LOAN MODIFICATION AGREEMENT NO. 2
This Loan Modification Agreement No. 2 (this "Agreement"), dated as of July
18, 2002 (the "Effective Date"), is made between IMMUCOR, INC., a Georgia
corporation ("U.S. Borrower"), DOMINION BIOLOGICALS LIMITED, the successor by
amalgamation to 3000524 Nova Scotia Limited and itself a corporation
incorporated under the laws of Canada ("Canadian Borrower"), and IMMUCOR
MEDIZINISCHE DIAGNOSTIK GMBH, a corporation incorporated under the laws of the
Federal Republic of Germany ("German Borrower"; U.S. Borrower, Canadian Borrower
and German Borrower, individually and collectively, "Borrower"), as borrower,
and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
lender ("Lender") for the purpose of amending or otherwise modifying the terms
of that certain Loan Agreement, dated as of February 23, 2001, heretofore made
between Lender and Borrower (which, as it has been, or hereafter may be,
modified or amended, is called herein the "Loan Agreement"), as amended by that
Loan Modification Agreement No. 1 amongst Borrower and the Lender dated as of
September 11, 2001 ("Loan Modification Agreement No. 1").
Background
Borrower and Lender previously entered into Loan Modification Agreement No.
1 which waived certain prior defaults by Borrower under the Loan Agreement. Such
waivers were conditioned upon, among other things, the receipt prior to December
31, 2001 by the U.S. Borrower of an investment of at least Five Million Dollars
($5,000,000) subordinated to all Obligations of each Credit Party to Lender and
which would be applied to reduce the outstanding Obligations (the "Junior
Capital Infusion").
The U.S. Borrower has not obtained the Junior Capital Infusion. As a
result, (i) U.S. Borrower became liable to Lender for a supplemental waiver fee;
(ii) U.S. Borrower became obligated to issue to Lender a warrant to purchase
from the U.S. Borrower 750,000 shares of voting common stock (which, in lieu
thereof, Lender subsequently agreed to accept certain fees), (iii) certain
interest rates under the Loan Documents increased; and (iv) the maturity dates
of all existing credit facilities advanced to February 28, 2003.
Borrower and Lender make this Loan Modification Agreement No. 2 in order to
amend certain terms and conditions of the Loan Agreement, including the maturity
dates, the applicable interest rates, and the loan covenants.
Now, therefore, in consideration of the mutual promises contained herein
and in the Loan Agreement, the receipt and sufficiency of which are hereby
acknowledged, Lender and Borrower, each intending to be legally bound, agree as
follows:
1. Definitions. Capitalized terms used herein, but not expressly defined
themselves herein, shall have the meanings given to such terms in the Loan
Agreement or in Loan Modification Agreement No. 1.
2. Loan Modifications. Lender and Borrower agree to modify the Loan Agreement
as follows:
2.1 Change in Termination Dates. Notwithstanding the failure by Borrower to
obtain the Junior Capital Infusion, the termination or maturity dates of
the Obligations shall be amended as follows:
(a) Revolvers. Commencing on the Effective Date, the Loan Agreement is hereby
amended to provided that each of the U.S. Line of Credit, the Canadian Line of
Credit, and the German Line of Credit will terminate no later than December 1,
2005.
(b) Term Loan A and Term Loan B. Borrower shall make payments of principal and
interest under Term Loan A and Term Loan B in accordance with the original
payment schedule as provided in the Loan Agreement dated February 23, 2001.
Specifically, the principal amount of Term Loan A shall be repaid by the U.S.
Borrower in twenty (20) quarterly installments on each Payment Date, commencing
on March 1, 2001, the first four (4) of which shall be in the amount of $375,000
each, the next four (4) of which shall be in the amount of $875,000 each and the
next twelve (12) of which shall be in the amount of $1,250,000 each; provided,
however, that the final such installment, due and payable on December 1, 2005,
shall be in such amount as is required to pay in full the unpaid principal
balance of Term Loan A, together with all accrued and unpaid interest thereon;
and the principal amount of Term Loan B, together with all accrued and unpaid
interest thereon, shall be due and payable in full on December 1, 2005.
(c) Canadian Term Loan. The outstanding principal balance of the CAD Term Loan
shall continue to be repaid by the U.S. Borrower in quarterly installments in
accordance with the amortization schedule set forth in the CAD Term Note;
provided, however, that the final such installment, which shall be due and
payable on September 1, 2002, shall be in such amount as is required to pay in
full the unpaid principal balance of the CAD Term Loan, together with all
accrued and unpaid interest thereon.
2.2 Change in Interest Rate. Commencing on the Effective Date, Subsections
2.1(a) and 2.1(b) of the Loan Agreement shall be
(a) Applicable Rate.
(i) The outstanding principal balance of each Loan (other than Term
Loan B), or each outstanding portion thereof, shall bear interest initially
at a rate per annum equal to either: (i) the Prime Rate in the case of that
portion of such Loan at any time constituting a Prime Borrowing or (ii)
subject to the conditions and limitations set forth in subsection (c)
below, the LIBOR Rate plus the Applicable Margin in the case of that
portion of such Loan at any time constituting a LIBOR Borrowing; subject,
however, in each case, to adjustment as provided in subsection (b) below.
(ii) The outstanding principal balance of Term Loan B shall bear
interest initially at a rate per annum equal to either: (i) the Prime Rate
plus one-half of one percent (0.5%), in the case of that portion of such
Loan at any time constituting a Prime Borrowing, or (ii) subject to the
conditions and limitations set forth in subsection (c) below, the LIBOR
Rate plus the Applicable Margin, in the case of that portion of such Loan
at any time constituting a LIBOR Borrowing; subject, however, in each case,
to adjustment as provided in subsection (b) below.
(b) Applicable Margin. The "Applicable Margin" shall mean as of the
Effective Date a rate per annum equal to, with respect to Advances under
the Lines of Credit, the Term Loan A 200 basis points (2.00%) and, with
respect to the Term Loan B, 250 basis points (2.50%), and the Applicable
Margin shall be subject to subsequent adjustment, up or down, based on the
U.S. Borrower's financial performance, determined by reference to the
Funded Debt/EBITDA Ratio, measured quarterly; that is, if the Funded
Debt/EBITDA Ratio, measured for each Fiscal Quarter of the U.S. Borrower,
commencing with the first Fiscal Quarter ending after the Effective Date,
is as described below, the Applicable Margin shall be the margin appearing
opposite said Funded Debt/EBITDA Ratio:
Applicable Margin
----------------------------------------------------------------------
Funded Debt/ Lines of Credit,
Level EBITDA Ratio and Term Loan A Term Loan B
------ ------------------- ------------------ -----------------
I <1.75:1.00 2.00% 2.50%
II >1.75:1.00, but 2.50% 3.00%
< 2.25:1.00
III >2.25:1.00 2.75% 3.25%
Lender shall determine whether any adjustment to the Applicable Margin is to be
made quarterly, based on the U.S. Borrower's financial statements for each
Fiscal Quarter delivered to Lender pursuant to Section 4.2; provided that if
such financial statements are not timely delivered to Lender, then an adjustment
to the Applicable Margin shall be made based on an assumed delivery of said
financial statements reflecting a Funded Debt/EBITDA Ratio of greater than
2.25:1.0; i.e., Level III above. Each such adjustment to the Applicable Margin
shall become effective as of the first day of the calendar month following the
date on which such financial statements are delivered (or deemed delivered) to
Lender, and shall remain effective unless and until any subsequent adjustment
becomes effective in accordance with the terms of this Section 2.2.1(b). Each
such adjustment shall apply only to LIBOR Borrowings made (including conversions
and continuations) within such period (but not to any then existing). In the
event that the annual audited financial statements of the U.S. Borrower for any
Fiscal Year shall require restatement of financial statements of the U.S.
Borrower and such restatement shall affect the Funded Debt/EBITDA Ratio and
would have required a different Applicable Margin to be in effect for prior
period(s), then Lender, at its option, may require Borrower to make additional
payments of interest for such prior period(s).
2.3 Change in Non-Usage Fee. Subsection 2.2.2(b) of the Loan Agreement shall be
amended and restated to read as set forth below:
(v) For purposes hereof, the term "Applicable Percentage" shall
mean as of the Effective Date, one-quarter of one percent (.25%), and
the Applicable Percentage shall be subject to subsequent adjustment,
up or down, based on the U.S. Borrower's financial performance, on a
quarterly basis, commencing with the first Fiscal Quarter ending after
the Effective Date, as set forth in the table below (with references
to Levels I through III below corresponding to the same Levels I
through III in Section 2.2.1):
LEVEL APPLICABLE PERCENTAGE
I .250%
II .375%
III .500%
Lender shall determine whether any adjustment to the Applicable
Percentage is to be made quarterly, based on the U.S. Borrower's
financial statements for each Fiscal Quarter delivered to Lender
pursuant to Section 4.2; provided that if such financial statements
are not timely delivered to Lender, then an adjustment to the
Applicable Percentage shall be made based on an assumed delivery of
such financial statements reflecting a Funded Debt/EBITDA Ratio of
greater than 2.25:1.00; i.e., Level III above; provided further if any
Default Condition shall exist no adjustment downward shall occur. Each
such adjustment to the Applicable Percentage shall become effective as
of the first day of the calendar month following the date on which
such financial statements are delivered (or deemed delivered) to
Lender, and shall remain effective unless and until any subsequent
adjustment becomes effective in accordance with the terms of this
Section 2.2.2(b). In the event that the annual audited financial
statements of the U.S. Borrower for any Fiscal Year shall require
restatement of financial statements of the U.S. Borrower and such
restatements shall affect the Funded Debt/EBITDA Ratio and would have
required a different Applicable Percentage to be in effect for prior
period(s), then Lender, at its option, may require Borrower to make
additional payments of interest for such prior period(s).
2.4 Annual Commitment Fee. There shall be added to the Loan Agreement the
following Subsection 2.2(c):
(c) Annual Commitment Fee. Commencing on July 1, 2003, and on
each anniversary thereof while Lender has an obligation to lend under
any of the Lines of Credit, Borrower shall pay to Lender a fully
earned, non-refundable annual commitment fee in an amount equal to the
product of (i) one-eighth of one percent (.125%) of the sum of the
U.S. Line of Credit Limit plus the Dollar Equivalent of the Canadian
Line of Credit Limit plus the Dollar Equivalent of the German Line of
Credit Limit outstanding on May 31 of such year, (ii) times the lesser
of (x) 1.00 or (y) a fraction, the numerator of which is the number of
days from July 1 of such year until December 1, 2005, and the
denominator of which is 365 days.
2.5 Roll Forward of Other Fees. There shall be added to the Loan Agreement the
following Subsection 2.2(d):
(d) Other Fees. To memorialize those fees now owing pursuant to
Loan Modification Agreement No. 1 and certain agreements made
subsequent thereto in exchange for Lender's waiver of the requirement
for delivery of the Warrants described therein, Borrower acknowledges,
confirms and agrees that Lender has earned, and Borrower is bound to
pay Lender the following fees on the dates prescribed below, provided
that upon any acceleration of all Obligations, all such fees then
shall become due and payable in full:
Restructuring Fee for Missing In Lieu of
Date (EOM) Fee 12/31 Deadline Warrant Fee Total
2002
July $62,500 $37,500 $100,000
August $62,500 $37,500 $100,000
September $37,500 $ 75,000 $112,500
October $37,500 $ 75,000 $112,500
November $37,500 $ 75,000 $112,500
December $37,500 $ 75,000 $112,500
2003
January $ 100,000 $100,000
February $ 100,000 $100,000
2.6 Changes in Financial Covenants.
(a) Definitions. The definitions of "Fixed Charge Coverage Ratio and "Leverage
Ratio" shall be amended and restated to read as follows: "Fixed Charge Coverage
Ratio" shall mean, with respect to any Person and for any fiscal period, the
ratio of (i) such Person's EBITDA for the consecutive 12-month period ending
with such period, minus such Person's Taxes for the consecutive 12-month period
ending with such period, to (ii) such Person's Fixed Charges for the consecutive
12-month period ending with such period, all as determined on a consolidated
basis; and "Leverage Ratio" shall mean, with respect to any Person and for any
fiscal period, the ratio of (i) the sum of such Person's total liabilities
(including accrued and deferred income taxes) as at the end of such fiscal
period to (ii) such Person's Net Worth as at the end of such fiscal period, all
as determined on a consolidated basis.
(b) Fixed Charge Coverage Ratio. Section 6.1 of the Loan Agreement shall be
amended and restated to read as set forth below:
6.1 Fixed Charge Coverage Ratio. The U.S. Borrower and its Consolidated
Subsidiaries shall have for each Fiscal Quarter ending closest to each date
set forth below, a Fixed Charge Coverage Ratio of not less than that set
forth below for such period:
Minimum Fixed
Fiscal Quarter Ending: Charge Coverage Ratio:
--------------------- ---------------------
Quarters ending August 31, 2002 through May 31, 2003 1.20:1.00
Quarters ending August 31, 2003 through May 31, 2004 1.35:1.00
Thereafter 1.45:1.00
(c) Funded Debt to EBITDA. Section 6.2 of the Loan Agreement shall be amended
and restated to read as set forth below:
6.2 Funded Debt/EBITDA Ratio. The U.S. Borrower and its Consolidated
Subsidiaries shall have for each Fiscal Quarter ending closest to each date
set forth below a Funded Debt/EBITDA Ratio of not more than that set forth
below for such period:
Maximum Funded
Fiscal Quarter Ending: Debt/EBITDA Ratio:
--------------------- -----------------
Quarters ending August 31, 2002 2.50:1.00
through May 31, 2003
Thereafter 2.00:1.00
Solely for purposes of this Section 6.2, so long as any Debt of the
U.S. Borrower or any of its Consolidated Subsidiaries is, by its
terms, expressly subordinated to the obligations of such Credit Party
to Lender, including, without limitation, all Obligations, on terms
and conditions satisfactory to Lender in its sole discretion, and so
long as Lender determines, in its sole discretion, that such
subordination is and continues to be in all respects valid and
enforceable against the holders of such obligations, such subordinated
Debt shall not be included as Funded Debt; provided, however, that the
foregoing shall not be deemed to be a consent by Lender to the
incurrence by any Credit Party of any Debt not otherwise permitted to
be incurred pursuant to Section 5.2.
(d) Leverage Ratio. Section 6.3 of the Loan Agreement shall be amended and
restated to read as set forth below:
6.3 Leverage Ratio. The U.S. Borrower and its Consolidated
Subsidiaries shall have for each Fiscal Quarter ending closest to each
date set forth below, a Leverage Ratio of not less than that set forth
below for such period:
Fiscal Quarter Ending: Leverage Ratio:
--------------------- --------------
Quarters ending August 31, 2002 through May 31, 2003 1.75:1.00
Quarters ending August 31, 2003 through May 31, 2004 1.50:1.00
Thereafter 1.25:1.00
(e) CAPEX. Section 5.14 of the Loan Agreement shall be amended and restated to
read as set forth below:
5.14 Certain Capital Expenditures. The U.S. Borrower and its Subsidiaries
shall not make Capital Expenditures to acquire equipment for lease to
their customers in an aggregate amount in excess of $3,500,000 during
any Fiscal Year.
2.7 Change in Borrowing Base and Borrowing Base Reporting.
(a) Definition of "Eligible Accounts." The definition of "Eligible Accounts"
shall be amended and restated to mean, collectively, the Eligible Domestic
Entity Accounts and the Eligible Foreign Entity Accounts, other than any account
receivable generated as a result of selling instruments.
(b) Definition of "Borrowing Base." The definition of "Borrowing Base" shall be
amended and restated to mean the aggregate of the following amounts: (i) an
amount equal to eighty (80%) of the Dollar value of Eligible Domestic Entity
Accounts plus (ii) an amount equal to forty-five percent (45%) of the Dollar
value of Eligible Foreign Entity Accounts plus (iii) an amount equal to the
lesser of (A) fifty percent (50%) of the Dollar value of Eligible Inventory or
(B) fifty percent (50%) of the amount of Advances outstanding pursuant to the
preceding clauses (i) and (ii) minus (iii) Borrowing Base Reserves.
(c) Weekly Delivery of Borrowing Base Certificate. Provided that no Event of
Default occurs, and notwithstanding any provision of Section 4.2.10 of the Loan
Agreement to the contrary, until May 31, 2003, Borrower shall deliver the
Borrowing Base Certificate on a weekly basis, as soon as practicable after the
end of each calendar week, but not later than the second Business Day of the
succeeding calendar week, reflecting weekly updates of the information specified
in said Section 4.2.10 for the U.S. Borrower and its Subsidiaries, and
monthly updates of such information for the German Borrower and the Canadian
Borrower. Subsequent to May 31, 2003, provided that no Event of Default occurs,
delivery of the Borrowing Base Certificate shall resume on a monthly basis in
accordance with said Section 2.4.10. In addition to the foregoing, the
requirement for delivery of weekly Cash Flow projections, prescribed in Section
5 of Loan Modification Agreement No. 1 shall continue without abatement both
before and after May 31, 2003.
(d) Field Exams. Unless and except to the extent that any Event of Default then
exists, the obligation of Borrower to reimburse Lender for field audits
conducted by it pursuant to Section 9.6 of the Loan Agreement shall be limited
to not more than: (i) one (1) field audit during the remainder of calendar year
2002; (ii) two (2) field audits during calendar year 2003; and (iii) one (1)
field audit per calendar year thereafter; it being understood that Lender's
standard audit fee has changed from a flat $2,500 per audit plus out-of-pocket
expenses to $750 per auditor per diem plus out-of-pocket expenses.
3. Inducing Representations. To induce Lender to enter into this Agreement,
Borrower hereby represents and warrants that: (i) Borrower is duly authorized to
enter into this Agreement, and this Agreement, upon its execution by Borrower
and Lender, will constitute Borrower's legal, valid and binding obligations
enforceable in accordance with its terms against Borrower; (ii) after giving
effect to this Agreement, no Event of Default exists; (iii) no present right of
setoff, counterclaim, recoupment claim, claim, cause or action or defense exists
in Borrower's favor in respect of its payment or performance of any Obligations
or arising from any action (or inaction) of Lender; and (iv) except as modified
by this Agreement, all terms of the Loan Agreement and each Loan Document are in
full force and effect as originally stated.
4. Miscellaneous. Except as otherwise expressly provided herein, all
modifications to the Loan Agreement set forth herein shall take effect on the
Effective Date. Each existing Loan Document (including, particularly, any Note)
shall be deemed modified hereby as necessary to conform its terms to the terms
of the Loan Agreement, as modified hereby. This Agreement constitutes a Loan
Document, and shall be governed and construed accordingly. This Agreement
constitutes the entire agreement between Lender and Borrower relative to the
subject matter hereof, and supersedes and replaces any prior understandings and
agreements, written or oral, in regard thereto. This Amendment shall be binding
on, and inure to the benefit of, the successors and assigns of Borrower and
Lender. Borrower shall reimburse Lender for all costs which Lender incurs,
including reasonable attorneys fees, in the preparation, negotiation, execution
and performance of this Agreement, and the recording of any Loan Documents in
connection herewith.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
WACHOVIA BANK,
NATIONAL ASSOCIATION
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
IMMUCOR, INC.
By:
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
DOMINION BIOLOGICALS LIMITED
By:
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
(SIGNATURES CONTINUED ON FOLLOWING PAGE)
IMMUCOR MEDIZINISCHE DIAGNOSTIK GMBH
By:
--------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
