SIXTH AMENDMENT TO REVOLVING
----------------------------
CREDIT AND TERM LOAN AGREEMENT
------------------------------
THIS AGREEMENT (the "Amendment") is made as of the 14th day of April, 1995 by
and among MEDCHEM PRODUCTS, INC., (the "Parent") and its affiliates, MEDCHEM
(P.R.), INC. (f/k/a BioChem Products, Inc.) ("MedChem PR"), MEDCHEM SECURITIES
CORPORATION, MEDCHEM PRODUCTS FOREIGN SALES CORPORATION; and GESCO
INTERNATIONAL, INC. ("Gesco") (all of the foregoing, together with the Parent,
the "Borrowers"); and FLEET BANK OF MASSACHUSETTS, N.A. (the "Bank").
RECITALS
--------
A. The Bank and the Borrowers are parties to a Revolving Credit and Term
Loan Agreement dated as of July 31, 1992, as amended by the First, Second,
Third, Fourth and Fifth Amendments (as so amended, the "Loan Agreement").
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Loan Agreement.
B. The Parent has entered into a Distribution Agreement (the "Distribution
Agreement") with Coletica, a French societe anonyme ("Coletica"), and an Escrow
Agreement (the "Escrow Agreement") with Coletica and Fleet Bank of Maine
("Escrow Agent"), each dated as of March 31, 1995.
C. The Borrowers have requested a $2,000,000 increase in the Commitment to
be used as the Deposit (as defined in and required by the Distribution
Agreement).
D. The Borrowers have also requested that the Bank issue a reducing standby
letter of credit for Borrowers' account in favor of its contract
manufacturer, Alcon, P.R.
E. Subject to certain terms and conditions, the Bank is willing to agree to
the same, as hereinafter set forth.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Amendments to Loan Agreement.
----------------------------
The Loan Agreement is hereby amended as follows:
(A) Exhibits. Exhibit 1.2(a) to the Loan Agreement is deleted and new
--------
Exhibit 1.2(a) attached hereto is substituted therefor (being an amended and
restated Revolving Note in the amount of $9,000,000). Exhibit 3.15 to the Loan
Agreement is deleted and new Exhibit 3.15 attached hereto is substituted
therefor (being an updated patent, trademark, patent application and trademark
application list).
(B) Revolving Note Interest. Section 1.4(a) of the Loan Agreement is amended
-----------------------
by deleting it in its entirety and inserting in its place the following
language:
"(a) Subject to the terms and conditions of subsection (c) of this Section,
the Borrowers shall pay interest on the Revolving Loans outstanding from time
to time at a rate per annum as follows:
(i) the rate for any portion of each Revolving Loan which is
not then subject to a Fixed Rate Option shall be the Prime Rate plus the
Prime Rate Applicable Margin, which rate of interest shall change
contemporaneously with any change in the Prime Rate.
(ii) the rate for any LIBOR Portion shall be the applicable
LIBOR Rate plus the Fixed Rate Applicable Margin.
(iii) the rate for any Cost of Funds Portion shall be the
applicable Cost of Funds Rate plus the Fixed Rate Applicable Margin.
For purposes of this Agreement, the term "Applicable Margin" shall mean:
-----------------
(i) from and after April 14, 1995 until the first Quarterly
date, the Applicable Margin shall be 2.25%; and
(ii) from and after June 30, 1995 and each Quarterly Date
thereafter until the Expiration Date, the Applicable Margin shall be
determined from the following table based upon the ratio of Indebtedness
(excluding trade debt and accrued liabilities) on such Quarterly
Date to Net Cash Flow for the four-quarter period ending on such
Quarterly Date, based on the consolidated financial statements of the
Borrowers provided under Section 4.1(a) and (c):
Ratio of Indebtedness Prime Rate Fixed Rate
to Net Cash Flow Applicable Margin Applicable Margin
--------------------- ------------------ ------------------
Greater than 2.00:1.00 .25% 2.25%
Less than or equal to
2.00:1.00 and greater
than 1.50:1.00 -0- 2.00%
Less than or equal to
1.50:1.00 -0- 1.75%
-2-
Notwithstanding the foregoing, no downward adjustment of the Applicable
Margin hereunder shall be permitted (a) unless all of the financial
statements for the relevant fiscal year have been delivered to the Bank as
required in Section 4.1(a) and (c); and (b) if, as of the date of such
proposed downward adjustment, there shall exist any Default."
(C) Mandatory Commitment Reduction and Prepayments of Loans. Section 1.16 of
-------------------------------------------------------
the Loan Agreement is amended by changing the title thereof from "1.16 Mandatory
---------
Commitment Reduction and Prepayments of Term Loan." to "1.16 Mandatory
------------------------------------------------- ---------
Prepayments of Loans." and by adding the following additional sentences at the
--------------------
end of said Section 1.16 as follows:
"On the date the Parent is entitled pursuant to the terms of the Escrow
Agreement to receive the escrow funds from the Escrow Agent: (a) the
Commitment will automatically reduce to a $7,000,000, and (b) the
Borrowers jointly and severally shall be required to prepay the
outstanding balance of the Revolving Loans in such amount, if any,
as is necessary to bring the principal amount thereof within the limits
of the Commitment as so reduced, plus accrued and unpaid interest
thereon. So long as the Commitment has not been permanently
voluntarily reduced to $7,000,000 by the Borrowers, the Parent
agrees that it shall not agree with Coletica to extend the "best
efforts" date set forth in Section 2.5(c) of the Distribution Agreement
for Premarket Approval (as defined in the Distribution Agreement)
without the prior written consent of the Bank which consent shall not be
unreasonably withheld."
(D) Standby Letter of Credit. A new Section 1.18 to the Loan Agreement is
------------------------
added as follows:
"1.18 Standby Letter of Credit. Subject to the conditions to Loans set
------------------------
forth in Section 2 of the Loan Agreement, all of which must be met, and
subject to the terms of the Bank's letter of credit application and
agreement therefor, the Bank shall issue a standby letter of credit (the
"Letter of Credit") for the account of the Borrowers for the benefit of
Alcon, P.R. with an initial drawing amount of $765,912.58 which reduces
to $665,912.58 on April 30, 1995, $465,912.58 on May 31, 1995,
$265,912.58 on June 30, 1995 and -0- on July 31, 1995 when it shall
terminate. Each draw made on the Letter of Credit shall be due and
payable jointly and severally by the Borrowers on the date of such draw.
Unpaid draws shall accrue interest at the Revolving Loan default rate
set forth in Section 1.4(c) hereunder. A fee of 1.50% on the Letter of
Credit shall be paid to the Bank upon its issuance. All Obligations
relating to
-3-
the Letter of Credit shall be secured by all of the collateral now or
hereafter granted under the Security Documents. Upon the termination of
the Commitment or the acceleration of the Loans, in the event the Letter
of Credit has not terminated by its terms, the Borrowers immediately
shall jointly and severally pay to the Bank an amount equal to the then
available drawing amount on the Letter of Credit to be held as cash
collateral for the Borrowers' obligation to pay draws and other
Obligations relating to the Letter of Credit."
(E) Amended and New Definitions. The following definitions in Section 8 of
---------------------------
the Loan Agreement are amended or added to read as follows:
"Applicable Margin": See Section 1.4(a).
-----------------
"Commitment": $9,000,000, subject to automatic reduction pursuant to
----------
Section 1.16.
"Letter of Credit": See Section 1.18.
----------------
"Quarterly Date": March 31, June 30, September 30 and December 31.
--------------
2. No Further Amendments.
---------------------
Except as specifically amended hereby, the Loan Agreement and the Security
Documents shall remain unmodified and in full force and effect and are hereby
ratified and affirmed in all respects, and the indebtedness of the Borrowers to
the Bank evidenced thereby and by the Notes is hereby reaffirmed in all
respects.
3. Certain Representations of the Borrowers.
----------------------------------------
As a material inducement to the Bank to enter into this Amendment, each of
the Borrowers hereby represents and warrants to the Bank (which representations
and warranties shall survive the delivery of this Amendment), after giving
effect to this Amendment, as follows:
(A) The execution and delivery of this Amendment and the revised Notes have
been duly authorized by all requisite corporate action on the part of the
Borrowers and will not violate any provision of law, any order, judgment or
decree of any court or other agency of government, or the articles or bylaws of
any of the parties thereto or any indenture, agreement or other instrument to
which any of the parties thereto is bound, or be in conflict with, or result in
a breach of, or constitute (with due notice or lapse of time or both) a default
under, or result in the creation or imposition of any lien, charge, or
encumbrance of any nature whatsoever upon any
-4-
of the property or assets of any of the parties thereto pursuant to, any such
indenture, agreement or instrument.
(B) The representations and warranties contained in Section 3 of the Loan
Agreement or in Section 3 of the Security Agreement or in any of the other
Security Documents and the information set forth in the Exhibits thereto (as
previously revised hereunder) and in the Officer's Certificate are true and
correct in all material respects on and as of the date of this Amendment as
though made at and as of such date (except to the extent that such
representations and warranties expressly relate to an earlier date or except to
the extent variations therefrom have been permitted under the terms of the Loan
Agreement or otherwise in writing by the Bank). No material adverse change has
occurred in the assets, liabilities, financial condition, business or prospects
of the Parent or the other Borrowers, taken as a whole from that disclosed in
the financial statements most recently furnished to the Bank pursuant to
Sections 3.5, 4.1(a) or 4.1(c) of the Loan Agreement. No Default has occurred
and is continuing.
(C) Each of this Amendment and the revised Notes constitutes the legal,
valid and binding obligations of each of the Borrowers, enforceable against each
of the Borrowers in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the rights and
remedies of creditors generally or the application of principles of equity,
whether in any action at law or proceeding in equity, and subject to the
availability of the remedy of specific performance or of any other equitable
remedy or relief to enforce any right thereunder.
4. Waivers.
-------
The Borrowers have informed the Bank that they changed their fiscal year from
a November 30 fiscal year end to a December 31 fiscal year end, effective as of
December 1, 1994, without the Bank's prior written consent, in violation of
Section 4.6 of the Loan Agreement. The Borrowers have also informed the Bank
that they failed to maintain a ratio of Indebtedness (excluding trade debt and
accrued liabilities) to Net Cash Flow of no more than 2.00:1.00 for the four-
quarter periods ending on December 31, 1994 and March 31, 1995 in violation of
Section 5.1(e) of the Loan Agreement. Subject to the terms of this Amendment,
the Bank is willing to waive such Events of Default; provided, however,
-------- -------
nothing in this Amendment (including without limitation this Section 4 or the
interest adjustments set forth in Section 1.4(a) as amended herein) shall
constitute a waiver of any other covenant, Default, Event of Default or right or
remedy now or hereafter available to the Bank and such waivers set forth herein
shall not constitute a waiver of, or consent to, any other fiscal year change or
any breach of the maximum permitted Indebtedness to Net Cash Flow ratio of
2.00:1.00 for any four-quarter period ending after March 31, 1995.
-5-
5. Conditions.
----------
The willingness of the Bank to agree to the foregoing and to make further
Advances under the Loan Agreement are subject to the following conditions:
(A) The Borrowers shall have executed and delivered to the Bank (or shall
have caused to be executed and delivered to the Bank by the appropriate persons)
the following:
(i) This Amendment, the revised Revolving Note and a Conditional
Assignment of the Parent's rights under the Distribution Agreement and the
Escrow Agreement;
(ii) True and complete copies of the Distribution Agreement, the Escrow
Agreement and any required stockholders' and directors' consents and/or
resolutions, authorizing the execution and delivery of this Amendment and
other documentation referred to in this Section 4, certified by the
respective secretaries of the Borrowers; and
(iii) Such other supporting documents and certificates as the Bank or its
counsel may reasonably request.
(B) The Bank shall have received the favorable written opinion of general
counsel for the Borrowers satisfactory to the Bank in scope and substance.
(C) The Borrowers shall have paid to the Bank a Commitment increase fee of
$10,000 and a waiver fee of $5,000.
(D) The proceeds of the $2,000,000 increase in the Commitment provided for
hereunder shall be used solely for the Deposit (as defined in the Distribution
Agreement) and, subject to the terms of the Loan Agreement, shall be deposited
directly into an escrow account at the Escrow Agent pursuant to the Escrow
Agreement.
(E) All legal matters incident to the transactions contemplated hereby shall
be satisfactory to counsel for the Bank.
6. Miscellaneous.
-------------
(A) As provided in the Loan Agreement, the Borrowers agree to reimburse the
Bank upon demand for all out-of-pocket costs, charges, liabilities, taxes and
expenses of the Bank (including reasonable fees and disbursements of counsel to
the Bank) in connection with the (a) preparation, negotiation, interpretation,
execution and delivery of this Amendment and
-6-
any other agreements, instruments and documents executed pursuant or relating
hereto, and (b) any enforcement hereof.
(B) This Amendment shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
(C) This Amendment may be executed by the parties hereto in several
counterparts hereof and by the different parties hereto on separate counterparts
hereof, all of which counterparts shall together constitute one and the same
agreement.
-7-
IN WITNESS WHEREOF, the Bank and the Borrowers have caused this Amendment to
be duly executed as a sealed instrument by their duly authorized
representatives, all as of the day and year first above written.
MEDCHEM PRODUCTS, INC.
By:/s/ John J. McDonough
-----------------------------
Title:V.P. Finance C.F.O.
MEDCHEM (P.R.), INC.
(f/k/a BioChem Products, Inc.)
By:/s/ John J. McDonough
-----------------------------
Title:
MEDCHEM SECURITIES CORPORATION
By:/s/ John J. McDonough
-----------------------------
Title:
MEDCHEM PRODUCTS FOREIGN SALES
CORPORATION
By:/s/ John J. McDonough
-----------------------------
Title:
GESCO INTERNATIONAL, INC.
By:/s/ John J. McDonough
-----------------------------
Title:
FLEET BANK OF MASSACHUSETTS, N.A.
By:/s/ Elise M. Russo
-----------------------------
Title:
-8-
Exhibit 1.2(a)
--------------
PROMISSORY NOTE
---------------
$9,000,000 Dated June 19, 1992
and amended and restated
Boston, Massachusetts on April 14, 1995
FOR VALUE RECEIVED, the undersigned (the "Makers") hereby jointly and
severally promise to pay to FLEET BANK OF MASSACHUSETTS, N.A. (the "Bank"), or
order, at the principal office of the Bank at 75 State Street, Boston,
Massachusetts 02109 or to such other address as advised in writing by the Bank,
the principal amount of NINE MILLION DOLLARS ($9,000,000) or such lesser amount
as shall equal the aggregate unpaid principal amount outstanding of Revolving
Loans made by the Bank to the Makers pursuant to and as defined in the Agreement
referred to below, in lawful money of the United States of America and in
immediately available funds, and to pay interest on the unpaid principal balance
hereof from time to time outstanding, at said office and in like money and
funds, for the period commencing on June 19, 1992 until paid in full, payable on
the dates and at the rate or rates specified in the Agreement. All principal
shall be due and payable in accordance with the Agreement, and all principal
remaining unpaid and any accrued but unpaid interest shall in any event be due
and payable on May 31, 1996.
This Note is issued pursuant to, and entitled to the benefits of, and is
subject to, the provisions of a certain Revolving Credit and Term Loan Agreement
dated as of July 31, 1992 by and among the Makers and the Bank (as amended or
extended from time to time, the "Agreement"), but neither this reference to the
Agreement nor any provision thereof shall affect or impair the absolute and
unconditional obligation of the Makers jointly and severally to pay the
principal of and interest on this Note as herein provided.
This Note is a revolving note and, subject to the foregoing and to the
terms of the Agreement, the Makers may borrow, pay, prepay and reborrow
hereunder, all in accordance with the provisions of this Note and the Agreement;
provided, however, the principal balance outstanding shall at no time exceed the
--------
face amount of this Note. Under certain circumstances, a portion of the
principal amount is also subject to mandatory prepayment under the terms of the
Agreement.
In case an Event of Default (as defined in the Agreement) shall occur,
the aggregate unpaid principal of and accrued interest on this Note shall become
or may be declared to be due and payable in the manner and with the effect
provided in the Agreement.
All agreements involving any of the Makers and the Bank are hereby
expressly limited so that in no contingency or event whatsoever shall the amount
paid or agreed to be paid to the Bank for the use or forbearance of the
indebtedness evidenced hereby exceed the maximum amount which the Bank is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision hereof or of the Agreement, at the time
performance of such provision shall be due, shall involve exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such validity, and if from any circumstance the Bank should ever receive as
interest an amount which would exceed such maximum amount, such amount which
would be excessive interest shall be applied to the reduction of the principal
balance evidenced hereby and not to the payment of interest. As used herein, the
term "applicable law" shall mean the law in effect as of the date hereof;
provided, however, that in the event there is a change in the law which results
-------- -------
in a higher permissible rate of interest, then this Note shall be governed by
such new law as of its effective date. This provision shall control every
provision of all agreements involving any of the Makers and the Bank.
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Bank, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. Each of
the Makers and every endorser or guarantor of this Note, regardless of the time,
order or place of signing, waives presentment, demand, protest, notice of
dishonor and other demands and notices of every kind (except notices, if any,
otherwise expressly provided for in the Agreement) in connection with the
delivery, acceptance, performance and enforcement of this Note and assents to
any extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange or release of collateral, and to the addition or
release of any other party or person primarily or secondarily liable.
If this Note shall not be paid when due and shall be placed by the Bank
in the hands of any attorney for collection, through legal proceedings or
otherwise, the Makers jointly and severally will pay reasonable attorneys' fees
to the Bank, together with reasonable costs and expenses of collection,
including, without limitation, any such attorneys' fees, costs and expenses
relating to any proceedings with respect to the
-2-
bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation of any Maker.
This Note shall inure to the benefit of the Bank and its successors and
assigns and subsequent holders hereof.
This Note shall have the effect of an instrument executed under seal and
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without giving effect to any conflicts of laws
provisions contained therein).
MEDCHEM PRODUCTS, INC.
By: /s/ John J. McDonough
------------------------
Title: V.P. Finance C.F.O.
MEDCHEM (P.R.), INC.
(f/k/a BioChem Products, Inc.)
By: /s/ John J. McDonough
------------------------
Title:
MEDCHEM SECURITIES
CORPORATION
By: /s/ John J. McDonough
------------------------
Title:
MEDCHEM PRODUCTS FOREIGN
SALES CORPORATION
By: /s/ John J. McDonough
------------------------
Title:
GESCO INTERNATIONAL, INC.
By: /s/ John J. McDonough
------------------------
Title: