LOAN DOCUMENT MODIFICATION AGREEMENT EXHIBIT 10.61
(No. 1; dated as of June 30, 1999)
LOAN DOCUMENT MODIFICATION AGREEMENT, dated as of June 30, 1999, by and
between LIFELINE SYSTEMS, INC., a Massachusetts corporation with its principal
place of business and chief executive office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower") and STATE STREET BANK AND TRUST COMPANY, a
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Massachusetts trust company with its head office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Bank").
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1. Reference to Existing Loan Documents.
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Reference is hereby made to that Revolving Credit Agreement, dated as
of April 22, 1998, between the Borrower and the Bank (with the attached
schedules and exhibits, the "Credit Agreement") and the Loan Documents referred
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to therein, including without limitation that certain Revolving Credit Note of
the Borrower, dated April 22, 1998 in the principal amount of $5,000,000 (the
"Revolving Credit Note") and that certain Convertible Revolving Loan Note of the
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Borrower, dated April 22, 1998 in the principal amount of $5,000,000 (the
"Convertible Note" and together with the Revolving Credit Note, the "Notes").
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Unless otherwise defined herein, capitalized terms used in this Agreement shall
have the same respective meanings as set forth in the Credit Agreement.
2. Effective Date.
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This Agreement shall become effective as of June 30, 1999 (the "Effective
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Date"), provided that the Bank shall have received the following on or before
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September 30, 1999:
a. two copies of this Agreement, duly executed by the Borrower; and
b. an amended and restated promissory note in the principal amount of
$10,000,000 in the form enclosed herewith (the "Amended Note"), duly executed by
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the Borrower.
By the signature of its authorized officer below, the Borrower is hereby
representing that, except as modified in Schedule A attached hereto, the
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representations of the Borrower set forth in the Loan Documents (including those
contained in the Credit Agreement, as amended by this Agreement) are true and
correct as of the Effective Date as if made on and as of such date. Finally, the
Borrower agrees that, as of the Effective Date, it has no defenses against its
obligations to pay any amounts under the Credit Agreement and the Loan
Documents.
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3. Description of Change in Terms.
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As of the Effective Date, the Credit Agreement is modified in the following
respects:
a. The definitions of "Convertible Revolving Credit Availability
Expiration Date," "Convertible Revolving Credit Commitment," "Convertible
Revolving Credit Loan," "Convertible Revolving Credit Maturity Date" and
"Convertible Revolving Credit Note" and all references to such terms in the
Credit Agreement and the other Loan Documents are hereby deleted in their
entirety.
b. The definition of "Interest Period" is hereby amended by deleting
the phrase "ninety (90), one hundred twenty (120) or three hundred sixty (360)
days" and replacing it with the phrase "thirty (30), sixty (60), ninety (90),
one hundred twenty (120) or one hundred eighty (180) days."
c. The definition of "Revolving Credit Maturity Date" is hereby amended
by deleting the date "June 30, 1999" and replacing it with the date "June 30,
2002."
d. Section 1.1 is hereby amended by inserting the following
definitions, in alphabetical order:
"'Acquisition Loan' shall mean a Revolving Credit Loan utilized to
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finance a Permitted Financeable Acquisition.
'Certificate of Permitted Acquisition' shall mean the notice,
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substantially in the form of Exhibit D hereto, to be given by the Borrower
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to the Bank to request an Acquisition Loan, in accordance with Section 3.
'EBITDA' shall mean, as of the applicable period, earnings before
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interest, taxes, depreciation and amortization, calculated in accordance
with GAAP.
'Permitted Financeable Acquisition' shall mean an acquisition which:
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(a) is a Permitted Acquisition; and
(b) satisfies each of the following requirements:
(i) The total consideration paid must represent a comparable
multiple to other recent industry transactions, as demonstrated by
the Borrower's furnishing evidence satisfactory to the Bank.
(ii) The target company must have positive pro forma adjusted
EBITDA for at least the previous twelve months of operations as
demonstrated by the Borrower's furnishing evidence satisfactory to
the Bank.
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(iii) After giving effect to each such acquisition, the
Borrower's Leverage Ratio shall not exceed (a) for any acquisition
occurring on or prior to March 31, 2000, 1.25 to 1.00, and (b) for
any acquisition occurring on or after April 1, 2000, 1.00 to 1.00,
in each case as demonstrated by the Borrower's furnishing pro forma
financial statements satisfactory to the Bank."
e. Section 2.1 is hereby amended by deleting the phrase "Five Million
Dollars ($5,000,000)" from the seventh line and replacing it with the phrase
"Ten Million Dollars ($10,000,000)."
f. Sections 2.2 and 2.6(b) are hereby deleted in their entirety and
each replaced with the word "Reserved."
g. Section 2.5 is hereby recaptioned "Maturity and Repayment" and the
second sentence of such Section 2.5 is hereby restated in its entirety as
follows:
"All Acquisition Loans made in any fiscal quarter shall be aggregated and
the principal amount of such aggregated Acquisition Loans will be repayable
in equal installments based upon a sixty (60) month amortization schedule
with the first installment to be made on the first day of the next
succeeding fiscal quarter, provided, however, nothing in this sentence
shall diminish the Borrower's obligation under the first sentence of this
Section 2.5 or under Section 4.6."
h. Section 3(a) is hereby amended by adding the following new sentences
at the end of such section:
"If the Borrower wishes to use a Revolving Credit Loan as an Acquisition
Loan (that is, to finance a Permitted Financeable Acquisition), the
Borrower shall so state the principal amount to be so utilized in its
telephonic notice, and shall give the Bank, in addition to the written
Notice of Borrowing or Conversion required by this Section 3.1(a), a
written Certificate of Permitted Acquisition. Such Certificate shall (i)
specify the effective date and amount of the Acquisition Loan and (ii)
describe the Permitted Financeable Acquisition which is to be financed."
i. Section 4.1(b) is hereby deleted in its entirety and replaced with
the following:
"(b) Notwithstanding the foregoing,
(i) if an Event of Default pursuant to Section 10.1(a) hereof shall
occur, or
(ii) if an Event of Default pursuant to any provision of Section
10.1 hereof (other than Section 10.1(a)) shall occur, beginning thirty
(30) days after notice from the Bank,
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then the unpaid balance of Loans shall bear interest at a rate per annum
equal to the Post-Default Rate until such Event of Default is cured or
waived, and any other amount payable hereunder which is not paid in full
when due shall bear interest, at a rate per annum equal to the Post-
Default Rate, until the sooner to occur of (x) the date upon which all
Obligations to the Bank have been paid in full and the Commitments have
been terminated, or (y) the date upon which such Event of Default is
cured or waived."
j. Section 4.3 is hereby amended by deleting the phrase "$500,000 or a
larger multiple of $100,000" appearing in the fourth line of such section and
substituting in place thereof the following: "$100,000 or a larger multiple of
$100,000."
k. Section 7.1 is hereby amended by restating the first sentence
thereof in its entirety as follows:
"The proceeds of the Revolving Credit Loans shall be used solely for
working capital purposes and to finance Permitted Financeable Acquisitions,
provided, however, the Bank will not make advances for Permitted
Financeable Acquisitions in an aggregate principal amount in excess of
$5,000,000, unless the Bank in it sole discretion so agrees in writing."
l. Section 8.2 is hereby amended by deleting the last paragraph
thereof.
m. Section 9.3 is hereby deleted in its entirety and replaced with the
following:
"Leverage Ratio. The Borrower will not permit its Leverage Ratio to be
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less than (i) 1.25 to 1.00 as of the end of any fiscal quarter, commencing
with the quarter ending June 30, 1999, through the quarter ending March 31,
2000 and (ii) 1.00 to 1.00 as of the end of any fiscal quarter, commencing
with the quarter ending June 30, 2000 and for each quarter ending
thereafter."
n. The Revolving Credit Note attached as Exhibit A-1 to the Credit
Agreement is hereby restated in its entirety in the form of Exhibit A hereto.
o. The Compliance Certificate attached as Exhibit C to the Credit
Agreement is hereby restated in its entirety in the form of Exhibit C hereto.
p. The Certificate of Permitted Financeable Acquisition attached hereto
as Exhibit D is hereby inserted as Exhibit D to the Credit Agreement.
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4. Restatement of Revolving Credit Note; Cancellation of Convertible Note.
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As of the Effective Date, (a) the Revolving Credit Note shall be amended
and restated in its entirety by the Amended Note and all references in the
Credit Agreement and the other Loan Documents shall mean and be a reference to
the Amended Note; and (b) the Convertible Note shall be cancelled and returned
to the Borrower so marked.
5. Consistent Changes.
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As of the Effective Date, the Loan Documents shall be amended wherever
necessary to reflect the changes described above.
6. Continuing Validity.
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Upon the effectiveness hereof, each reference in each Loan Document to
the "Revolving Credit Agreement," the "Credit Agreement," "thereunder,"
"thereof," "therein" or words of like import referring to the Credit Agreement
shall mean and be a reference to the Credit Agreement, as amended hereby.
Except as specifically set forth above, the Credit Agreement shall remain in
full force and effect and is hereby ratified and confirmed. Except as provided
in the foregoing sentence and paragraph 4 above, each of the other Loan
Documents is in full force and effect and is hereby ratified and confirmed. The
amendments set forth above (i) do not constitute a waiver or modification of any
term, condition or covenant of the Credit Agreement or any Loan Document, other
than as expressly set forth herein, and (ii) shall not prejudice any rights
which the Bank may now or hereafter have under or in connection with the Credit
Agreement, as modified hereby, or any Loan Document and shall not obligate the
Bank to assent to any further modifications.
7. Miscellaneous.
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a. This Agreement may be signed in one or more counterparts each of
which taken together shall constitute one and the same document.
b. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
c. THE BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS IN
ANY ACTION, SUIT OR PROCEEDING OF ANY KIND AGAINST IT WHICH ARISES OUT OF OR BY
REASON OF THIS LOAN DOCUMENT MODIFICATION AGREEMENT.
d. THE BORROWER AND THE BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS
TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION OF WHATEVER NATURE BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREIN.
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EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A
MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS
AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
e. The Borrower agrees to promptly pay on demand all costs and expenses of
the Bank in connection with the preparation, reproduction, execution and
delivery of this letter amendment and the other instruments and documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses of
▇▇▇▇▇▇▇▇ & Worcester LLP, special counsel for the Bank with respect thereto.
IN WITNESS WHEREOF, the Bank and the Borrower have caused this Agreement to
be signed under seal by their respective duly authorized officers as of the date
set forth above.
Sincerely,
LIFELINE SYSTEMS, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Finance, CFO
STATE STREET BANK AND TRUST COMPANY
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Vice President
Schedule A
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Modifications to Representations and Warranties
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None.
Exhibit A
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AMENDED AND RESTATED NOTE
$10,000,000 June 30, 1999
(Originally dated April 22, 1998)
For value received, the undersigned, LIFELINE SYSTEMS, INC., a
Massachusetts corporation (the "Borrower"), promises to pay to STATE STREET BANK
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AND TRUST COMPANY, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Bank"), or to its order, the lesser of Ten Million Dollars ($10,000,000) or the
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outstanding principal amount of Revolving Credit Loans (as defined in the Credit
Agreement referred to below) advanced by the Bank to the Borrower pursuant to
the Credit Agreement, on the Revolving Credit Maturity Date (as defined in the
Credit Agreement), together with interest on the principal amount hereof from
time to time outstanding at the rates and at the times provided in the Credit
Agreement.
Computations of interest shall be made by the Bank on the basis of a year
of 360 days for the actual number of days occurring in the period for which such
interest is payable.
This promissory note amends and restates the terms and conditions of the
obligations of the Borrower under the promissory note dated April 22, 1998 (the
"Original Note") by the Borrower to the Bank. This promissory note is referred
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to in the credit agreement dated as of April 22, 1998, as amended by a loan
document modification agreement dated as of June 30, 1999, by the Bank and
accepted by the Borrower together with all related schedules, as the same may be
amended, modified or supplemented from time to time (the "Credit Agreement"),
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and is subject to optional and mandatory prepayment as provided therein, and is
entitled to the benefits thereof and of the other Loan Documents referred to
therein.
Each reference in each Loan Document (as defined in the Credit Agreement)
to "the Note," "thereof," "therein," "thereunder" or words of like import
referring to the Original Note, shall mean and be a reference to the Original
Note, as amended and restated hereby.
Upon the occurrence of any Event of Default under, and as defined in, the
Credit Agreement, at the option of the Bank, the principal amount then
outstanding of and the accrued interest on the advances under this note and all
other amounts payable under this note shall become immediately due and payable,
without notice (including, without limitation, notice of intent to accelerate),
presentment, demand, protest or other formalities of any kind, all of which are
hereby expressly waived by the Borrower.
The Bank shall keep a record of the amount and the date of the making of
each advance pursuant to the Credit Agreement and each payment of principal with
respect thereto by maintaining a computerized record of such information and
printouts of such computerized record, which computerized record, and the
printouts thereof, shall constitute prima facie evidence of the accuracy of the
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information so endorsed.
The undersigned agrees to pay all reasonable costs and expenses of the Bank
(including, without limitation, the reasonable fees and expenses of attorneys)
in connection with the enforcement of this note and the other Loan Documents and
the preservation of their respective rights hereunder and thereunder.
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. The
Borrower and every endorser or guarantor of this note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any one or more extensions or postponements of the
time of payment or any other indulgences, to any substitutions, exchanges or
releases of collateral for this note, and to the additions or releases of any
other parties or persons primarily or secondarily liable.
THE BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT IT MAY NOW OR HEREAFTER HAVE
TO A JURY TRIAL IN ANY SUIT, ACTION OR PROCEEDING WHICH ARISES OUT OF OR BY
REASON OF THIS NOTE, ANY LOAN DOCUMENT (AS DEFINED IN THE CREDIT AGREEMENT), OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
BY ITS EXECUTION AND DELIVERY OF THIS NOTE, THE BORROWER ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE COMMONWEALTH OF MASSACHUSETTS IN ANY ACTION, SUIT OR PROCEEDING OF ANY
KIND AGAINST IT WHICH ARISES OUT OF OR BY REASON OF THIS NOTE, ANY LOAN DOCUMENT
(AS DEFINED IN THE CREDIT AGREEMENT), OR THE TRANSACTIONS CONTEMPLATED HEREBY,
IN ADDITION TO ANY OTHER COURT IN WHICH SUCH ACTION, SUIT OR PROCEEDING MAY BE
BROUGHT, IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED BY ANY
SUCH COURT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN WHICH IT SHALL HAVE BEEN
SERVED WITH PROCESS IN THE MANNER HEREINAFTER PROVIDED, SUBJECT TO EXERCISE AND
EXHAUSTION OF ALL RIGHTS OF APPEAL AND TO THE EXTENT THAT IT MAY LAWFULLY DO SO,
WAIVES AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN
SUCH ACTION, SUIT OR PROCEEDING ANY CLAIMS THAT IT IS NOT PERSONALLY SUBJECT TO
THE JURISDICTION OF SUCH COURT, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM
ATTACHMENT OR EXECUTION, THAT THE ACTION, SUIT OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM OR THAT THE VENUE THEREOF IS IMPROPER, AND AGREES THAT
PROCESS MAY BE SERVED UPON IT IN ANY SUCH ACTION, SUIT OR PROCEEDING IN THE
MANNER PROVIDED BY CHAPTER 223A OF THE GENERAL LAWS OF MASSACHUSETTS, RULE 4 OF
THE MASSACHUSETTS RULES OF CIVIL
A-3
PROCEDURE OR RULE 4 OF THE FEDERAL RULES OF PROCEDURE.
ALL RIGHTS AND OBLIGATIONS HEREUNDER SHALL BE GOVERNED BY THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS AND THIS NOTE SHALL BE DEEMED TO BE UNDER SEAL.
LIFELINE SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Finance, CFO
Exhibit C
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COMPLIANCE CERTIFICATE
TO: State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned Responsible Officer of Lifeline Systems, Inc., a
Massachusetts corporation (the "Borrower") hereby certifies with respect to the
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Credit Agreement, dated as of April 22, 1998, between State Street Bank and
Trust Company (the "Bank") and the Borrower, as amended through the date hereof
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(the "Credit Agreement"), that (a) the Borrower has been in complete compliance
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for the period from __/__/____ to __/__/____ (the "Applicable Initial Financial
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Statements Date") with the covenants of the Borrower contained therein, as
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demonstrated below, and (b) no Default or Event of Default has occurred and is
continuing as of the date hereof, except, in either case, as noted below. All
capitalized terms used herein and not otherwise defined shall have the meanings
prescribed therefor in the Credit Agreement.
Actual as of
Covenant Required ________ ___, ____
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Financial Statements Quarterly within 46 days
FYE within 91 days
All documents filed with the SEC Within 5 days after filing
Net Income (quarterly) $ 1,000,000 $___________________
Current Ratio (quarterly) 1.50 : 1.00 _________ : ________
Leverage Ratio Quarter ending: Ratio: _________ : ________
6/30/99 thru 3/31/2000 1.25 : 1.00 ($__________________ to
6/30/2000 and thereafter 1.00 : 1.00 $___________________ )
Comments Regarding Exceptions:
Attached hereto are financial statements as of and for the fiscal [quarter]
[year] ended on the applicable initial financial statements date, which have
been certified by the [undersigned] [Accountants] as required by the Credit
Agreement.
[_] The Leverage Ratio has changed so as to warrant an adjustment in the
Applicable Margin from ___% to ___%. (check if applicable)
Submitted by:
_________________________ Date: _______________________
Name:
Title:
Exhibit D
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FORM OF CERTIFICATE OF PERMITTED
FINANCEABLE ACQUISITION
______________, ____
State Street Bank and Trust Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Re: Revolving Credit Agreement between Lifeline
Systems, Inc. and State Street Bank and Trust Company
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Ladies and Gentlemen:
The undersigned requests, pursuant to Section 3(a) of the Revolving Credit
Agreement dated as of April 22, 1998 between Lifeline Systems, Inc. (the
"Borrower") and State Street Bank and Trust Company (the "Bank"), as amended
(the "Credit Agreement"), that the Bank make an Acquisition Loan to the Borrower
in the aggregate amount of $_____________ on ______________, ____ and hereby
represents and warrants that the requested Acquisition Loan will be used for the
Permitted Financeable Acquisition described in Schedule 1 hereto (including, but
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not limited to, the name and location of company to be acquired).
The Borrower hereby certifies that the Permitted Financeable Acquisition
satisfies the following: (a) if the acquisition involves a merger or
consolidation, the Borrower is the surviving party; (b) at the time of the
acquisition, no Default or Event of Default has occurred and is continuing; (c)
as a result of the acquisition, no Default or Event of Default or violation of
any covenant under the Credit Agreement will arise or is reasonably anticipated
to arise, which the Borrower will confirm by providing to the Bank pro forma
financial statements giving effect to the acquisition at least ten (10) days
before the closing of the acquisition; (d) the target of the acquisition is
engaged in a line of business similar to the current businesses of the Borrower
and its Subsidiaries; (e) the total consideration to be paid represents a
comparable multiple to other recent industry transactions, and such
determination has been confirmed by the Bank; (f) the target company has
positive pro forma adjusted EBITDA for at least the previous twelve months of
operations, as demonstrated by evidence satisfactory to the Bank; and (g) after
giving effect to the acquisition, the Borrower's Leverage Ratio does not exceed
(i) for any acquisition occurring on or prior to March 31, 2000, 1.25 to 1.00,
and (ii) for any acquisition occurring on or after April 1, 2000, 1.00 to 1.00,
in each case as demonstrated by evidence satisfactory to the Bank. Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Credit Agreement.
LIFELINE SYSTEMS, INC.
By: _______________________________
Name:
Title: