AMENDMENT NO. 4 TO THE LOAN AND SECURITY AGREEMENT
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This AMENDMENT XX. 0 ("Xxxxxxxxx Xx. 0") dated as of February 18, 2005 to
the Loan and Security Agreement dated as of January 18, 2002 by and between
MISONIX, INC., a New York corporation with offices at 0000 Xxx Xxxxxxx,
Xxxxxxxxxxx, Xxx Xxxx 00000 ("Debtor") and Fleet National Bank, a Bank of
America company, a national banking association having a place of business at
000 Xxxxx Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Secured Party"), as amended by
Amendment No. 1 to the Loan and Security Agreement dated as of November 12,
2002, as further amended by Amendment No. 2 to the Loan and Security Agreement
dated June 20, 2003, as further amended by Amendment No. 3 to the Loan and
Security Agreement dated as of January 18, 2005.
W I T N E S S E T H :
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WHEREAS, on January 18, 2002, Debtor and Secured Party had entered into a
certain loan and security agreement, as amended by Amendment No. 1 to the Loan
and Security Agreement dated on or about November 11, 2002, as further amended
by Amendment No. 2 to the Loan and Security Agreement dated June 20, 2003, as
further amended by Amendment No. 3 to the Loan and Security Agreement dated as
of January 18, 2005 (collectively, the "Loan Agreement").
WHEREAS, Debtor has requested that Secured Party increase the Borrowing
Capacity (as defined in the Loan Agreement) by an additional $1,000,000.00 and
extend the Termination Date (as defined in the Loan Agreement) for an additional
period of time, and the Secured Party has agreed to do so, in the manner set
forth below, provided however, that, among other things, Debtor execute this
Amendment No. 4.
NOW, THEREFORE, in consideration of the mutual promises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. The definition of "Borrowing Capacity" is hereby amended to read in
its entirety as follows:
BORROWING CAPACITY means, at the time of computation, with respect to
the Revolving Credit Facility, Six ($6,000,000.00) Million Dollars.
2. The definition of "Fleet National Bank" is hereby amended to read in
its entirety as follows:
FLEET NATIONAL BANK means Fleet National Bank, a Bank of America
company, a national banking association, including its successors
and/or assigns.
3. The definition of "Floating Rate Option" is hereby restated to read in
its entirety as follows:
FLOATING RATE OPTION means a rate per annum equal to the Prime Rate
plus the margins determined by the Secured Party based on the
following "Total Debt to Tangible Net Worth" Grid:
"Total Debt to Tangible Net Worth" Grid.
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Total Debt to
Period Tangible Net Worth Spread above Prime
------ ------------------ ------------------
From
Closing [less than or equal to]1.00 0.00% per annum
Date and >1.00 to 1.00 0.25% per annum
thereafter
4. The definition of "LIBOR Rate Option" is hereby amended to read in its
entirety as follows:
LIBOR RATE OPTION means a rate per annum equal to LIBOR plus the
margins determined by the Secured Party based on the following "Total
Debt to Tangible Net Worth" Grid:
"Total Debt to Tangible Net Worth" Grid.
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Total Debt to Spread Above
Period Tangible Net Worth LIBOR Rate
------ ------------------ ----------
From
Closing [less than or equal to]1.00 1.25% per annum
Date and
thereafter >1.00 to 1.00 1.50% per annum
5. The definition of "TERMINATION DATE" is hereby amended to read in its
entirety as follows:
TERMINATION DATE means, with respect to the Revolving Credit Facility,
the earlier to occur of (a) January 18, 2008 or (b) upon the
occurrence of an Event of Default.
6. The definition of "WORKING CAPITAL" is hereby amended to read in its
entirety as follows:
WORKING CAPITAL means the ratio of (a) Current Assets to (b) Current
Liabilities plus Secured Party debt (excluding
from the calculation the assets and liabilities of Labcaire Systems
Limited).
7. Section 7.3. of the Loan Agreement shall be amended in its entirety to
read as follows:
7.3. PROMISE TO PAY FEES.
Revolving Credit Unused Facility Fee. Debtor promises to pay to
Secured Party quarterly, on the first day of each calendar quarter, an
unused fee at the rate of one quarter of one percent (.25%) per annum
of Six Million ($6,000,000.00) Dollars less the aggregate principal
balance of all Advances outstanding during the quarter just ended
under the Revolving Credit Facility.
8. Section 9.1. of the Loan Agreement shall be amended in its entirety to
read as follows:
9.1. FINANCIAL STATEMENTS. Debtor shall furnish to Secured Party:
(a) Annual Audited Financial Statements of Debtor. Debtor shall
deliver to Secured Party, within ten (10) days of filing, a copy of
the Form 10-K filed with the Securities and Exchange Commission, and
internally prepared consolidated and consolidating financial
statements of the Debtor and each Consolidated Subsidiary. All such
financial statements and other documents delivered to Secured Party
are to be certified as accurate by the chief financial officer of the
Debtor.
(b) Quarterly 10-Q Reports. Debtor shall provide to Secured
Party, within ten (10) days of filing, the consolidated 10-Q report
filed with the Securities and Exchange Commission of the Debtor and
each Consolidated Subsidiary as of the end of such period, fairly
presenting the Debtor's and each Consolidated Subsidiary's financial
position. All such reports shall be in such detail as the Securities
and Exchange Commission shall request and in accordance with GAAP. All
such financial statements and other documents delivered to Secured
Party are to be certified as accurate by the chief financial officer
of the Debtor.
(c) Certificate of Non-Default Along with such quarterly
financial statements required to be delivered pursuant to
subparagraphs (a) and (b) above, Debtor shall deliver a non-default
certificate in the form of
Exhibit B attached to the Loan Agreement along with covenant
compliance calculations, certified as correct and accurate by the
chief financial officer of the Debtor.
(d) Other Information. Debtor shall provide to Secured Party,
promptly after their preparation, copies of any and all financial
statements, and reports which Debtor sends to its shareholders and
such additional information as Secured Party may from time to time
reasonably request regarding the financial and business affairs of
Debtor or any Guarantor. Without limiting the foregoing, Debtor shall
notify Secured Party in writing of all proposed acquisitions,
investments and stock repurchases. Prior to and immediately subsequent
to each acquisition or investment, Debtor shall demonstrate to the
satisfaction of the Secured Party that the Debtor is in compliance
with all of the covenants set forth in Section 9.26 of this Agreement.
All information provided by the Debtor to the Secured Party that is
not in the public domain will remain confidential, and will not be
disclosed by Secured Party without the prior written consent of the
Debtor, except to the Secured Party's attorneys, accountants, auditors
and consultants, and except as required by applicable law or by the
direction of a court of law.
9. Section 9.26. of the Loan Agreement shall be amended in its entirety
to read as follows:
9.26. FINANCIAL COVENANTS. The financial covenants to include the
following:
(a) Debtor shall maintain at all times a ratio of Funded Debt to
EBIDTA of not greater than 2.00 to 1, to be tested at the end of each
fiscal quarter, based upon the financial statements required to be
submitted to Secured Party pursuant to Section 9.1. herein, and shall
be tested on a trailing four-quarter basis.
(b) Debtor shall maintain at all times a Working Capital ratio of
not less than 1.5 to 1, to be tested quarterly, based upon the
financial statements required to be submitted to Secured Party
pursuant to Section 9.1. herein.
(c) Debtor shall not permit an operating loss in any two
consecutive two-quarter period, to be tested based upon the financial
statements required to be
submitted to Secured Party pursuant to Section 9.1. herein.
(d) Debtor shall not permit "Leverage" to exceed 1.00 to 1, to be
tested quarterly based upon the financial statements required to be
submitted to Secured Party pursuant to Section 9.1. herein. "Leverage"
shall be defined as Total Debt minus Subordinated Debt (if any),
divided by Net Worth, minus Intangible Assets, plus Subordinated Debt
(if any), with the terms "Subordinated Debt" and "Net Worth" defined
in accordance with GAAP.
10. Section 10.14. of the Loan Agreement shall be amended in its entirety
to read as follows:
10.14. CAPITAL EXPENDITURES. Incur Capital Expenditures or make
advances to related third parties in excess of $2,000,000 at any time,
to be tested based upon the financial statements required to be
submitted to the Secured Party pursuant to the terms of Section 9.1.
herein. As used herein, the term "Capital Expenditures" shall be
defined in accordance with GAAP.
11. Section 10.15 of the Loan Agreement shall be amended in its entirety
to read as follows:
10.15. STOCK REPURCHASE. Spend in excess of $500,000 annually for
stock repurchase, to be tested based upon the financial statements
required to be submitted to the Secured Party pursuant to the terms of
Section 9.1. herein.
12. Section 10.16. of the Loan Agreement shall be deleted in its entirety.
13. As an inducement to the Secured Party's extending the Termination
Date, increasing the Borrowing Capacity and modifying the Loan Agreement
pursuant to the terms hereof, Debtor confirms that it has paid the commitment
fee of $27,500.00, and Secured Party's counsel's legal fees plus disbursements
thereof, as set forth in the invoice delivered to Debtor as of the date hereof.
15. This Amendment No. 4 and the other Transaction Documents, and the
rights and obligations of the parties hereunder or thereunder, as the case may
be, will be construed and interpreted in accordance with the laws of the State
of New York (excluding the laws applicable to conflicts or choice of law).
16. DEBTOR AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS AMENDMENT NO.
4 OR ANY OF THE OTHER TRANSACTION DOCUMENTS MAY, AT THE OPTION OF SECURED PARTY,
BE BROUGHT IN THE COURTS OF THE STATE OF NEW
YORK OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE
UPON DEBTOR BY MAIL AT THE ADDRESS SET FORTH IN THIS AMENDMENT NO. 4. DEBTOR
HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
FORUM.
17. Debtor hereby grants to Secured Party a continuing lien, security
interest and right of setoff as security for all liabilities and obligations to
Secured Party, whether now existing or hereafter arising, upon and against all
deposits, credits, collateral and property, now or hereafter in the possession,
custody, safekeeping or control of Secured Party or any entity under the control
of Bank of America or in transit to any of them. At any time, without demand or
notice (any such notice being expressly waived by Debtor), Secured Party may set
off the same or any part thereof and apply the same to any liability or
obligation of Debtor even though unmatured and regardless of the adequacy of any
other collateral securing the Loans. ANY AND ALL RIGHTS TO REQUIRE SECURED PARTY
TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE LOANS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH
DEPOSITS, CREDITS OR OTHER PROPERTY OF THE DEBTOR OR ANY GUARANTOR, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
18. DEBTOR AND SECURED PARTY (BY ENTERING INTO THIS AMENDMENT NO. 4)
MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A
TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THE AGREEMENT (INCLUDING THIS AMENDMENT NO. 4) OR ANY OF THE
OTHER TRANSACTION DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH
OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF SECURED PARTY RELATING TO
THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE TRANSACTION DOCUMENTS, AND
AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER
ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. EXCEPT AS
PROHIBITED BY LAW, DEBTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. DEBTOR
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF SECURED PARTY HAS
PRESENTED, EXPRESSLY OR OTHERWISE, THAT SECURED PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR SECURED PARTY TO ENTER
INTO THIS AMENDMENT NO. 4.
IN WITNESS WHEREOF, the parties have executed this Amendment No. 4 as
of the day and year first above written.
FLEET NATIONAL BANK,
A BANK OF AMERICA COMPANY
By: /s/ Xxxxxxxx X. Xxxxxxx
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Name: Xxxxxxxx X. Xxxxxxx
Title: Vice President
MISONIX, INC.
By: /s/ Xxxxxxx X. XxXxxxx
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Name: Xxxxxxx X. XxXxxxx, Xx.
Title: President and Chief Executive Officer
