CONSENT, WAIVER, JOINDER AND
EIGHTH AMENDMENT TO
THIRD AMENDED AND RESTATED REVOLVING CREDIT, TERM LOAN AND
SECURITY AGREEMENT
This CONSENT,
WAIVER, JOINDER AND EIGHTH AMENDMENT TO THIRD AMENDED AND RESTATED
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT (the “
Eighth Amendment ”) is made as of this 30
th day of April, 2009 by and among CAPITALSOURCE
FINANCE LLC , a Delaware limited liability company, with its
chief executive office located at 4445 Willard Avenue, Chevy Chase,
Maryland 20815, as agent for itself and the other lenders under the
Loan Agreement referred to below (in such capacity, the “
Agent ”), UNITED STATES PHARMACEUTICAL GROUP,
L.L.C. d/b/a NATIONSHEALTH (“USPG”) , a Delaware
limited liability company, NATIONSHEALTH HOLDINGS, L.L.C.,
(“NHH”) a Florida limited liability company,
NATIONSHEALTH, INC. (“NationsHealth”) , a
Delaware corporation and DIABETES CARE & EDUCATION, INC.
(“DCE”), a South Carolina corporation (USPG, NHH,
NationsHealth and DCE being sometimes individually, collectively
and jointly and severally, “Current Borrower”
).
WHEREAS,
CapitalSource Finance LLC (together, individually and collectively,
with its successors and assigns, “ Lender ”) and
Current Borrower entered into that certain Third Amended and
Restated Revolving Credit, Term Loan and Security Agreement dated
as of the April 11, 2007, as amended by that certain First
Amendment to Third Amended and Restated Revolving Credit, Term Loan
and Security Agreement dated as of August 29, 2007, as further
amended by that certain Joinder Agreement and Second Amendment to
Third Amended and Restated Revolving Credit, Term Loan and Security
Agreement dated as of September 4, 2007, as further amended by
that certain Waiver and Third Amendment to Third Amended and
Restated Revolving Credit, Term Loan and Security Agreement dated
as of November 13, 2007, as further amended by that certain
Fourth Amendment to Third Amended and Restated Revolving Credit,
Term Loan and Security Agreement dated as of February 1, 2008,
as further amended by that certain Fifth Amendment to Third Amended
and Restated Revolving Credit, Term Loan and Security Agreement
dated as of March 27, 2008, as further amended by that certain
Sixth Amendment to Third Amended and Restated Revolving Credit,
Term Loan and Security Agreement dated as of May 15, 2008 and
as further amended by that certain Seventh Amendment to Third
Amended and Restated Revolving Credit, Term Loan and Security
Agreement dated as of April 21, 2009 (as it may be further
amended, restated, replaced, supplemented, or otherwise modified
from time to time, the “Loan Agreement” )
whereby Lender agreed to make loans, advances and other extensions
of credit to Current Borrower thereunder; and
WHEREAS,
Lender has designated Agent as its agent for taking certain actions
under the Loan Agreement pursuant to Section 12.12 of the Loan
Agreement; and
WHEREAS,
NationsHealth intends to merge with NationsHealth Acquisition Corp.
(“ NAC ”), a Delaware corporation and a wholly
owned subsidiary of ComVest NationsHealth Holdings, LLC (“
ComVest ”), a Delaware limited liability company,
subject to the terms of that certain Agreement and Plan of Merger
dated April 30 th ,
2009 (the “ Merger Agreement ”), pursuant to
which NAC shall be merged with and into NationsHealth, the separate
corporate existence of NAC shall thereupon cease, and NationsHealth
shall be the surviving corporation (such transaction, the “
Merger ”); and
WHEREAS,
in connection with the execution and delivery of the Merger
Agreement, NationsHealth has agreed to sell to ComVest shares of
NationsHealth’s Series A Convertible Preferred Stock
(the “ Series A Preferred Stock ”) in
accordance with the terms of that certain Series A Preferred
Stock Purchase Agreement dated April 30
th , 2009 by and between ComVest and NationsHealth
(the “ Series A Preferred Stock Purchase
Agreement ”); and
WHEREAS,
in connection with the execution and delivery of the Merger
Agreement, ComVest has also agreed to provide a bridge loan to
Current Borrower and National Pharmaceuticals (as defined below) in
the principal amount of $3,000,000 (the “ Bridge Loan
”) in accordance with the terms of that certain Bridge Loan
Agreement dated April 30 th ,
2009 by and between ComVest and NationsHealth (the “
Bridge Loan Agreement ”); and
WHEREAS,
in connection with the execution and delivery of the Merger
Agreement, NationsHealth has requested that MHR Capital Partners
Master Account LP (as assignee of MHR Capital Partners
(500) LP (f/k/a MHR Capital Partners LP)), OTQ LLC and MHR
Capital Partners (100) LP, collectively as holders of the
7 3
/ 4 %
Convertible Secured Notes of the Current Borrower (the “
MHR Noteholders ”), and MHR Capital Partners
(500) LP, as collateral agent for the MHR Noteholders (the
“ MHR Agent ” and, together with the MHR
Noteholders, “ MHR ”) consent to the execution
and delivery of the Merger Agreement and the Bridge Loan Agreement
and waive certain provisions of the 7 3 / 4
% Convertible Secured Notes, in
accordance with the terms of the Limited Waiver and Consent to
Convertible Secured Notes dated April 30
th , 2009 by and among Current Borrower, National
Pharmaceuticals, MHR and the other parties thereto (the “
MHR Waiver and Consent ”); and
WHEREAS,
in accordance with the terms of the Loan Agreement, Current
Borrower has requested and Lender has agreed to (a) consent to
the execution and delivery of the Merger Agreement and the Bridge
Loan Agreement and the other documents and agreements required to
be executed in connection therewith or other relating thereto,
(b) waive certain provisions of the Loan Agreement,
(c) join National Pharmaceuticals and Medical Products (USA),
LLC, a Florida limited liability company (“ National
Pharmaceuticals ” and sometimes individually,
collectively and jointly and severally with Current Borrower,
“ Borrower ”) as a party to and a borrower under
the Loan Agreement and (d) modify certain provisions of the
Loan Agreement upon the terms and subject to the conditions set
forth herein; and
WHEREAS,
Section 12.8 of the Loan Agreement provides that no
modification or waiver of the Agreement shall be effective unless
the same shall be in writing and signed by the parties
thereto;
NOW,
THEREFORE, in consideration of the foregoing, the terms and
conditions, premises and other mutual covenants set forth in this
Eighth Amendment, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Lender and
Borrower hereby agree as follows:
1.
Consent . As of the Effective Date (defined below), Lender
permanently and irrevocably consents to the taking of the following
actions by Borrower:
|
|
A.
|
|
The
execution and delivery by NationsHealth of the Merger Agreement and
the other documents and agreements executed in connection therewith
or otherwise relating thereto, including without limitation, the
Certificate of Merger (collectively, the “ Merger
Documents ”), without any amendment, modification or
waiver of the terms and conditions thereof disclosed to Lender,
except for amendments and supplements to the Company Disclosure
Schedule or the Parent Disclosure Schedule, amendments pursuant to
Section 5.3(c) of the Merger Agreement and waivers of conditions
precedent pursuant to Article VI of the Merger
Agreement;
|
2
|
|
B.
|
|
The
execution and delivery by NationsHealth of the Series A
Preferred Stock Purchase Agreement and the other documents and
agreements executed in connection therewith or otherwise relating
thereto, including, without limitation, the Amended and Restated
Certificate of Incorporation and the Management Agreement
(collectively, the “ Series A Preferred Stock
Purchase Documents ”); without any amendment,
modification or waiver of the terms and conditions thereof
disclosed to Lender;
|
|
|
|
|
|
|
|
C.
|
|
The
execution and delivery by Borrower of the Bridge Loan Agreement and
the other documents and agreements executed in connection therewith
or otherwise relating thereto, including, without limitation, that
certain 10% Secured Convertible Subordinated Promissory Note
(collectively, the “ Bridge Loan Documents ”)
and the consummation of the transactions contemplated thereby
(other than the Voluntary Series A Conversion), without any
amendment, modification or waiver of the terms and conditions
thereof disclosed to Lender, and the closing of the Bridge Loan
pursuant to the Bridge Loan Documents on the Effective
Date;
|
|
|
|
|
|
|
|
D.
|
|
The
execution and delivery by Current Borrower and National
Pharmaceuticals of the MHR Waiver and Consent and the other
documents and agreements executed in connection with or otherwise
relating thereto, including, without limitation, the Bridge Loan
Intercreditor Agreement, the Rollover Documents, the
Indemnification Agreement (in each case as defined in the MHR
Waiver and Consent)(collectively, the “ MHR Documents
”), and the issuance and delivery of the Amended Notes and
the MHR Warrants in accordance with the terms and conditions of the
MHR Waiver and Consent; in each case without any amendment,
modification or waiver of the terms and conditions thereof
disclosed to Lender; and
|
|
|
|
|
|
|
|
E.
|
|
The
foregoing consent is applicable solely to the execution and
delivery of the Merger Documents, the Series A Preferred Stock
Documents, the Bridge Loan Documents and the MHR Documents and the
consummation of the transactions specifically set forth above. The
foregoing consent does not apply to the execution and delivery of
any other documents or agreements, the consummation of any other
transaction or to the consummation of the transactions set forth
above to the extent that any of the terms and conditions thereof
may be amended, modified or waived by the parties thereto except as
otherwise permitted hereunder. In addition, the foregoing consent
does not (i) apply to the consummation of the Merger nor the
exercise by ComVest of its voluntary option to convert the Bridge
Loan into shares of Series A Preferred Stock of NationsHealth
in accordance with Section 7.2 of the Merger Agreement and the
corresponding sections of the Bridge Loan Documents (the “
Voluntary Series A Conversion ”)(the consummation
of such transactions to be permitted solely under the terms and
conditions of Sections 4.2 and 4.3 of that certain Fourth
Amended and Restated Revolving Credit, Term Loan and Security
Agreement being executed by and among Lender and Borrower
concurrently with this Eighth Amendment) or (ii) permit the
payment of any unpaid Transaction Fees due to ComVest, the
Termination Fee or any Parent Damages (as each of the foregoing are
defined in the Merger Agreement)(collectively, the “
Merger Agreement Fees and Damages ”) by Borrower upon
the termination of the Merger Agreement except to the extent
permitted by the ComVest Subordination Agreement (as defined
herein). Further, except as otherwise set forth in this Eighth
Amendment, the foregoing does not constitute an agreement by Lender
to provide its consent under the provisions of any affirmative,
negative or financial covenant or other provision of the Loan
Agreement at any time in the future. The foregoing consent shall
not imply any obligation or commitment of Lender to provide any
further consents under the Loan Agreement or any of the other Loan
Documents to Borrower at any other time and does not constitute a
course of dealing or a course of conduct. Lender hereby reserves
all of its rights under the Loan Agreement and the other Loan
Documents except as specifically provided in this Eighth
Amendment.
|
3
2.
Waiver . As of the Effective Date (defined below), Lender
and Borrower hereby agree to the following:
|
|
A.
|
|
Borrower hereby acknowledges and
agrees that pursuant to Section 1) of Annex I of the Loan
Agreement, entitled “ Minimum EBITDA ”, it was
required to maintain a minimum EBITDA, as defined therein, not to
exceed the levels described therein for each Test Period and that
Borrower did not maintain such a minimum EBITDA for the Test Period
ending October 31, 2008, November 30, 2008,
December 31, 2008, January 31, 2009 and February 28,
2009.
|
|
|
|
|
|
|
|
B.
|
|
Borrower hereby acknowledges and
agrees that pursuant to Section 2) of Annex I of the Loan
Agreement, entitled “ Fixed Charge Coverage Ratio (EBITDA/
Fixed Charges) ”, it was required to maintain a minimum
Fixed Charge Coverage Ratio, as defined therein, not to exceed the
levels described therein as of the end of each calendar month and
that Borrower did not maintain such a minimum Fixed Charge Coverage
Ratio for the calendar months ending October 31, 2008,
November 30, 2008, December 31, 2008, January 31, 2009
and February 28, 2009.
|
|
|
|
|
|
|
|
C.
|
|
Borrower hereby acknowledges and
agrees that pursuant to Section 7.6 of the Loan Agreement,
entitled “ Transactions with Affiliates ”, it
was required to limit the severance payments it made during
(i) the period commencing January 1, 2008 and ending
December 31, 2008 to an aggregate amount of $400,000 and
(ii) the period commencing January 1, 2009 and ending
March 31, 2009 to an aggregate amount of $250,000 and that
Borrower made severance payments in excess of the permitted amounts
for such periods.
|
|
|
|
|
|
|
|
D.
|
|
Borrower has requested that Lender
agree to a waiver of any Default or Event of Default which may
occur as a result of Borrower’s failure to perform the
preceding obligations within the time period set forth in the Loan
Agreement. Subject to the terms and conditions of this
Section 2, Lender does hereby waive any such Default or Event
of Default.
|
|
|
|
|
|
|
|
E.
|
|
Except as set forth in this
Section 2, the foregoing waivers are applicable solely to
Borrower’s compliance with the aforementioned covenants by
the aforementioned dates. Further, the foregoing does not
constitute an agreement by Lender to waive the provisions of any
affirmative, negative or financial covenant or other provision of
the Loan Agreement at any time in the future or any other Defaults
or Events of Default which may have occurred but which are not
referenced within this Section 2. The foregoing waiver shall
not imply any obligation or commitment of Lender to provide any
further waivers under the Loan Agreement or any of the other Loan
Documents to Borrower at any other time and does not constitute a
course of dealing or a course of conduct. Lender hereby reserves
all of its rights under the Loan Agreement and the other Loan
Documents except as specifically provided in this
Section 2.
|
4
3.
Joinder . Current Borrower, National Pharmaceuticals and
Lender agree that, as of the Effective Date (as herein defined) and
by its execution and delivery of this Eighth Amendment and its
satisfaction of the other conditions set forth herein, National
Pharmaceuticals shall become and shall be deemed for all purposes
to be, a party to the Loan Agreement as a Borrower as if it were an
original signatory thereto. Accordingly, by its execution hereof,
National Pharmaceuticals hereby agrees as of the Effective Date
hereof (i) to be a party to the Loan Agreement as a Borrower
thereunder, (ii) that it will be deemed to have been and be
bound, jointly and severally with each other Borrower, by all of
the conditions, obligations, appointments, covenants,
representations, warranties and other agreements of a Borrower
under, and as set forth in, the Loan Agreement, the Loan Documents
and this Eighth Amendment, (iii) that it assumes all
Obligations as a primary obligor, (iv) that it grants and
confirms the grant of a security interest in its Collateral
pursuant to Section 4 of this Eighth Amendment, and
(v) that it will promptly execute all further documentation,
amendments, supplements, schedules, agreements and/or financing
statements required by Lender consistent and in connection with the
Loan Agreement and this Eighth Amendment. All references to the
term “Borrower” in the Loan Agreement and the other
Loan Documents shall, unless otherwise specifically provided,
include National Pharmaceuticals. Notwithstanding the foregoing,
and notwithstanding any provision of the Loan Agreement or this
Eighth Amendment to the
|
