8
#2350426 (116721.034)
#2350426 (116721.034)
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Sixth Amendment to Loan and Security Agreement made as of the
26th day of September, 2003 (this "Amendment") by and between NEW BRUNSWICK
SCIENTIFIC CO., INC. (the "Borrower"), a corporation organized under the laws of
the State of New Jersey, having an address at 00 Xxxxxxxx Xxxx, Xxxxxx, Xxx
Xxxxxx 00000-0000 and WACHOVIA BANK, NATIONAL ASSOCIATION (formerly known as
First Union National Bank) (the "Bank"), a national banking association formed
under the laws of the United States of America, having an office at 000 Xxxxxx
Xxxx, Xxxx Xxxxxxx, Xxx Xxxxxx 00000.
W I T N E S S E T H:
-------------------
WHEREAS, the Bank and the Borrower previously entered into commercial
lending arrangements in accordance with the terms and conditions of a certain
Loan and Security Agreement dated April 1, 1999, as amended by that certain
First Amendment to Loan and Security Agreement dated as of November 22, 1999
between the same parties, as further amended by that certain Second Amendment to
Loan and Security Agreement dated as of June 30, 2000 between the same parties,
as further amended by that certain Third Amendment to Loan and Security
Agreement dated as of May 11, 2001 between the same parties, as further amended
by that certain Fourth Amendment to Loan and Security Agreement dated as of
November 13, 2001 between the same parties and as further amended by that
certain Fifth Amendment to Loan and Security Agreement dated as of March 15,
2002 (the "Agreement"); and
1
WHEREAS, the Borrower and the Bank have agreed to, subject to the
provisions hereof, among other things, (i) make a certain Incremental Term Loan
in the principal amount of $1,500,000, (ii) decrease the amount available with
respect to Incremental Term Loans from $12,500,000 to $10,000,000, (iii) convert
$900,000 of Equipment Loan Advances to a term loan, and (iv) to amend certain
financial covenants in the Agreement.
NOW, THEREFORE, for and in consideration of mutual covenants and
agreements herein contained, and other good and valuable consideration, receipt
of which is hereby acknowledged, it is agreed as follows:
1. The following definitions contained in Subsection 1.1 of the Agreement
are hereby amended in their entirety to read as follows
"Applicable Margin": Shall mean as follows:
WITH RESPECT TO EURODOLLAR LOANS WITH RESPECT TO PRIME RATE LOANS
-------------------------------- --------------------------------
REVOLVING LOAN An additional 125 basis points a reduction of 1.25%.
-------------- ------------------------------ ---------------------
INCREMENTAL TERM LOANS An additional 125 basis points a reduction of
---------------------- ------------------------------ --------------
1.25%.
------
EQUIPMENT LOAN An additional 125 basis points a reduction of 1.25%
-------------- ------------------------------ --------------------
Notwithstanding the foregoing, with respect to (i) the Equipment Loan in
the original principal amount of $900,000, as evidenced by the Equipment Term
Note being delivered simultaneously with the Sixth Amendment, and (ii) the
Incremental Term Loan in the original principal amount of $1,500,000 as
contemplated by the Sixth Amendment, the Applicable Margin for Eurodollar Loans
shall be an additional 175 basis points and for Prime Rate Loans shall be a
reduction of .75%, until such time as the Borrower has satisfied the provisions
of Subsection 9.23(1) of the Agreement (as evidenced by the financial statements
to be delivered pursuant to Subsections 9.12(a) and (b) hereof) for two
consecutive quarters, on a rolling four quarter basis; provided that it is
hereby acknowledged by the parties hereto that the failure of the Borrower to
comply with such covenant shall constitute an Event of Default hereunder and
that the Bank reserves all of its rights and remedies with respect thereto,
including, without limitation, the right to charge the Default Rate.
2
2. The following definitions are hereby added to Subsection 1.1 of the
Agreement to read as follows:
"Sixth Amendment": That certain Sixth Amendment to Loan and Security Agreement
----------------
dated as September 26, 2003 by and between the Borrower and the Bank.
3. Subsection 3.1(a) of the Agreement is hereby amended to read as follows:
(a) General Terms. The Bank agrees to lend to the Borrower individual term
--------------
loans in increments of $250,000.00 or more (collectively, the "Incremental Term
Loans") up to the aggregate principal sum of $7,692,500, pursuant to the terms
hereof. If the Borrower shall request Incremental Term Loans which, when added
together with all other Incremental Term Loans, would result in the aggregate
principal balance of all Incremental Term Loans exceeding $7,692,500, such
requested Incremental Term Loans (collectively, the "Excess Incremental Term
Loans") shall only be made by the Bank if the Bank, in its sole and absolute
discretion, determines to honor such requests, and if the Bank so desires to
honor such requests, upon the terms and conditions imposed by the Bank, and in
no event shall the aggregate principal amount of all Incremental Term Loans
exceed TEN MILLION 00/100 DOLLARS ($10,000,000.00), unless no Event of Default
shall have occurred at anytime during the period commencing on the date of the
Sixth Amendment and ending on (and including) the last day of the first fiscal
quarter of 2005 and no Default shall exist on the last day of the first fiscal
quarter of 2005, in which case, in no event shall the aggregate principal amount
of all Incremental Terms Loans exceed TWELVE MILLION FIVE HUNDRED AND 00/100
DOLLARS ($12,500,000.00). If the Borrower requests an Incremental Term Loan
after the last day of the first fiscal quarter of 2005 and such Incremental Term
Loan, together with all other prior Incremental Term Loans, shall exceed TEN
MILLION AND 00/100 DOLLARS ($10,000,000.00), the Borrower shall deliver to the
Bank, prior to the Bank extending (without any obligation to do so) any such
Incremental Term Loan, such financial statements and other information as
requested by the Bank evidencing that such no Event of Default has occurred and
that no such Default exists for period and as of the date described above, all
such financial statements and other information to be in form and substance
satisfactory to Bank. The Borrower's right to request the issuance of
Incremental Term Loans from the Bank shall terminate on the Termination Date and
the Bank shall have no obligation to make any Incremental Term Loans after such
date. The outstanding principal amount of all previous advanced Incremental Term
3
Loans under this Subsection 3.1(a), since April 1, 1999, shall be considered for
the purposes of determining the amount available under this Subsection 3.1(a)
hereof.
4. Subsection 4.1(g) of the Agreement is hereby amended to read as follows:
(g) Equipment Line of Credit Note. Initially, the principal amount of the
---------------------------------
Equipment Loan Advances to be made by the Bank shall all be evidenced by a
single promissory note of the Borrower (the "Equipment Line of Credit Note"),
substantially in the form attached to the Fifth Amendment as Exhibit A, in the
---------
principal face amount equal to the Equipment Loan Advance Limit. On September
26, 2003, March 15, 2004 and May 31, 2005 ("Conversion Dates"), the outstanding
principal amount advanced by the Bank as Equipment Loan Advances since the
Closing Date or the last Conversion Date, as the case may be, shall be converted
to a term loan and evidenced by a separate promissory note of the Borrower (each
such promissory note, as it may be amended, restated, substituted or extended,
an "Equipment Term Note") in the principal face amount equal to such amount of
said Equipment Loan Advances, substantially in the form attached to the Fifth
Amendment as Exhibit B. The Equipment Term Notes shall be dated the date of
----------
said Conversion Date.
5. The definition of "Debt Service Coverage Ratio" contained in Subsection
9.23(d) is hereby amended as follows:
"Debt Service Coverage Ratio" shall mean the sum of net income (adjusted for any
noncash losses, to the extent of the Borrower's investment in DGI, resulting
from equity offerings which reduce the Borrower's ownership interest in DGI,
whereby said interest is reduced below 50%) plus interest expense plus income
tax expense minus income tax benefit plus depreciation and amortization plus
rent or lease payments, minus dividends paid, all for the period being tested,
divided by the sum of interest expense plus the principal payments made on long
term debt plus principal payments made on capital leases, plus rent or lease
payments, all for the period being tested, as reflected on the Borrower's
financial statements, provided that excluded from the foregoing calculation is
payment of the outstanding principal of the Revolving Loan with a Termination
Date of May 31, 2005. All payments referred to above shall include all such
payments made by the Borrower whether as direct obligor or as guarantor. This
ratio shall be computed as of the end of the last fiscal quarter and on a
rolling four quarter basis.
4
6. Subsection 9.23(l) of the Agreement is hereby amended to read as follows:
(1) Debt Service Coverage Ratio of the Borrower and Subsidiaries. Borrower
--------------------------------------------------------------
and its Subsidiaries, on a consolidated basis, shall, at all times, maintain a
Debt Service Coverage Ratio of not less than 1.30 to 1.00. For the purposes of
this Subsection 9.23(l), "Debt Service Coverage Ratio" shall mean the sum of net
income (adjusted for any noncash losses, to the extent of the Borrower's
investment in DGI, resulting from equity offerings which reduce the Borrower's
ownership interest in DGI, whereby said interest is reduced below 50%) plus
interest expense plus income tax expense minus income tax benefit plus
depreciation and amortization plus rent or lease payments, minus dividends paid,
all for the period being tested, divided by the sum of interest expense plus the
principal payments made on long term debt plus principal payments made on
capital leases, plus rent or lease payments, all for the period being tested, as
reflected on the Borrower's financial statements, provided that excluded from
the foregoing calculation is payment of the outstanding principal of the
Revolving Loan with a Termination Date of May 31, 2005. All payments referred
to above shall include all such payments made by the Borrower whether as direct
obligor or as guarantor. This ratio for purposes of this Subsection 9.23(1)
shall be tested at the end of each fiscal quarter, commencing December 31, 2003,
and on a rolling four quarter basis, provided that with respect to the
Borrower's fourth fiscal quarter ending December 31, 2003, first fiscal quarter
ending April 3, 2004, and second fiscal quarter ending July 3, 2004, said
covenant shall be tested on a rolling one quarter, two quarter and three quarter
basis, respectively.
7. Subsection 9.23(m) of the Agreement is hereby amended to read as follows:
(m) Net Worth of Borrower and Subsidiaries. Borrower and its Subsidiaries,
----------------------------------------
on a consolidated basis, shall maintain a Net Worth of at least (i) $32,600,000
as of the December 31, 2003, (ii) $32,950,000 as of April 3, 2004, (iii)
$33,300,000 as of July 3, 2004 (iv) $33,500,000 as of October 2, 2004, and (v)
$33,800,000 as of December 31, 2004. With respect to each fiscal quarter end
thereafter, the minimum Net Worth of the Borrower and its Subsidiaries, on a
consolidated basis, shall increase by not less than 65% of the net income for
the immediately preceding fiscal year just ending (with no reduction for
losses).
8. The following Subsection 9.23(p) is hereby added to the Agreement to read
as follows:
5
(p) Maximum Net Loss. Borrower and its Subsidiaries, on a consolidated
------------------
basis, shall not report a net loss before taxes, of greater than $1,029,000 for
] fiscal quarter ending September 27, 2003.
9. The following subsection 9.27 is hereby added to the Agreement to read as
follows:
9.27 Liquid Assets. The Borrower shall own and maintain at all times at
--------------
least $3,000,000 of "Liquid Assets." For the purpose of this Subsection 9.27,
"Liquid Assets" shall mean cash and securities traded on the New York Stock
Exchange, the American Stock Exchange or NASDAQ. Notwithstanding the foregoing,
the Borrower shall not be required to continue to comply with the foregoing
provisions of this Subsection 9.27 in the event that no Event of Default shall
have occurred at anytime during period commencing the date of the Sixth
Amendment and ending (and including) December 31, 2004 and no Default shall
exist on December 31, 2004.
10. Subsection 13.17 of the Agreement is hereby amended to read as follows:
13.17 Exemplary Damages, Jury Trial Waiver. The parties hereto agree that
--------------------------------------
they shall not have a remedy of punitive or exemplary damages against other
parties in any judicial proceeding, any claim or controversy arising out of or
relating to the Loan Documents between the parties hereto (a "Dispute") and
hereby waive any right or claim to punitive or exemplary damages they have now
or which may arise in the future in connection with any Dispute. THE PARTIES
HERETO IRREVOCABLY WAIVE ANY RIGHT THEY MAY HAVE TO JURY TRIAL WITH REGARD TO A
DISPUTE.
11. Borrower shall pay simultaneously herewith (i) a fee to the Bank in the
amount of $5,000 and (ii) all reasonable expenses and expenditures of the Bank,
including, without limitation, reasonable attorneys' fees and expenses
incurred or paid by the Bank in connection with this Amendment and all other
documents delivered in connection herewith.
12. Prior to extending the Borrower the $1,500,000 Incremental Term Loan for
the purpose of acquiring the assets of RS Biotech, (i) no Default or Event
of Default shall exist at the time of such advance, (ii) the Borrower shall have
delivered to the Bank a copy of the Purchase Agreement with respect to such
6
acquisition, in form and substance satisfactory to the Bank, and (iii) Borrower
shall have complied with all terms and conditions with respect to Incremental
Term Loans under the Agreement, as well as with any other requirements imposed
by the Bank.
13. All provisions contained in the Loan Documents similar to Subsection
13.17 of the Agreement are hereby amended in a manner consistent with the
amendment to said Section 13.17 set forth in the Sixth Amendment.
14. This Amendment has been duly executed and delivered by the parties
hereto, and the Agreement, as amended hereby, and all other documents executed
in connection with the Agreement and this Amendment, as amended, constitute
legal, valid and binding obligations of the parties thereto in accordance with
their terms.
15. The parties hereto confirm and agree that, except as modified or changed
by virtue of this Amendment and the other documents delivered in connection
herewith, the Agreement and the other documents executed in connection with the
Agreement and this Amendment are and shall remain in full force and effect, and
that the parties hereto each are and shall be entitled to all rights and
interests and subject to all liabilities created thereunder and hereunder.
16. All capitalized terms contained in this Amendment shall have the same
meanings ascribed to them in the Agreement.
17. This Amendment may be executed in one or more counterparts, each of
which shall constitute one and the same Amendment.
7
IN WITNESS WHEREOF, the parties hereunto set their hands and cause these
presents to be signed by the authorized officers on the date and year first
above mentioned.
NEW BRUNSWICK SCIENTIFIC CO., INC.
BY:________________________________________
XXXXXX XXXXXXXXXX, Vice President,
Finance
WACHOVIA BANK, NATIONAL ASSOCIATION
BY:________________________________________
XXXXXXX XXXXXXXX, Vice President
8
