Fourth Amendment To Loan Agreement
This Fourth Amendment to Loan Agreement (“Amendment”) is dated as of November __, 2010, and is between Regions Bank, an Alabama banking corporation, as successor by merger to Union Planters Bank, N.A. (“Lender”) and Bioanalytical Systems, Inc., an Indiana corporation (“Borrower”).
Recitals
Lender, Borrower and BAS Evansville, Inc. (“BAS”) entered into a certain Loan Agreement dated October 29, 2002, as amended by a certain Amendment to Loan Agreement dated June 1, 2004 and a certain First Amendment to Loan Agreement dated February 11, 2008 (collectively, the “Prior Loan Agreement”) in connection with (i) a certain Promissory Note (Term Loan) executed by Borrower in favor of Lender in the original principal amount of $5,410,000.00 dated October 29, 2002, as amended by Amendment to Promissory Note (Term Loan) dated June 1, 2004, (ii) a certain Promissory Note (Loan (West Lafayette)) executed by Borrower in favor of Lender in the original principal amount of $2,250,000.00 dated October 29, 2002, as amended by Amendment to Promissory Note (Loan (West Lafayette)) dated June 1, 2004, and (iii) a certain First Replacement Promissory Note (Loan (Mt. Vernon)) executed by Borrower and BAS in favor of Lender in the original principal amount of $1,698,540.11 dated February 11, 2008 (“Mt. Vernon Note”) (all notes listed in this recital are collectively, the “Prior Notes”). As security for the Prior Loan Agreement and the Prior Notes, Borrower granted to Lender a certain Real Estate Mortgage and Security Agreement (Fixture Filing) (West Lafayette) dated October 29, 2002, and recorded on November 19, 2002, as Instrument No. 02037358 with the Office of the Recorder of Tippecanoe County, Indiana, and BAS Evansville, Inc. granted to Lender a certain Real Estate Mortgage and Security Agreement (Fixture Filing) (Mt. Vernon) dated October 29, 2002, and recorded on November 13, 2002, as Instrument No. 20027318 with the Office of the Recorder of Posey County, Indiana (collectively, the “Prior Mortgages”).
Lender and Borrower entered into a certain Loan Agreement dated December 18, 2007, as amended by a certain First Amendment to Loan Agreement dated January 3, 2008, a certain Second Amendment to Loan Agreement dated May 18, 2009 and a certain Third Amendment to Loan Agreement dated January 13, 2010 (as may be further amended from time to time, collectively, the “Loan Agreement”).
To further secure the Indebtedness of Borrower to Lender, BAS executed and delivered to Lender a certain Unconditional Unlimited Continuing Guaranty dated January 13, 2010 whereby BAS guarantied the Indebtedness of Borrower to Lender including, but not limited to, the Prior Notes and the Replacement Note (as such term is hereinafter defined).
The parties desire to amend the Loan Agreement to modify certain covenants provided by the Loan Agreement, as herein provided.
Terms
NOW, THEREFORE, in consideration of the foregoing and the mutual obligations of the parties hereto, the Loan Agreement is hereby amended as follows:
| | 1. | Amendments to the Loan Agreement. |
A. Section 1 (Definitions) is amended to add the following definition:
“Capital Expenditures” means all expenditures which, in accordance with generally accepted accounting principles, would be required to be capitalized and shown on the balance sheet of Borrower, including expenditures in respect of capital leases, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (a) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored or (b) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced.
B. Section 7 (Borrower’s Affirmative Covenants). Section 7 (Borrower’s Affirmative Covenants) of the Loan Agreement is hereby amended by deleting the existing subsection (d) and replacing it with the following subsection (d):
d. Liens. Borrower will cause any lien (including, without limitation, any judgment, attachment, execution, mechanic’s lien, or federal or state income tax lien) that may attach to Borrower’s real estate or personal property to be satisfied and released no later than thirty (30) days after attachment, except for (i) the lien of current property taxes and assessments, (ii) liens contested in good faith in an appropriate proceeding if Borrower has given Lender any assurances Lender deems necessary under the circumstances, (iii) liens in favor of Lender, (iv) any lien in favor of Entrepreneur Growth Capital, LLC, or its successor as provider of an asset-based line of credit, (the “Asset Based Lender”) to secure indebtedness not to exceed the principal amount of $3,000,000.00, provided that any real property lien is governed by an Intercreditor Agreement by and between Lender and the Asset Based Lender, and (v) those liens permitted pursuant to Section 9(e) herein.
C. Section 8 (Borrower’s Financial Covenants). Section 8 (Borrower’s Financial Covenants) of the Loan Agreement is hereby amended by deleting the existing subsections (b) and (c) and replacing them with the following subsections (b) and (c):
b. Fixed Charge Coverage Ratio. Borrower will maintain a Fixed Charge Coverage Ratio of not less than 1.25 to 1.00. “Fixed Charge Coverage Ratio” means the ratio of (i) the sum of Borrower’s aggregate net income for the current fiscal year as of the end of such period, plus depreciation expense and other non cash expenditures, plus interest expense, plus income tax expense, less Capital Expenditures not funded with long term debt, less income tax paid or accrued in the current fiscal year as of the end of such period, to (ii) the sum of all interest payments and the principal payments on long-term debt paid or accrued in the current fiscal year as of the end of such period, including payments made under capitalized leases but excluding the anticipated principal reductions of the Replacement Note and the Mt. Vernon Note on or before December 18, 2010 and February 11, 2011, respectively. The Fixed Charge Coverage Ratio will be tested on a fiscal year-to-date basis at the end of each fiscal quarter beginning December 31, 2010.
c. Borrower will maintain a Total Liabilities to Tangible Net Worth Ratio of not less than 2.10 to 1.00, tested quarterly at the end of each fiscal quarter beginning December 31, 2010.
C. Section 9 (Negative Covenants). Section 9 (Negative Covenants) of the Loan Agreement is hereby amended by deleting the existing subsections (d) and (e) and replacing them with the following subsections (d) and (e):
d. Borrowing. Borrower will not, without Lender’s prior written consent, create, incur, assume or suffer to exist any indebtedness except (a) trade accounts and normal business accruals payable in the ordinary course of business, (b) Indebtedness to Lender, (c) an asset-based line of credit available to Borrower from the Asset Based Lender in the maximum principal amount not to exceed $3,000,000.00, (d) indebtedness for Capital Expenditures, and (e) any other unsecured indebtedness, nor shall Borrower assume, guarantee or otherwise become liable as a guarantor or surety for the obligations of any person or firm except guaranties in favor of Lender.
e. Liens and Encumbrances. Borrower will not, without Lender’s prior written consent, create or permit to exist any mortgage, pledge, lien, security interest or other encumbrance (except those in favor of Lender, except those in favor of Asset Based Lender as permitted in Section 7.d. herein, and except those encumbering the specific asset hereafter acquired in connection with any Capital Expenditures) in any of Borrower’s tangible or intangible real or personal property, whether now owned or hereafter acquired, nor will Borrower become security on a recognizance or other bond.
2. Continuing Effect. All other terms, conditions, representations, warranties and covenants contained in the Loan Agreement shall remain the same and shall continue in full force and effect. In consideration hereof, Borrower represents and warrants that each representation and warranty set forth in the Loan Agreement, as hereby amended, remains true and correct as of the date hereof, except to the extent that such representation and warranty is expressly intended to apply solely to an earlier date, that there presently exist no known offsets, counterclaims or defenses to the performance of the obligations under the Instruments (collectively, the “Obligations”) (such known offsets, counterclaims or defenses, if any, being hereby expressly waived), and that Borrower has no other known claims, demands, allegations or rights of action of any nature based on any matter arising from or related to the Obligations or Borrower’s relationship with the Lender (such known claims, demands, allegations or rights of action, if any, being hereby expressly waived) nor has there occurred any Event of Default under the Loan Agreement or any of the Instruments, and that there will be no Event of Default after giving effect to the transactions contemplated by this Amendment. The representations and warranties contained in the Loan Agreement originally shall survive this Amendment in their original form and shall survive as continuing representations and warranties of Borrower. Except as expressly herein provided, the Loan Agreement and this Amendment shall be interpreted, wherever possible, in a manner consistent with one another, but in the event of any irreconcilable inconsistency, this Amendment shall control. The parties each hereby agree to cooperate in all reasonable requests of each other party hereto, including, without limitation, the authentication of financing statements and other documents, which the requesting party deems reasonable, necessary, appropriate or expedient to carry out the intents and purposes of this Amendment. Capitalized terms used herein and not specifically herein defined shall have the meanings ascribed in the Loan Agreement.
It was Lender’s intent that the Loan Agreement should replace the Prior Loan Agreement and, in good faith, Lender has been monitoring and administering the Obligations and the Prior Notes with the covenants contained in the Loan Agreement. By execution of this Amendment, Borrower and Lender agree that (i) the Prior Loan Agreement, (ii) the Prior Notes, (iii) the Prior Mortgages, (iv) a certain First Replacement Promissory Note (Term Loan) executed by Borrower in favor of Lender in the original principal amount of $1,400,000.00 dated January 3, 2008 (the “Replacement Note”), (v) a certain Real Estate Mortgage and Security Agreement (Fixture Filing) granted by Borrower to Lender dated December 18, 2007, and recorded January 10, 2008, as Instrument No. 200808000629 with the Office of the Recorder of Tippecanoe County, Indiana, and (vi) a certain Real Estate Mortgage and Security Agreement (Fixture Filing) granted by Borrower to Lender dated December 18, 2007, and recorded February 19, 2008, as Instrument No. 200800695 with the office of the Recorder of Posey County, Indiana, and all documents and instruments executed in connection therewith, shall be monitored and administered in accordance with the Loan Agreement, and in the event of any irreconcilable inconsistency between the Prior Loan Agreement and the Loan Agreement, the Loan Agreement shall control.
3. Conditions Precedent. Notwithstanding anything contained in this Amendment to the contrary, the Lender shall have no obligation under this Amendment until each of the following conditions precedent have been fulfilled to the satisfaction of the Lender:
(a) The Lender shall have received each of the following, in form and substance satisfactory to the Lender:
(1) This Amendment and such other instruments, documents and opinions as the Lender shall reasonably require, all duly executed by the parties thereto in the forms approved by the Lender;
(2) A Consent and Confirmation of Guaranty executed by BAS;
(3) A duly executed certificate of an authorized officer of Borrower (A) certifying as to attached copies of resolutions of the Board of Directors of Borrower authorizing the execution, delivery and performance of this Amendment, the Loan Agreement, the Instruments, as amended, and any other documents provided for in this Amendment to which Borrower is a party or certifying that prior resolutions executed and delivered to the Lender are in full force and effect, and (B) certifying as complete and correct as to attached copies of the Articles of Incorporation and Bylaws of Borrower or certifying that such Articles of Incorporation and Bylaws have not been amended (except as shown) since the previous delivery thereof to the Lender;
(4) A duly executed certificate of an authorized officer of BAS (A) certifying as to attached copies of resolutions of the Board of Directors of BAS authorizing the execution, delivery and performance of the Consent and Confirmation of Guaranty or certifying that prior resolutions executed and delivered to the Lender are in full force and effect, and (B) certifying as complete and correct as to attached copies of the Articles of Incorporation and Bylaws of Borrower or certifying that such Articles of Incorporation and Bylaws have not been amended (except as shown) since the previous delivery thereof to the Lender;
(5) Payment of a modification fee in the amount of $25,000.00, which fee the Borrower acknowledges was earned upon execution of this Amendment and is due and payable and non-refundable;
(6) All reasonable expenses of the Lender (including, without limitation, reasonable attorneys’ fees), shall have been reimbursed by Borrower.
(b) All legal matters incident to this Amendment shall be reasonably satisfactory to the Lender and its counsel.
4. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Facsimile signatures will be deemed acceptable and binding.
The parties are signing this Amendment on the date stated in the introductory paragraph.
LENDER:
| | REGIONS BANK |
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| | By: | |
| | | Michael F. Zingraf, Senior Vice President |
BORROWER:
| | BIOANALYTICAL SYSTEMS, INC. |
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| | By: | |
| | | Michael R. Cox, Vice President – Finance |
| STATE OF INDIANA | ) | |
| | ) | SS: |
| TIPPECANOE COUNTY | ) | |
Before me, the undersigned Notary Public, personally appeared Michael R. Cox, the Vice President of Finance of Bioanalytical Systems, Inc., an Indiana corporation, who on behalf of said entity acknowledged the execution of the foregoing instrument and swore to the truth of the statements made therein.
Witness my hand and Notarial Seal this _____ day of November, 2010.
SEAL
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| | Notary Public Signature |
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