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 (
