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SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

Security Agreement

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT | Document Parties: INFOLOGIX INC | Embedded Technologies, LLC | Hercules Technology Growth Capital, Inc | InfoLogix Systems Corporation | InfoLogix, Inc | InfoLogix-DDMS, Inc | Opt Acquisition LLC You are currently viewing:
This Security Agreement involves

INFOLOGIX INC | Embedded Technologies, LLC | Hercules Technology Growth Capital, Inc | InfoLogix Systems Corporation | InfoLogix, Inc | InfoLogix-DDMS, Inc | Opt Acquisition LLC

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Title: SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
Governing Law: California     Date: 6/4/2009
Industry: Computer Networks     Sector: Technology

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Exhibit 10.3

 

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT dated as of May 31, 2009 (this “ Second Amendment ”), among InfoLogix, Inc., a Delaware corporation (“ Parent Borrower ”), InfoLogix Systems Corporation, a Delaware corporation (“ ISC ”), Embedded Technologies, LLC, a Delaware limited liability company (“ Embedded ”), Opt Acquisition LLC, a Pennsylvania limited liability company (“ Opt ”) and InfoLogix–DDMS, Inc., a Delaware corporation (“ DDMS ”) (Parent Borrower, ISC, Embedded, Opt and DDMS are each referred to herein as a “Borrower” and collectively as the “Borrowers”) and Hercules Technology Growth Capital, Inc., a Maryland corporation (“ Lender ”).  Reference is made to that certain Loan and Security Agreement dated as of May 1, 2008 by and among the Borrowers and the Lender, as amended by the First Amendment to Loan and Security Agreement (the “ First Amendment ”) dated November 19, 2008 (as amended and in effect from time to time, the “ Loan Agreement ”).  Capitalized terms used herein and which are not otherwise defined herein have the same meanings herein as specified in the Loan Agreement.

 

RECITALS

 

WHEREAS , the Borrowers and the Lender desire to amend the Loan Agreement as provided herein;

 

NOW, THEREFORE , in consideration of the mutual agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

AGREEMENTS

 

§1.           Amendments to Loan Agreement .  The Loan Agreement is hereby amended in the following respects:

 

(a)            Section 1.1 of the Loan Agreement is hereby amended by adding the following definitions in the appropriate alphabetical order:

 

“Fundamental Event Closing” means the consummation of the transaction contemplated by the Fundamental Event Transaction on terms and subject to definitive documentation in form and substance reasonably satisfactory to Lender in its discretion and application of cash proceeds from such Fundamental Event Transaction to the repayment of the Term Loan in full.

 

“Fundamental Event Transaction” means a binding definitive agreement for one or more of the following (i) the sale, transfer or conveyance or other disposition of all or substantially all of the assets of the Parent Borrower or its direct and indirect Subsidiaries, (ii) the sale of all or substantially all of the Capital Stock of the Parent Borrower or its direct or indirect Subsidiaries, (iii) a cash equity infusion in an amount of at least $12,000,000, or (iv) the incurrence of Subordinated Indebtedness in an amount of at least $12,000,000, each on terms and in form and substance reasonably satisfactory to Lender in its discretion.

 



 

“Liquidity Event” shall have the meaning ascribed to it in Section 2.7(b) of this Loan Agreement.

 

“Restructuring Fee” shall have the meaning ascribed to it in Section 7.23 of this Loan Agreement.

 

“Restructuring Fee First Installment” shall have the meaning ascribed to it in Section 7.23 of this Loan Agreement.

 

“Second Amendment Effective Date” means May 31, 2009.

 

(b)            Section 1.1 of the Loan Agreement is hereby amended by deleting the definition of “Fundamental Event Agreement” in its entirety.

 

(c)            Section 1.1 of the Loan Agreement is hereby amended by amending and restating the following definitions in their entirety as follows:

 

“Average Total Enterprise Value Differential” shall mean the amount, if any, by which (i) the average of the Parent Borrower’s market capitalization for the 10-day period preceding any payments described in Section 2.7(b) exceeds (ii) $11,326,808.  In the event such market capitalization preceding any payments described in Section 2.7(b) does not exceed $11,326,808, then the Average Total Enterprise Value Differential shall be deemed to be zero (0).

 

“Revolving Interest Rate” means

 

(a) for periods prior to the Second Amendment Effective Date, the rates required pursuant to the terms of this Loan Agreement as initially executed through the Amendment Effective Date of the First Amendment and, from the Amendment Effective Date of the First Amendment until immediately prior to the Second Amendment Effective Date, the rates required pursuant to the terms of the First Amendment; and

 

(b) for the period commencing on the Second Amendment Effective Date to and including September 30, 2009, the sum of (i) the greater of fourteen and one-quarter percent (14.25%) per annum, and the prime rate as reported in The Wall Street Journal plus nine and three-quarter percent (9.75%) per annum, plus (ii) one and one half percent (1.50%) per annum, which interest under this clause (ii) shall be payable in kind on the first business day of each month, commencing June 1, 2009, by capitalizing the amount of such interest accrued prior to such monthly payment date, and adding such amount to the principal amount of the Revolving Loan; and

 

(c) for the period commencing on October 1, 2009 and at all times thereafter, the sum of (i) the greater of fourteen and one-quarter percent (14.25%) per annum, and the prime rate as reported in The Wall Street Journal plus nine and three quarter percent (9.75%) per annum, plus (ii) four and one half percent (4.50%) per annum, which interest under this clause (ii) shall be payable in kind on the first business day of each month, commencing November 1, 2009, by capitalizing the amount of such interest accrued prior to such monthly payment date, and adding such amount to the principal amount of the Revolving Loan.

 

“Revolving Loan Maturity Date” means January 1, 2010.

 



 

“Term Loan Interest Rate” means

 

(a) for periods prior to the Second Amendment Effective Date, the rates required pursuant to the terms of this Loan Agreement as initially executed through the Amendment Effective Date of the First Amendment, and, from the Amendment Effective Date of the First Amendment until immediately prior to the Second Amendment Effective Date, the rates required pursuant to the terms of the First Amendment; and

 

(b) for the period commencing on the Second Amendment Effective Date to and including September 30, 2009, the sum of (i) the greater of fifteen and three-quarter percent (15.75%) per annum, and the prime rate as reported in The Wall Street Journal plus ten and three quarter percent (10.75%) per annum; plus (ii) three and three quarter percent (3.75%) per annum, which interest under this clause (ii) shall be payable in kind on the first business day of each month, commencing June 1, 2009, by capitalizing the amount of such interest accrued prior to such monthly payment date, and adding such amount to the principal amount of the Term Loan; and

 

(c) for the period commencing on October 1, 2009 and at all times thereafter, the sum of (i) the greater of fifteen and three-quarter percent (15.75%) per annum, and the prime rate as reported in The Wall Street Journal plus ten and three quarter percent (10.75%) per annum, plus (ii) six and three quarter percent (6.75%) per annum, which interest under this clause (ii) shall be payable in kind on the first business day of each month, commencing November 1, 2009, by capitalizing the amount of such interest accrued prior to such monthly payment date, and adding such amount to the principal amount of the Term Loan.

 

(d)            The definition of “Consolidated Adjusted EBITDA” in Section 1.1 of the Loan Agreement is hereby amended by inserting “and Second Amendment” immediately following “Amendment” in clause (x) of such definition.

 

(e)            The definition of “Permitted Acquisition” in Section 1.1 of the Loan Agreement is hereby amended by deleting “of clause (i) and (ii)” from the second parenthetical of the first paragraph of such definition and inserting “of clause (i) and (ii)” immediately following “in each case” in the third parenthetical of the first paragraph of such definition and deleting the words “on an individual basis” in clause (xi) thereof.

 

(f)             Section 2.5(c) of the Loan Agreement is hereby amended and restated as follows:

 

“(c)          Term Loan Repayment .  On the first day of each month from February 1, 2009 through and including May 1, 2009, the Borrowers repaid the principal of the Term Loan in an aggregate amount as to all such payments of $600,000.  In addition, Borrowers shall repay the outstanding principal under the Term Loan on the first Business Day of each calendar month, commencing January 1, 2010, as follows: (i) for the period commencing January 1, 2010 and continuing through and including May 1, 2010, in monthly installments each equal to an amount that is fifteen percent (15.0%) of the outstanding principal balance of the Term Loan as of the Term Loan Determination Date divided by 5; (ii) for the period commencing June 1, 2010 and continuing through and including May 1, 2011, in monthly installments each equal to an amount that is twenty-five percent (25.0%) of the outstanding principal balance of the Term Loan as of the Term Loan

 



 

Determination Date, divided by 12; and (iii) for the period commencing June 1, 2011 and continuing through and including the Term Loan Maturity Date, in monthly installments each equal to an amount that is fifty-five percent (55.0%) of the outstanding principal balance of the Term Loan on the Term Loan Determination Date, divided by 12.  The Term Loan entire principal balance and all accrued but unpaid interest hereunder, shall be due and payable on the Term Loan Maturity Date.”

 

(g)            Section 2.6(c)(i) of the Loan Agreement is hereby amended and restated as follows:

 

“i.             Upon any prepayment of the Term Loan pursuant to Section 2.6(b)  and Section 10.1 , Borrowers shall pay a prepayment charge equal to the following percentage of the Term Loan being prepaid: if such payment is made or required to be made on or after the Second Amendment Effective Date but prior to the date that is twenty-four (24) months following the Closing Date, 2.0%; and thereafter, 1.0% (each, a “ Term Loan Prepayment Charge ”).”

 

(h)            The following Section 2.6(d) shall be added to the Loan Agreement immediately following Section 2.6(c) of the Loan Agreement:

 

“(d)          Voluntary Commitment Reduction .

 

i. Borrower may, at any time upon at least 5 Business Days’ notice to Lender, voluntarily terminate, in whole (or in part solely with the consent of the Lender) the commitment evidenced by the Maximum Revolving Loan Amount.

 

ii. Upon any termination of the commitment evidenced by the Maximum Revolving Loan Amount, including without limitation, a voluntary termination or reduction of the commitment evidenced by the Revolving Loan Amount, if required pursuant to Section 10.01, or upon the Revolving Loan Maturity Date, all Revolving Loan Advances, together with all accrued but unpaid interest thereon, shall be immediately due and payable in full.”

 

(i)             Section 2.7(b) of the Loan Agreement is hereby amended and restated as follows:

 

“Upon the earliest to occur of (i) demand from the Lender at any time between June 30, 2009 and April 30, 2012, (ii) the acceleration of the Secured Obligations, (iii) the Term Loan Maturity Date, and (iv) a prepayment in full of the Term Loan, Borrowers shall pay to Lender an amount equal to (1) if the Fundamental Event Closing has occurred on or prior to September 30, 2009, the greater, as of such date of determination, of (x) $1,200,000, or (y) an amount equal to six percent (


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