EXHIBIT 10.37
ALLONGE
to
AGREEMENT OF AMENDMENT
TO
LOAN AND SECURITY AGREEMENT, MORTGAGE,
ASSIGNMENT OF LEASES
AND OTHER DOCUMENTS
This modification ("Allonge to Agreement of Amendment") made this 13th day
of November, 2002 to the Agreement of Amendment to Loan and Security Agreement,
Mortgage, Assignment of Leases and Other Documents effective March 13, 2002
("Agreement of Amendment") among FLEET NATIONAL BANK, ("Lender"); OSTEOTECH,
INC., a Delaware Corporation, OSTEOTECH INVESTMENT CORPORATION, a New Jersey
Corporation, CAM IMPLANTS, INC., a Colorado Corporation, OSTEOTECH, B.V., H.C.
IMPLANTS, B.V., OSTEOTECH IMPLANTS, B.V., f/k/a CAM IMPLANTS, B.V. (pursuant to
documents of name change submitted simultaneously herewith), OSTEOTECH/CAM
SERVICES, B.V., each a Company of The Netherlands, OSTEOTECH, S.A., and OST
DEVELOPPEMENT, S.A., each a Corporation of France (jointly and severally
"Borrower") and to which Agreement of Amendment these presents are so firmly
affixed as to become a part thereof.
A. Notwithstanding anything to the contrary set forth in the Agreement of
Amendment, the Agreement of Amendment is hereby amended as follows:
1. Paragraph 3A(2) (relating to the second paragraph of the Revolving
Note) is hereby amended to read as follows:
Prior to January 1, 2002, this Note bore interest at the option of
the Borrower, at either Lender's Prime Rate minus three-quarters of
one percent or the applicable Base LIBOR Rate plus 175 basis points.
Effective January 1, 2002 and ending on the date Lender receives
Borrower's Annual Report on Form 10K for the fiscal year ending
December 31, 2002, this Note bears interest and is repayable in
monthly installments of interest only (and not principal) at a
fluctuating interest rate per annum equal at all times to either (a)
the Lender's Prime Rate (as hereinafter defined) of interest in
effect from time to time plus 150 basis points, each change in such
fluctuating rate to take effect simultaneously with the
corresponding change in such Prime Rate, without notice to the
undersigned or (b) the applicable Base LIBOR Rate as defined in the
Loan Agreement plus 400 basis points, at the option of the Borrower
pursuant to the Loan Agreement. Commencing with the receipt by
Lender of Borrower's December 31, 2002 financial statements, and
effective following the filing with the Securities and Exchange
Commission ("SEC") and delivery to Lender thereafter of Borrower's
Annual Report on Form 10K for the fiscal year ending December 31,
2002, interest is repayable in accordance with the following at the
option of Borrower, if the ratio of the Borrower's Senior Funded
Debt as determined in accordance with generally accepted accounting
principles consistently applied, to EBITDA as more fully described
below ("Ratio") is as follows:
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Ratio Option -or- Option
----- ------ ------
Less than 1.5:1 Base LIBOR +225 bp ("Libor Rate") Prime Rate - 25bp
1.5:1 - 2.5:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 50 bp
2.5:1 - 3.99:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 100 bp
4.0 and greater Base LIBOR + 400 bp ("Libor Rate") Prime Rate + 150 bp
For purposes of determining the Ratio:
(i) The first determination will be made by Lender for the fourth
quarter, 2002. The determination will be made by dividing (a)
the Senior Funded Debt as of December 31, 2002 by (b) the
Borrower's EBITDA determined on a rolling four quarter basis;
(ii) Thereafter, each determination of the Ratio will be made by
Lender, upon delivery to Lender of either the Borrower's
Quarterly Report on Form 10Q or Annual Report on Form 10K, on
a rolling four quarter basis; and
(iii) Senior Funded Debt means all indebtedness of the Borrower
owing to financial institutions, all bonds, notes and
debentures payable by the Borrower (unless subordinated to
Fleet National Bank), all outstanding letters of credit issued
for the account of the Borrower, and all capital leases of the
Borrower.
Each payment is to be made on the first day of each month. In no
event is the interest rate to be higher than the maximum lawful
rate. The Prime Rate of Lender means the fluctuating Prime Rate of
interest established by Fleet National Bank from time to time
whether or not such rate shall be otherwise published. The Prime
Rate is established for the convenience of Lender. It is not
necessarily Lender's lowest rate. In the event that there should be
a change in the Prime Rate of Lender, such change shall be effective
on the date of such change without notice to Borrower or any
guarantor, endorser or surety. Any such change will not effect or
alter any other term or conditions of this Note.
2. Paragraph 3B(1) (relating to the second paragraph of the Equipment Loan
Note) is hereby amended to read as follows:
Prior to January 1, 2002, this Note bore interest, at the option of
the Borrower at either the Lender's Prime Rate minus one-half of one
percent or the applicable Base LIBOR Rate plus 175 basis points.
Effective as of the Conversion Date, the Borrower began monthly
payments of principal and interest, such principal payments
repayable in 84 equal monthly installments, the first of such
payments was made as of the second month following the Conversion
Date and on the same day of each successive month. As of the
Conversion Date through December 31, 2001, this Note bore interest
at the applicable LIBOR Rate (Equipment) defined in the Loan
Agreement. Effective January 1, 2002 and ending on the date Lender
receives Borrower's Annual Report on Form 10K for the fiscal year
ending December 31, 2002, this Note bears interest and is
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repayable in monthly installments of interest, such interest to be
at a fluctuating interest rate per annum equal at all times to
either (a) the Lender's Prime Rate (as hereinafter defined) of
interest in effect from time to time plus 150 basis points, each
change in such fluctuating rate to take effect simultaneously with
the corresponding change in such Prime Rate, without notice to the
undersigned or (b) the applicable Base LIBOR Rate as defined in the
Loan Agreement plus 400 basis points, at the option of the Borrower
pursuant to the Loan Agreement. Effective September 10, 2001 the
Borrower was to commence payment of principal, together with
interest, in 84 equal monthly installments on the same day of each
successive month thereafter commencing December 1, 2001. Borrower is
to continue making such principal and interest payments and, upon
the 84th such installment payment (the "Maturity Date"), the full
amount of unpaid principal together with unpaid accrued interest is
due and payable. Commencing with the receipt by Lender of Borrower's
December 31, 2002 financial statements, and effective following the
filing with the SEC and delivery to Lender thereafter of Borrower's
Annual Report on Form 10K for the fiscal year ending December 31,
2002, interest is repayable in accordance with the following at the
option of Borrower, if the ratio of the Borrower's Senior Funded
Debt as determined in accordance with generally accepted accounting
principles consistently applied, to EBITDA as more fully described
below ("Ratio") is as follows:
Ratio Option -or- Option
----- ------ ------
Less than 1.5:1 Base LIBOR +225 bp ("Libor Rate") Prime Rate - 25bp
1.5:1 - 2.5:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 50 bp
2.5:1 - 3.99:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 100 bp
4.0 and greater Base LIBOR + 400 bp ("Libor Rate") Prime Rate + 150 bp
For purposes of determining the Ratio:
(i) The first determination will be made by Lender for the fourth
quarter, 2002. The determination will be made by dividing (a)
the Senior Funded Debt as of December 31, 2002 by (b) the
Borrower's EBITDA determined on a rolling four quarter basis;
(ii) Thereafter, each determination of the Ratio will be made by
Lender upon delivery to Lender of either the Borrower's
Quarterly Report on Form 10Q or Annual Report on Form 10K, on
a rolling four quarter basis; and
(iii) Senior Funded Debt means all indebtedness of the Borrower
owing to financial institutions, or bonds, notes and
debentures payable by the Borrower (unless subordinated to
Fleet National Bank), all outstanding letters of credit issued
for the account of the Borrower, and all capital leases of the
Borrower.
Each payment is to be made on the first day of each month. In no
event is the interest rate to be higher than the maximum lawful
rate. The Prime Rate of Lender means the fluctuating Prime Rate of
interest established by Fleet
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National Bank from time to time whether or not such rate shall be
otherwise published. The Prime Rate is established for the
convenience of Lender. It is not necessarily Lender's lowest rate.
In the event that there should be a change in the Prime Rate of
Lender, such change shall be effective on the date of such change
without notice to Borrower or any guarantor, endorser or surety. Any
such change will not effect or alter any other term or conditions of
this Note.
3. Paragraph 3C(1) (relating to the second paragraph of the Mortgage Note)
is hereby amended to read as follows:
Prior to January 1, 2002, this Note bore interest during each
calendar month at a fixed rate of 7.38% per annum. Effective January
1, 2002 and ending on the date Lender receives Borrower's Annual
Report on Form 10K for the fiscal year ending December 31, 2002,
this Note bears interest and is repayable in monthly installments of
interest at a fluctuating interest rate per annum equal at all times
to either (a) the Lender's Prime Rate (as hereinafter defined) of
interest in effect from time to time plus 150 basis points, each
change in such fluctuating rate to take effect simultaneously with
the corresponding change in such Prime Rate, without notice to the
undersigned or (b) the applicable Base LIBOR Rate as defined in the
Loan Agreement plus 400 basis points, at the option of the Borrower
pursuant to the Loan Agreement. Commencing with the receipt by
Lender of Borrower's December 31, 2002 financial statements, and
effective following the filing with the SEC and delivery to Lender
thereafter of Borrower's Annual Report on Form 10K for the fiscal
year ending December 31, 2002, interest is repayable in accordance
with the following at the option of Borrower, if the ratio of the
Borrower's Senior Funded Debt as determined in accordance with
generally accepted accounting principles consistently applied, to
EBITDA as more fully described below ("Ratio") is as follows:
Ratio Option -or- Option
----- ------ ------
Less than 1.5:1 Base LIBOR +225 bp ("Libor Rate") Prime Rate - 25bp
1.5:1 - 2.5:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 50 bp
2.5:1 - 3.99:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 100 bp
4.0 and greater Base LIBOR + 400 bp ("Libor Rate") Prime Rate + 150 bp
For purposes of determining the Ratio:
(i) The first determination will be made by Lender for the fourth
quarter, 2002. The determination will be made by dividing (a)
the Senior Funded Debt as of December 31, 2002 by (b) the
Borrower's EBITDA determined on a rolling four quarter basis;
(ii) Thereafter, each determination of the Ratio will be made by
Lender upon delivery to Lender of either the Borrower's
Quarterly Report on Form 10Q or Annual Report on Form 10K, on
a rolling four quarter basis; and
(iii) Senior Funded Debt means all indebtedness of the Borrower
owing to financial institutions, all bonds, notes and
debentures
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payable by the Borrower (unless subordinated to Fleet National
Bank), all outstanding letters of credit issued for the
account of the Borrower, and all capital leases of the
Borrower.
The first thirteen (13) months of principal and interest was to be
paid by the Borrower to Lender in equal installments of principal
and interest in the amount of Thirty-Six Thousand Two Hundred Three
Dollars - 56/100 ($36,203.56) commencing February 1, 2001 and on the
same day of each successive month thereafter. Effective as of the
date of the Agreement, remaining principal and interest is to be
paid during and throughout the period of one hundred seven (107)
months in equal payments of principal in the amount of Nineteen
Thousand Three Hundred Twenty-Nine - 36/100 Dollars ($19,329.36),
together with accrued interest by the Borrower to Lender on the
first day of each month commencing on April 1, 2002, and on the same
day of each successive month thereafter. Upon the 107th such
installment (the "Maturity Date"), the full amount of unpaid
principal, together with unpaid accrued interest is due and payable.
In no event is the interest rate to be higher than the maximum
lawful rate. The Prime Rate of Lender means the fluctuating Prime
Rate of interest established by Fleet National Bank from time to
time whether or not such rate shall be otherwise published. The
Prime Rate is established for the convenience of Lender. It is not
necessarily Lender's lowest rate. In the event that there should be
a change in the Prime Rate of Lender, such change shall be effective
on the date of such change without notice to Borrower or any
guarantor, endorser or surety. Any such change will not effect or
alter any other term or conditions of this Note.
4. Paragraph 3D(7) (relating to Section 1.4(k) of the Loan Agreement) is
hereby amended to read as follows:
Notwithstanding the foregoing provisions of Section 1.4, and in the
absence of Default, effective January 1, 2002 and ending on the date
Lender receives Borrower's Annual Report on Form 10K for the fiscal
year ending December 31, 2002, interest accrues on the Loan and is
repayable in monthly installments of interest at a fluctuating
interest rate per annum equal at all times to either (a) the
Lender's Prime Rate of interest in effect from time to time plus 150
basis points, each change in such fluctuating rate to take effect
simultaneously with the corresponding change in such Prime Rate,
without notice to the Borrower or (b) the applicable Base LIBOR Rate
as defined in the Loan Agreement plus 400 basis points ("LIBOR
Rate"), at the option of the Borrower pursuant to this Agreement.
Commencing with the receipt by Lender of Borrower's December 31,
2002 financial statements, and effective following the filing with
the SEC and delivery to Lender thereafter of Borrower's Annual
Report on Form 10K for the fiscal year ending December 31, 2002,
interest is repayable in accordance with the following at the option
of Borrower, if the ratio of the Borrower's Senior Funded Debt as
determined in accordance with generally accepted accounting
principles consistently applied, to EBITDA as more fully described
below ("Ratio") is as follows:
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Ratio Option -or- Option
----- ------ ------
Less than 1.5:1 Base LIBOR +225 bp ("Libor Rate") Prime Rate - 25bp
1.5:1 - 2.5:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 50 bp
2.5:1 - 3.99:1 Base LIBOR + 000 xx ("Xxxxx Rate") Prime Rate + 100 bp
4.0 and greater Base LIBOR + 400 bp ("Libor Rate") Prime Rate + 150 bp
For purposes of determining the Ratio:
(i) The first determination will be made by Lender for the fourth
quarter, 2002. The determination will be made by dividing (a)
the Senior Funded Debt as of December 31, 2002 by (b) the
Borrower's EBITDA determined on a rolling four quarter basis;
(ii) Thereafter, each determination of the Ratio will be made by
Lender upon delivery to Lender of either the Borrower's
Quarterly Report on Form 10Q or Annual Report on Form 10K, on
a rolling four quarter basis; and
(iii) Senior Funded Debt means all indebtedness of the Borrower
owing to financial institutions, all bonds, notes and
debentures payable by the Borrower (unless subordinated to
Fleet National Bank), all outstanding letters of credit issued
for the account of the Borrower, and all capital leases of the
Borrower.
The interest rates herein provided also apply following any
applicable Conversion Date.
5. Paragraph 3D(15) (relating to Section 6.15 of the Loan Agreement) is
hereby amended to read as follows:
Section 6.15 Fees
A new section 6.15(c) is hereby added as follows:
6.15(c) Waiver and Amendment Fee. The Borrower is to pay to Lender a
waiver and amendment fee of $25,000.00 payable upon execution of the
Allonge to Agreement of Amendment.
6. Paragraph 3D(16) (relating to Section 6.17 of the Loan Agreement) is
hereby amended to read as follows:
Section 6.17 Additional Covenants
The following new sections to Section 6.17 are hereby added as
follows:
The Borrower is to perform and/or deliver the following, in form and
substance satisfactory to Lender, not later than 45 days from
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the date of the execution of the Allonge to Agreement of Amendment
in the case of 6.17(g) and (h); and not later than December 16, 2002
in the case of 6.17(i):
6.17(g) Updated report of Borrower's counsel (and meeting with
Borrower's counsel, if requested by Lender) regarding the
Borrower's litigation, its anticipated litigation costs, and
potential for economic loss if adverse to Borrower;
6.17(h) Reimbursement of all costs incurred by Lender in
conducting an appraisal of all domestic Equipment; and
6.17(i) Projections of the financial condition of the Borrower
for the next five (5) fiscal years.
7. Paragraph 3D(22) (relating to Section 7.15 of the Loan Agreement) is
hereby amended to read as follows:
Section 7.15 EBITDA Ratio
Osteotech, Inc. is not to cause or permit any of the following:
(a) For the first quarter of 2002, the earnings before
interest, taxes, depreciation and amortization of Osteotech,
Inc. and its Subsidiaries ("EBITDA") to be less than
$1,100,000.00 (the fee payable pursuant to Section 6.15(b),
attorneys' fees payable by the Borrower hereunder, appraisal
fees, collateral review exam fees, counsel fees payable by the
Borrower to implement the pledge of stock set forth in Article
4(c) and related expenses ("Excluded Expenses")) are not to be
included in this determination);
(b) For the second quarter of 2002, EBITDA to be less than
$1,920,000.00 (Excluded Expenses are not to be included in
this determination);
(c) For the third quarter of 2002, the ratio of EBITDA less
capital expenditures, less cash taxes (multiplied by 4) to the
current maturities of long term debt plus interest expense, to
be less than 1:1 (Excluded Expenses are not to be included in
this determination);
(d) For the fourth quarter of 2002, a minimum EBITDA of
$1,570,000.00 (Excluded Expenses are not to be included in
this determination);
(e) For the first quarter of 2003, the ratio of EBITDA for
such quarter less capital expenditures, less cash taxes (all
multiplied by 4) to the current
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maturities of long term debt plus (first quarter interest
expense multiplied by 4), to be less than 1:1 (Excluded
Expenses are not to be included in this determination);
(f) For the second quarter of 2003, the ratio of EBITDA for
the first and second quarters of 2003 less capital
expenditures, less cash taxes (all divided by 2 and then
multiplied by 4) to the current maturities of long term debt
plus (interest expense for the first and second quarters
divided by 2 and then multiplied by 4), to be less than 1:1
(Excluded Expenses are not to be included in this
determination);
(g) For the third quarter of 2003, the ratio of EBITDA for the
first, second and third quarters of 2003 less capital
expenditures, less cash taxes (all divided by 3 and then
multiplied by 4) to the current maturities of long term debt
plus (interest expense for the first, second and third
quarters divided by 3 and then multiplied by 4), to be less
than 1.25:1 (Excluded Expenses are not to be included in this
determination);
(h) For the fourth quarter of 2003, the ratio of EBITDA for
the first, second, third and fourth quarters of 2003 less
capital expenditures, less cash taxes to the current
maturities of long term debt plus interest expense for the
first, second, third and fourth quarters, determined on a
rolling four quarter basis, to be less than 1.25:1 (Excluded
Expenses are not to be included in this determination); or
(i) Thereafter, the ratio of EBITDA less capital expenditures
less cash taxes to the current maturities of long term debt
plus interest expense, determined on a rolling four quarter
basis, to be less than 1.25:1 (Excluded Expenses are not to be
included in this determination).
Non-compliance by the Borrower with its prior covenant that its
ratio of EBITDA less capital expenditures, less cash taxes
(multiplied by 4) to the current maturities of long term debt plus
interest expense be not less than 1:1 for the third quarter of 2002
is hereby waived by Lender. Such waiver shall be without prejudice
in the event of a Default hereunder. Such waiver is also not to be
deemed a waiver of any further or other non-compliance or Default.
All of the foregoing is to be determined in accordance with
generally accepted accounting principles consistently applied.
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B. The following is added as Section 7.21 to the Loan Agreement (as
defined in the Agreement of Amendment:
Section 7.21 Maintenance of Minimum Quick Ratio
Borrower is not to cause or permit its Quick Ratio to be less than
1.5:1 tested on a quarterly basis. The term Quick Ratio means the
ratio of cash of the Borrower and marketable securities of the
Borrower plus Accounts to the Borrower's current liabilities
determined in accordance with generally accepted accounting
principles consistently applied.
Except as specifically modified herein, all of the terms and conditions of
the Agreement of Amendment, and the certificates and other documents executed in
connection therewith, shall remain in full force and effect and any term in
initial capitals and not otherwise defined herein shall have the meaning
ascribed thereto in the Agreement of Amendment.
IN WITNESS WHEREOF, the parties have signed this Allonge to Agreement of
Amendment.
Witness: OSTEOTECH, INC.
A Delaware Corporation
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Executive Vice President
Witness: OSTEOTECH INVESTMENT CORPORATION
A New Jersey Corporation
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Executive Vice President
Signatures continued ......
................. continuation of signatures to Allonge to Agreement of Amendment
Witness: CAM IMPLANTS, INC.
A Colorado Corporation
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Chief Financial Officer
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Witness: OSTEOTECH, B.V.
A Company of The Netherlands
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Managing Director
Witness: H.C. IMPLANTS, B.V.
A Company of The Netherlands
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Managing Director
Witness: OSTEOTECH IMPLANTS, B.V.
f/k/a Cam Implants, B.V.
A Company of The Netherlands
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Managing Director
Witness: OSTEOTECH/CAM SERVICES, B.V.
A Company of The Netherlands
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Managing Director
Witness: OSTEOTECH, S.A.
A Corporation of France
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Managing Director
Signatures continued ......
................. continuation of signatures to Allonge to Agreement of Amendment
Witness: OST DEVELOPPEMENT, S.A.
A Corporation of France
____________________________ By: ____________________________________
XXXXXXX X. XXXXXXXX
Managing Director
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Witness: FLEET NATIONAL BANK
____________________________ By: ____________________________________
XXXXX X. XXXXXX
Senior Vice President
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