Exhibit 4.12


 


FOURTH AMENDED AND RESTATED FORBEARANCE
AGREEMENT


 


This Fourth Amended and Restated Forbearance Agreement (the
“Agreement”) is made effective the 1st day of February, 2003, and is
by and among American Medical Technologies, Inc. a Delaware corporation (the
“Borrower”) and Bank One, N. A. (formerly known as Bank One, Michigan
and collectively with its predecessors and assignors shall be referred to
herein as the “Lender”).


 


W I T N E S S E T H:


 


In consideration of the sum of Ten Dollars ($10.00), the mutual
covenants and agreements contained herein and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:


 


1.                                       Recitations.


 


1.1                                 The Credit Agreement.  On or
about September 21, 2000, the Lender and the Borrower executed a certain Line
of Credit Agreement (the “Credit Agreement”) providing for certain loans made
by Lender to Borrower and evidenced by a Revolving Business Credit Note (the
“Note”). Among other documents executed contemporaneously with the Credit
Agreement were a Continuing Security Agreement and UCC-1 Financing Statements
(collectively, the “Loan Documents”).


 


1.2                                 The First Amendment.  On or
about March 20, 2001, the Lender and Borrower executed that certain letter agreement
constituting an amendment to the Credit Agreement (the “First Amendment”)
providing for certain amendments to the Credit Agreement as set forth therein.


 


1.3                                 The Second Amendment.  On or about June 25, 2001, the Lender and
Borrower executed that certain letter agreement constituting an amendment to
the Credit Agreement (the “Second Amendment”) providing for certain amendments
to the Credit Agreement as set forth therein.


 


1.4                                 The Credit Card
Balance.  Borrower is further
indebted to Lender in the approximate amount of $140,134.62 resulting from
charges made by Borrower utilizing a business charge card line of credit (the
“Credit Card Balance”).


 


1.5                                 Payable Status.  All obligations of Borrower are in default
and are presently due and payable and Borrower has requested that Lender: (a)
forbear from taking any actions to collect the amounts due under the Loan
Documents, and (b) agree to the other terms and conditions set forth herein.
The Lender is willing to agree to the Borrower’s request on the condition that
the Borrower fully and faithfully perform its obligations under the Loan
Documents, including but not limited to, the Credit Agreement, as amended.


 


1.6                                 The Forbearance
Agreement.  At Borrower’s request, Borrower and Lender entered into that certain
Forbearance Agreement dated November 6, 2001 (the “Forbearance Agreement”)
whereby the Lender agreed to forbear from exercising certain of its rights and
remedies under the


 

















 


Loan Documents for a period ending on
December 20, 2001 in reliance upon the covenants,
representations, and warranties of Borrower contained in the Forbearance
Agreement.


 


1.7                                 The Amended & Restated Forbearance Agreement.  At
Borrower’s request, Borrower and Lender
entered into that certain Amended and Restated Forbearance Agreement dated
December 20, 2001 (the “A&R Forbearance Agreement”) whereby the Lender
agreed to forbear from exercising certain of its rights and remedies under the
Loan Documents for a period ending on February 18, 2002 in reliance upon the covenants,
representations, and warranties of Borrower contained in the A&R Forbearance Agreement.  The
A&R Forbearance Agreement
amended and restated the terms and provisions of the Forbearance
Agreement.


 


1.8                                 The Second Amended & Restated Forbearance
Agreement.  At Borrower’s request, Borrower and Lender entered into that certain
Second Amended and Restated Forbearance Agreement dated February 18, 2002 (the
“Second A&R Forbearance Agreement”) whereby the Lender agreed to forbear
from exercising certain of its rights and remedies under the Loan Documents for
a period ending on September 15, 2002 in reliance upon the covenants,
representations, and warranties of Borrower contained in the Second A&R Forbearance Agreement.  The
Second A&R Forbearance Agreement amended and restated the terms and
provisions of the A&R Forbearance Agreement.


 


1.9                                 The Third Amended & Restated Forbearance
Agreement.  At Borrower’s request, Borrower and Lender entered into that certain
Third Amended and Restated Forbearance Agreement dated October 30, 2002 (the
“Third A&R Forbearance Agreement”) whereby the Lender agreed to forbear
from exercising certain of its rights and remedies under the Loan Documents for
a period ending on January 31, 2003 in reliance upon the covenants,
representations, and warranties of Borrower contained in the Third A&R Forbearance Agreement.  As part
of the consideration for Lender agreeing, at Borrower’s request, to enter into
the Third A&R Forbearance
Agreement, the Borrower granted Lender or a designated subsidiary of Lender a
Stock Purchase Warrant dated October 30, 2002, for the right to purchase
721,510, shares of the Borrower’s common stock pursuant to the terms and
conditions as set forth in the Stock Purchase Warrant.  The
Third A&R Forbearance Agreement amended and restated the terms and
conditions of the Second A&R Forbearance Agreement.  This Agreement is intended to amend and
restate the terms and provisions of the Third A&R Forbearance
Agreement.


 


1.10                           Borrower’s Request.  Borrower continues to be in default
in the payment and/or performance of the Note and other Loan Documents.  Borrower acknowledges that the indebtedness
evidenced by the Note is due and owing to the Lender without right of setoff,
and such indebtedness has not been paid in accordance with the terms of the
Loan Documents.  Borrower has requested
that the Lender forebear from exercising its rights and remedies under the Loan
Documents for a period of time as specified herein in reliance upon the
covenants, representations, and warranties of Borrower and for other good and
valuable consideration.


 


The term “Loan Documents” shall include the Credit Agreement, the Note,
the First Amendment, the Second Amendment, the Credit Card Balance, the
Forbearance Agreement, the A&R Forbearance Agreement, the Second A&R
Forbearance Agreement, the Third A&R Forbearance Agreement, this Agreement
and all guaranties and other writings, documents, instruments, security
agreements contemplated herein or therein, respectively.  The term “Obligations” shall include the
Note, the Credit


 


2

















 


Card Balance, all obligations as otherwise set forth in any of the Loan
Documents and all other obligations pursuant to which Borrower or any guarantor
may owe performance or payment to Lender. 
The term “Indebtedness” shall include the Note, the Credit Card Balance
and all other indebtedness owing from Borrower or any guarantor to Lender.


 


2.                                       Acknowledgment
of Amounts Due and Maturity Date.  
Lender and Borrower acknowledge that as of the beginning of business on
February 25, 2003, the outstanding balance in respect of the Indebtedness was
as follows:


 


	
   

  	
   

  	
  Principal

  	
   

  	
  Accrued
  and Unpaid Interest

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Note:

  	
   

  	
  $

  	
  1,655,656.25

  	
   

  	
  $

  	
  9,485.53

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Card Balance:

  	
   

  	
  $

  	
  140,134.62

  	
   

  	
   

  	
   

  
								



 


Subject to Section 16 hereof,
Borrower waives any and all rights to notice of payment default or any other
default, protest and notice of protest, dishonor, diligence in collecting and
the bringing of suit against any party, notice of intention to accelerate,
notice of acceleration, demand for payment and other notices whatsoever
regarding the Credit Agreement, as amended, the Indebtedness, or any other Loan
Documents, and further waives any claims that any notices previously given are
insufficient for any reason.  Borrower
further agrees that the Indebtedness set forth above is presently due and
payable in full to Lender without discount or offset, and any claims or
defenses thereto are waived and released herein.


 


3.                                       No
Further Advances.  Borrower acknowledges
and agrees that it shall not be entitled to, nor shall Borrower request, any
additional advances under the Credit Agreement, the Note, or any other Loan
Documents.  Furthermore, Borrower shall
not request nor shall Lender be obligated to issue any further or additional
letters of credit.


 


4.                                       No
Waiver. The execution, delivery and
performance of this Agreement by Lender and the acceptance by Lender of
performance of Borrower hereunder (a) shall not constitute a waiver or release
by Lender of any default that may now or hereafter exist under the Loan
Documents, (b) shall not constitute a novation of the Loan Documents as it is
the intent of the parties to modify the Loan Documents as expressly set out
herein, and (c) except as expressly provided in this Agreement, shall be
without prejudice to, and is not a waiver or release of, Lender’s rights at any
time in the future to exercise any and all rights conferred upon Lender by the
Loan Documents or otherwise at law or in equity, including but not limited to
the right to accelerate the Indebtedness, if not already accelerated, and to
institute collection proceedings against Borrower and/or any right against any
other person or entity not a party to this Agreement.  Similarly, the execution, delivery, and performance of this
Agreement by Borrower and the acceptance by Borrower of the performance by
Lender hereunder shall not, subject to the express provisions of this
Agreement, constitute a waiver or release of any of Borrower’s rights under the
Loan Documents; provided, however, that Borrower waives any and all claims now
or hereafter arising from or related to any delay by Lender in exercising any
rights or remedies under the Loan Documents, including, without limitation, any
delay in foreclosing on any collateral securing the Indebtedness.


 


5.                                       Forbearance.
So long as this Agreement is not terminated as provided herein, the Lender
agrees not to foreclose or attempt to foreclose any collateral securing the
Indebtedness, institute suit for


 


3

















 


collection of the Indebtedness
against Borrower or any guarantor, or exercise any other remedies available to
it under the Loan Documents or under applicable law for a period of time
commencing on the date hereof and extending through and including May 31, 2003
at 5:00 p.m. (the “Forbearance Period”). 
Upon termination of the Forbearance Period, or otherwise under the
provisions of this Agreement, or if all amounts due and owing under the Credit
Agreement, the Indebtedness or other Loan Documents, are not paid in full on or
before the expiration of the Forbearance Period, Lender may seek to foreclose
upon any collateral and to exercise any other remedies to which Lender may be
entitled under the Loan Documents, or applicable law to collect amounts due
under the Indebtedness, the Credit Agreement or any other Loan Documents.  Borrower agrees that Borrower will not
during the Forbearance Period, initiate any action of any kind against Lender
with respect to the Loan Documents, exercise any remedy available under the
Loan Documents or otherwise, or make or suffer to exist any type of demand upon
Lender with respect to the Obligations.


 


6.                                       Interest
Rate.  During the Forbearance
Period, all Indebtedness owed by Borrower to Lender under the Loan Documents shall continue to bear interest at the per annum
rate equal to the sum of the Prime Rate plus four percent (4.0%).  The Prime Rate shall be that variable per
annum rate announced, from time to time, by the Lender as its Prime Rate.


 


7.                                       Interest
Payments. Borrower shall continue to make the interest payments required by
the Forbearance Agreement on or before the 15th day of each month
until the Indebtedness is paid in full. 
Such payments shall continue on March 15, 2003, at which time the
Borrower shall pay all accrued and unpaid interest due on the Indebtedness.


 


8.                                       Final Payment.  The Borrower shall pay all
outstanding principal and all accrued and unpaid interest on or before the end
of the Forbearance Period.


 


9.                                       Loan
Fee.  Borrower acknowledges and
affirms that a loan fee in the amount of $50,000.00 is due and owing to the
Lender pursuant to the terms of the Second A&R Forbearance Agreement (the
“Loan Fee”).  Borrower shall pay Lender
the Loan Fee on or before the expiration of the Forbearance Period or upon an
event of default as set forth herein, and such payment shall not be applied to
the payment of the Indebtedness. Notwithstanding the foregoing, if the Borrower pays the Lender the entire outstanding
Indebtedness on or before the expiration of the Forbearance Period and provided
no event of default has occurred, the Lender agrees to waive the payment of the
Loan Fee.


 


10.                                 Forbearance
Fee.  Borrower acknowledges and
affirms that a forbearance fee in the aggregate amount of $100,000.00 is due
and owing to the Lender pursuant to the terms of the Third A&R Forbearance
Agreement (the “Forbearance Fee”).  The
Borrower shall pay the Lender the Forbearance Fee on or before the expiration
of the Forbearance Period or upon an event of default as set forth herein, and
such payment shall not be applied to the payment of the Indebtedness.  Notwithstanding the foregoing, if the Borrower pays the Lender the entire outstanding
Indebtedness on or before the expiration of the Forbearance Period and provided
no event of default has occurred, the Lender agrees to waive the payment of the
Forbearance Fee.


 


11                                    Tangible
Net Worth.   Paragraph 6.3(H) of the
Credit Agreement is amended to read as follows:  “Permit its Tangible Net Worth plus Subordinated Debt to be less
than $2,000,000.00.”


 


4

















 


12.                                 Borrowing
Base.        Notwithstanding any other
provision of this Agreement or the Loan Documents, the aggregate principal
amount of the Indebtedness outstanding at any one time shall not exceed the
Borrowing Base.   Should the
Indebtedness exceed the Borrowing Base, Borrower shall immediately prepay the
excess amount to Lender.  “Borrowing
Base” means the sum of 75% of Eligible Accounts and 40% of Eligible
Inventory.  “Eligible Accounts” means an
Account of the Borrower: (i) which arises from a bona fide, outright sale of
inventory or for services performed, or expenses incurred in the normal course
of business; (ii) which is based upon a valid, enforceable and legally binding
order or contract; (iii) as to which an invoice for payment has been sent to
the account debtor and for which the account debtor is unconditionally
obligated and liable to make payment thereof; (iv) in and to which the rights
of the Borrower are absolute and not subject to any assignment, claim, lien or
security interest (except in favor of Lender); (v) except as otherwise agreed
by Lender, which is not an intracompany account or an account receivable
between the Borrower and any affiliate of the Borrower; (vi) which is not
evidenced by any note, chattel paper, trade acceptance, draft, check or other
instrument with respect thereto or in payment thereof; (vii) except as
otherwise agreed by Lender, as to which the account Borrower thereof has not
died and is not the subject of dissolution, liquidation, termination of
existence, insolvency, business failure, receivership, bankruptcy, readjustment
of debt, assignment for the benefit of creditors or similar proceedings; (viii)
which has not been outstanding for more than 90 days from date of invoice; (ix)
which is not owed by an account debtor not a resident of the United States; (x)
which is not an account owed by a debtor from which 20% or more of the
aggregate amount owed from such debtor is more than 90 days past due from the
date of invoice; (xi) which is not owed by any governmental entity; (xii) which
is not owed by a contractor; (xiii) which is not an account that is bonded or
secured by a bond; and (xiv) which is not an account otherwise unacceptable to
Lender.  At any particular date, the
Eligible Accounts shall be the sum of the unpaid principal balance of all of
the Eligible Accounts, as defined above. 
“Eligible Inventory” shall mean that Inventory physically located in the
United States owned by the Borrower and in which Lender holds a perfected first
priority security interest that constitutes: (a) finished goods in marketable
condition; and (b) raw materials reasonably necessary to meet the Borrower’s
production requirements for a period of twelve (12) months.  For purposes hereof, Eligible Inventory
shall be valued at the lower of cost or market value.


 


13.                                 Borrowing
Base Certificate and Compliance Statement.   Prior to the 20th day of each and every month
hereafter, the Borrower shall provide to Lender a Borrowing Base Certificate
and Compliance Statement in the form attached hereto as Exhibit “A” signed by
an officer of Borrower.


 


14.                                 Tax
Refunds.  Upon the first to occur of
an event of default as set forth in Section 21 of this Agreement or the termination
of the Forbearance Period, the Borrower shall pay Lender 50% of any federal or
state tax refunds from any governmental entity (the “Refunds”) including, but
not limited to, 50% of the $202,000.00 in Refunds received by Borrower before
the date of this Agreement.  Any refund
payment received by Lender shall be applied to the payment of the Indebtedness.


 


15.                                 Purchase Agreement.  As a
condition for Lender agreeing to enter this Agreement, Borrower agrees that it
shall execute a purchase and sale agreement regarding the sale of Borrower on
or before April 15, 2003.  If Borrower
fails to execute a purchase and sale agreement by April 15, 2003, this
Agreement shall automatically terminate on such date.


 


16.                                 Compliance with Loan Documents. During the term of this Agreement, Borrower
shall fully and faithfully comply with all of the terms of the Loan Documents
including the Forbearance


 


5

















 


Agreement,
the A&R Forbearance Agreement, the Second A&R Forbearance Agreement and
the Third A&R Forbearance Agreement, the terms of which shall remain in
full effect unless modified herein. 
Upon Borrower’s failure to fully and faithfully timely pay Lender any of
the payments set forth in this Agreement, the term of this Agreement shall
immediately end and terminate without the necessity of notice or demand, and
Lender shall be entitled to pursue any and all remedies.  Upon the occurrence of Borrower’s failure to
fully and faithfully perform any other obligation with respect to the Loan
Documents, the Borrower shall be entitled to such notice and opportunity to
cure, if any, as provided in the Loan Documents.


 


17.                                 Patents.  Borrower hereby agrees that it will take any
action reasonably requested by the Lender to insure the attachment, perfection
and first priority of, and the ability of the Lender to enforce, the Lender’s
security interest in all of the Borrower’s patents received, patent
applications or patents that are pending and other intellectual property
including, without limitation, any filings that may need to be made with the
United States Patent and Trademark Office, any other governmental entity or
agency or any other entity or agency of any kind.


 


18.                                 Representations and Warranties. In order to induce Lender to execute,
deliver, and perform this Agreement, Borrower warrants and represents to Lender
that:


 


(a)                                  this Agreement is not being made or entered into
with the actual intent to hinder, delay, or defraud any entity or person;


 


(b)                                 this Agreement is not intended by the parties to
be a novation of the Loan Documents and, except as expressly modified herein,
all terms, conditions, rights and obligations as set out in the Loan Documents
are hereby reaffirmed and shall otherwise remain in full force and effect as originally
written and agreed;


 


(c)                                  no action or proceeding, including, without
limitation, a voluntary or involuntary petition for bankruptcy under any
chapter of the Federal Bankruptcy Code, has been instituted by or against the
Borrower;


 


(d)                                 to
the best of Borrower’s knowledge, and with the sole exception of financial
statements projecting profitability for the periods ending September 30, 2002,
and December 31, 2002, all balance sheets, and cash flow statements, and all
information provided by Borrower to Lender prior to the date hereof, including,
without limitation, all financial statements, balance sheets, and cash flow
statements, were, at the date of delivery, and are, as of the date hereof, true
and correct in all material respects. 
Borrower recognizes and acknowledges that Lender is entering into this
Agreement based in part on the financial information provided to Lender by
Borrower and that the truth and correctness of that financial information is a
material inducement to Lender in entering into this Agreement.  During the term of this Agreement, Borrower
agrees to advise Lender promptly in writing of any and all new information,
facts, or occurrences that would in any way materially supplement, contradict,
or affect any financial statements, balance sheets, cash flow statements, or
similar items furnished to Lender;


 


(e)                                  this
Agreement and the Loan Documents constitute the entire agreement among Lender
and Borrower with respect to this matter;


 


6

















 


(f)                                    Borrower
hereby reaffirms to Lender that Lender has a perfected first priority secured
interest in all of Borrower’s patents received, applied for or that are pending
and other intellectual property and that Lender has the ability to enforce
Lender’s security interest in such patents and other intellectual property; and


 


(g)                                 attached
hereto as Exhibit “B” is a complete list of all of Borrower’s patents that have
been received, applied for or that are pending and Borrower confirms that no
other patents, patent applications or pending patents exist.


 


19.                                 Bankruptcy.   In entering into this
Agreement, Borrower and Lender hereby stipulate, acknowledge and agree that
Lender gave up valuable rights and agreed to forbear from exercising legal
remedies available to it in exchange for the promises, representations,
acknowledgments and warranties of Borrower as contained herein and that Lender
would not have entered into this Agreement but for such promises,
representations, acknowledgments, agreements, and warranties, all of which have
been accepted by Lender in good faith, the breach of which by Borrower in any
way, at any time, now or in the future, would admittedly and confessedly
constitute cause for dismissal of any such bankruptcy petition pursuant to 11 U.S.C.
§ 1112(b).  As additional consideration
for Lender agreeing to forbear from immediately enforcing its rights and
remedies under this Agreement and in the Loan Documents, including but not
limited to the institution of foreclosure or collection proceedings, Borrower
agrees that in the event a bankruptcy petition under any Chapter of the
Bankruptcy Code (11 U.S.C. §101, et  seq.) is filed by or against
any Borrower at any time after the execution of this Agreement, Lender shall be
entitled to the immediate entry of an order from the appropriate bankruptcy
court granting Lender complete relief from the automatic stay imposed by §362
of the Bankruptcy Code (11 U.S.C. §362) to exercise its foreclosure and other
rights, including but not limited to obtaining a foreclosure judgment and
foreclosure sale, upon the filing with the appropriate court of a motion for
relief from the automatic stay with a copy of this Agreement attached
thereto.  Borrower specifically agrees
(i) that upon filing a motion for relief from the automatic stay, Lender shall
be entitled to relief from the stay without the necessity of an evidentiary
hearing and without the necessity or requirement of the Lender to establish or
prove the value of any collateral, the lack of adequate protection of its
interest in any collateral, or the lack of equity in any collateral; (ii) that
the lifting of the automatic stay hereunder by the appropriate bankruptcy court
shall be deemed to be “for cause” pursuant to §362(d)(1) of the Bankruptcy Code
(11 U.S.C. §362 (d)(1); and (iii) that Borrower will not directly or indirectly
oppose or otherwise defend against Lender’s efforts to gain relief from the
automatic stay. This provision is not intended to preclude Borrower from filing
for protection under any Chapter of the Bankruptcy Code.  The remedies prescribed in this paragraph
are not exclusive and shall not limit Lender’s rights under the Loan Documents,
this Agreement or under any law.  All of
the above terms and conditions have been freely bargained for and are all
supported by reasonable and adequate consideration and the provisions herein
are material inducements for Lender entering into this Agreement.


 


20.                                 Release.  Borrower hereby remises, releases, and
forever discharges Lender, its successors and assigns, its officers, directors,
employees, agents and attorneys (collectively, “Released Parties”) of and from
all actions, causes of action, suits, proceedings, debts, contracts, claims,
damages, liability and demands whatsoever, known or unknown, in law or equity,
which Borrower ever had or now has, by reason of any matter, cause, or thing
whatsoever arising from the actions or inactions of the Released Parties prior
to the date hereof including any matter relating to the Agreement, the Loan
Documents (collectively, “Released Matters”); and Borrower covenants not to sue
any of the Released Parties with respect to the Released Matters.  The release and covenant not to sue set
forth in this Section are intended by the parties to be as


 


7

















 


broad and
comprehensive as possible.  However,
this release will not cover any intentional torts or acts of gross negligence.


 


21.                                 Default.  Lender shall be entitled to pursue each and
every remedy hereunder and under the Loan Documents, at Lender’s sole option,
upon the occurrence of any of the following:


 


(a)                                  Borrower files a petition for bankruptcy under
any chapter of the Federal Bankruptcy Code or takes advantage of any other
debtor relief law, or an involuntary petition for bankruptcy under any chapter
of the Federal Bankruptcy Code is filed against Borrower, or any other judicial
action is taken with respect to Borrower by any creditor;


 


(b)                                 Lender discovers that any representation or
warranty made herein by Borrower was or is untrue, incorrect or misleading in
any material respect;


 


(c)                                  After
the date of this Agreement, and except for the financial covenants set forth in
Section 6.3 (I) and (J) of the Credit Agreement, Borrower’s breach or default
in the performance of any covenant or agreement contained in this Agreement or
the Loan Documents;


 


(d)                                 Lender
receives any draft or request for payment in respect of any letter of credit.


 


(e)                                  Borrower’s failure to comply with any of the
terms and conditions of this Agreement.


 


22.                                 Authorization To File Financing Statements. The Borrower hereby irrevocably
authorizes Lender at any time and from time to time to file in any Uniform
Commercial Code jurisdiction any financing statements and amendments thereto
that: (i) indicate the collateral as that set forth in the Loan Documents, and
(ii) contain any other information required by part 5 of Article 9 of the
Uniform Commercial Code for the sufficiency or filing office acceptance of any
financing statement or amendment.  The
Borrower agrees to furnish any of the foregoing information to the Lender
promptly upon request. The Borrower ratifies its authorization for the Lender
to have filed any like initial financing statements or amendments thereto if
filed prior to the date hereof.  The Lender
may add any supplemental language to any such financing statement as the Lender
may determine to be necessary or helpful in acquiring or preserving rights
against third parties.


 


23.                                 Miscellaneous.


 


23.1  Successors and Assigns. All of the grants, covenants,
terms, conditions and agreements hereof shall be binding upon and inure to the
benefit of all of the assigns and successors in interest of the parties hereto.


 


23.2                           Modification.  Neither this Agreement nor any provision hereof may be changed,
altered, waived, amended, or discharged orally, but only by an instrument
reduced to writing, signed by all parties hereto.


 


23.3                           Choice of Law.  It is the intention of the
parties hereto that the laws of the State of Michigan shall govern the validity
of this Agreement, construction of
its terms and the interpretation of the rights and duties of the parties.


 


8

















 


23.4                           Paragraph Headings. 
Headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this agreement.


 


23.5                           Authority.  Each party, for itself, its
successors and assigns, hereby represents and warrants that it has the full
capacity and authority to enter into, execute, deliver and perform this Agreement, and that such execution, delivery and
performance does not violate any contractual or other obligation by which it is
bound.


 


23.6                           Controlling Agreement.  This
Agreement shall be construed to govern and control over any inconsistent
provisions that may be contained in the Agreement or any other Loan Documents.


 


23.7                           Expenses.  Borrower agrees to pay all
costs and expenses incurred by Lender in connection with this Agreement,
including charges for recording, filing, appraisal and legal fees.


 


THIS AGREEMENT REPRESENTS THE
FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR ORAL OR WRITTEN, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS AMONG THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.


 


IN WITNESS WHEREOF, the parties have executed
this agreement as of the date and year first above written.


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  AMERICAN
  MEDICAL TECHNOLOGIES, INC.

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Roger W.
  Dartt

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BANK ONE, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Tipton J. Burch

  	
   

  



 


9

















 


EXHIBIT
“A”


 


BORROWING BASE
CERTIFICATE AND COMPLIANCE STATEMENT


 


	
   

  	
  BORROWING BASE CALCULATION

  



 


	
  DATE:

  	
   

  	
                
        ,        

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Accounts Receivable

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less the Following:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Invoices
  over 90 days old

  	
   

  	
  $

  	
                      

  	
   

  
	
  Intracompany
  Accounts

  	
   

  	
  $

  	
                      

  	
   

  
	
  Affiliate
  Accounts

  	
   

  	
  $

  	
                      

  	
   

  
	
  Foreign Accounts

  	
   

  	
  $

  	
                      

  	
   

  
	
  Receivables
  subject to any assignment, claim, lien or security interest (except in favor
  of Bank)

  	
   

  	
  $

  	
                      

  	
   

  
	
  Receivables
  evidenced by any note, chattel paper, trade acceptance, draft check or other
  instrument

  	
   

  	
  $

  	
                      

  	
   

  
	
  Receivables
  in which the account debtor thereof has died or is the subject of
  dissolution, liquidation, termination of existence, insolvency, business
  failure, receivership, bankruptcy, readjustment of debt, assignment for the
  benefit of creditors or similar proceedings

  	
   

  	
  $

  	
                      

  	
   

  
	
  Receivables
  which owed by an account debtor from which 20% or more of the aggregate
  amount owed from such debtor is more than 90 days past due from the date of
  invoice

  	
   

  	
  $

  	
                      

  	
   

  
	
  Receivables
  owed by a Contractor

  	
   

  	
  $

  	
                      

  	
   

  
	
  Receivables
  that are bonded or secured by a bond

  	
   

  	
  $

  	
                      

  	
   

  
	
  Receivables
  owed by any type of governmental entity

  	
   

  	
  $

  	
                      

  	
   

  
	
  Other
  ineligible accounts as specified by Bank

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Eligible Accounts Receivable:

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Multiplied
  by 75% eligibility factor

  	
   

  	
  X .75

  	
   

  



 


10

















 


	
  Receivable Borrowing Base

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Eligible Inventory shall include only
  inventory owned by Borrower that is located in the United States and in which
  Bank holds a perfected first priority security interest and which is
  comprised of the following:

  	
   

  	
  See footnote

  	
  (1)

  
	
   

  	
   

  	
   

  	
   

  
	
  Finished
  goods in marketable condition

  	
   

  	
  $

  	
                      

  	
   

  
	
  Raw
  materials reasonably necessary to meet Borrower’s production requirements for
  a 12 month period

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Eligible Inventory:

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Multiplied
  by 40% eligibility factor

  	
   

  	
  X .40

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Inventory Borrowing Base

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Borrowing Base

  	
   

  	
  $

  	
                      

  	
   

  



 












(1)                                  For
purposes hereof, Eligible Inventory shall be valued at the lower of cost or
market value.


 


	
  II.

  	
  TANGIBLE NET WORTH CALCULATION

  



 


	
  Tangible Net
  Worth

  	
   

  	
  $

  	
                      

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Plus
  Subordinated Debt

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Less Floor

  	
   

  	
  $

  	
  (2,000,000

  	
  )

  
	
   

  	
   

  	
   

  	
   

  
	
  Tangible Net Worth Calculation

  	
   

  	
  $

  	
                      

  	
   

  



 


11

















 


III.                                 COMPLIANCE
STATEMENT


 


I hereby
certify that (i) the information set forth in the Borrowing Base Calculation
and the Tangible Net Worth Calculation is complete and accurate, (ii) I have no
knowledge of any material fact, which would adversely affect the Borrowing Base
Calculation or the Tangible Net Worth Calculation as set forth above, (iii) as
of the date of this Borrowing Base Certificate and Compliance Statement, the
Borrower is in compliance with all representations, warranties and covenants
set forth in the Loan Documents, including without limitation, the Fourth
Amended and Restated Forbearance Agreement.


 


 


	
   

  	
  AMERICAN
  MEDICAL TECHNOLOGIES, INC. 

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							



 


 


ACKNOWLEDGMENT


 


	
  STATE
  OF                       

  	
  )

  
	
   

  	
  )  ss.

  
	
  COUNTY
  OF                   

  	
  )

  



 


The foregoing
instrument was acknowledged before me on
              
     ,        by
                       , as
                  
of American Medical Technologies, Inc., a Delaware corporation.


 


 


	
   

  	
   

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
  My
  commission expires:

  	
  My
  commission number is:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Seal]

  	
   

  
					



 


12

















 


EXHIBIT “B”


 


LIST
OF PATENTS RECEIVED, APPLIED FOR OR THAT ARE PENDING


 


 


	
  Item # on
  List

  	
   

  	
  Patent No.

  	
   

  	
  Status

  	
   

  
	
  1

  	
   

  	
  4,521,194

  	
   

  	
   

  	
   

  
	
  2

  	
   

  	
  4,635,897

  	
   

  	
   

  	
   

  
	
  3

  	
   

  	
  4,708,534

  	
   

  	
   

  	
   

  
	
  4

  	
   

  	
  4,733,503

  	
   

  	
   

  	
   

  
	
  5

  	
   

  	
  4,818,230

  	
   

  	
   

  	
   

  
	
  6

  	
   

  	
  4,893,440

  	
   

  	
   

  	
   

  
	
  7

  	
   

  	
  4,940,411

  	
   

  	
   

  	
   

  
	
  8

  	
   

  	
  5,055,048

  	
   

  	
   

  	
   

  
	
  9

  	
   

  	
  5,122,060

  	
   

  	
   

  	
   

  
	
  10

  	
   

  	
  5,123,845

  	
   

  	
   

  	
   

  
	
  11

  	
   

  	
  5,180,304

  	
   

  	
  Abandoned

  	
   

  
	
  12

  	
   

  	
  5,207,576

  	
   

  	
   

  	
   

  
	
  13

  	
   

  	
  5,228,852

  	
   

  	
  Abandoned

  	
   

  
	
  14

  	
   

  	
  5,232,367

  	
   

  	
   

  	
   

  
	
  15

  	
   

  	
  5,257,935

  	
   

  	
   

  	
   

  
	
  16

  	
   

  	
  5,275,561

  	
   

  	
   

  	
   

  
	
  17

  	
   

  	
  5,275,564

  	
   

  	
  Abandoned

  	
   

  
	
  18

  	
   

  	
  5,310,344

  	
   

  	
   

  	
   

  
	
  19

  	
   

  	
  5,324,200

  	
   

  	
  Abandoned

  	
   

  
	
  20

  	
   

  	
  5,330,354

  	
   

  	
   

  	
   

  
	
  21

  	
   

  	
  5,334,016

  	
   

  	
   

  	
   

  
	
  22

  	
   

  	
  5,334,019

  	
   

  	
   

  	
   

  
	
  23

  	
   

  	
  5,342,198

  	
   

  	
   

  	
   

  
	
  24

  	
   

  	
  5,350,299

  	
   

  	
   

  	
   

  
	
  25

  	
   

  	
  5,390,204

  	
   

  	
   

  	
   

  
	
  26

  	
   

  	
  5,507,739

  	
   

  	
  Abandoned

  	
   

  



 


13

















 


	
  27

  	
   

  	
  5,525,058

  	
   

  	
   

  	
   

  
	
  28

  	
   

  	
  5,621,745

  	
   

  	
   

  	
   

  
	
  29

  	
   

  	
  5,746,596

  	
   

  	
   

  	
   

  
	
  30

  	
   

  	
  5,748,655

  	
   

  	
  Inactive/Client
  Drop

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  31

  	
   

  	
  5,752,829

  	
   

  	
   

  	
   

  
	
  32

  	
   

  	
  5,759,031

  	
   

  	
  Abandoned

  	
   

  
	
  33

  	
   

  	
  5,832,013

  	
   

  	
  Inactive/Client
  Drop

  	
   

  
	
  34

  	
   

  	
  6,019,605

  	
   

  	
   

  	
   

  
	
  35

  	
   

  	
  6,075,714

  	
   

  	
   

  	
   

  
	
  36

  	
   

  	
  6,309,216B1

  	
   

  	
   

  	
   

  



 


14