Exhibit 10.5
FOURTH AMENDMENT AND
MODIFICATION
TO LOAN AND SECURITY
AGREEMENT
THIS FOURTH AMENDMENT AND
MODIFICATION TO LOAN AND SECURITY AGREEMENT (the
“Amendment” ) is made effective as of the 30th
day of September, 2007, by and among INFOLOGIX SYSTEMS
CORPORATION (formerly known as Info Logix Inc.) , a Delaware
corporation ( “Infologix” ), OPT ACQUISITION
LLC , a Pennsylvania limited liability company (
“Optasia” ), EMBEDDED TECHNOLOGIES, LLC ,
a Delaware limited liability company (
“Embedded” and together with Infologix and
Optasia, jointly, severally and collectively
“Borrowers” and each a
“Borrower” ) and SOVEREIGN BANK (the
“Bank ”
).
BACKGROUND
A.
Pursuant to that certain Loan and Security Agreement dated March
16, 2006 by and among Borrowers and Bank (as amended by that
certain First Amendment and Modification to Loan and Security
Agreement dated August 25, 2006 (the “First
Amendment” ), that certain Second Amendment and
Modification to Loan and Security Agreement dated October 31, 2006
(the “Second Amendment” ), that certain Third
Amendment and Modification to Loan and Security Agreement dated
March 23, 2007 (the “Third Amendment” ) and as
the same may hereafter be amended, modified, supplemented or
restated from time to time, being referred to herein as the
“Loan Agreement” ), Bank agreed, inter
alia , to extend to Borrowers the following credit
facilities: (i) a line of credit in the maximum principal
amount of Eight Million Five Hundred Thousand Dollars
($8,500,000.00), (ii) a term loan in the original principal amount
of One Million Five Hundred Thousand Dollars ($1,500,000.00) and
(iii) a term loan in the original principal amount of One Million
Dollars ($1,000,000.00).
B.
Borrowers have requested and Bank has agreed to amend the Loan
Agreement in accordance with the terms and conditions contained
herein.
C.
All capitalized terms contained herein and not otherwise defined
herein shall have the meanings set forth in the Loan
Agreement.
NOW, THEREFORE ,
intending to be legally bound hereby, the parties hereto agree as
follows:
1.
New Term Loan C . The Loan
Agreement is hereby amended by adding the following as Sections 2.2B, 3.2B, 4.3B and 4.3C
thereto:
“2.2B Term
Loan C . Bank shall lend to Borrowers and Borrowers shall
borrow from Bank the aggregate amount of Two Million Dollars
($2,000,000.00) ( “Term Loan C” ).
Borrowers’ obligation to repay Term Loan C shall be evidenced
by Borrowers’ promissory note (the “Term Note
C” ) in the face amount of Two Million Dollars
($2,000,000.00).”
“3.2B
Interest on Term Loan C . Interest on the entire outstanding
principal balance of Term Loan C will accrue at the rate per annum
which is equal to the Prime Based Term C Rate.”
“4.3C
Principal Payments on Term Loan C . Borrowers will pay the
principal of Term Loan C in equal and consecutive monthly
installments of Fifty-Five Thousand Five Hundred Fifty-Five and
56/100 Dollars ($55,555.56) each, on the first day of each calendar
month commencing on March 1, 2008, and in one (1) final payment of
the remaining principal balance, plus all accrued and unpaid
interest thereon on March 16, 2011.”
2.
Definitions .
(a)
Contract Period .
Section 1.1(n) of the Loan
Agreement is hereby deleted in its entirety and replaced with the
following:
“(n)
“ Contract Period ” means the period of
time commencing on the date hereof and continuing through and
including March 16, 2011.”
(b)
Maximum Line Amount .
Section 1.1(bbb) of the
Loan Agreement is hereby deleted in its entirety and replaced with
the following:
“(bbb) “ Maximum
Line Amount ” means an amount up to Eleven Million
Dollars ($11,00,000.00).”
(c)
Net Income. Section 1.1(ccc) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
“(ccc) “
Net Income ” means
income (or loss) of Borrowers after income and franchise taxes and
shall have the meaning given such term by GAAP, provided that there
shall be specifically excluded therefrom (i) gains or losses from
the sale of capital assets, (ii) net income of any Person in which
any Borrower has an ownership interest, unless received by such
Borrower in a cash distribution, (iii) any gains arising from
extraordinary items, and (iv) non-cash expenses related to options,
all as determined in accordance with GAAP on a consolidated
basis.”
(d)
Prime Rate Advance .
Section 1.1(nnn) of the
Loan Agreement is hereby deleted in its entirety and replaced with
the following:
“(nnn) “ Prime
Rate Advance ” means any Advance accruing interest at
the Prime Based Line Rate, the Prime Based Term Rate, the Prime
Based Term B Rate or the Prime Based Term C Rate.”
3.
Additional Definitions .
Section 1.1 of the Loan
Agreement is hereby amended by adding the following as Sections 1.1(l)A, 1.1(lll)C, 1.1(lll)D,
1.1(aaaa)B and 1.1(bbbb)B thereto:
“(l)A
“ Cash Equivalents ” means the aggregate
of a Person’s (i) cash on hand or in any bank or trust
company, (ii) monies on deposit in any money market accounts and
(iii) treasury bills, certificates of deposit, commercial paper and
readily marketable
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securities traded on a
nationally recognized exchange at current market value having, in
each instance, a maturity of not more than one hundred eighty (180)
days.”
“(lll)C
“ Prime Based Term C Rate ” means the
Prime Rate, plus the Prime Rate Term C Margin (such rate to
change immediately upon any change in the Prime Rate).”
“(lll)D
“ Prime Rate Term C Margin ” means 150
basis points.”
“(aaaa)B
“ Term Loan C ” shall have the meaning
given such term in Section
2.2B hereof.”
“(bbbb)B
“ Term Note C ” shall have the meaning
given such term in Section
2.2B hereof.”
4.
Line of Credit . The
reference to “Eight Million Five Hundred Thousand Dollars
($8,500,000.00)” set forth in Section 2.1 of the Loan Agreement is
hereby deleted and replaced with “Eleven Million Dollars
($11,000,000.00)”.
5.
Use of Proceeds .
Section 2.3 of the Loan
Agreement is hereby deleted in its entirety and replaced with the
following:
“2.3
Use of Proceeds . Borrowers
agree to use Advances (other than Advances under Term Loan B and
Term Loan C) to refinance obligations of Borrowers to Silicon
Valley Bank and for proper working capital purposes. Borrowers
agree to use Advances under Term Loan B to repay certain
obligations of Infologix to Cosmo DeNicola, Craig Wilensky, Richard
Hodge, David Gulian and/or Albert Ciardi, Jr. Borrowers agree to
use Advances under Term Loan C to fund a portion of the purchase
price of the acquisition of substantially all of the assets of
Healthcare Informatics Associates, Inc.”
6.
Method of Advances .
Section 2.4(b) of the Loan
Agreement is hereby deleted in its entirety and replaced with the
following:
“(b)
Term Loan Advance . The
entire principal amount of the Term Loan shall be advanced on the
date hereof. The entire principal amount of Term Loan B shall be
advanced on August 25, 2006. The entire principal amount of Term
Loan C shall be advanced on October 1, 2007.”
7.
Term Loan Payments .
Section 4.3(a) of the Loan
Agreement is hereby deleted in its entirety and replaced with the
following:
“(a)
Principal Payments on the Term
Loan . Subject to the next succeeding sentence, Borrowers
will pay the principal of the Term Loan in (i) equal and
consecutive monthly installments of Forty-One
3
Thousand Six Hundred
Sixty-Six and 66/100 Dollars ($41,666.66) each, on the first day of
each calendar month commencing on April 1, 2006 and continuing
through and including August 1, 2007, and (ii) one (1) final
payment of the remaining principal balance, plus all accrued and
unpaid interest thereon on March 16, 2011. Notwithstanding the
foregoing, in addition to any other rights or remedies that Bank
may have hereunder or under any of the other Loan Documents, if at
any time Bank does not have a lien against the Pledged Account,
Borrowers will pay the principal of the Term Loan in equal and
consecutive monthly installments of Forty-One Thousand Six Hundred
Sixty-Six and 66/100 Dollars ($41,666.66) each, on the first day of
each calendar month commencing on the first day of the first
calendar month following the date the Bank no longer has a
lien against the Pledged Account and one (1) final payment of the
remaining principal balance, plus all accrued and unpaid interest
thereon on March 16, 2011.”
8.
Term Loan B Payments .
Section 4.3A of the Loan
Agreement is hereby deleted in its entirety and replaced with the
following:
“4.3A
Principal Payments on Term Loan
B . Subject to the next succeeding sentence, Borrowers will
pay the principal of Term Loan B in (a) equal and consecutive
monthly installments of Twenty-Seven Thousand Seven Hundred
Seventy-Seven and 78/100 Dollars ($27,777.78) each, on the first
day of each calendar month commencing on November 1, 2006 and
continuing through and including August 1, 2007, and (b) one (1)
final payment of the remaining principal balance, plus all accrued
and unpaid interest thereon on March 16, 2011. Notwithstanding the
foregoing, in addition to any other rights or remedies that Bank
may have hereunder or under any of the other Loan Documents, if at
any time Bank does not have a lien against the Pledged Account,
Borrowers will pay the principal of the Term Loan in equal and
consecutive monthly installments of Twenty-Seven Thousand Seven
Hundred Seventy-Seven and 78/100 Dollars ($27,777.78) each, on the
first day of each calendar month commencing on the first day of the
first calendar month following the dated Bank no longer has a lien
against the Pledged Account and one (1) final payment of the
remaining principal balance, plus all accrued and unpaid interest
thereon on March 16, 2011.”
9.
Excess Cash Flow .
Section 4.3B of the Loan
Agreement is hereby deleted in its entirety and replaced with the
following:
“4.3B Excess
Cash Flow . In addition to the monthly Term Loan, Term Loan B
and Term Loan C payments required by the foregoing Sections 4.3, 4.3A and 4.3C , at
Bank’s option, Borrowers shall pay to Bank, on an annual
basis contemporaneously with its delivery of the financial
statements required by Section
9.1 hereof and in any event
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no later than ninety
(90) days after the end of each fiscal year of Borrowers, an amount
equal to fifteen percent (15%) of Excess Cash Flow for the
immediately preceding fiscal year, which payment shall be applied
to the regularly scheduled payments of the Term Loan, Term Loan B
and/or Term Loan C, as Bank’s sole option, in the inverse
order in which they are due.”
10.
Termination of Line; Prepayment of
Term Loans . Section
4.8 of the Loan Agreement is hereby deleted in its entirety
and replaced with the following:
“4.8
Termination of Line; Prepayment of
Term Loan, Term Loan B and/or Term Loan C .
(a)
Right to Terminate .
Borrowers may terminate the Line upon sixty (60) days prior written
notice to Bank.
(b)
Termination Fee . In the
event that (i) the Line is terminated by Borrowers for any reason,
including without limitation prepayment or refinancing of the Line
with another lender or from any other source, or (ii) an Event of
Default occurs and the Line is terminated, Borrowers shall pay to
Bank a termination fee calculated as follows:
(1)
if the termination date is on or prior to March 16, 2009, the
termination fee will be equal to one-half of one percent (.5%) of
the sum of the (i) Maximum Line Amount, plus (ii) the then
outstanding principal balance of Term Loan, plus (iii) the then
outstanding principal balance of Term Loan B, plus (iv) the then
outstanding principal balance of Term Loan C; and
(2)
if the termination date is after March 16, 2009, there will be no
termination fee.
If Borrowers request an
extension of the Contract Period, Bank reserves the right,
inter alia , to amend the termination fees for
subsequent periods as a condition of any extension of the Line,
together with such other conditions as Bank shall
require.
In the event Bank
exercises its right to accelerate payments under Term Loan, Term
Loan B or Term Loan C following an Event of Default or otherwise,
any tender of payment of the amount necessary to repay all or part
of Term Loan, Term Loan B or Term Loan C made thereafter at any
time by Borrowers, their successors or assigns, or by anyone on
behalf of Borrowers and any receipt by Bank of proceeds of
Collateral in payment of Term Loan, Term Loan B or Term Loan C
shall be deemed to be a voluntary prepayment and in connection
therewith Bank shall be entitled to receive the premium, if any
required to be paid under the foregoing prepayment
restrictions.
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(c)
Term Loan, Term Loan B and Term
Loan C Co-Terminus with Line . In the event the Line is
terminated for any reason including, without limitation, as a
result of an Event of Default, expiration of the Contract Period,
pre-payment by Borrowers or otherwise, the entire outstanding
principal balance of each of Term Loan, Term Loan B and Term Loan
C, together with any accrued and unpaid interest thereon and any
other sums due pursuant to the ter
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