beginning with the calendar month ending January
31, 1998 plus (b) 100% of the net proceeds realized from the issuance of
any equity securities or borrowings under the Subordinated Note (or other
subordinated indebtedness approved by Bank in writing) by Borrower or its
Subsidiaries during that period.
5. SECTION 6.1.4 AAMENDED. Section 6.1.4 of the Loan Agreement is hereby
amended in its entirety to be and read as follows:
6.1.4.AGING AND BORROWING BASE CERTIFICATE. Furnish to the Bank (x)
monthly by the 10th of each month and (y) beginning June 5, 1998, weekly
as of the last Business Day of each week by the first Business Day of the
following week, a Borrowing Base Certificate confirming that the sum of
(1) the aggregate unpaid principal balance of all the Revolving Loans PLUS
(2) the aggregate Letter of Credit Liabilities, does not exceed the
Maximum Available Amount as then in effect (or if such is not the case,
accompanied by a prepayment of the Revolving Note or Cover for Letters of
Credit or a cancelled Letter of Credit, or combination thereof, in
accordance with SECTION 2.8 of this Agreement), an aging as of the end of
the preceding month of the Obligors' Accounts in a form satisfactory to
the Bank, a summary of the Obligors' Inventory as of the end of such
calendar month, prepared in reasonable detail and containing such other
information as the Bank may request, and an aging as of the end of the
preceding month of the Obligors' accounts payable in a form satisfactory
to the Bank in its sole and absolute discretion. In addition, furnish the
Bank by the 10th of the month, a Borrowing Base Certificate confirming
that the sum of (1) the aggregate unpaid principal balance of all the
Revolving Loans PLUS (2) the aggregate Letter of Credit Liabilities, does
not exceed the Maximum Available Amount as then in effect (or if such is
not the case, accompanied by a prepayment of the Revolving Note or Cover
for Letters of Credit or a cancelled Letter of Credit, or a combination
thereof, in accordance with
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<PAGE>
Section 2.8 of this Agreement).
6. LEVERAGE RATIO AMENDED. Section 6.6 of the Loan Agreement is hereby
amended in its entirety to be and read as follows:
"6.6. MAINTAIN LEVERAGE RATIO. Have on a consolidated statement
basis, at all times on or after June 29, 1998, a ratio of (a) Debt less
the Debt evidenced by the Subordinated Debt Documents to (b) Effective
Tangible Net Worth of not more than 2.50 to 1.00."
7. SECTION 6.20 ADDED. A new Section 6.20 is hereby added to the Loan
Agreement, such new section to read in its entirety as follows:
6.20. MAINTAIN NET INCOME. Have on a consolidated basis, (i) for the
quarter ending June 30, 1998, Net Income equal to or greater than
$200,000, (ii) for the quarter ending September 30, 1998, Net Income equal
to or greater than $400,000 and (iii) for the quarter ending on December
31, 1998, Net Income equal to or greater than $600,000.
8. NEW EXHIBIT B ATTACHED. Exhibit B to the Loan Agreement (which is the
form of Revolving Note) is hereby deleted in its entirety and there is hereby
substituted therefor a new Exhibit B, which shall be in the form of Exhibit A
attached hereto and incorporated herein by reference.
9. CONSENTS REGARDING FOREIGN SUBSIDIARY. Lender hereby consents, for the
purposes of Sections 7.4 and 7.6 of the Loan Agreement, to the Borrower's
guaranty of up to (but no more than) $4,500,000 of indebtedness incurred by
Henley Healthcare, B.V. ("Henley B.V."), a wholly-owned Subsidiary of the
Borrower (Lender also consenting, for the purposes of Section 7.4 of the Loan
Agreement, to the incurrence of such indebtedness by Henley B.V.). Henley B.V.
shall not be required to execute any Additional Security Documents covering any
of its assets. The Lender shall not require any pledge of the stock of Henley
B.V. Henley B.V. shall constitute an "Approved Subsidiary" for purposes of the
Loan Agreement, notwithstanding the failure to satisfy the conditions set forth
in the definition of "Approved Subsidiary" set forth in the Loan Agreement as to
Henley B.V.; provided, however, that the Borrower and its Subsidiaries (other
than Henley B.V.) shall not be permitted to extend credit to Henley B.V. and
provided further, however, that the Borrower and its Subsidiaries (other than
Henley B.V.) shall not be permitted to make investments in Henley B.V.
which exceed, in the aggregate, $1,000,000.
10. CERTAIN DEFINITIONS AND REFERENCES. Terms used but not defined herein,
but which are defined in the Loan Agreement or in the other Loan Documents,
shall have the meanings herein ascribed to them therein. The term "Agreement" as
used in the Loan Agreement and the term "Loan Agreement," as used in the other
Loan Documents or any other instrument, document or writing finished to Lender
by Borrower shall mean the Loan Agreement as hereby amended.
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<PAGE>
11. CONDITIONS. No part of this Amendment shall become effective until the
Borrower shall have delivered (or shall have caused to be delivered) to Bank
(unless otherwise waived or deferred by Bank) each of the following, in Proper
Form:
(1) certificates dated as of the date hereof of the Secretary or
any Assistant Secretary of Borrower authorizing the execution,
delivery and performance of this Amendment, and such other
related documents and information as Lender may request;
(2) Lender's facility fee in the amount of $60,000;
(3) the replacement Revolving Note in the form attached hereto as
Exhibit A, duly executed by Borrower;
(4) a dominion of fluids processing account agreement, in Proper
Form;
(5) a Joinder Agreement executed by Henley B.V.;
(6) an Amendment to Subordination Agreement, duly executed and in
Proper Form;
(7) a legal opinion of counsel for the Obligors, in Proper Form;
(8) All actions, proceedings, instruments and documents required
to carry out the transactions contemplated by this Amendment
or incidental thereto and all other related legal matters
shall have been satisfactory to and approved by Liddell, Sapp,
Zivley, Hill & LaBoon, L.L.P., legal counsel for Bank.
12. EXPENSES; INDEMNIFICATION. TO THE EXTENT NOT PROHIBITED BY APPLICABLE
LAW, BORROWER WILL PAY ALL COSTS AND EXPENSES AND REIMBURSE LENDER FOR ANY AND
ALL EXPENDITURES OF EVERY CHARACTER INCURRED OR EXPENDED FROM TIME TO TIME,
REGARDLESS OF WHETHER A DEFAULT HAS OCCURRED, IN CONNECTION WITH THE
PREPARATION, NEGOTIATION, DOCUMENTATION, RECORDING, CLOSING, RENEWAL, REVISION,
MODIFICATION, INCREASE, REVIEW OR RESTRUCTURING OF THIS AMENDMENT.
13. NO USURY INTENDED; SPREADING. Notwithstanding any provision to the
contrary contained in this Amendment, the Notes or any of the other Loan
Documents, it is expressly provided that in no case or event shall the aggregate
of (i) all interest on the unpaid balance of the Notes, accrued or paid from the
date hereof and (ii) the aggregate of any other amounts accrued or paid pursuant
to the Notes or any of the other Loan Documents, which under applicable laws are
or may be deemed to constitute interest upon the indebtedness evidenced by the
Notes ever exceed the Maximum Legal Rate. In this connection, the parties hereto
expressly stipulate and agree that it is their common and overriding intent to
contract in strict compliance with the applicable usury laws. In furtherance
thereof, none of the terms of the Notes or any of the other Loan Documents shall
ever
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be construed to create a contract to pay, as consideration for the use,
forbearance or detention of money, interest at a rate in excess of the Maximum
Legal Rate. No Borrower nor any other parties now or hereafter becoming liable
for payment of the indebtedness evidenced by the Notes shall ever be liable for
interest in excess of the Maximum Legal Rate. If, for any reason whatever, the
interest paid or received on the Notes during its full term produces a rate
which exceeds the Maximum Legal Rate, the holder of the Notes shall credit
against the principal of the Notes (or, if such indebtedness shall have been
paid in lull, shall refund to the payor of such interest) such portion of said
interest as shall be necessary to cause the interest paid on the Notes to
produce a rate equal to the Maximum Legal Rate. All sums paid or agreed to be
paid to the holder of the Notes for the use, forbearance or detention of the
indebtedness evidenced thereby shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread in equal parts throughout the lull
term of the Notes, so that the interest rate is uniform throughout the lull term
of the Notes. The provisions of this paragraph shall control all agreements,
whether now or hereafter existing and whether written or oral, between Borrower
and Lender.
14. BUSINESS LOANS. Borrower warrants and represents to Lender and all
other holders of the Notes that all loans evidenced by the Notes are and will be
for business, commercial, investment or other similar purpose and not primarily
for personal, family, household or agricultural use, as such terms are used in
Chapter Chapter 1D of Title 79, Tex. Rev. Civ. Stats. 1925.
15. WAIVER OF JURY TRIAL. BORROWER AND LENDER HEREBY IRREVOCABLY WAIVE THE
RIGHT TO TRAIL BY JURY WITH RESPECT TO ANY AND ALL ACTIONS OR PROCEEDINGS AT ANY
TIME IN WHICH THE BORROWER AND LENDER ARE PARTIES ARISING OUT OF THIS AMENDMENT,
THE LOAN AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
16. LIEN CONTINUATION; MISCELLANEOUS. Borrower and Lender hereby
acknowledge, confirm and agree that the Security Documents secure and shall
continue to secure the obligations of Borrower and any other party to any of the
Loan Documents (other than Lender) under the Loan Documents, including, without
limitation, this Amendment, the Notes, the Letter of Credit Liabilities and the
Security Documents are hereby deemed modified to the extent necessary to
evidence the foregoing acknowledgments, agreements and confirmations. Nothing
contained in this Amendment or the Notes or any other document, instrument or
other writing executed in connection with this Amendment shall be construed as a
release or impairment of any of the liens, assignments and security interests
created or granted pursuant to the Security Documents and such liens,
assignments and security interests are hereby ratified and confirmed. The Liens
are not waived. To the extent of any conflict between the Loan Agreement or any
of the other Loan Documents (or any earlier modification of any of them) and
this Amendment, this Amendment shall control. Except as hereby expressly
modified, all terms of the Loan Agreement and the other Loan Documents (as any
of them may have been previously modified by any written agreement) remain in
lull force and effect. This Amendment (a) shall bind and benefit Borrower and,
except as herein expressly limited, Lender, and their respective receivers,
trustees, successors and assigns (provided, that Borrower may not assign its
rights hereunder without the prior written consent of Lender); (b) may be
modified or amended only by a writing signed by each party; (c) SHALL BE
GOVERNED BY AND CONSTRUED IN
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ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE OF TEXAS AND THE
UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT; (d) may be executed
in several counterparts, and by the patties hereto in separate counterparts, and
each counterpart, when executed and delivered, shall constitute an original
agreement enforceable against all who signed it without production of or
accounting for any other counterpart, and all separate counterparts shall
constitute the same agreement and (e) embodies the entire agreement and
understanding between the parties with respect to modifications of instruments
provided for herein and supersedes all prior conflicting or inconsistent
agreements, consents and understandings relating to such subject matter.
Borrower acknowledges and agrees that there are no oral agreements among the
patties with respect to the transactions contemplated by the Loan Documents
which have not been incorporated in this Amendment or in the Loan Documents. If
any provision of this Amendment should be determined by any court of competent
jurisdiction to be illegal, invalid or unenforceable under present or future
laws, the legality, validity and enforceability of the remaining provisions of
this Amendment shall not be affected thereby. Each waiver in this Amendment is
subject to the overriding and controlling rule that it shall be effective only
if and to the extent that (a) it is not prohibited by applicable law and (1,)
applicable law neither provides for nor allows any material sanctions to be
imposed against Lender for having bargained for and obtained it. Wherever the
term "including" or a similar term is used in this Amendment, it shall be read
as if it were "including by way of example only and without in any way limiting
the generality of the clause or concept referred to." Any exhibits, appendices
and annexes described in this Amendment as being attached to it are hereby
incorporated into it. The headings in this Amendment shall be accorded no
significance in interpreting it. BORROWER HEREBY RELEASES, DISCHARGES AND
ACQUITS FOREVER LENDER AND ITS OFFICERS, DIRECTORS, TRUSTEES, AGENTS, EMPLOYEES
AND COUNSEL (IN EACH CASE, PAST, PRESENT AND FUTURE) FROM ANY AND ALL CLAIMS
EXISTING AS OF THE DATE HEREOF (OR THE DATE OF ACTUAL EXECUTION HEREOF BY THE
APPLICABLE PERSON OR ENTITY, IF LATER). AS USED HEREIN, THE TERM "CLAIM" SHALL
MEAN ANY AND ALL LIABILITIES, CLAIMS, DEFENSES, DEMANDS, ACTIONS, CAUSES OF
ACTION, JUDGMENTS, DEFICIENCIES, INTEREST, LIENS, COSTS OR EXPENSES (INCLUDING
BUT NOT LIMITED TO COURT COSTS, PENALTIES, ATTORNEYS' FEES AND DISBURSEMENTS,
AND AMOUNTS PAID IN SETTLEMENT) OF ANY KIND AND CHARACTER WHATSOEVER, INCLUDING
BUT NOT LIMITED TO CLAIMS FOR USURY, BREACH OF CONTRACT, BREACH OF COMMITMENT,
NEGLIGENT MISREPRESENTATION OR FAILURE TO ACT IN GOOD FAITH, IN EACH CASE
WHETHER NOW KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, ASSERTED OR UNASSERTED
OR PRIMARY OR CONTINGENT, AND WHETHER ARISING OUT OF WRITTEN DOCUMENTS,
UNWRITTEN UNDERTAKINGS, COURSE OF CONDUCT, TORT, VIOLATIONS OF LAWS OR
REGULATIONS OR OTHERWISE. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
BORROWER HEREBY WAIVES ALL RIGHTS, REMEDIES, CLAIMS AND DEFENSES BASED UPON OR
RELATED TO SECTIONS 51.003, 51.004 AND 51.005 OF THE TEXAS PROPERTY CODE, TO THE
EXTENT THE SAME PERTAIN OR MAY PERTAIN TO ANY ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SS.26.02
THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED
BY ANY OF THE PARTIES BEFORE OR SUBSTANTIALLY
CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH
6
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REPRESENTS 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.
EXECUTED effective as of the date first set forth above.
HENLEY HEALTHCARE, INC.,
a Texas corporation
By: /S/ MICHAEL M. BARBOUR
Name: MICHAEL M. BARBOUR
Title: PRESIDENT
COMERICA BANK-TEXAS,
a Texas banking association
By: /S/ JAMES R. MCNUTT
Name: JAMES R. MCNUTT
Title: VICE PRESIDENT
Attachments:
EXHIBIT A - Revolving Note
(Exhibit B to the Loan Agreement)
7
<PAGE>
The undersigned hereby joins in this Amendment to evidence its consent to
execution by Borrower of this Amendment, to confirm that each Loan Document now
or previously executed by the undersigned applies and shall continue to apply to
the Loan Agreement, as amended hereby (and that the Guaranty executed by the
undersigned or which it has joined in pursuant to a joinder agreement apply to
the "Notes" as such term is amended by this Amendment), to acknowledge that
without such consent and confirmation, Lender would not execute this Amendment
and to join in the notice pursuant to Tex. Bus. & Comm. Code ss.26.02 set forth
above.
GARVEY COMPANY, a Minnesota corporation
By: /S/ MICHAEL M. BARBOUR
Name: MICHAEL M. BARBOUR
Title: PRESIDENT
8
EXHIBIT 10.3
AMENDMENT TO SUBORDINATION AGREEMENT
THIS AMENDMENT TO SUBORDINATION AGREEMENT (this "SUBORDINATION AGREEMENT
AMENDMENT") is dated as of , 1998. The parties to it are MAXXIM MEDICAL, INC.
(the "SUBORDINATE CREDITOR"), a Delaware corporation, HENLEY HEALTHCARE, INC.
(formerly known as Lasermedics, Inc.) (the "BORROWER"), a Texas corporation, and
COMERICA BANK - TEXAS ("SENIOR CREDITOR"), a Texas banking association.
RECITALS:
A. Borrower and Senior Creditor have entered into that certain Loan
Agreement dated as of May 20, 1996 (as the same has been amended, restated,
modified, replaced and supplemented from time to time, the "ORIGINAL LOAN
AGREEMENT"), pursuant to which, among other things, Senior Creditor agreed to
provide certain financial accommodations to Borrower.
B. Borrower and Senior Creditor have executed and delivered an Amended and
Restated Loan Agreement (as the same may be amended, restated, modified,
replaced and supplemented from time to time, the "LOAN AGREEMENT"), dated as of
June 30, 1997, providing for, among other things, an increase in the maximum
principal amount of Indebtedness to an amount less than $10,000,000, and
otherwise amending and restating the Original Loan Agreement.
C. As a condition, among others, for the extension of credit under the
terms of the Loan Agreement and the other Senior Loan Documents (as that term is
defined in the Loan Agreement), Subordinated Creditor, Senior Creditor and
Borrower entered into that certain Subordination Agreement (as the same has
heretofore been amended, restated, modified, replaced and supplemented from time
to time, the "ORIGINAL SUBORDINATION AGREEMENT").
D. Borrower has requested Senior Creditor to enter into a Fourth Amendment
to Amended and Restated Loan Agreement, substantially in the form attached
hereto as EXHIBIT A and incorporated herein by reference for all purposes.
E. Senior Creditor is unwilling to do unless and until Subordinate
Creditor enters into this Subordination Agreement Amendment to make certain
changes to the Original Subordination Agreement, all as is more fully described
hereinbelow, which shall control over any inconsistencies or conflicts with the
foregoing recitals.
1
<PAGE>
AGREEMENTS:
In consideration of the premises and the mutual agreements herein set
forth, the patties hereto hereby agree as follows:
1. DEFINITION OF SENIOR CLAIMS AMENDED. The definition of "Senior Claims"
contained in Section 1 of the Original Subordination Agreement is hereby amended
by deleting the amount "$12,000,000" where it appears therein and substituting
therefor the amount "$14,000,000" where it appears therein.
2. GENERAL RATIFICATION. The parties hereto expressly acknowledge, confirm
ratify and agree that, except as expressly modified hereby, all terms of the
Original Subordination Agreement remain in full force and effect.
3. CERTAIN DEFINITIONS AND REFERENCES. Terms used but not defined herein,
but which are defined in the Original Subordination Agreement or in the other
Senior Loan Documents (as that term is defined in the Loan Agreement), shall
have the meanings herein ascribed to them therein. The term "Agreement" as used
in the Original Subordination Agreement shall mean the Original Subordination
Agreement, as hereby amended.
4. EXPENSES. Borrower hereby agrees to pay upon demand all attorneys' fees
and expenses reasonably incurred by Senior Creditor in connection with the
enforcement of its rights under this Subordination Agreement Amendment.
5. MISCELLANEOUS. This Subordination Agreement Amendment (a) shall bind
and benefit Borrower and, except as herein expressly limited, Bank, and their
respective receivers, trustees, successors and assigns (PROVIDED, that Borrower
may not assign its rights hereunder without the prior written consent of Bank);
(b) may be modified or amended only by a writing signed by each party; (c) SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE STATE
OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN EFFECT; (d) may
be executed in several counterparts, and by the parties hereto in separate
counterparts, and each counterpart, when executed and delivered, shall
constitute an original agreement enforceable against all who signed it without
production of or accounting for any other counterpart, and all separate
counterparts shall constitute the same agreement and (e) embodies the entire
agreement and understanding between the parties with respect to modifications of
instruments provided for herein and supersedes all prior conflicting or
inconsistent agreements, consents and understandings relating to such subject
matter. The parties hereto acknowledge and agree that there are no oral
agreements among any of them with respect to the transactions contemplated by
the Senior Loan Documents which have not been incorporated in this Subordination
Agreement Amendment or in the Senior Loan Documents. If any provision of this
Subordination Agreement Amendment should be determined by any court of competent
jurisdiction to be illegal, invalid or unenforceable under present or future
laws, the legality, validity and enforceability of the remaining provisions of
this Subordination Agreement Amendment shall not be
2
<PAGE>
affected thereby. Each waiver in this Subordination Agreement Amendment is
subject to the overriding and controlling rule that it shall be effective only
if and to the extent that (a) it is not prohibited by applicable law and (b)
applicable law neither provides for nor allows any material sanctions to be
imposed against Bank for having bargained for and obtained it. Wherever the term
"including" or a similar term is used in this Subordination Agreement Amendment,
it shall be read as if it were "including by way of example only and without in
any way limiting the generality of the clause or concept referred to." Any
exhibits, appendices and annexes described in this Subordination Agreement
Amendment as being attached to it are hereby incorporated into it. The headings
in this Subordination Agreement Amendment shall be accorded no significance in
interpreting it.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement effective as of the date first above-written.
"SUBORDINATE CREDITOR"
MAXXIM MEDICAL, INC., a Delaware corporation
By:
Name:
Title:
3
<PAGE>
"BORROWER"
HENLEY HEALTHCARE, INC., a Texas
corporation
By: /S/ MICHAEL M. BARBOUR
Name: MICHAEL M. BARBOUR
Title: PRESIDENT
4
<PAGE>
"SENIOR CREDITOR"
COMERICA BANK - TEXAS, a Texas banking
corporation
By: /S/ JAMES R. MCNUTT
James R. McNutt, Vice President
ATTACHMENTS:
EXHIBIT A - Fourth Amendment to Amended and Restated Loan Agreement
5
<PAGE>
THE STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
This instrument was acknowledged before me on , 1998, by of MAXXIM
MEDICAL, INC., a Delaware corporation, on behalf of said corporation.
Notary Public in and for the State of TEXAS
Printed Name:
My Commission Expires:
THE STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
This instrument was acknowledged before me JUNE 5 on , 1998, by MICHAEL M.
BARBOUR, PRESIDENT of HENLEY HEALTHCARE, INC., a Texas corporation, on behalf of
said corporation.
/S/ N. H. SORENSEN
Notary Public in and for the State of TEXAS
Printed Name: NICK H. SORENSEN
My Commission Expires: 10-18-2001
6
<PAGE>
THE STATE OF TEXAS ss.
ss.
COUNTY OF HARRIS ss.
This instrument was acknowledged before me on _____________, 1998, by
James R. McNutt, Vice President of COMERICA BANK - TEXAS, a Texas banking
association, on behalf of said association.
Notary Public in and for the State of TEXAS
Printed Name:
My Commission Expires:
7
EXHIBIT 10.4
JOINDER AGREEMENT
This JOINDER AGREEMENT (this "JOINDER AGREEMENT") is dated effective as of
____________, 1998, and is executed and delivered by HENLEY HEALTHCARE, B.V.
(the "JOINING GUARANTOR"), a _________________________________, to COMERICA
BANK-TEXAS (the "BANK"), a Texas banking association.
W I T N E S S E T H:
RECITALS:
1. Henley Healthcare, Inc. (the "BORROWER"), a Texas corporation, of which
Joining Guarantor is a Subsidiary, has entered into that certain Amended and
Restated Loan Agreement (as amended, modiiied, restated and supplemented from
time to time, the "LOAN AGREEMENT") with Bank and certain financial institutions
which are signatories thereto or which may become a party thereto from time to
time, dated as of June 30, 1997.
2. Pursuant to the terms of the Loan Agreement, and as a condition (among
others) for making the initial Loan thereunder and issuing the Initial Letter of
Credit pursuant thereto, certain Subsidiaries of Borrower executed and delivered
to Bank a Master Guaranty of even date with the Loan Agreement, pursuant to
which, among other things, each of such Subsidiaries jointly and severally
unconditionally guaranteed the payment and performance of all of the Debt. The
Master Guaranty, as heretofore or herealter amended, modified, supplemented,
joined in and restated from time to time, is herein called the "GUARANTY." AH
Persons from time to time a partyto the Guaranty (whether originally or by
joinder) are herein collectively called the "GUARANTORS" and are each a
"GUARANTOR" herein.
3. In addition, in connection with the execution and delivery of the
Guaranty, Borrower and Guarantors have executed and delivered a Contribution
Agreement of even date with the Guaranty, pursuant to which, among other things,
each Guarantor grants to the other Guarantors a right of contribution from such
Guarantor for any payments made under the Guaranty, all as is more flilly
described therein. The Contribution Agreement as heretofore or hereatter
amended, modified, supplemented, joined in and restated from time to time, is
herein called the "CONTRIBUTION AGREEMENT."
Joining Guarantor is now required, among other things and subject to
certain terms and conditions, to join in the execution and delivery to Bank of
(a) the Guaranty and (1,) the Contribution Agreement, in each case, by its
execution and delivery of this Joinder Agreement and otherwise by such action as
Bank may reasonably require.
1
<PAGE>
4. In order to comply with such requirement, Joining Guarantor executes
and delivers this Joinder Agreement.
AGREEMENTS:
Now, in consideration of the credit and fmancial accommodations extended
and to be extended to Borrower pursuant to the Loan Agreement and the other Loan
Documents or otherwise, which Joining Guarantor hereby agrees have and shall
continue to benefit Joining Guarantor and its shareholders, directly or
indirectly, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Joining Guarantor hereby agrees,
assumes, ratifies, joins and acknowledges as follows:
1. ASSUMPTION. Joining Guarantor hereby unconditionally, jointly and
severally, assumes liability for all covenants, warranties, representations,
indemnifications, obligations and other Indebtedness of Guarantors now existing
or which may hereafier arise under the Guaranty and shall be liable therefor as
though Joining Guarantor had originally been a party to the Guaranty. Without
limltation of the foregoing, Joining Guarantor, as a primary obligor and not as
a surety, unconditionally, jointly and severally, guarantees unto Bank (i) the
payment of the Debt when due (whether at the stated maturity, by acceleration or
otherwise) in accordance with the terms of the Loan Documents, and (ii) that
Borrower will perform and observe each agreement, covenant, term and condition
in the Loan Documents to be performed or observed by Borrower and, upon
Borrower's failure to do so, will promptly perform and observe, or will cause to
be promptly performed and observed, each such agreement, covenant, term or
condition.
2. CONTRIBUTION. Joining Guarantor hereby unconditionally, jointly and
severally, assumes liability for all covenants, warranties, representations,
indemnifications, obligations and other Indebtedness of Guarantors now existing
or which may hereatter arise under the Contribution Agreement and shall be
liable therefor as though Joining Guarantor had originally been a party to the
Contribution Agreement. Without limitation of the foregoing, Joining Guarantor
unconditionally agrees that in the event any other Guarantor shall suffer any
loss or liability under the Guaranty or any security therefor, beyond such
Guarantor's Proportionate Share (as defined in the Contribution Agreement), then
Joining Guarantor will upon demand by such other Guarantor pay thereto a sum
equal to the amount of such excess loss or liability, not to exceed Joining
Guarantor's Proportionate Share of the total loss or liability.
3. TERMS RATIFIED. Joining Guarantor hereby expressly ratifies all
guarantees, terms, covenants, representations, indemnifications, warranties,
agreements, provisions, WAIVERS, RELEASES, restrictions, duties and
responsibilities of the Guarantors under the Guaranty and the Contribution
Agreement and all other Loan Documents and agrees that they shall apply to
Joining Guarantor as if Joining Guarantor had executed the Guaranty and the
Contribution Agreement, and that any reference to "Guarantors" or a "Guarantor"
contained in the Guaranty, the Contribution Agreement, the Loan Agreement or any
other Loan Documents shall mean, without limitation, Joining Guarantor.
2
<PAGE>
4. REPRESENTATIONS. Joining Guarantor (a) confirms that it has received a
copy of the Loan Documents, together with such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Joinder Agreement; ~) agrees that it will, independently and
without reliance upon Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (c) represents that
the value of the consideration received and to be received by Joining Guarantor
is reasonably worth at least as much as the liability and obligation of such
Joining Guarantor hereunder, and that such liability and obligation may
reasonably be expected to benefit Joining Guarantor directly or indirectly. The
Board of Directors of Joining Guarantor has duly adopted resolutions certifying
that the execution, delivery and performance of this Joinder Agreement (and the
effect thereof) will benefit Joining Guarantor.
5. NO IMPAIRMENT. Nothing herein shall in any manner impair or extinguish
the Guaranty, the Contribution Agreement or any of the other Loan Documents or
any lien or security interest now or hereafter securing the payment of any of
the Indebtedness arising pursuant to the Loan Documents.
6. GOVERNING LAW. Unless otherwise specified therein, this Joinder
Agreement shall be governed by and conrtrued in accordance with the laws of the
State of Texas and the United States of America. Joining Guarantor hereby
irrevocably agrees that any legal proceeding against Bank arising out of or in
connection with this Joinder Agreement, the Guaranty or the other Loan Documents
shall be brought in the district courts of Harris County, Texas, or in the
United States District Court for the Southern District of Texas, Houston
Division.
7. SURVIVAL: PARTIES BOUND. All representations, warranties, covenants and
agreements made by or on behalf of Joining Guarantor in connection herewith
shall survive the execution and delivery of this Joinder Agreement and the other
Loan Documents, shall not be affected by any investigation made by any Person,
and shall bind Joining Guarantor and its successors, trustees, receivers and
assigns and inure to the benefit of the successors and assigns of Bank. The term
of this Joinder Agreement shall be until the termination of the Guaranty and the
Contribution Agreement as to all Parties.
8. CAPTIONS. The headings and captions appearing in this Joinder Agreement
have been included solely for convenience and shall not be considered in
construing this Joinder Agreement.
9. DEFINITIONS. Terms used herein and not defined herein, but which are
defmed in the Loan Agreement or the Guaranty, shall have the meanings herein
assigned to them in the Loan Agreement or the Guaranty, respectively.
10. PARTIES BOUND. This Joinder Agreement shall bind and benefit the
parties hereto and their respective successors and assigns, except that Joining
Guarantor and Borrower may not assign their rights or obligations hereunder
without the prior written consent of Bank.
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<PAGE>
11. AMENDMENTS. ETC. No amendment or waiver of any provision of this
Joinder Agreement or any other Loan Document, nor any consent to any departure
by Joining Guarantor therefrom, shall in any event be effective unless the same
shall be agreed or consented to by Bank and Joining Guarantor, and each such
waiver or consent shall be effective only in the specific iaatance and for the
specific purpose for which given, unless otherwise specifically provided in the
Loan Agreement.
12. WAIVER OF CLAIMS. JOINING GUARANTOR HEREBY WAIVES AND RELEASES BANK
FROM ANY AND ALL CLAIMS OR CAUSES OF ACTION WHICH JOINING GUARANTOR MAY OWN,
HOLD OR CLAIM IN RESPECT OF BANK AS OF THE DATE HEREOF.
IN WITNESS WHEREOF, Joining Guarantor has executed this Agreement as of
the date set forth above.
HENLEY HEALTHCARE, B.V.
By:
Name:
Title:
4
EXHIBIT 10.5
SECOND MODIFICATION TO CONVERTIBLE
SUBORDINATED PROMISSORY NOTE
THIS SECOND MODIFICATION TO CONVERTIBLE SUBORDINATED PROMISSORY NOTE (this
"Modification") dated as of June 5, 1998, between Henley Healthcare, Inc., a
Texas corporation (the "Company"), and Maxxim Medical, Inc., a Delaware
corporation (the "Holder"). Hereinafter, capitalized words and phrases used
herein which are defined in the Note (as such term is hereinafter defined) are
used herein as therein defined, unless otherwise indicated.
WITNESSETH :
WHEREAS, the Company issued to the Holder a $7,000,000 Convertible
Subordinated Promissory Note dated as of April 30, 1996 (the "Note") which was
previously modified by that certain First Modification To Convertible
Subordinated Note dated September 30, 1997;
WHEREAS, the Company intends to consummate a purchase agreement between
the Company and Delft Instruments ("Delft"), whereby the Company will acquire
Enraf Nonius, a wholly-owned subsidiary of Delft ("Enraf");
WHEREAS, in connection with the Enraf acquisition, the Company has
requested that the Holder execute an amendment (the "Subordination Amendment")
to that certain Subordination Agreement, dated as of April 30, 1996, by and
among the Holder, the Company and Comerica Bank -Texas (the "Subordination
Agreement"), which was previously amended on September 30, 1997, increasing the
amount of allowable indebtedness under the Senior Loan Documents (as defined in
the Subordination Agreement) from $12,000,000 to 14,000,000; and
WHEREAS, the parties hereto desire to modify the applicable provisions of
the Note.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1. MODIFICATION OF THE NOTE. Section 6.7(b) of the Note is hereby deleted
and the following section is substituted therefor:
"(b) Funded Debt of the Company under the Senior Indebtedness
not exceeding $14,000,000 in aggregate principal amount at any one
time outstanding;"
2. CONSENT AND WAIVER. Holder hereby consents to the Company's incurrence
of certain debt in connection with the Enraf acquisition as shall be evidenced
by the notes to be issued by the Company (directly or indirectly through any of
its subsidiaries) to (i) Delft in the principal amount of no more than
$4,500,000, and (ii) the Bank of Artesia in the principal amount of no more than
$8,000,000, and the Company's guarantee of the debts of Henley BV. Holder waives
the event of default which may have otherwise occurred as a result of the
issuance of the notes or giving of the guarantee pursuant to Section 6.7 and 6.8
of the Note; provided, however, that the Holders's consent
<PAGE>
and waiver hereunder shall not be construed as an agreement or acknowledgment to
subordinate the Note except as specifically provided by its terms or the
Subordination Agreement, as amended.
3. NO FURTHER EFFECT. Except as expressly modified hereby, the Note shall
remain in full force and effect.
4. GOVERNING LAW. This Modification shall be governed by and construed in
accordance with the laws of the State of Texas.
5. COUNTERPARTS; EFFECTIVENESS. This Modification may be signed in any
number of counterparts, each of which shall be an original, and with the effect
as if the signatures thereto and hereto were upon the same instrument. This
Modification shall be effective as of the date hereof when each of the parties
hereto shall have executed counterparts hereof.
6. ORAL AGREEMENTS. This Modification represents the final expression
between the parties with respect to the subject matter hereof, and may not be
contradicted by evidence of prior or contemporaneous oral agreement of the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this Modification to be
executed as of the date first written above.
HENLEY HEALTHCARE, INC.
a Texas corporation
By: /s/ MICHAEL M. BARBOUR
Michael M. Barbour,
President and Chief Executive Officer
MAXXIM MEDICAL, INC.
a Delaware corporation
By:
Name:
Title:
2
EXHIBIT 10.6
STRICTLY CONFIDENTIAL
Enraf-Nonius B.V.
Rontgenweg 1
P. O. Box 810
2600 AV DELFT
TW/BuS May, 29th 1998
Dear Sirs,
With reference to the recent conversations between Messrs. M. Barbour, D. D.
Sudduth and T. Mathews on your part and Messrs. Th.J. Wischhoff and B. J. van
Someren on our part, we have the pleasure in confirming to you that we are
willing to grant Enref-Nonius B. V. a credit facility up to the maximum amount
of:
NLG 16,000,000 (IN WORDS: SIXTEEN MILLION DUTCH GUILDERS),
or the countervalue thereof in convertible currencies, if available to our bank.
The credit facility, which is at the disposal of Enraf-Nonius B.V. will be used
for the financing of the stock and accounts receivable of your companies, and is
valid until further notice.
Up to a maximum amount of NLG 8.000.000,--this facility can be used for the
drawing of short term loans with a maturity of 3 or 8 months.
The credit facility may be used for overdrafts in current account, as well as
for liabilities on account of the issuing of Letters of Credit and bank
guarantees which are acceptable to us and for concluding forward and foreign
exchange contracts for your account and risk, with a maximum maturity of 6
months. Liabilities will be deducted from your available credit line.
The total amount of your obligations and liabilities on account of the facility
towards our bank, with due observance of the above mentioned maximum, may never
exceed the sum of:
A. NLG 5.000.000,__(say: five million Dutch guilders), as long as the bank
guarantee referred to below is in place;
B. 80% of the total amount of the claims and accounts receivable on
NCM-insured debtors at our convenience, pledged to us in first ranking,
which are not older than 90 days and which are no debts on companies
belonging to the Henley-group:
C. 80% of the NCM-insured project based receivables with an extended
maturity, pledged to us in first ranking, could be taken into account at
our discretion.
<PAGE>
Enraf-Nonius B.V.
Henley Healthcare B.V.
Delft 2
CONDITIONS
Until further notice the following conditions will be applicable:
Debit interest NJG : 1% p.a. above the one month AIBOR (Amsterdam InterBank
Offered Rate).
Debit Interest USD : 1% p.a. above the one month LIBOR (London Interbank
Offered Rate).
Credit Interest NLG: the one month AIBOR minus 1% p.a.
Credit interest USD: the one month LIBOR minus 1% p.a.
The AIBOR/LIBOR will be adapted every Friday on basis of the then current
AIBOR/LIBOR and will be applicable for the following week, unless extreme
tension occurs on the money market.
Credit commission : nil
Turnover commission : nil
Arrangement fee : NLG 100,000,--, to be paid upon acceptance of this
facility.
The interest will be settled quarterly in arrear.
In all cases, other than those specifically arranged for in this letter, the
standard rates and conditions that are usual with us, will apply.
COLLATERAL
As collateral for the due fulfillment of all obligations on any account
whatsoever that your companies have, or will have towards us, will serve:
o joint and several liability between Enraf-Nonius B.V., Henley Healthcare
B.V., Enraf-Nonius N.V., Enraf-Nonius S.A. and Enraf-Nonius
Medizinelektronik GmbH. towards the bank, as to be described in the deed
of joint and several liability;
o a first right of pledge on claims and accounts receivable on debtors of
your companies, as to be described in the deed of pledge. Although this is
a continuous obligation on your part, for
<PAGE>
Enraf-Nonius B.V.
Henley Healthcare B.V.
Delft 3
practical reasons you are allowed, until further notice, to send us a pledge
list once a month, at the beginning of each month;
o a first right of pledge on the business and trade stock of your companies,
as to be described in the deed of pledge;
o a first right of pledge of the rights from the policy of the Nederlandse
Credietverzekerings Maatschappij N.V. (NCM), as to be described in the
deed of pledge. Our Bank will be agent for this policy;
o a first right of pledge on inventory and equipment of your companies, as
to be described in the deed of pledge;
o a company guarantee by Henley Healthcare Inc. according to the enclosed
draft;
o a first call Bank guarantee up to an amount of NLG 5.000.000,-- (say: five
million Dutch guilders) and issued by a bank, acceptable to us;
CONDITIONS
Furthermore, the following conditions will apply to the offered credit facility:
- - Notwithstanding our right of immediate revocation at any time, if (one of)
your companies does(do) not fulfill any obligation towards our Bank, on any
account whatsoever, or towards a third party, any amount due will be payable
immediately.
- - You will provide us annually, within six months after closing of the fiscal
bookyear, with the consolidated financial statements of your companies and
Henley Healthcare Inc., accompanied with an unqualified opinion to be issued
by a chartered accountant;
- - You will provide us each quarter, within one month after closing of the
preceding quarter, with the balance sheet and profit and loss account
(internal quarterly financial statements) of your companies and Henley
Healthcare Inc. of the previous quarter;
- - The sales and distribution organization in Belgium and Spain will be sold
within one year after closing of this agreement resulting in annual savings.
We would like to receive copies of the agreement(s) as soon as possible;
<PAGE>
Enraf-Nonius B.V.
Henley Healthcare B.V.
Delft 4
- - The sales and distribution organization in Germany will be fully closed
before 1 November 1998 resulting in annual savings. The sales and
distribution organization in Germany will be transferred to your new agent
within one month after closing of this agreement;
- - Your company will not issue any collateral in favor of third parties, without
our prior written consent;
- - The credit facility may not be used for making profits of interest by
concluding transactions, which can not be considered as normal operating
business;
- - All banking business of your companies will be led through our Bank;
- - Your companies will conclude and/or maintain adequate insurances for all
operating activities, against risks and conditions as usual in your branch;
- - You will inform us immediately about incidental or structural developments in
the results of your companies;
- - You will inform us in time about intended or expected material changes in the
management or organization of your companies and companies belonging to the
group;
- - The present banker of your companies will release in writing all collateral,
which have been established by your companies.
For the sake of good order it is mentioned that the credit facility will be at
your actual disposal, when all the required and legally perfect deeds are in our
possession.
Our general terms and conditions, of which a copy is enclosed, as well as the
provisions in the respective deeds, form an integral part of this credit
arrangement and will always be applicable.
In witness of the fact that you agree with the contents of this letter, we
kindly request you to return the enclosed copy of this letter, dated, marked
"approved", and legally signed on behalf of your companies on the last page and
initialed on the previous pages.
<PAGE>
Enraf-Nonius B.V.
Henley Healthcare B.V.
Delft 5
We trust that this credit facility will be the start of a mutually fruitful
relationship. Of course, we will always be prepared to explain the contents of
this offer, which will be valid until June 5, 1998.
Yours faithfully,
BANQUE ARTESIA NEDERELAND N.V.
Th.J. Wischhoff E.J. Wils
'Having read and agreed with the above'
Enref-Nonius B.V., date:
Henley Healthcare B.V., date:
