Allonge to Agreement of Amendment to Loan and Security Agreement among Fleet National Bank and Osteotech Entities

Summary

This document is an amendment to a previous agreement between Fleet National Bank and several Osteotech companies. It modifies the terms of their loan and security agreement, including the interest rates and repayment terms for both a revolving note and an equipment loan note. The new terms link interest rates to the companies' financial ratios and require regular financial reporting. The amendment also clarifies how interest rates are determined and when payments are due, ensuring both parties understand their updated obligations.

EX-10.37 3 d54375_ex10-37.txt ALLONGE TO AGREEMENT OF AMENDMENT EXHIBIT 10.37 ALLONGE to AGREEMENT OF AMENDMENT TO LOAN AND SECURITY AGREEMENT, MORTGAGE, ASSIGNMENT OF LEASES AND OTHER DOCUMENTS This modification ("Allonge to Agreement of Amendment") made this 13th day of November, 2002 to the Agreement of Amendment to Loan and Security Agreement, Mortgage, Assignment of Leases and Other Documents effective March 13, 2002 ("Agreement of Amendment") among FLEET NATIONAL BANK, ("Lender"); OSTEOTECH, INC., a Delaware Corporation, OSTEOTECH INVESTMENT CORPORATION, a New Jersey Corporation, CAM IMPLANTS, INC., a Colorado Corporation, OSTEOTECH, B.V., H.C. IMPLANTS, B.V., OSTEOTECH IMPLANTS, B.V., f/k/a CAM IMPLANTS, B.V. (pursuant to documents of name change submitted simultaneously herewith), OSTEOTECH/CAM SERVICES, B.V., each a Company of The Netherlands, OSTEOTECH, S.A., and OST DEVELOPPEMENT, S.A., each a Corporation of France (jointly and severally "Borrower") and to which Agreement of Amendment these presents are so firmly affixed as to become a part thereof. A. Notwithstanding anything to the contrary set forth in the Agreement of Amendment, the Agreement of Amendment is hereby amended as follows: 1. Paragraph 3A(2) (relating to the second paragraph of the Revolving Note) is hereby amended to read as follows: Prior to January 1, 2002, this Note bore interest at the option of the Borrower, at either Lender's Prime Rate minus three-quarters of one percent or the applicable Base LIBOR Rate plus 175 basis points. Effective January 1, 2002 and ending on the date Lender receives Borrower's Annual Report on Form 10K for the fiscal year ending December 31, 2002, this Note bears interest and is repayable in monthly installments of interest only (and not principal) at a fluctuating interest rate per annum equal at all times to either (a) the Lender's Prime Rate (as hereinafter defined) of interest in effect from time to time plus 150 basis points, each change in such fluctuating rate to take effect simultaneously with the corresponding change in such Prime Rate, without notice to the undersigned or (b) the applicable Base LIBOR Rate as defined in the Loan Agreement plus 400 basis points, at the option of the Borrower pursuant to the Loan Agreement. Commencing with the receipt by Lender of Borrower's December 31, 2002 financial statements, and effective following the filing with the Securities and Exchange Commission ("SEC") and delivery to Lender thereafter of Borrower's Annual Report on Form 10K for the fiscal year ending December 31, 2002, interest is repayable in accordance with the following at the option of Borrower, if the ratio of the Borrower's Senior Funded Debt as determined in accordance with generally accepted accounting principles consistently applied, to EBITDA as more fully described below ("Ratio") is as follows: E-2

For purposes of determining the Ratio: (i) The first determination will be made by Lender for the fourth quarter, 2002. The determination will be made by dividing (a) the Senior Funded Debt as of December 31, 2002 by (b) the Borrower's EBITDA determined on a rolling four quarter basis; (ii) Thereafter, each determination of the Ratio will be made by Lender upon delivery to Lender of either the Borrower's Quarterly Report on Form 10Q or Annual Report on Form 10K, on a rolling four quarter basis; and (iii) Senior Funded Debt means all indebtedness of the Borrower owing to financial institutions, all bonds, notes and debentures payable by the Borrower (unless subordinated to Fleet National Bank), all outstanding letters of credit issued for the account of the Borrower, and all capital leases of the Borrower. The interest rates herein provided also apply following any applicable Conversion Date. 5. Paragraph 3D(15) (relating to Section 6.15 of the Loan Agreement) is hereby amended to read as follows: Section 6.15 Fees A new section 6.15(c) is hereby added as follows: 6.15(c) Waiver and Amendment Fee. The Borrower is to pay to Lender a waiver and amendment fee of $25,000.00 payable upon execution of the Allonge to Agreement of Amendment. 6. Paragraph 3D(16) (relating to Section 6.17 of the Loan Agreement) is hereby amended to read as follows: Section 6.17 Additional Covenants The following new sections to Section 6.17 are hereby added as follows: The Borrower is to perform and/or deliver the following, in form and substance satisfactory to Lender, not later than 45 days from E-7 the date of the execution of the Allonge to Agreement of Amendment in the case of 6.17(g) and (h); and not later than December 16, 2002 in the case of 6.17(i): 6.17(g) Updated report of Borrower's counsel (and meeting with Borrower's counsel, if requested by Lender) regarding the Borrower's litigation, its anticipated litigation costs, and potential for economic loss if adverse to Borrower; 6.17(h) Reimbursement of all costs incurred by Lender in conducting an appraisal of all domestic Equipment; and 6.17(i) Projections of the financial condition of the Borrower for the next five (5) fiscal years. 7. Paragraph 3D(22) (relating to Section 7.15 of the Loan Agreement) is hereby amended to read as follows: Section 7.15 EBITDA Ratio Osteotech, Inc. is not to cause or permit any of the following: (a) For the first quarter of 2002, the earnings before interest, taxes, depreciation and amortization of Osteotech, Inc. and its Subsidiaries ("EBITDA") to be less than $1,100,000.00 (the fee payable pursuant to Section 6.15(b), attorneys' fees payable by the Borrower hereunder, appraisal fees, collateral review exam fees, counsel fees payable by the Borrower to implement the pledge of stock set forth in Article 4(c) and related expenses ("Excluded Expenses")) are not to be included in this determination); (b) For the second quarter of 2002, EBITDA to be less than $1,920,000.00 (Excluded Expenses are not to be included in this determination); (c) For the third quarter of 2002, the ratio of EBITDA less capital expenditures, less cash taxes (multiplied by 4) to the current maturities of long term debt plus interest expense, to be less than 1:1 (Excluded Expenses are not to be included in this determination); (d) For the fourth quarter of 2002, a minimum EBITDA of $1,570,000.00 (Excluded Expenses are not to be included in this determination); (e) For the first quarter of 2003, the ratio of EBITDA for such quarter less capital expenditures, less cash taxes (all multiplied by 4) to the current E-8 maturities of long term debt plus (first quarter interest expense multiplied by 4), to be less than 1:1 (Excluded Expenses are not to be included in this determination); (f) For the second quarter of 2003, the ratio of EBITDA for the first and second quarters of 2003 less capital expenditures, less cash taxes (all divided by 2 and then multiplied by 4) to the current maturities of long term debt plus (interest expense for the first and second quarters divided by 2 and then multiplied by 4), to be less than 1:1 (Excluded Expenses are not to be included in this determination); (g) For the third quarter of 2003, the ratio of EBITDA for the first, second and third quarters of 2003 less capital expenditures, less cash taxes (all divided by 3 and then multiplied by 4) to the current maturities of long term debt plus (interest expense for the first, second and third quarters divided by 3 and then multiplied by 4), to be less than 1.25:1 (Excluded Expenses are not to be included in this determination); (h) For the fourth quarter of 2003, the ratio of EBITDA for the first, second, third and fourth quarters of 2003 less capital expenditures, less cash taxes to the current maturities of long term debt plus interest expense for the first, second, third and fourth quarters, determined on a rolling four quarter basis, to be less than 1.25:1 (Excluded Expenses are not to be included in this determination); or (i) Thereafter, the ratio of EBITDA less capital expenditures less cash taxes to the current maturities of long term debt plus interest expense, determined on a rolling four quarter basis, to be less than 1.25:1 (Excluded Expenses are not to be included in this determination). Non-compliance by the Borrower with its prior covenant that its ratio of EBITDA less capital expenditures, less cash taxes (multiplied by 4) to the current maturities of long term debt plus interest expense be not less than 1:1 for the third quarter of 2002 is hereby waived by Lender. Such waiver shall be without prejudice in the event of a Default hereunder. Such waiver is also not to be deemed a waiver of any further or other non-compliance or Default. All of the foregoing is to be determined in accordance with generally accepted accounting principles consistently applied. E-9 B. The following is added as Section 7.21 to the Loan Agreement (as defined in the Agreement of Amendment: Section 7.21 Maintenance of Minimum Quick Ratio Borrower is not to cause or permit its Quick Ratio to be less than 1.5:1 tested on a quarterly basis. The term Quick Ratio means the ratio of cash of the Borrower and marketable securities of the Borrower plus Accounts to the Borrower's current liabilities determined in accordance with generally accepted accounting principles consistently applied. Except as specifically modified herein, all of the terms and conditions of the Agreement of Amendment, and the certificates and other documents executed in connection therewith, shall remain in full force and effect and any term in initial capitals and not otherwise defined herein shall have the meaning ascribed thereto in the Agreement of Amendment. IN WITNESS WHEREOF, the parties have signed this Allonge to Agreement of Amendment. Witness: OSTEOTECH, INC. A Delaware Corporation ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Executive Vice President Witness: OSTEOTECH INVESTMENT CORPORATION A New Jersey Corporation ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Executive Vice President Signatures continued ...... ................. continuation of signatures to Allonge to Agreement of Amendment Witness: CAM IMPLANTS, INC. A Colorado Corporation ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Chief Financial Officer E-10 Witness: OSTEOTECH, B.V. A Company of The Netherlands ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Managing Director Witness: H.C. IMPLANTS, B.V. A Company of The Netherlands ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Managing Director Witness: OSTEOTECH IMPLANTS, B.V. f/k/a Cam Implants, B.V. A Company of The Netherlands ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Managing Director Witness: OSTEOTECH/CAM SERVICES, B.V. A Company of The Netherlands ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Managing Director Witness: OSTEOTECH, S.A. A Corporation of France ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Managing Director Signatures continued ...... ................. continuation of signatures to Allonge to Agreement of Amendment Witness: OST DEVELOPPEMENT, S.A. A Corporation of France ____________________________ By: ____________________________________ MICHAEL J. JEFFRIES Managing Director E-11 Witness: FLEET NATIONAL BANK ____________________________ By: ____________________________________ DAVID M. NILSEN Senior Vice President E-12