Attached files
| file | filename |
|---|---|
| 8-K - DERMA SCIENCES, INC. | v179810_8k.htm |
Exhibit
10.01
FIFTH
AMENDMENT TO CREDIT AND SECURITY AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AND
SECURITY AGREEMENT (this “Amendment”), dated as
of March 26, 2010, is by and among GE BUSINESS FINANCIAL SERVICES
INC., formerly known as
Merrill Lynch Business Financial Services Inc., in its capacity as successor
Administrative Agent and as a Lender under the Credit Agreement (as defined
below) (“Agent”), DERMA SCIENCES, INC., a
Pennsylvania corporation, DERMA
FIRST AID PRODUCTS, INC., a Pennsylvania corporation, SUNSHINE PRODUCTS, INC., a
Missouri corporation and any additional Borrower that may hereafter be added to
this Agreement (each individually as a “Borrower” and
collectively as “Borrowers”).
WHEREAS,
Borrower and Agent (in its capacity as Administrative Agent and as a Lender
thereunder) are parties to that certain Credit and Security Agreement, dated as
of November 8, 2007 (the “Credit
Agreement”);
WHEREAS,
Borrower and Agent entered into that certain First Amendment to Credit and
Security Agreement on March 28, 2008;
WHEREAS,
Borrower and Agent entered into that certain Second Amendment to Credit and
Security Agreement on August 13, 2008;
WHEREAS,
Borrower and Agent entered into that certain Third Amendment to Credit and
Security Agreement on March 31, 2009;
WHEREAS,
Borrower and Agent entered into that certain Fourth Amendment to Credit and
Security Agreement on February 26, 2010;
WHEREAS,
Borrower and Agent have agreed to amend certain provisions of the Credit
Agreement;
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. Defined
Terms. Capitalized terms used but not otherwise defined herein
shall have the respective meanings assigned to such terms in the Credit
Agreement, as amended.
2. Amendments to Credit
Agreement.
a. Section 1.1. Base Rate
Definition. The definition of “Base Rate” is deleted in its
entirety and replaced with the following:
““Base Rate” means the LIBOR
Rate; provided that effective March 28, 2010, the Base Rate shall mean the
greater of: 1.50% or the LIBOR Rate.”
b. Section 1.1 - Borrowing Base
Definition. Subject to the completion of and satisfactory
review of the next field exam by Agent, which field exam does not provide for
any material adjustments compared to the applicable., comparative borrowing base
certificate prepared by Borrower, the definition of “Borrowing Base” is amended
by deleting “$1,500,000” and replacing it with “$1,000,000” at the end of
subsection (v).
c. Section 1.1 - Minimum Excess Availability
Reserve Definition. Subject to the completion of and satisfactory review
of the next field exam by Agent, which field exam does not provide for any
material adjustments compared to the applicable., comparative borrowing base
certificate prepared by Borrower, the definition of “Minimum Excess Availability
Reserve” is amended by deleting “$1,500,000” and replacing it with
“$1,000,000.”
d. Section 5.10. Payments and Modifications of
Subordinated Debt. Section 5.10 is amended by adding the
following to the end of Section 5.10:
“Notwithstanding
the forgoing or anything in Section 5.10 to the contrary, Agent acknowledges and
agrees that, on or before April 30, 2010, Borrower may pay Western Medical up to
$500,000 on account of the Subordinated Debt, provided that no Default or Event
of Default exists and no Default or Event of Default will be created by reason
of such payment.”
e. Section 6.2 Minimum
EBITDA. Section 6.2 is amended by deleting Section 6.2 in its
entirety.
f. Section 6.3 Fixed Charge Coverage
Ratio. Section 6.3 is amended by deleting Section 6.3 and
replacing it with the following:
“Section 6.3 Fixed Charge Coverage Ratio.
Borrowers will not permit the Fixed Charge Coverage Ratio for any period
set forth below to be less than the ratio set forth below for such
period:
| Period | Ratio | ||
|
As
of the end of any given calendar quarter,
after
January 1, 2010, as measured on
a
trailing 12-month basis
|
1.50 to 1.00 |
For
clarity, the Defined Period for calculation of Operating Cash Flow and Fixed
Charges shall be for the same period as the corresponding EBITDA for such
Defined Period.”
g. Section 6.4 Senior Leverage
Ratio. Section 6.4 is amended by deleting Section 6.4 in its
entirety.
h. Section 6.5 Total Leverage
Ratio. Section 6.5 is amended by deleting Section 6.5 and
replacing it with the following:
2
“Section 6.5 Total Leverage
Ratio. Borrowers shall not permit the Total Leverage Ratio for
any period set forth below to exceed the ratio set forth below for such
period:
| Period | Ratio | ||
|
As
of the end of any given calendar quarter,
after
January 1, 2010, as measured on
a
trailing 12-month basis
|
2.0 to 1.0” |
i. Fixed Charge Coverage Ratio
Worksheet. The Fixed Charge Coverage Ratio Worksheet attached
to the Compliance Certificate is deleted and replaced with the attached
worksheet.
3. Representations and
Warranties. Borrower represents and warrants to Agent as
follows:
a. After
giving effect to this Amendment, the representations and warranties set forth in
each of the Financing Documents shall be true and correct in all respects on and
as of the Effective Date (as defined below) with the same effect as if then made
(unless stated to relate solely to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date.)
b. The
execution, delivery and performance by Borrower of this Amendment are within
Borrower’s powers, have been duly authorized and do not:
i. (A)
contravene any of Borrower’s Organizational Documents, or (B) result in a
default under any contractual restriction binding on or affecting Borrowers, or
any law or governmental regulation binding on or affecting Borrower;
or
ii. result
in, or require the creation or imposition of, any Lien on any of Borrower’s
properties.
c. This
Amendment and the Credit Agreement, as amended hereby, constitute the legal,
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms (except, in any case, as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally at law or by principles of equity).
d. After
giving effect to this Amendment, no Default or Event of Default has occurred and
is continuing.
4. Conditions to
Effectiveness. This Amendment shall become effective as of
March 28, 2010 (the “Effective Date”),
subject to (a) the due authorization, execution and delivery of this Amendment
by Borrower and Agent, and (b) with respect to the amendments to the definitions
of “Borrowing Base” and “Minimum Excess Availability Reserve”, such amendments
are conditioned upon the completion of and satisfactory review of the next field
exam by Agent, which field exam shall not provide for any material adjustments
compared to the applicable., comparative borrowing base certificate prepared by
Borrower,. In addition, Borrowers shall be responsible for the
payment of all reasonable fees incurred by Agent (including legal fees) incurred
in connection with the preparation of this Amendment and in consideration of the
modifications set forth herein. Borrower hereby authorizes Agent to
deduct all of such fees from the proceeds of the next Revolving
Loan.
3
5. Documents to Remain in
Effect; Confirmation of Obligations; References. The Financing
Documents shall remain in full force and effect as originally executed and
delivered by the parties, except as expressly modified and amended herein.
Borrower hereby (a) confirms and reaffirms all of its respective obligations
under the Financing Documents, as modified and amended herein; (b) acknowledge
and agree that Agent, by entering into this Agreement, does not waive any
existing or future Default or Event of Default under any of the Financing
Documents, or any rights or remedies under any of the Financing Documents; (c)
acknowledge and agree that Agent has not heretofore waived any Default or Event
of Default under any of the Financing Documents, or any rights or remedies under
any of the Financing Documents, other than as expressly provided for hereunder;
and (d) acknowledge that they do not have any defense, set-off or counterclaim
to the payment or performance of any of their respective obligations under the
Financing Documents, as modified and amended herein. From and after
the date hereof, this Amendment shall be deemed a Financing Document for all
purposes of the Credit Agreement and the other Financing Documents and each
reference to the Financing Documents shall be deemed to include this
Amendment.
6. Counterparts;
Integration. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same
instrument. Signatures by facsimile or by electronic mail delivery of
an electronic version of an executed signature page shall bind the parties
hereto. This Amendment constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. In the event of any irreconcilable inconsistency between this
Amendment and any of the other Financing Documents, the terms of this Amendment
shall control.
7. Governing
Law. THIS AMENDMENT, AND ALL MATTERS RELATING HERETO OR
ARISING HEREFROM (WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE),
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARDING TO CONFLICTS OF LAWS
PRINCIPLES.
[Remainder
of page intentionally left blank; signature pages follow.]
4
IN
WITNESS WHEREOF, the undersigned have duly executed this Amendment as of the
date first set forth above.
BORROWER:
DERMA
SCIENCES, INC.
By:
_____________________________
Name:
___________________________
Title:
____________________________
DERMA
FIRST AID PRODUCTS, INC.
By:
_____________________________
Name:
___________________________
Title:
____________________________
SUNSHINE
PRODUCTS, INC.
By:
_____________________________
Name:
___________________________
Title:
____________________________
5
AGENT:
GE
BUSINESS FINANCIAL SERVICES INC.
(formerly
known as Merrill Lynch Business Financial Services Inc.),
as
Administrative Agent
By:
____________________________
Name:
__________________________
Its Duly
Authorized Signatory
LENDER:
GE
BUSINESS FINANCIAL SERVICES INC.
(formerly
known as Merrill Lynch Business Financial Services Inc.),
as a
Lender
By:
____________________________
Name:
__________________________
Its Duly
Authorized Signatory
6
Fixed Charge Coverage Ratio
Worksheet (Attachment to Compliance Certificate)
|
Fixed
Charge Coverage Ratio for the applicable measurement period (the “Defined Period”) is
defined as follows:
|
|||
|
Fixed
Charges:
|
|||
|
Interest
expense ($______), net of interest income ($______), interest paid in kind
($______) and amortization of capitalized fees and expenses and included
in interest expense ($______), included in the determination of net income
of Borrowers and their Consolidated Subsidiaries for the Defined Period
(“Total Interest
Expense”)
|
$__________
|
||
| Plus: |
Any
provision for (or less any benefit from) income or franchise taxes
included in the determination of net income for the Defined Period
*
|
___________
|
|
|
Scheduled
payments of principal for the Defined Period with respect to all Debt
(including the portion of scheduled payments under capital leases
allocable to principal but excluding mandatory prepayments required by
Section 2.1(a) and excluding amortization and repayment of the Term
Loan, repayment of the Subordinated Debt and scheduled repayments of
Revolving Loans and other Debt subject to reborrowing to the extent not
accompanied by a concurrent and permanent reduction of the Revolving Loan
Commitment (or equivalent loan commitment))
|
___________
|
||
|
Restricted
Distributions made by Borrowers pursuant to Section 5.3 during the Defined
Period
|
___________
|
||
|
Fixed
Charges
|
$
|
||
|
Operating
Cash Flow:
|
|||
|
EBITDA
for the Defined Period (calculated in the manner required by relevant
worksheet attached to the Compliance Certificate)
|
$__________
|
||
| Less: |
Unfinanced
capital expenditures for the Defined Period (calculated as capital
expenditures not financed with new Debt or capital leases)
|
___________
|
|
|
To
the extent not already reflected in the calculation of EBITDA, other
capitalized costs, defined as the gross amount paid in cash and
capitalized during the Defined Period, as long term assets, other than
amounts capitalized during the Defined Period as capital expenditures for
property, plant and equipment or similar fixed asset
accounts
|
___________
|
||
| Operating Cash Flow |
$
|
||
| Fixed Charge Coverage Ratio (Ratio of Operating Cash Flow to Fixed Charges) for the Defined Period |
___
to 1.0
|
||
| Minimum Fixed Charge Coverage for the Defined Period |
1.5
to 1.0
|
||
| In Compliance |
Yes/No
|
||