THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (“Amendment”) is made
effective this 18th day of June, 2004 by and among LASALLE BUSINESS CREDIT, LLC,
successor by merger to LaSalle Business Credit, Inc., as Agent
(“Agent”) for STANDARD FEDERAL BANK NATIONAL ASSOCIATION
(“Lender”), MEDICAL TECHNOLOGY SYSTEMS, INC. (“MTS”)
and MTS PACKAGING SYSTEMS, INC. (“Packaging”, and with MTS,
each a “Borrower” and collectively, the “Borrowers”.
BACKGROUND
A.
Agent, Lender and Borrowers previously entered into that certain Loan and
Security Agreement dated June 26, 2002 (as amended by that certain First
Amendment to Loan and Security Agreement dated July 8th, 2003 and as the same
may be further amended from time to time, the “Loan
Agreement”).
B.
Agent, Lender and Borrowers desire to amend the Loan Agreement in accordance
with the terms and conditions set forth herein.
C.
Capitalized terms used herein and not otherwise defined shall have the meanings
provided for such terms in the Loan Agreement.
NOW
THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:
1.
Definitions.
| (a) |
|
The definition of “Business Day” set forth in Section
1 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following: |
| |
|
““Business
Day” shall mean any day other than a Saturday, a Sunday or (i) with respect to
all matters, determinations, fundings and payments in connection with LIBOR Rate Loans,
any day on which banks in London, England or Chicago, Illinois are required or permitted
to close, and (ii) with respect to all other matters, any day that banks in Philadelphia,
Pennsylvania are required or permitted to close.” |
| (b) |
|
The definition of “Debt Service Coverage Ratio” set forth in
Section 1 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following: |
| |
|
““Debt
Service Coverage Ratio” shall mean, for any Person, with respect to any period of
determination, the ratio of (i) such Person’s net income after taxes for such
period, excluding any after-tax gains or losses on the sale of assets (other than the sale
of Inventory in the ordinary course of business), any other after-tax extraordinary gains
or losses and, during Borrowers’ fiscal year ending March 31, 2005 only, the Original
Issue Discount, the Deferred Financing Costs and the Leasehold Write-Off, plus
depreciation and amortization deducted in determining net income for such period,
plus tax benefits which offset any income tax expense provisions deducted in
determining net income for such period, minus Unfinanced Capital Expenditures for
such period plus the after-tax increase in LIFO reserves, or minus the after
tax decrease in LIFO reserves, to (ii) such Person’s current principal maturities of
long-term debt and capitalized leases paid or scheduled to be paid during such period,
plus any prepayments on indebtedness owed to any other Person (exclusive of trade
payables and Revolving Loans) and paid during such period, plus, any Permitted
Dividends paid during such period.” |
| (c) |
|
The definition of “Maximum Loan
Limit” set forth in Section 1 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following: |
| |
|
““Maximum
Loan Limit” shall mean Ten Million Dollars ($10,000,000.00), plus the Overadvance
Amount.” |
| (d) |
|
The definition of “Maximum Revolving Loan Limit” set forth in
Section 1 of the Loan Agreement is hereby deleted in its
entirety and replaced with the following: |
| |
|
““Maximum
Revolving Loan Limit” shall mean Eight Million Five Hundred Thousand Dollars
$8,500,000.00).” |
| (e) |
|
The definition of “Minimum Net
Availability” set forth in Section 1 of the Loan Agreement is
hereby deleted in its entirety and replaced with the following: |
| |
|
““Minimum
Net Availability” shall mean, at any time of determination, an amount equal to
(a) the lesser of: (i) the Maximum Revolving Loan Limit; and (ii) the Revolving Loan Limit
available to the Borrowers at such time; plus the Availability Block, minus
(b) the sum of: (i) all sums due and owing by the Borrowers to the Borrowers’ trade
creditors which are outstanding beyond trade terms usually and customarily afforded to the
Borrowers by their trade creditors (as determined by Agent from time to time in the
reasonable exercise of its discretion); plus (ii) the outstanding principal balance
of all Revolving Loans and Letter of Credit Obligations; plus (iii) all taxes due
to any federal, state or local taxing authority due and not yet paid.” |
| (f) |
|
The definition of “Tangible Net
Worth” set forth in Section
1 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following: |
| |
|
““Tangible
Net Worth” shall mean, with respect to a Person, the sum of (i) such
Person’s shareholders’ equity, defined in accordance with GAAP, less (ii)
the book value (to the extent included in such shareholders’ equity) of all assets
reflected as goodwill (which shall in no event include trademarks, patents or other
intellectual property or capitalized development costs), plus (iii) plus the
amount of any LIFO reserve, all as determined under GAAP, consistently applied.” |
| (g) |
|
The definition of “Term Loans” set
forth in Section
1 of the Loan Agreement is hereby deleted in its entirety and
replaced with the following: |
2
| |
|
““Term
Loans” shall mean, collectively, Term Loan A, Term Loan B and Term Loan C.” |
| (h) |
|
Section 1 of the Loan
Agreement is hereby amended by adding the following definitions alphabetically where they would
otherwise appear: |
| |
|
““Availability
Block” shall mean (a) commencing June 18, 2004 and at all time through and
including September 30, 2005, an amount equal to Five Hundred Thousand Dollars
($500,000.00) and (b) commencing October 1, 2005 and at all times thereafter, an amount
equal to Zero Dollars ($0). |
| |
|
“Deferred
Financing Costs” shall mean an amount equal to the lesser of (i) Four Hundred
Thousand Dollars ($400,000.00) or (ii) the amount of deferred financing costs incurred by
Borrowers prior to June 17, 2004 and actually expensed by Borrowers, as required by GAAP. |
| |
|
“Interest
Period” shall mean any continuous period of thirty (30), sixty (60) or ninety
(90) days, as selected from time to time by Borrowers. |
| |
|
“Leasehold
Write-Off” shall mean an amount equal to the lesser of (i) Two Hundred
Seventy-Five Thousand Dollars ($275,000.00) or (ii) the amount actually expensed by
Borrowers in connection with the relocation of Borrowers’ headquarters from 00000
Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, XX to 0000 Xxxxx Xxxxxxxxx Xxxxx, Xx. Xxxxxxxxxx, XX. |
| |
|
“LIBOR
Rate” shall mean, with respect to any LIBOR Rate Loan for any Interest Period, a
rate per annum equal to the offered rate for deposits in United States dollars for a
period equal to such Interest Period as it appears on Telerate page 3750 as of 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest Period.
“Telerate page 3750” means the display designated as “Page 3750” on
the Telerate Service (or such other page as may replace page 3750 of that service or such
other service) as may be nominated by the British Bankers’ Association as the vendor
for the purpose of displaying British Bankers’ Association interest settlement rates
for United States dollar deposits). |
| |
|
“LIBOR
Rate CapEx Loan” shall mean a Capital Expenditure Loan bearing interest with
reference to the LIBOR Rate. |
| |
|
“LIBOR
Rate Revolving Loan” shall mean a Revolving Loan bearing interest with reference
to the LIBOR Rate. |
| |
|
“LIBOR
Rate Term C Loan” shall mean any portion of Term Loan C bearing interest with
reference to the LIBOR Rate. |
| |
|
“LIBOR
Rate Loans” shall mean the Loans bearing interest with reference to the LIBOR
Rate, including, without limitation, each LIBOR Rate CapEx Loan, each LIBOR Rate Revolving
Loan and each LIBOR Rate Term C Loan. |
3
| |
|
“Original
Issue Discount” shall mean an amount equal to the lesser of (i) Seven Hundred
Forty-One Thousand Dollars ($741,000.00) or (ii) the actual amount of the original issue
discount expensed by Borrowers in connection with the repayment in full of the
Subordinated Debt. |
| |
|
“Overadvance
Amount” shall mean for each period listed in Column A below, an amount up to the
amount listed in Column B below for such period: |
| Column A |
|
Column B |
|
|
|
| |
|
|
| June 18, 2004 through July 31, 2004 |
|
$ 3,000,000.00 |
| August 1, 2004 through August 31, 2004 |
|
$ 2,900,000.00 |
| September 1, 2004 through September 30, 2004 |
|
$ 2,800,000.00 |
| October 1, 2004 through October 31, 2004 |
|
$ 2,700,000.00 |
| November 1, 2004 through November 30, 2004 |
|
$ 2,500,000.00 |
| December 1, 2004 through December 31, 2004 |
|
$ 2,300,000.00 |
| January 1, 2005 through January 31, 2005 |
|
$ 2,100,000.00 |
| February 1, 2005 through February 28, 2005 |
|
$ 1,800,000.00 |
| March 1, 2005 through March 31, 2005 |
|
$ 1,500,000.00 |
| April 1, 2005 through April 30, 2005 |
|
$ 1,200,000.00 |
| May 1, 2005 through May 31, 2095 |
|
$ 1,000,000.00 |
| June 1, 2005 through June 30, 2005 |
|
$ 800,000.00 |
| July 1, 2005 through July 31, 2005 |
|
$ 600,000.00 |
| August 1, 2005 through August 31, 2005 |
|
$ 400,000.00 |
| September 1, 2005 through September 30, 2005 |
|
$ 200,000.00 |
| October 1, 2005 and at all times thereafter |
|
$ 0 |
| |
|
“Prime
Rate Loans” shall means the Loans bearing interest with reference to the Prime
Rate. |
| |
|
“Tax”
shall mean, in relation to any LIBOR Rate Loans and the applicable LIBOR Rate, any tax,
levy, impost, duty, deduction, withholding or charges of whatever nature (i) required to
be paid by Lender and/or (ii) to be withheld or deducted from any payment otherwise
required hereby to be made by Borrower to Lender; provided, that the term “Tax”
shall not include any taxes imposed upon the net income of Lender.” |
2.
Revolving Loans. Sections 2(a) is
hereby deleted in its entirety and replaced with the following:
| (a) |
|
Revolving Loans. Subject to the terms and conditions of
this Agreement and the Other Agreements, during the Term, Agent on behalf of
Lender shall make revolving loans and advances (the “Revolving
Loans”) to one or more Borrowers in an aggregate amount up to the
lesser of: (x) the Maximum Revolving Loan Limit minus the Letter of
Credit Obligations or (y) the sum of the following sublimits (the
“Revolving Loan Limit”) minus the Letter of Credit
Obligations: |
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(i) |
Up to eighty-five percent (85%) of the face amount (less maximum discounts,
credits and allowances which may be taken by or granted to Account Debtors in
connection therewith in the ordinary course of each Borrower’s business) of
Eligible Accounts of the Borrowers; plus |
| |
(ii) |
Up to the lesser of: (A) the sum of (without duplication) sixty percent (60%) of
the lower of cost or market value on a FIFO basis of the Eligible Inventory of
each Borrower; and (B) Two Million Five Hundred Thousand Dollars ($2,500,000);
plus |
| |
(iii) |
the Overadvance Amount; minus |
| |
(iv) |
the Availability Block; minus |
| |
(v) |
such reserves as Lender elects, in its reasonable discretion, to establish from
time to time. |
| |
|
All Revolving Loans shall be deemed to be advanced, first, under the Overadvance Amount
portion of the Revolving Loan Limit and, second, under the remainder of the Revolving Loan
Limit. The aggregate unpaid principal balance of the Revolving Loans made to all
Borrowers, plus the outstanding Letter of Credit Obligations of the Borrowers shall
not at any time exceed the lesser of (i) the Revolving Loan Limit and (ii) the
Maximum Revolving Loan Limit (as each of such amounts may be increased or decreased by
Agent, in its sole discretion). If at any time the outstanding Revolving Loans made to all
Borrowers exceed either the Revolving Loan Limit or the Maximum Revolving Loan Limit, or
any portion of the Revolving Loans plus the outstanding Letter of Credit Obligations
exceed any applicable sublimit within the Revolving Loan Limit, the Borrowers shall
immediately, and without the necessity of demand by Agent, pay to Agent such amount as may
be necessary to eliminate such excess, and Agent shall apply such payment to the
outstanding Revolving Loans in such order as Agent shall determine in its sole discretion;
provided, however, that if such excess results from any establishment of reserves by Agent
or from the imposition of any modification to the eligibility criteria set forth in the
definitions of Eligible Accounts and Eligible Inventory or in this Section
2(a) in such a manner that items heretofore eligible thereunder are
rendered ineligible, Borrowers shall have five (5) days to eliminate such excess. |
| |
|
Each Borrower hereby authorizes Agent, in its sole discretion, to charge any accounts of the
Borrowers maintained at LaSalle Bank or advance Revolving Loans to make any payments of
principal, interest, fees, costs or expenses required to be made under this Agreement or
the Other Agreements. All Revolving Loans shall, in Agent’s sole discretion, be
evidenced by one or more promissory notes in form and substance satisfactory to Agent.
However, if such Revolving Loans are not so evidenced, such Revolving Loans may be
evidenced solely by entries upon the books and records maintained by Agent. |
5
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A request for a Revolving Loan shall be made or shall be deemed to be made, each in the
following manner: Borrower shall give Agent same day notice, no later than 12:00 P.M.
(Philadelphia time) for such day, of its request for a Revolving Loan as a Prime Rate
Loan, and at least three (3) Business Days prior notice of its request for a Revolving
Loan as a LIBOR Rate Loan, in which notice Borrower shall specify the amount of the
proposed borrowing and the proposed borrowing date; provided, however, that no such
request for a Revolving Loan may be made at a time when there exists an Event of Default
and no such request for a Revolving Loan as a LIBOR Rate Loan may be made at any time when
there exists an event which, with the passage of time or giving of notice, will become an
Event of Default. Each check or request for payment against the control disbursement
account maintained by Borrowers at LaSalle Bank shall constitute a request for a Revolving
Loan as a Prime Rate Loan. As an accommodation to the Borrowers, Agent may permit
telephone requests for Revolving Loans and electronic transmittal of instructions,
authorizations, agreements or reports to Agent by Borrowers. Unless such Borrower
specifically directs Agent in writing not to accept or act upon telephonic or electronic
communications from it, Agent shall have no liability to such Borrower for any loss or
damage suffered by such Borrower as a result of Agent’s honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on any reports
communicated to it telephonically or electronically and purporting to have been sent to
Agent by such Borrower, and Agent shall have no duty to verify the origin of any such
communication or the authority of the Person sending it (but such request must purport to
be sent by an Authorized Officer). |
| |
|
Each Borrower hereby irrevocably authorizes Agent to disburse the proceeds of each Revolving
Loan requested by such Borrower, or deemed to be requested by such Borrower, as follows:
the proceeds of each Revolving Loan requested under Section 2(a)
shall be disbursed by Agent in lawful money of the United States of America in immediately
available funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrower, and in the case of each subsequent borrowing,
by wire transfer or Automated Clearing House (ACH) transfer to such bank account as may be
agreed upon by such Borrower and Agent from time to time, or elsewhere if pursuant to a
written direction from such Borrower.” |
3.
Capital Expenditure Loans. Section
2(d) of the Loan Agreement is hereby deleted in its entirety and
replaced with the following:
6
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|
"(d) Capital Expenditure Loans. Subject to the terms and
conditions of this Agreement and the Other Agreements, after the initial Loans
are advanced hereunder, but in no event after the date which is six months prior
to the last day of the Term, Agent shall make one (1) advance to the Borrowers
of up to eighty percent (80%) of the purchase price (exclusive of sales taxes,
delivery charges and other “soft” costs related to such purchase) of
Equipment which (i) has been purchased by either Borrower on or after May 1,
2004 with the working capital of such Borrower or (ii) is to be purchased with
the proceeds of such advance, which Equipment is acceptable to Agent in its
reasonable discretion, and upon which Agent on behalf of Lender shall have a
first priority perfected security interest; provided, that (i) the
maximum amount advanced hereunder for such purchases shall not exceed Three
Hundred Thousand Dollars ($300,000.00), (ii) at least five (5) Business Days
prior to any such advance hereunder, the Borrowers shall have furnished to Agent
an invoice and acceptance letter for the Equipment being purchased and shall
have executed such documents and taken such other actions as Agent shall
required to assure that Agent has a first priority perfected security interest
in such Equipment, and (iii) the Borrowers shall have executed and delivered to
Agent a CapEx Note in the form of Exhibit D annexed hereto.
The CapEx Line shall not be available for advance at any time during which a
Default or Event of Default has occurred unless the Agent in its sole discretion
waives such Default or Event of Default in writing.” |
4.
Term Loan C. Section 2 of the Loan
Agreement is hereby amended by adding the following as Section 2(c)A
thereto:
| |
|
“(c)A
Term Loan C Subject to the terms and conditions of this Agreement and
the Other Agreements, Lender shall make a term loan to the Borrowers in an amount equal to
One Million Two Hundred Thousand Dollars ($1,200,000.00) (“Term Loan C”).
Term Loan C shall be advanced on June 18, 2004.” |
5.
Repayment of the Capital Expenditure Loan. Section
2(e)(iv) of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:
| |
|
“(iv)The principal of the Capital Expenditure Loan shall be repaid in (A)
consecutive monthly installments, payable on the first day of each month during
the period beginning on and including the first day of the month next succeeding
the month in which such Capital Expenditure Loan is made, each in an amount
equal to (I) Four Thousand Dollars ($4,000.00) for each payment made on or prior
to June 30, 2005, (II) Eight Thousand Dollars ($8,000.00) for each payment made
on or prior to June 30, 2006, but after July 1, 2005, (III) Thirteen Thousand
Dollars ($13,000.00) for each payment made on or prior to June 30, 2007, but
after July 1, 2006 and (B) one final payment of the remaining principal balance
thereof, together with all interest and fees accrued and unpaid thereon, on the
last day of the Term. If any such payment due date is not a Business Day, then
such payment shall be made on the next succeeding Business Day, and such
extension of time shall be included in the computation of the amount of interest
and fees due hereunder.” |
7
6.
Repayment of Term Loan C. Section 2(e)
of the Loan Agreement is hereby amended by adding the following as Section
2(e)(vi) thereto:
| |
|
“(vi) Repayment of Term Loan C. The principal of Term Loan C shall be repaid
in (i) twelve (12) equal and consecutive monthly installments of principal of
Sixteen Thousand Dollars ($16,000.00), payable on the first day of each month
during the period beginning on and including August 1, 2004 and ending on and
including July 31, 2005, (ii) twelve (12) equal and consecutive monthly
installments of principal of Thirty-Two Thousand Dollars ($32,000.00), payable
on the first day of each month during the period beginning on and including
August 1, 2005 and ending on and including July 31, 2006, (iii) eleven (11)
equal and consecutive monthly installments of principal of Fifty-Two Thousand
Dollars ($52,000.00), payable on the first day of each month during the period
beginning on and including August 1, 2007 and ending on and including June 30,
2007 and (ii) one final payment of the remaining principal balance thereof,
together with all interest and fees accrued and unpaid thereon, on the last day
of the Term. If any such payment due date is not a Business Day, then such
payment shall be made on the next succeeding Business Day, and such extension of
time shall be included in the computation of the amount of interest and fees due
hereunder.” |
7.
Interest Rate. Section 4(a) of the
Loan Agreement is hereby deleted in its entirety and replaced with the
following:
| (a) |
|
Interest Rate. Subject to the terms and conditions set
forth herein, each Loan shall bear interest as follows: |
| |
(i) |
Each Revolving Loan (other than Revolving Loans supported by the Overadvance
Amount) shall bear interest at the per annum rate of interest set forth in
subsection (A) or (B) below: |
| |
(A) |
the Prime Rate in effect from time to time. |
| |
(B) |
two and one quarter of one percent (2.25%) in excess of the LIBOR Rate for the
applicable Interest Period selected by Borrowers by irrevocable notice (in
writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
not less than three (3) Business Days prior to the first day of each respective
Interest Period; provided that: (I) each such period occurring after such
initial period shall commence on the day on which the immediately preceding
period expires; (II) the final Interest Period shall be such that its expiration
occurs on or before the end of the Term; and (III) if for any reason Borrowers
shall fail to timely select a period, then such Revolving Loans shall continue
as, or revert to, Prime Rate Loans, such rate to remain fixed for such Interest
Period. |
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(ii) |
Each Revolving Loan (other than Revolving Loans supported by the Overadvance
Amount) shall bear interest at the per annum rate of interest set forth in
subsection (A) or (B) below: |
| |
(A) |
one percent (1%) per annum in excess of the Prime Rate in effect from time to
time. |
| |
(B) |
three and one quarter of one percent (3.25%) in excess of the LIBOR Rate for the
applicable Interest Period selected by Borrowers by irrevocable notice (in
writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
not less than three (3) Business Days prior to the first day of each respective
Interest Period; provided that: (I) each such period occurring after such
initial period shall commence on the day on which the immediately preceding
period expires; (II) the final Interest Period shall be such that its expiration
occurs on or before the end of the Term; and (III) if for any reason Borrowers
shall fail to timely select a period, then such Revolving Loans shall continue
as, or revert to, Prime Rate Loans, such rate to remain fixed for such Interest
Period. |
| |
(iii) |
Intentionally Deleted. |
| |
(iv) |
Intentionally Deleted. |
| |
(v) |
Term Loan C shall bear interest
at the per annum rate of interest set forth in subsection (A) or (B) below: |
| |
(A) |
one-half of one percent (.5%) per annum in excess of the Prime Rate |
| |
(B) |
two and three quarter of one percent (2.75%) in excess of the LIBOR Rate for the
applicable Interest Period selected by Borrowers by irrevocable notice (in
writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
not less than three (3) Business Days prior to the first day of each respective
Interest Period; provided that: (I) each such period occurring after such
initial period shall commence on the day on which the immediately preceding
period expires; (II) the final Interest Period shall be such that its expiration
occurs on or before the end of the Term; and (III) if for any reason Borrowers
shall fail to timely select a period, then such portion of Term Loan C shall
continue as, or revert to, Prime Rate Loans, such rate to remain fixed for such
Interest Period. |
| |
(vi) |
Each Capital Expenditure
Loan shall bear interest at the per annum rate of interest set forth in subsection
(A) or (B) below: |
| |
(A) |
one-half of one percent (.5%) per annum in excess of the Prime Rate in effect
from time to time. |
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(B) |
two and three quarter of one percent (2.75%) in excess of the LIBOR Rate for the
applicable Interest Period selected by Borrowers by irrevocable notice (in
writing, by telecopy, telex, telegram, electronic mail or cable) given to Agent
not less than three (3) Business Days prior to the first day of each respective
Interest Period; provided that: (I) each such period occurring after such
initial period shall commence on the day on which the immediately preceding
period expires; (II) the final Interest Period shall be such that its expiration
occurs on or before the end of the Term; and (III) if for any reason Borrowers
shall fail to timely select a period, then such Capital Expenditure Loans shall
continue as, or revert to, Prime Rate Loans, such rate to remain fixed for such
Interest Period. |
| |
|
All such interest to be payable on Prime Rate Loans shall be payable on the first Business Day
of each month in arrears. All such interest to be payable on LIBOR Rate Loans shall be
payable on the first Business Day of each month in arrears and on the last Business Day of
such Interest Period. Said rates of interest shall increase or decrease by an amount equal
to each increase or decrease in the Prime Rate, effective on the effective date of each
such change in the Prime Rate. Upon the occurrence of an Event of Default and during the
continuance thereof, each Loan shall bear interest at the rate of two percent (2%) per
annum in excess of the interest rate otherwise payable thereon, which interest shall be
payable on demand. All interest shall be calculated on the basis of a 360-day year.” |
8.
Other LIBOR Provisions. Section 4 of
the Loan Agreement is hereby amended by adding the following as Section
4(d) thereto:
| (d) |
|
Other Libor Provisions. |
| |
(i) |
Subject to the provisions of this Agreement, Borrower shall have the option (A)
as of any date, to convert all or any part of the Prime Rate Loans to, or
request that new Loans be made as, LIBOR Rate Loans of various Interest Periods,
(B) as of the last day of any Interest Period, to continue all or any portion of
the relevant LIBOR Rate Loans as LIBOR Rate Loans; (C) as of the last day of any
Interest Period, to convert all or any portion of the LIBOR Rate Loans to Prime
Rate Loans; and (D) at any time, to request new Loans as Prime Rate Loans;
provided, that Loans may not be continued as or converted to LIBOR Rate Loans,
if the continuation or conversion thereof would violate the provisions of this
Agreement or if an Event of Default or an event which, with the passage of time
or giving of notice, will become an Event of Default, has occurred. |
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(ii) |
Lender’s determination of LIBOR as provided above shall be conclusive,
absent manifest error. Furthermore, if Lender determines, in good faith (which
determination shall be conclusive, absent manifest error), prior to the
commencement of any Interest Period that (A) U.S. Dollar deposits of sufficient
amount and maturity for funding the Loans are not available to Lender in the
London Interbank Eurodollar market in the ordinary course of business, or (B) by
reason of circumstances affecting the London Interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the rate of interest to be
applicable to the Loans requested by Borrower to be LIBOR Rate Loans or the
Loans bearing interest at the rates set forth in Section
4(a)(i)(B), Section 4(a)(ii)(B),
Section 4(a)(v)(B) or Section
4(a)(iv)(B) of this Agreement shall not represent the
effective pricing to Lender for U.S. Dollar deposits of a comparable amount for
the relevant period (such as for example, but not limited to, official reserve
requirements required by Regulation D to the extent not given effect in
determining the rate), Lender shall promptly notify Borrower and (1) all
existing LIBOR Rate Loans shall convert to Prime Rate Loans upon the end of the
applicable Interest Period, and (2) no additional LIBOR Rate Loans shall be made
until such circumstances are cured. |
| |
(iii) |
If, after the date hereof, the introduction of, or any change in any applicable
law, treaty, rule, regulation or guideline or in the interpretation or
administration thereof by any governmental authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over Lender or its
lending offices (a “Regulatory Change”), shall, in the opinion
of counsel to Lender, make it unlawful for Lender to make or maintain LIBOR Rate
Loans, then Lender shall promptly notify Borrower and (A) the LIBOR Rate Loans
shall immediately convert to Prime Rate Loans on the last Business Day of the
then existing Interest Period or on such earlier date as required by law and (B)
no additional LIBOR Rate Loans shall be made until such circumstance is cured. |
| |
(iv) |
If, for any reason, a LIBOR Rate Loan is paid prior to the last Business Day of
any Interest Period or if a LIBOR Rate Loan does not occur on a date specified
by Borrower in its request (other than as a result of a default by Lender),
Borrower agrees to indemnify Lender against any loss (including any loss on
redeployment of the deposits or other funds acquired by Lender to fund or
maintain such LIBOR Rate Loan) cost or expense incurred by Lender as a result of
such prepayment. |
| |
(v) |
If any Regulatory Change (whether or not having the force of law) shall (A)
impose, modify or deem applicable any assessment, reserve, special deposit or
similar requirement against assets held by, or deposits in or for the account of
or loans by, or any other acquisition of funds or disbursements by, Lender; (B)
subject Lender or the LIBOR Rate Loans to any Tax or change the basis of
taxation of payments to Lender of principal or interest due from Borrower to
Lender hereunder (other than a change in the taxation of the overall net income
of Lender); or (C) impose on Lender any other condition regarding the LIBOR Rate
Loans or Lender’s funding thereof, and Lender shall determine (which
determination shall be conclusive, absent any manifest error) that the result of
the foregoing is to increase the cost to Lender of making or maintaining the
LIBOR Rate Loans or to reduce the amount of principal or interest received by
Lender hereunder, then Borrower shall pay to Lender, on demand, such additional
amounts as Lender shall, from time to time, determine are sufficient to
compensate and indemnify Lender from such increased cost or reduced amount. |
11
| |
(vi) |
Lender shall receive payments of amounts of principal of and interest with
respect to the LIBOR Rate Loans free and clear of, and without deduction for,
any Taxes. If (A) Lender shall be subject to any Tax in respect of any LIBOR
Rate Loans or any part thereof or, (B) Borrower shall be required to withhold or
deduct any Tax from any such amount, the LIBOR Rate applicable to such LIBOR
Rate Loans shall be adjusted by Lender to reflect all additional costs incurred
by Lender in connection with the payment by Lender or the withholding by
Borrower of such Tax and Borrower shall provide Lender with a statement
detailing the amount of any such Tax actually paid by Borrower. Determination by
Lender of the amount of such costs shall be conclusive, absent manifest error.
If after any such adjustment any part of any Tax paid by Lender is subsequently
recovered by Lender, Lender shall reimburse Borrower to the extent of the amount
so recovered. A certificate of an officer of Lender setting forth the amount of
such recovery and the basis therefor shall be conclusive, absent manifest error. |
| |
(vii) |
Each request for LIBOR Rate Revolving Loan shall be in an amount not less than
Five Hundred Thousand and No/100 Dollars ($500,000.00), and in integral
multiples of Fifty Thousand and No/100 Dollars ($50,000.00). Each request for
LIBOR Rate CapEx Loan shall be in an amount not less than Fifty Thousand and
No/100 Dollars ($50,000.00), and in integral multiples of, One Thousand and
No/100 Dollars ($1,000.00). Each request for a LIBOR Rate Term C Loan shall be
in an amount not less than One Hundred Thousand and No/100 Dollars
($100,000.00), and in integral multiples of, One Thousand and No/100 Dollars
($1,000.00). |
| |
(viii) |
Unless otherwise specified by Borrower, all Loans shall be Prime Rate Loans. |
| |
(ix) |
No more than six (6) Interest Periods may be in effect with respect to
outstanding LIBOR Rate Revolving Loans and LIBOR Rate Term C Loans at any one
time. No more than one (1) Interest Period may be in effect with respect to
outstanding LIBOR Rate CapEx Loans at any one time.” |
9.
Term. The reference contained in Section
10(i) to “July 1, 2005” is hereby deleted and replaced
with “July 1, 2007".
10.
Prepayment Premium. The last sentence of Section
10(i) is hereby deleted in its entirety and replaced with the
following:
12
| |
|
“If, during the Term of this Agreement, the Revolving Loan facility is terminated by Borrowers
or this Agreement is terminated as a result of the occurrence of an Event of Default, then
the Borrowers agree to repay and satisfy in full all of the Liabilities, and additionally,
as a prepayment fee, the Borrowers shall pay to Agent an amount equal to (i) three percent
(3%) of the Maximum Loan Limit, if such prepayment occurs at anytime on or prior to July
1, 2005 and (ii) two percent (2%) of the Maximum Loan Limit if such prepayment occurs at
any time prior to the date thirty (30) days prior to the last day of the Term but after
July 1, 2005.” |
11.
Use of Proceeds. Section 12(g) of the
Loan Agreement is hereby deleted in its entirety and replaced with the
following:
| |
“ (g) Use of Proceeds. All monies and other property obtained by
any Borrower from Agent pursuant to this Agreement shall be used solely as
follows: (a) the proceeds of the initial Loans shall be used to refinance all
existing indebtedness of each Borrower or any Guarantor owing to South Trust
Bank; (b) a portion of Term Loan C shall be used to repay Borrowers’
outstanding obligations in under Term Loan A and (c) the proceeds of the
remainder of Term Loan C and all other Loans shall be used for working capital
and general corporate purposes.” |
12.
Financial Covenants. Section 14 of the
Loan Agreement is hereby deleted in its entirety and replaced with the
following::
| 14. |
|
FINANCIAL COVENANTS. MTS and its Subsidiaries shall
maintain and keep in full force and effect each of the financial covenants set
forth below: |
| (a) |
|
Tangible Net Worth. MTS and its Subsidiaries on a
consolidated basis shall maintain at all times during each time period set forth
below a Tangible Net Worth of not less than the amount set forth below opposite
each such time period: |
13
| Period |
|
Tangible Net Worth |
|
|
|
| | | |
| As of March 31, 2004 |
|
$800,000 plus the greater of (i) $4,600,000
and (ii) 95% of Tangible Net Worth at March 31, 2003 (the "2004 Tangible Net Worth Requirement") |
|
| | | |
| As of April 1, 2004 and at all times through and including June 29, 2004 | |
$7,478,000.00 | |
| | | |
| As of June 30, 2004 and at all times through and including September 29, 2004 | |
$6,678,000.00 | |
| | | |
| As of September 30, 2004 and at all times through and including March 30, 3005 | |
$ 6,705,000.00 | |
| | | |
| As of March 31, 2005 |
|
$7,105,000.00 (the "2005 Tangible Net Worth Requirement") |
|
| | | |
| As of April 1, 2005 and at all times
through and including September 29, 2005 |
|
the greater of (i) the 2005 Tangible
Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2005 |
|
| | | |
| As of September 30, 2005
and at all times through and including March 30, 2006 |
|
(i) the 2005 Tangible Net
Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2005 |
|
| | | |
| As of March 31, 2006 | |
$800,000 plus the greater of (i) the 2005
Tangible Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2005 (the "2006 Tangible Net Worth Requirement") | |
| | | |
|
As of April 1, 2006 and at all times through and including March 30, 2007 |
|
the greater of (i) the 2006
Tangible Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2006 |
|
| | | |
| As of March 31, 2007 |
|
$800,000 plus the greater of(i) the 2006 Tangible
Net Worth Requirement and (ii) 95% of Tangible Net Worth at March 31, 2006 (the "2007 Tangible Net Worth Requirement") |
|
| | | |
| As of April 1, 2007 and at all times thereafter |
|
the greater of (i) the 2007 Tangible Net Worth Requirement and (ii)
95% of Tangible Net Worth at Xxxxx 00, 0000 |
|
| (x) |
|
Debt Service Coverage Ratio. MTS and its Subsidiaries on a
consolidated basis will maintain a Debt Service Coverage Ratio for each time
period set forth below of not less than the ratio set forth below opposite each
such time period: |
14
| Measuring Period |
|
Debt Service Coverage Ratio |
|
|
|
|
|
| | | | |
| Fiscal quarter ending June 30, 2004 |
|
1.25:1.00 |
|
| Two fiscal quarters ending September 30, 2004 | |
1.25:1.00 | |
| Three fiscal quarters ending December 31, 2004 | |
1.25:1.00 | |
| Four fiscal quarters ending March 31, 2005 | |
1.25:1.00 | |
| Fiscal quarter ending June 30, 2005 and as of the end of each fiscal quarter
thereafter, in each case together with the three preceding fiscal quarters | |
1.25:1.00 | |
| (c) |
|
Capital Expenditure Limitations. MTS and its Subsidiaries
on a consolidated basis shall not make Capital Expenditures in excess of (i)
Three Million Dollars ($3,000,000.00) during the Fiscal Year ending March 31,
2005 and (ii) One Million Eighty Hundred Thousand Dollars ($1,800,000.00) during
any Fiscal Year thereafter. |
| (d) |
|
Availability. Borrowers will maintain a Minimum Net
Availability of not less than Seven Hundred Fifty Thousand Dollars ($750,000);
provided, however, that Minimum Net Availability may be less than Seven Hundred
Fifty Thousand Dollars ($750,000) for a total of five (5) days during each
calendar month.” |
13.
Deletion of Material Adverse Effect Provisions
| (a) |
|
Section 12(b)(vii) of the Loan Agreement is hereby deleted
in its entirety and replaced with the following: |
| “(vii) |
|
Default. Promptly advise Agent of the occurrence of any Default or Event
of Default hereunder or under any of the Subordinated Debt Documents or any of
the Preferred Stock Documents.” |
| (b) |
|
Section 15(c) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following: |
| "(c) |
|
Breaches or Amendments of Other Obligations. A default or event of
default or breach under, or other failure of any Obligor to perform, keep or
observe any of the covenants, conditions, promises, agreements or obligations of
such Obligor (after the expiration of any applicable cure or grace periods)
under: (i) any of the Subordinated Debt Documents or Preferred Stock Documents
shall be amended or modified in any respect prohibited hereunder without
Agent’s prior written consent; or (ii) any other agreement with any Person,
if such failure is reasonably likely to have a Material Adverse Effect.” |
| (c) |
|
Section 15(p) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following: |
| “(p) |
|
Intentionally Deleted.” |
15
| (d) |
|
Section 17(o) of the Loan Agreement is hereby deleted in
its entirety and replaced with the following: |
| “(o) |
|
Intentionally Deleted.” |
14.
Change of Address. The reference to “c/o LaSalle
Business Credit, Inc., 0000 Xxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxxxxxxxx, XX 00000, Attention: Xxxxxxx X. Xxxxxx, facsimile number: (000)
000-0000” set forth in Section 19 of the Loan
Agreement is hereby deleted in its entirety and replaced with the “c/o
LaSalle Business Credit, LLC, 0 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxxxxxxx, XX
00000".
15.
Notes. Contemporaneously with the execution of this
Amendment, Borrower shall execute and deliver to Agent an Amended and Restated
Revolving Note in the face amount of Eight Million Five Hundred Thousand Dollars
($8,500,000.00) (the “Amended and Restated Note”) and Term Note
C in the face amount of One Million Two Hundred Thousand Dollars ($1,200,000.00)
(the “Term Note C”), each of which shall be in form and content
acceptable to Agent.
16.
Merger and Name Change
| (a) |
|
Borrowers have informed Agent that Borrowers are contemplating the following
actions: (i) an amendment to the articles of incorporation of MTS in order to
change the name of MTS to “MTS Medication Technologies” (the
“Name Change”) and (ii) subsequent to the Name Change, the
merger of Packaging with and into MTS (the “Merger”). MTS, a
Delaware corporation, will be the corporation surviving the Merger. Agent and
Lender hereby consent to the Name Change and the Merger and, solely for the
purpose of avoiding the occurrence of a Default or an Event of Default which
could be caused by the Name Change and/or the Merger, waive Borrowers’
compliance with those provisions of the Loan Agreement and the Other Agreements
which would prohibit the Name Change and/or the Merger. Agent’s and
Lender’s consent and waiver is contingent upon the execution and delivery
to Agent of the following documents: |
| |
(i) |
Copy of the authorizing resolutions regarding the Name Change, certified to be
true and correct by the Secretary of MTS; |
| |
(ii) |
Copy of the articles of amendment to the articles of incorporation of MTS,
certified to be true and correct by the Secretary of MTS; |
| |
(iii) |
Copy of the authorizing resolutions regarding the Merger, certified to be true
and correct by the Secretary of MTS and Packaging, as applicable; |
| |
(iv) |
Evidence that the state of formation of the surviving company is the State of
Delaware. |
| |
(v) |
Copy of the articles of merger, certified to be true and correct by the
Secretary of MTS and Packaging; and |
| |
(vi) |
Copy of the by-laws of the company surviving the merger, certified to be true
and correct by the Secretary of such company. |
| (b) |
|
The foregoing consent and waiver is given solely in connection with the Name
Change and the Merger and shall not be deemed to be an agreement, obligation or
commitment by Agent or Lender to consent to any other transactions which would
be prohibited by the terms and conditions of the Loan Agreement or any of the
Other Agreements. |
16
17.
Conditions Precedent. In addition to all of the other terms
and conditions set forth herein, this Amendment is contingent upon the
following:
| (a) |
|
Immediately after giving effect to the repayment in full of the Subordinated
Indebtedness, the Borrowers shall have Minimum Net Availability of not less than
Seven Hundred Fifty Thousand Dollars ($750,000); and |
| (b) |
|
Agent shall have received satisfactory confirmation of the amount required to
repay the Subordinated Indebtedness in full as of the date hereof. |
18.
Amendment/References. The Loan Agreement and the Other
Agreements are hereby amended to be consistent with the terms of this Amendment.
All references in the Loan Agreement and the Other Agreements to (a) the
“Liabilities” shall include, without limitation, all sums due in
connection with Term Loan C, (b) the “Loan Agreement” shall mean the
Loan Agreement as amended hereby; (c) the “Loans” shall include,
without limitation, Term Loan C and (d) the “Other Agreements” shall
include, without limitation, this Amendment, the Amended and Restated Note, Term
Note C and all other instruments or agreements executed pursuant to or in
connection with the terms hereof.
19.
Amendment Fee. Contemporaneously with the execution hereof,
and in addition to all other sums due from Borrowers to Agent and/or Lender,
Borrowers shall pay to Agent an amendment fee in an amount equal to Ninety-Five
Thousand Dollars ($95,000.00) (the “Amendment Fee”). The
Amendment Fee may be debited from any account of either Borrower maintained with
Agent, Lender or LaSalle Bank or charged to the Revolving Loan.
20.
Release. Borrowers and each Guarantor acknowledge and agree that
it has no claims, suits or causes of action against Agent or Lender and hereby
remises, releases and forever discharges Agent, Lender, their officers,
directors, shareholders, employees, agents, successors and assigns from any
claims, suits or causes of action whatsoever, in law or equity, which either
Borrower or any Guarantor has or may have arising from any act, omission or
otherwise, at any time up to and including the date of this Amendment.
21.
Additional Documents; Further Assurances. Borrowers shall take
such other actions and execute and deliver to Agent, or to cause to be executed
and delivered to Agent, at the sole cost and expense of Borrowers, from time to
time, all documents, agreements, statements, certificates and information as
Agent shall reasonably request to evidence or effect the terms of the Loan
Agreement, as amended, or any of the Other Agreements, as amended, or to enforce
or protect Agent’s interest in all Collateral or to evidence or effect the
Name Change and/or the Merger. All such documents, agreements, statements,
certificates and information shall be in form and content acceptable to Agent.
22.
Further Agreements and Representations. Each Borrower does
hereby:
| (a) |
|
ratify, confirm and acknowledge that, as amended hereby, the Loan Agreement and
all Other Agreements are valid, binding and in full force and effect; |
| (b) |
|
covenant and agree to perform all obligations of such Borrower contained herein,
in the Loan Agreement and in the Other Agreements, as amended hereby; |
| (c) |
|
acknowledge and agree that as of the date hereof, such Borrower has no defense,
set-off, counterclaim or challenge against the payment of any sums owing under
the Loan Agreement or any of the Other Agreements or the enforcement of any of
the terms or conditions thereof; |
17
| (d) |
|
represent and warrant that no Default or Event of Default exists under the Loan
Agreement; |
| (e) |
|
acknowledge and agree that nothing contained herein and no actions taken
pursuant to the terms hereof is intended to constitute a novation of the Loan
Agreement or any of the Other Agreements, and does not constitute a release,
termination or waiver of any of the liens, security interests, rights or
remedies granted to Agent therein, which liens, security interests, rights and
remedies are hereby ratified, confirmed, extended and continued as security for
the Liabilities as amended; and |
| (f) |
|
acknowledge and agree that such Borrower’s failure to comply with or
perform any of its covenants, agreements or obligations contained in this
Amendment shall constitute an Event of Default under the Loan Agreement and each
of the Other Documents as amended. |
23.
Fees, Costs, Expenses and Expenditures. Each Borrower agrees to
pay all of Agent’s expenses in connection with the review, preparation,
negotiation, documentation and closing of this Amendment and the consummation of
the transactions contemplated hereunder, including, without limitation, fees,
disbursements, expenses and disbursements of counsel retained by Agent and all
fees related to filings, recording of documents and searches, whether or not the
transactions contemplated hereunder are consummated.
24.
Inconsistencies. To the extent of any inconsistency between the
terms and conditions of this Amendment and the terms and conditions of the Loan
Agreement or the Other Agreements, the terms and conditions of this Amendment
shall prevail. All terms and conditions of the Loan Agreement and the Other
Agreements not inconsistent herewith shall remain in full force and effect and
are hereby ratified and confirmed by Borrowers.
25.
Binding Effect. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their successors and assigns.
26.
Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
27.
Headings. The headings of the articles, sections, paragraphs and
clauses of this Amendment are inserted for convenience only and shall not be
deemed to constitute a part of this Amendment.
[SIGNATURES ON
FOLLOWING PAGE]
18
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
effective as of the day and year first above written.
| |
|
|
| |
MEDICAL TECHNOLOGY SYSTEMS, INC. |
|
| | | |
| |
By: |
|
|
| |
Name/Title: |
|
|
| | | |
| | | |
| |
MTS PACKAGING SYSTEMS, INC. |
|
| | | |
| |
By: |
|
|
| |
Name/Title: |
|
|
| | | |
| | | |
| |
LASALLE BUSINESS
CREDIT, LLC, successor by merger to | |
| |
LaSalle Business Credit, Inc., as Agent for Standard | |
| |
Federal Bank National Association | |
| | | |
| |
By: |
|
|
| |
Name/Title: |
|
|
| | | |
| | | |
| |
STANDARD FEDERAL BANK NATIONAL ASSOCIATION | |
| | | |
| |
By: |
|
|
| |
Name/Title: |
|
|
21
RATIFICATION AND
CONFIRMATION OF GUARANTY
The
undersigned, intending to be legally bound hereby, (1) acknowledge and agree to the
foregoing Amendment, (2) agree to be bound by the foregoing Amendment and (3) agree that
those certain Continuing Unconditional Guaranty Agreements from each of the undersigned to
Agent dated June 26, 2002 are in full force and effect.
| |
|
|
| |
MEDICATION MANAGEMENT TECHNOLOGIES, INC. |
|
| | | |
| |
By: |
|
|
| |
Name/Title: |
|
|
| | | |
| | | |
| |
MEDICATION MANAGEMENT SYSTEMS, INC. |
|
| | | |
| |
By: |
|
|
| |
Name/Title: |
|
|
| | | |
| | | |
| |
MEDICAL TECHNOLOGY LABORATORIES, INC. |
|
| | | |
| |
By: |
|
|
| |
Name/Title: |
|
|
20
