SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 7)
NutraMax Products, Inc.
-----------------------
(Name of Issuer)
Common Stock, par value $.001 per share
---------------------------------------
(Title of Class of Securities)
67061A30
-----------------
(CUSIP Number)
David M. Schulte
Chilmark Fund II, L.P.
875 North Michigan Avenue
Chicago, Illinois 60611
(312) 984-9711
------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 1, 2000
-----------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing
this Schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Page 1 of 28 Pages
Exhibit Index Appears on Page 5
<PAGE>
This Amendment No. 7 (this "Amendment") amends and supplements the Schedule
13D filed on September 22, 1997, as previously amended (the "Schedule 13D"), by
Cape Ann Investors, L.L.C. ("Cape Ann"), Chilmark Fund II, L.P. ("Chilmark
Fund"), Chilmark II, L.L.C. ("Chilmark II"), Chilmark Partners, L.L.C.
("Chilmark Partners") and David M. Schulte (collectively, the "Reporting
Persons") with respect to the Common Stock, par value $.001 per share ("Common
Stock"), of NutraMax Products, Inc. (the "Issuer"). All capitalized terms used
in this Amendment and not otherwise defined herein have the meanings ascribed to
such terms in the Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
Pursuant to the Commitment Letter (as defined and described below), and
subject to the terms and conditions thereof, Cape Ann has agreed to lend
$8,100,000 to the Issuer. The source of the funds used to make the loan will be
capital contributions from one or more of the members of Cape Ann.
Item 4. Purpose of Transaction.
----------------------
On May 1, 2000, in connection with the filing by the Issuer and its
subsidiaries (collectively, "NutraMax") of voluntary petitions under chapter 11
of the United States Bankruptcy Code (the "Bankruptcy Code"), Cape Ann entered
into a letter agreement, dated May 1, 2000, with the Issuer, Fleet National
Bank, National Bank of Canada, The Sumitomo Bank, Limited, Senior Debt
Portfolio, Peritus Capital Partners LLC ("Peritus") and Mr. Bernard Korman (the
"Letter Agreement") and, together with Peritus and Mr. Korman (Cape Ann, Peritus
and Mr. Korman are sometimes referred to, collectively, as the "Junior
Subsequent DIP Lenders"), a commitment letter agreement, dated May 1, 2000, with
the Issuer and each of its subsidiaries (the "Commitment Letter"). A copy of the
Letter Agreement is attached hereto as Exhibit 11 and a copy of the Commitment
Letter is attached hereto as Exhibit 12. The summary contained in this Amendment
of certain provisions of the Letter Agreement and the Commitment Letter is not
intended to be complete and is qualified in its entirety by reference to the
Letter Agreement and the Commitment Letter, respectively, each of which is
incorporated herein by reference.
In the Letter Agreement, Cape Ann agreed to take necessary and appropriate
actions to assist in the consummation of the reorganization of NutraMax under
the Bankruptcy Code and not to (i) support or encourage any financial
restructuring of NutraMax that is inconsistent with the plan of reorganization
described in the Letter Agreement or (ii) object to, delay, impede or take any
other action reasonably likely to prevent the consummation of such
reorganization.
In the Commitment Letter, and subject to the terms and conditions thereof,
including the receipt of the requisite Bankruptcy Court approvals under the
Bankruptcy Code, the Junior Subsequent DIP Lenders committed to provide NutraMax
with an $18,000,000 junior secured superpriority debtor-in-possession credit
facility (the "Junior Subsequent DIP Facility"). Cape Ann has agreed to provide
$8,100,000 of this total facility.
It is contemplated that NutraMax will propose a plan of reorganization (the
"Plan") which will provide for, among other things, the distributions of rights
("Rights") to holders of Common Stock. Each Right will provide the holder
thereof with the right to purchase its pro rata share of 100% of the new common
stock ("Reorganized Common Stock") to be issued and outstanding upon
effectiveness of the Plan. In connection with the effectiveness of the Plan, the
existing Common Stock will be canceled and cease to represent an equity interest
in the Issuer and will be replaced in its entirety by the Reorganized Common
Stock. In addition, the Warrants previously described in the Schedule 13D will
be canceled as part of the Plan, upon its effectiveness, and will be of no
further force or effect.
Under the Plan, upon its effectiveness, the Junior Subsequent DIP Facility
will be repaid and satisfied by distributing to the Junior Subsequent DIP
Lenders (a) 100% of the net proceeds that NutraMax receives from the exercise of
Rights and (b) all of the Reorganized Common Stock for which holders of Rights
have not subscribed.
Cape Ann expects to exercise the Rights it receives in respect of its
Common Stock.
Except as stated above, no Reporting Person has any plans or proposals of
the type referred to in clauses (a) through (j) of Item 4 of Schedule 13D, as
promulgated by the Securities and Exchange Commission.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
---------------------------------------------------------------------
As described above, Cape Ann entered into the Letter Agreement and the
Commitment Letter, which provide for, among other things, (x) certain
restrictions on Cape Ann's actions with respect to its existing Common Stock, to
the extent such actions might delay, impede or prevent consummation of the Plan,
and (y) Cape Ann's potential acquisition of Reorganized Common Stock in
satisfaction of the Junior Subsequent DIP Facility.
Item 7. Material to be filed as Exhibits.
--------------------------------
Exhibit 11 - Letter Agreement, dated May 1, 2000, among the Issuer,
Fleet National Bank, National Bank of Canada, The Sumitomo
Bank, Limited, Senior Debt Portfolio, Cape Ann, Peritus
and Mr. Korman
Exhibit 12 - Commitment Letter Agreement, dated May 1, 2000 between
NutraMax and Cape Ann, Peritus and Mr. Korman
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in the statement is true, complete and correct.
Dated: May 3, 2000
Cape Ann Investors, L.L.C.
By: /s/ David Schulte
--------------------------
Name: David Schulte
Title: President
Chilmark Fund II, L.P.
By: Chilmark II, L.L.C.
By: /s/ David Schulte
--------------------------
Name: David Schulte
Title: President
Chilmark II, L.L.C.
By: /s/ David Schulte
--------------------------
Name: David Schulte
Title: President
Chilmark Partners, L.L.C.
By: /s/ David Schulte
--------------------------
Name: David Schulte
Title: Managing Member
/s/ David Schulte
------------------------------
David Schulte
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
Number Description Number
- ------- ----------- ------
1 Joint Filing Agreement, dated September 19, 1997, *
among the Reporting Persons.
2 Stock Purchase Agreement. *
3 Amendment No. 1. *
4 Form of Share Purchase Agreement, dated as of *
September 18, 1997.
5 October Agreement. *
6 Amendment to October Agreement. *
7 August 1998 Amendment to Stock Purchase Agreement. *
8 Purchases of Common Stock during the Sixty Days *
Leading up to and including August 31, 1998.
9 1998 Superseding Agreement *
10 Letter Agreement regarding the determination *
of the Exercise Price of the Warrants
11 Letter Agreement, dated May 1, 2000, among the 6
Issuer, Fleet National Bank, National Bank of
Canada, The Sumitomo Bank, Limited, Senior Debt
Portfolio, Cape Ann, Peritus and Mr. Korman
12 Commitment Letter Agreement, dated May 1, 2000 15
between NutraMax and Cape Ann, Peritus and
Mr. Korman
- --------
* previously filed
Exhibit 11
NutraMax Products, Inc.
51 Blackburn Drive
Gloucester, Massachusetts 01930
(978) 282-1800
May 1, 2000
Fleet National Bank f/k/a National Bank of Canada
BankBoston, N.A. One Federal Street, 27th floor
100 Federal Street Boston, Massachusetts 02110
Boston, Massachusetts 02110
Attn: Robert Riley
The Sumitomo Bank, Limited Senior Debt Portfolio
One Post Office Square, Suite 3820 c/o Eaton Vance Management
Boston, Massachusetts 02109 24 Federal Street
Boston, Massachusetts 02110
Cape Ann Investors LLC Peritus Capital Partners LLC
c/o Chilmark Partners 315 E. Canon Perdido Street
875 N. Michigan Avenue, Suite 2100 Santa Barbara, CA 93101
Chicago, Illinois 60611 Attn: Steve Gevirtz
Attn: David Schulte
Mr. Bernard Korman
2129 Chestnut Street
Philadelphia, PA 19103
Re: NutraMax Products, Inc.
Gentlemen:
The purpose of this letter agreement (this "Letter Agreement") is to
set forth the agreement among (i) NutraMax Products, Inc. and its subsidiaries
(collectively, "NutraMax"), (ii) Cape Ann Investors LLC, Peritus Capital
Partners LLC, and Mr. Bernard Korman (each an "Investors") and (iii) each of
Fleet National Bank f/k/a BankBoston, N.A. ("Fleet"), National Bank of Canada,
Senior Debt Portfolio and The Sumitomo Bank, Limited, in its capacity as a
lender (each, a "Pre-petition Lender") under that certain Revolving Credit and
Term Loan Agreement, dated as of December 30, 1996 (as amended, the
"Pre-petition Credit Agreement"), among NutraMax, the Pre-petition Lenders, and
Fleet, as agent (the Investors, the Pre-petition Lenders and NutraMax, are
collectively referred to herein as the "Parties"), regarding the basic terms and
conditions of the transactions (the "Transactions") that will effectuate the
agreement between the Pre-petition Lenders and NutraMax set forth herein to
settle and compromise all claims of the Pre-petition Lenders arising under, or
in any way related to, the Pre-petition Credit Agreement (the "Pre-petition
Credit Agreement Claims"). The Transactions will be implemented in cases filed
by NutraMax under chapter 11 of title 11 of the United States Code (the
"Bankruptcy Code") in the District of Delaware (the "Bankruptcy Court") as soon
as possible but in no event later than May 1, 2000 (the date of such filings,
the "Filing Date").
1. The Transactions.
The basic terms and conditions of the Transactions as agreed among the
Parties are set forth in the Summary of Terms and Conditions (the "Term Sheet")
attached hereto as Exhibit A, which is incorporated herein and made a part of
this Letter Agreement.
2. Bank Agreements.
Each Pre-petition Lender represents and warrants to, and hereby agrees
with, NutraMax and each Investor that (i) it has the power to enter into this
Letter Agreement and compromise its pro rata share of the Pre-petition Credit
Agreement Claims, and (ii) is entitled to all of the rights and economic
benefits inuring to such Pre-petition Lender under the Pre-petition Credit
Agreement. Each Pre-petition Lender agrees and represents to NutraMax and each
Investor that, subject to Section 5 hereof, and subject to its receipt of
definitive documentation in respect of the Transactions that is consistent with
the terms and conditions of this Letter Agreement (including the Term Sheet):
(a) it will take all necessary and appropriate actions to achieve
consummation of the Transactions in a timely fashion,
including without limitation, filing or supporting any
statements or motions with respect to the Transactions that
are reasonably requested by NutraMax;
(b) it will not at any time prior to the termination of this
Letter Agreement (i) support or encourage, directly or
indirectly, any financial restructuring concerning NutraMax
that is inconsistent with the Transactions or (ii) object to,
delay, impede or take any other action reasonably likely to
prevent the consummation of the Transactions;
(c) it will not sell, transfer or assign any part of the
Pre-petition Credit Agreement Claims or any interest therein
during the term of this Letter Agreement, except to a
purchaser who agrees prior to such acquisition to be bound by
all the terms of this Letter Agreement as if such purchaser
had originally executed this Letter Agreement with respect to
the Pre-petition Credit Agreement Claim being acquired by such
purchaser, which agreement shall be confirmed in writing in
favor of NutraMax; and
(d) subject to the terms of a mutually satisfactory adequate
protection stipulation between the Debtors and Pre-petition
Lenders and the related order, it shall forbear during the
term of this Letter Agreement from taking any action in
connection with any Events of Default (as defined in the
Pre-petition Credit Agreement) occurring prior to or during
the term of this Letter Agreement.
The parties hereto understand that the agreements of The Sumitomo Bank,
Limited with respect to the Partial Repayment and the transaction contemplated
to occur thereafter are subject to The Sumitomo Bank, Limited obtaining the
necessary approvals from its Tokyo office. The Sumitomo Bank, Limited
acknowledges it is in the process of obtaining such approvals as expeditiously
as possible.
3. Investor Agreements.
Each Investor represents and warrants to Nutramax and each Pre-petition
Lender that it has the power to enter into this Letter Agreement. Each Investor
also agrees and represents to Nutramax and each Pre-petition Lender that,
subject to Section 5 hereof, and subject to its receipt of definitive
documentation in respect of the Transactions that is consistent with the terms
and conditions of this Letter Agreement (including the Term Sheet) and
reasonably satisfactory to the Pre-petition Lenders:
(a) it will take all necessary and appropriate actions to achieve
consummation of the Transactions in a timely fashion,
including without limitation, filing or supporting any
statements or motions with respect to the Transactions that
are reasonably requested by NutraMax; and
(b) it will not at any time prior to the termination of this
Letter Agreement (i) support or encourage, directly or
indirectly, any financial restructuring concerning NutraMax
that is inconsistent with the Transactions or (ii) object to,
delay, impede or take any other action reasonably likely to
prevent the consummation of the Transactions.
4. NutraMax Agreements.
NutraMax hereby agrees with each of the Pre-petition Lenders that,
following the Filing Date, it will use its best efforts to consummate the
Transactions, and obtain the necessary and appropriate orders of the Bankruptcy
Court, as expeditiously as possible under the Bankruptcy Code and Bankruptcy
Rules, and consistent with the terms and conditions set forth in this Letter
Agreement (including the Term Sheet).
5. Termination of Agreement.
The obligations of the Pre-petition Lenders' and Investors hereunder
shall terminate: (a) if the Filing Date has not occurred by May 1, 2000, (b) if
the Partial Repayment (as defined in the Term Sheet) has not occurred by June
30, 2000 and (c) upon the entry of a final order of the Bankruptcy Court that is
materially inconsistent with the Transactions.
6. Amendments.
This Letter Agreement may not be modified, amended or supplemented
except in writing signed by each of the Parties.
7. Publicity.
Until the Filing Date, this Letter Agreement and each of the
Transactions shall be kept confidential until the Parties agree upon the
language and timing of a press release to be issued by NutraMax.
8. No Third Party Beneficiaries.
This Letter Agreement is only for the benefit of the undersigned
parties and nothing herein, expressed or implied, is intended or shall be
construed to confer upon any person or entity, other than such persons or
entities, any rights or remedies under or by reason of, and no person or entity,
other than such persons or entities, is entitled to rely in any way upon, this
Letter Agreement.
9. Specific Performance.
It is understood and agreed by the Parties that money damages alone
would not be a sufficient remedy for any breach of this Letter Agreement by any
of the Parties and the non-breaching Party shall be entitled to specific
performance and injunctive or other equitable relief as a remedy of any such
breach.
10. Survival.
The agreements and obligations of NutraMax in Sections 8-9 shall
survive any termination and shall continue in full force and effect for the
benefit of the Pre-petition Lenders in accordance with the terms hereof.
11. Headings.
The headings of the Sections, paragraphs and subsections of this Letter
Agreement are inserted for convenience only and shall not affect the
interpretation hereof.
12. Successors and Assigns.
This Letter Agreement is intended to bind and inure to the benefit of
the Parties and their respective successors, assigns, heirs, executors,
administrators and representatives.
13. Counterparts.
This Letter Agreement (and any modifications, amendments, supplements
or waivers in respect hereof) may be executed in counterparts by manual or
facsimile signature of each undersigned party, and all such counterparts shall
be deemed to constitute one and the same instrument.
If the foregoing accurately reflects the agreement among the parties
regarding the matters referred to herein, NutraMax requests that you execute the
enclosed copy of this Letter Agreement and return it to the undersigned.
Very truly yours,
NUTRAMAX PRODUCTS, INC.
By:
-------------------------
Name:
Title:
Accepted and Agreed as of the date first written above.
FLEET NATIONAL BANK f/k/a
BankBoston, N.A.
individually, and as Agent
on behalf of the Pre-petition Lenders
By:
----------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
----------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
SENIOR DEBT PORTFOLIO
By:
----------------------------
Name:
Title:
CAPE ANN INVESTORS LLC
By:
----------------------------
Name:
Title:
PERITUS CAPITAL PARTNERS LLC
By:
----------------------------
Name:
Title:
MR. BERNARD KORMAN
----------------------------
<PAGE>
Exhibit A
Summary of Terms and Conditions
1. On the Filing Date, the Debtors will file a motion seeking (a) interim
order authorizing it to enter into an Initial DIP Agreement (the "Initial
DIP Agreement") with Fleet National Bank (the "Initial DIP Lender"), and
(b) subsequent order (the "Subsequent Order") (x) authorizing it to enter
into (i) a Senior Subsequent DIP Agreement (the "Senior Subsequent DIP
Agreement") with the lenders thereto (the "Senior Subsequent DIP Lenders")
and The CIT Group/Business Credit, Inc., as a lender and as agent for the
Senior Subsequent DIP Lenders and (ii) a Junior Subsequent DIP Agreement
(the "Junior Subsequent DIP Agreement", together with the "Senior
Subsequent DIP Agreement", the "Subsequent DIP Agreements") with Cape Ann
Investors LLC, Peritus Capital Partners, LLC and Mr. Bernard Korman (the
"Junior Subsequent DIP Lenders"), (y) approving the Assignment Agreement
(as defined in section 3 below) and (c) approving the transactions and
other actions contemplated hereby.
o The Initial DIP Agreement will provide the Debtors with a
revolving credit facility in the amount of up to $5 million which
will be available to fund the Debtors' working capital needs
during the chapter 11 cases.
o The Senior Subsequent DIP Agreement will provide the Debtors with
up to a $30 million credit facility which will be used as follows:
(i) all amounts outstanding under the Initial DIP Agreement will
be repaid in full and (ii) up to $14.5 million of the proceeds
under the Senior Subsequent DIP Agreement will be used to repay a
portion of the obligations outstanding under the Pre-petition
Credit Agreement as described in section 3 below.
o The Junior Subsequent DIP Agreement will provide the Debtors with
an $18 million credit facility which will be used to repay a
portion of the obligations outstanding under the Pre-petition
Credit Agreement as described in section 3 below.
o The rights and obligations between the Senior Subsequent DIP
Lenders, the Junior Subsequent DIP Lenders and the Pre-petition
Lenders (as defined below) will be reflected in an intercreditor
agreement between such parties (the "Intercreditor Agreement").
2. In connection with the loans to be made by the Initial DIP Lender under
the Initial DIP Agreement, the Pre-petition Lenders will consensually
agree to have their liens and security interests in the Debtors' assets
under the Pre-petition Credit Agreement primed by the liens and security
interests granted to the Initial DIP Lender under the Initial DIP
Agreement; provided that, the Debtors are obligated to provide for
adequate protection in respect of the Pre-petition Credit Agreement Claims
as set forth in a mutually agreed to adequate protection stipulation and
adequate protection order.
3. On or as soon as practicable after the date on which the Subsequent Order
becomes a final order of the Bankruptcy Court, (i) the Initial DIP
Agreement will be repaid in full from proceeds of the Senior Subsequent
DIP Agreement, (ii) up to $14.5 million in proceeds from the Senior
Subsequent DIP Agreement and simultaneously therewith $18 million in
proceeds from the Junior Subsequent DIP Agreement will be paid by the
Debtors to the Pre-petition Lenders as a partial repayment of the
Pre-petition Credit Agreement Claims (the "Partial Repayment"). Note: the
$32 million cash portion of the Partial Repayment will be (a) increased,
dollar for dollar, by the amount by which the Company's obligations under
the over-advance currently available under the Pre-petition Credit
Agreement exceeds $3,000,000 on the Filing Date; provided that such
increase shall in no event exceed $500,000 and (b) decreased, dollar for
dollar, by the amount of any and all payments or other distributions the
Pre-petition Lenders receive after the Filing Date in respect of the
collateral or the Pre-petition Credit Agreement Claims.
o Upon the occurrence of the Partial Repayment, (i) the Pre-petition
Lenders will retain $4 million of the Pre-Petition Credit
Agreement Claims, together with the entitlement to the accrued and
accruing adequate protection payments in respect thereof (the
"Retained Claim") and (ii) pursuant to an assignment agreement
between the Pre-petition Lenders and the Junior Subsequent DIP
Lenders (the "Assignment Agreement"), the Pre-petition Lenders
will assign all of their right, title and interest in and to the
balance of the Pre-petition Credit Agreement Claims, together with
the entitlement to the accrued and accruing adequate protection
payments in respect thereof (the "Assigned Claim"), to the Junior
Subsequent DIP Lenders.
o The Intercreditor Agreement will provide (x) that the Retained
Claim shall be junior in priority to the claims of the Senior
Subsequent DIP Lenders, but senior to the claims of the Junior
Subsequent DIP Lenders, and (y) during the pendency of the chapter
11 cases, the Retained Claim shall be "silent" (i.e., the
Pre-petition Lenders shall not exercise any ---- rights or
remedies with respect to such claim other than its rights to
receive proceeds in a liquidation). Upon the occurrence of the
Partial Repayment, the interest paid by the Debtors on the portion
of the Senior Subsequent DIP Agreement and the Junior Subsequent
DIP Agreement used to fund the Partial Repayment shall be deemed
to satisfy, dollar for dollar, the accrual of adequate protection
in respect of the Pre-petition Credit Agreement Claims.
o Pursuant to the Intercreditor Agreement, from and after the date
of the Partial Repayment, the Junior Subsequent DIP Lenders shall
solely and exclusively control the rights and remedies with
respect to the Pre-petition Credit Agreement Claims during the
pendancy of these chapter 11 cases.
4. The Debtors chapter 11 plan of reorganization (the "Plan") will provide
for, among other things, the distribution of rights (the "Rights")
pursuant to the Rights Plan to holders of Old Common Stock. Each Right
will provide the holder thereof with the right to purchase its pro rata
share of 100% of the New Common Stock to be issued and outstanding on the
Effective Date. If 100% of the Rights were exercised, the Debtors would
yield net cash proceeds equal to the obligations outstanding under the
Junior Subsequent DIP Facility on the date the Plan is confirmed.
5. The Plan will provide that on the Effective Date:
o The Debtors will enter into an exit credit facility (the "Exit
Facility") in an amount not to exceed $30 million;
o The Debtors' obligations outstanding under the Senior Subsequent
DIP Agreement will be satisfied from the proceeds of the Exit
Facility.
o The Debtors obligations outstanding under the Junior Subsequent
DIP Agreement will be satisfied by distributing the following to
the Junior Subsequent DIP Lenders: (a) 100% of the net proceeds
that the Debtors receive from the exercise of the Rights and (b)
100% of the New Common Stock of Reorganized NutraMax that has not
been subscribed for pursuant to the Rights Plan.
o The Debtors' obligations in respect of the Pre-petition Credit
Agreement Claims and any and all accrued adequate protection
payments in respect thereof will be satisfied by distributing the
New Senior Notes in an aggregate principal amount of $4 million
(the "New Senior Note Distribution"). The Plan will provide that
the holders of the Assigned Claim have agreed that the entire New
Senior Note Distribution will be made to the holders of the
Retained Claim. The New Senior Notes shall be secured notes issued
by Reorganized NutraMax that shall be subordinated to Reorganized
NutraMax's obligations under the Exit Facility.
Exhibit 12
May 1, 2000
NutraMax Products, Inc.
51 Blackburn Drive
Gloucester, MA 01930
Attention: Mr. Richard G. Glass
Ladies and Gentlemen:
NutraMax Products, Inc., a Delaware corporation (the "Parent"), has
informed Cape Ann Investors LLC, Peritus Capital Partners LLC, and Mr. Bernard
J. Korman (each an "Investor" and, collectively, the "Investors") that the
Parent and its subsidiaries (collectively, the "Borrowers") are considering
filing voluntary petitions under chapter 11 of the United States Bankruptcy
Code, 11 U.S.C. ss.ss.101-1330 (the "Bankruptcy Code"), in the United States
Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"). In that
connection, the Investors are pleased to advise the Borrowers of their
commitment (the "Commitment"), substantially upon the terms and subject to the
conditions set forth or referred to in this commitment letter and in the Summary
of Terms and Conditions attached as Exhibit A (the "Term Sheet"), to provide the
Borrowers with a $18,000,000 junior secured superpriority debtor-in-possession
credit facility under sections 364(c) (1), (2) and (3) and section 364(d)(1) of
the Bankruptcy Code (the "Junior Subsequent DIP Agreement").
The Commitment is subject to the negotiation, execution and delivery of
satisfactory definitive loan documentation with respect to the Junior Subsequent
DIP Agreement, including, without limitation, a subordination and inter-creditor
agreement among the Investors, the lenders providing the Senior Subsequent DIP
Agreement (as defined in the Term Sheet), the lenders providing the Interim DIP
Agreement (as defined in the Term Sheet) and the Borrowers. The Commitment also
is subject to the terms and conditions set forth in the Term Sheet.
The Commitment is also subject to the Investors' satisfaction with, and the
approval by the Bankruptcy Court of, all aspects of the Junior Subsequent DIP
Agreement and the transactions contemplated by that certain letter agreement
(including the term sheet attached thereto) by and among the Borrowers, the
Existing Lenders (as defined in the Term Sheet), and the Investors (the "Letter
Agreement").
In addition, if any present or proposed law or regulation affecting the
Investors' entering into the financing transaction contemplated by this
commitment letter imposes or may impose any material liability, loss, expense or
damage, as reasonably determined in consultation with counsel, that is not
contemplated by this commitment letter, the Commitment may be terminated by the
Investor. The terms and conditions of the Commitment are not limited to the
terms and conditions set forth in this commitment letter and in the Term Sheet.
Those matters that are not covered by or made clear under the provisions of this
commitment letter or the Term Sheet are subject to the approval and agreement of
the Investor and the Borrowers.
By its signature below, the Borrowers further agree (i) that all reasonable
out-of-pocket legal, due diligence and closing expenses, including, without
limitation, travel expenses, attorneys' fees and disbursements, asset evaluation
expenses (including, without limitation, the fees and expenses of consultants
and auditors advising the Investor) and other charges and disbursements and any
other out-of-pocket costs and expenses incurred by the Investor in connection
with this commitment letter and the transactions contemplated hereby, will be
paid by the Borrowers whether or not such transactions are consummated and (ii)
to indemnify and hold harmless the Investor and its officers, directors,
employees, affiliates, agents and controlling persons from and against any and
all losses, claims, damages and liabilities to which any such person may become
subject arising out of, or in connection with, this commitment letter, the
transactions contemplated hereby or any claim, litigation, investigation or
proceeding relating to any of the foregoing, including reasonable legal or other
expenses incurred in connection with investigating or defending any of the
foregoing, whether or not the transactions contemplated hereby are consummated;
provided that the foregoing indemnity set forth in clause (ii) above will not,
as to any indemnified person, apply to losses, claims, damages, liabilities or
related expenses to the extent that they arise from the bad faith, willful
misconduct or gross negligence of such indemnified person. No such indemnified
person shall be liable for any damages arising from the use by others of
materials obtained through electronic, telecommunications or other information
transmission systems or for any special, indirect, consequential or punitive
damages in connection with this commitment letter or the transactions
contemplated hereby.
As consideration for the Commitment and the agreements of the Investors
under this commitment letter, the Parent agrees that it will pay to the
Investors the fees set forth in the Term Sheet. Once paid, such fees shall not
be refundable under any circumstances. All such fees, and the fees and expenses
described in the preceding paragraph shall be paid as provided in the Term
Sheet.
This commitment letter is not assignable by the Borrowers and may not be
amended or any provision waived or modified except by an instrument in writing
signed by the Borrowers and the Investors. This commitment letter is not
intended to benefit or confer any rights upon, and may not be relied upon by,
any person or entity other than, after timely acceptance of this commitment
letter in accordance with the terms of this commitment letter, the Borrowers and
the Investors. No other person is an intended beneficiary of this commitment
letter.
This commitment letter shall be governed by, and construed in accordance
with, the internal laws of the State of Illinois without regard to the conflicts
provisions thereof. The Borrowers and the Investors irrevocably agree to waive
trial by jury in any suit, action, proceeding, claim or counterclaim brought by
or on behalf of any party related to or arising out of this commitment letter or
the performance of services hereunder.
If the foregoing correctly sets forth the agreement between the Borrowers
and the Investors, please indicate the Borrowers' acceptance of the terms hereof
by signing in the appropriate spaces below and returning to the Investors the
enclosed duplicate original of this commitment letter not later than 5:00 p.m.,
Chicago Time, on May 1, 2000. The Commitment shall expire at such time unless
the Investors have theretofore received such executed original. The Commitment
will automatically terminate unless definitive documentation for the Junior
Subsequent DIP Agreement is executed on or before the 60th day after the
Petition Date (as defined in the Term Sheet).
This commitment letter may be executed in any number of counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one agreement.
Very truly yours,
Cape Ann Investors LLC
By:__________________________
Title:
Peritus Capital Partners LLC
By:__________________________
Title:
Mr. Bernard J. Korman
By:__________________________
Title:
<PAGE>
Agreed to and accepted as of
the 1st day of May, 2000:
NUTRAMAX PRODUCTS, INC.
By:_________________________
Title:
ADHESIVE COATINGS, INC.
By:_________________________
Title:
ELMWOOD PARK REALTY, INC.
By:_________________________
Title:
CERTIFIED CORP.
By:_________________________
Title:
POWERS PHARMACEUTICAL CORPORATION
By:_________________________
Title:
<PAGE>
FAIRTON REALTY HOLDINGS, INC.
By:_________________________
Title:
FIRST AID PRODUCTS, INC.
By:_________________________
Title:
NUTRAMAX HOLDINGS, INC.
By:_________________________
Title:
NUTRAMAX HOLDINGS II, INC.
By:_________________________
Title:
F.A. PRODUCTS, L.P.
By: FIRST AID PRODUCTS, INC.,
its general partner
By:_________________________
Title:
<PAGE>
FLORENCE REALTY, INC.
By:_________________________
Title:
NUTRAMAX ACQUISITION CORPORATION
By:_________________________
Title:
NUTRAMAX OPHTHALMICS INC.
By:_________________________
Title:
ORAL CARE, INC.
By:_________________________
Title:
<PAGE>
EXHIBIT A
SUMMARY OF TERMS AND CONDITIONS
The terms and conditions contained in this Summary of Terms and Conditions (this
"Term Sheet") are in addition to those set forth in the accompanying commitment
letter (the "Commitment Letter") from Cape Ann Investors LLC, Peritus Capital
Partners LLC and Mr. Bernard J. Korman (each an "Investor" and, collectively,
the "Investors") to NutraMax Products, Inc. Capitalized terms used in this Term
Sheet and not otherwise defined have the meaning set forth for such terms in the
Commitment Letter.
Borrowers
- ---------
NutraMax Products, Inc., a Delaware corporation (the "Parent"),
and each of the Parent's subsidiaries (collectively, the "Borrowers"
and each, a "Borrower"), jointly and severally, each as debtors and
debtors-in-possession in cases (collectively, the "Cases" and each, a
"Case") pending under chapter 11 of the United States Bankruptcy Code,
11 U.S.C. ss.ss.101-1330 (the "Bankruptcy Code"), in the United States
Bankruptcy Court for the District of Delaware (the "Court").
Investors
- ---------
Cape Ann Investors LLC, Peritus Capital Partners LLC, and Mr.
Bernard J. Korman (each an "Investor" and, collectively, the
"Investors"). The Investors have each committed the following (such
Investor's "Share"):
Cape Ann Investors LLC $ 8,100,000
Peritus Capital Partners LLC 8,100,000
Bernard J. Korman 1,800,000
------------
Total $18,000,000
Term Loan
- ---------
The Investors shall provide the Borrowers with a term loan (the
"Term Loan") in the amount of $18,000,000. The Term Loan shall be due
and payable in full upon any termination of that certain $30,000,000
senior secured superpriority debtor-in-possession credit facility
provided by The CIT Group/Business Credit, Inc., as agent (the "Senior
Subsequent DIP Agreement" and, together with the Junior Subsequent DIP
Agreement, the "Subsequent DIP Agreements").
Closing Date
- ------------
The date for the Closing of the Junior Subsequent DIP Agreement
(the "Closing Date") will occur promptly upon the entry of the Final
Order (as defined below) approving the Subsequent DIP Agreements and
related documents but in no event later than (a) 60 days after the
commencement of the Cases (the "Petition Date") or (b) two days after
the entry of the Final Order.
Term
- ----
The Junior Subsequent DIP Agreement will terminate upon the
earliest to occur of (a) the second anniversary of the Petition Date,
(b) the substantial consummation (as defined in the Bankruptcy Code
and for which for purposes of the Junior Subsequent DIP Agreement
shall be no later than the effective date thereof, the "Effective
Date") of a plan of reorganization (the "Plan") that is confirmed
pursuant to an order entered by the Court or any other court having
jurisdiction in the Cases and (c) the acceleration of the Senior
Subsequent DIP Agreement and/or the termination of the Senior
Subsequent DIP Agreement in accordance with its terms.
Use of Proceeds
- ---------------
Proceeds of the Junior Subsequent DIP Agreement (along with the
proceeds from the Senior Subsequent DIP Agreement) will be used for
(i) repayment in full of outstanding borrowings under that certain
$5,000,000 senior secured superpriority debtor-in-possession credit
facility provided by Fleet National Bank (the "Interim DIP Agreement")
provided to the Borrowers on or about the Petition Date, (ii) a
$32,000,000 partial repayment of outstanding obligations owing to the
lenders (the "Existing Lenders") under the Borrower's existing
revolving credit facility (the "Existing Facility") plus any excess
over $3,000,000 under the overdraft component thereof, (iii) working
capital requirements of the Borrowers during the term of the
Subsequent DIP Agreements and (iv) fees and expenses related to the
Subsequent DIP Agreements.
Interest Rate and Fees
- ----------------------
Interest will be computed monthly on the Term Loan at a rate
equivalent to the Chase Manhattan Bank Rate plus 2.00% per annum or,
at the Borrowers' option, LIBOR plus 4.50% per annum.
"Chase Manhattan Bank Rate" means the rate of interest per annum
announced by The Chase Manhattan Bank from time to time as its prime
rate in effect at its principal office in the City of New York. Such
rate is not intended to be the lowest rate charged by Chase Manhattan
Bank to its borrowers.
A $360,000 loan facility fee earned on the Closing Date.
Such other fees and expenses as are set forth in the Junior
Subsequent DIP Agreement.
Payment of the loan facility fee, interest due and other fees and
expenses shall be deferred until the earlier to occur of (a) the
Effective Date and (b) the date on which the principal balance of the
Term Loan becomes due pursuant to its terms or an event of default.
Superpriority
- -------------
All direct borrowings shall have the highest available priority
under section 364(c) of the Bankruptcy Code with priority over all
other costs and expenses of the kind specified in, or ordered pursuant
to, any provision of the Bankruptcy Code (the "Superpriority Claim")
except for claims pursuant to the Senior Subsequent DIP Agreement and
the Retained Claim (as defined in the Letter Agreement) to which such
borrowings shall be expressly subordinated pursuant to an agreement
among the lender(s) under the Senior Subsequent DIP Agreement, the
lender(s) under the Initial DIP Agreement and the Investors (the
"Intercreditor Agreement"). Except for the Carve-Out and as provided
in the Intercreditor Agreement, no other claim of any other creditor
shall be senior, or equal in priority to the Junior Subsequent DIP
Agreement. In addition, the Junior Subsequent DIP Agreement shall at
all times be senior to the rights of the Borrowers, their respective
estates and any successor trustee or estate representative in any
bankruptcy case or proceeding of the Borrowers under the Bankruptcy
Code.
Collateral
- ----------
All direct borrowings shall be secured (a) pursuant to section
364(d) of the Bankruptcy Code by a perfected priority, senior, priming
lien on all of the Borrowers' present and future assets, including,
without limitation, accounts receivable, instruments, contract rights,
chattel paper, general intangibles (including, without limitation,
causes of action), inventory, equipment, fixtures, documents of title,
trademarks, patents, trade names, real estate (whether owned or
leased), claims against and recoveries from any person whatsoever,
including, without limitation, avoidance claims under sections 544,
545, 547, 548 and 553 of the Bankruptcy Code, and all proceeds of the
foregoing (collectively, the "Collateral") that is subject to a
validly perfected security interest or lien in existence as of the
Petition Date in favor of the Existing Lenders under the Existing
Facility, (b) pursuant to section 364(c)(2) of the Bankruptcy Code by
a perfected first priority lien on all of the Collateral that is
otherwise not encumbered by a valid and perfected lien as of the date
the Petition Date and (c) pursuant to section 364(c)(3) of the
Bankruptcy Code by a perfected junior lien on all of the Collateral
that (i) is subject to a validly perfected security interest or lien
in existence on the Petition Date (other than as described in clause
(a) above), (ii) is subject to valid liens on the Petition Date that
are perfected after the Petition Date as permitted by section 346(b)
of the Bankruptcy Code and (iii) is subject to a lien permitted by the
Agreement.
The security interests in and liens on the Collateral with
respect to the Junior Subsequent DIP Agreement shall be senior in rank
and priority to all other liens on and security interests in the
Collateral, subject only to (a) the claims under the Senior Subsequent
DIP Agreement, (b) the Retained Claim, (c) any other valid, perfected
and enforceable security interests and liens that are expressly
permitted by the Junior Subsequent DIP Agreement and (d) the
Carve-Out.
The liens and security interests with respect to the Junior
Subsequent DIP Agreement shall at all times be senior to the rights of
the Borrowers and any successor trustee or estate representative in
the Cases or proceeding under the Bankruptcy Code and any lien or
security interest in the Collateral that is avoided or otherwise
preserved for the benefit of the Borrowers' estate shall be
subordinate to these liens and security interests. No liens or
security interests granted in the Collateral with respect to the
Junior Subsequent DIP Agreement, and no claim of the Agent or the
Investors shall be subject to subordination to any other lien or
security interest or claim under section 510 of the Bankruptcy Code or
to surcharge under section 506 of the Bankruptcy Code or otherwise.
The security interests and liens granted in the Collateral with
respect to the Junior Subsequent DIP Agreement shall be perfected by
operation of law upon execution by the Court of the Final Order.
Carve-Out
- ---------
The liens and security interests on the Collateral and the
Superpriority Claim granted to the Investors will be subject to (a)
following the occurrence and during the continuance of an Event of
Default (as defined below), the payment (as the same may be due and
payable) of professional fees and disbursements allowed by order of
the Court and incurred by the Borrowers and any statutory committee of
unsecured creditors appointed in the Cases and any disbursements of
any member of such committee in an aggregate amount not to exceed
$1,000,000 (in addition to compensation previously awarded, whether or
not paid) and (b) the payment of unpaid fees pursuant to 28 U.S.C.
Section 1930 and any fees payable to the Clerk of the Court
(collectively, the "Carve-Out").The Investors agree that so long as no
Event of Default or an event that would constitute an Event of Default
with the giving of notice or lapse of time or both, shall have
occurred and be continuing, the Borrowers shall be permitted to pay
compensation and reimbursement of expenses allowed and payable under
sections 330 and 331 of the Bankruptcy Code, as the same may be
payable, and the amounts so paid shall not reduce the Carve-Out.
Representations, Warranties and Covenants
- -----------------------------------------
The Junior Subsequent DIP Agreement will contain such
representations, warranties and covenants as are customary for
financing transactions of this type, including, without limitation,
the following:
(a) the Borrowers will deliver to the Investors all
pleadings, motions, applications, judicial
information, financial information and other
documents filed by or on behalf of the Borrowers with
the Court or distributed by the Borrowers to the
lenders under the Senior Subsequent DIP Agreement
and/or any official committee appointed in the Cases;
(b) as soon as possible, the Borrower will deliver to the
Investors, and the Investors must be satisfied with,
the Borrowers' re-stated financial statements for the
fiscal year ended September 30, 1999;
(c) as soon as possible, the Borrower will deliver to the
Investors, and the Investors must be satisfied with,
the "reviewed" financial statements of the Borrowers
for the period from October 1, 1999, through January
31, 2000;
(d) the Borrowers will provide to the Investors, among
other things, monthly interim financial statements
and fiscal year end statements, commencing with the
first fiscal year end subsequent to the Closing Date
(such fiscal year end statements to be certified by
an independent public accountant mutually acceptable
to the Borrowers and the Investors); and
(e) the Borrowers will provide the Investors with weekly
accounts receivable reports and weekly inventory
reports, along with such supporting documentation as
is requested by the Investors, all as specified in
the Junior Subsequent DIP Agreement;
Events of Default
- -----------------
The Junior Subsequent DIP Agreement will contain such events of
default ("Events of Default") as are customary for financing
transactions of this type, including, without limitation, the
following:
(a) entry of an order converting any Case to a case under chapter
7 of the Bankruptcy Code;
(b) entry of an order dismissing or suspending any Case;
(c) entry of an order confirming a plan of reorganization
or liquidation in any Case other than one which
provides a plan substantially identical to that
contemplated by the Letter Agreement;
(d) entry of an order in any Case appointing a trustee under
section 1104 of the Bankruptcy Code without consent of the
Investors;
(e) entry of an order granting another Superpriority
Claim pari passu with or senior to that granted to
the Investors pursuant to the Junior Subsequent DIP
Agreement (other than the Senior Subsequent DIP
Agreement, the Retained Claim or the Carve Out), in
the Final Order;
(f) the Final Order is reversed, stayed, vacated or rescinded
without consent of the Investors;
(g) the Final Order is amended, supplemented or otherwise
modified;
(h) the Court enters an order in any Case appointing an
examiner having enlarged powers relating to the
operation of the Borrowers' businesses (powers beyond
those set forth under sections 1106(a)(3) and (4) of
the Bankruptcy Code) under section 1106(b) of the
Bankruptcy Code without consent of the Investors; or
(i) the Borrowers shall make any payment on account of
any material pre-petition indebtedness or payables
other than as permitted by the Court, the Junior
Subsequent DIP Agreement, the Letter Agreement or the
Final Order.
Remedies
- --------
Upon the occurrence and continuance of any Event of Default, the
Investors will have such remedies as are customary for financing
transactions of this type. Without limiting the foregoing, the
Investors may take all or any of the following actions without further
order of or application to the Court; provided that with respect to
clause (b) below, the Investors shall provide the Borrowers (with a
copy to counsel for any statutory committee of unsecured creditors
appointed in the Cases and to the United States Trustee for the
District of Delaware) with five business days' prior written notice;
(a) declare the principal of and accrued interest on the outstanding
borrowings to be immediately due and payable; or
(b) take any other action or exercise any other right or remedy
permitted under the Agreements or by applicable law.
Conditions of Closing
- ---------------------
The several obligation of each Investor to provide such
Investor's Share of the Term Loan shall be subject to the following
additional conditions:
(a) the execution and delivery of appropriate legal documentation
in form and substance satisfactory to the Borrowers and the
Investors;
(b) the absence of any material adverse change in the financial
condition, business, prospects, profitability, assets or
operations of the Borrowers, including the resignation of the
Chief Executive Officer of the Borrowers;
(c) all conditions to the Senior Subsequent DIP Agreement shall have
been met or waived and the Borrowers shall have borrowed on the
Closing Date under the Senior Subsequent DIP Agreement an amount
equal to (i) $32,000,000 plus (a) the excess, if any, of the
outstanding balance of the Overdraft Facility above $3,000,000
plus (b) the outstanding balance of the Interim DIP Agreement
(including any letters of credit issued thereunder) less (ii)
$18,000,000 (the amount of the loans under the Junior Subsequent
DIP Agreement);
(d) The execution by the Existing Lenders of all documentation
necessary to effect the transactions contemplated by the Letter
Agreement which shall be reasonably satisfactory to the
Investors;
(e) the concurrent funding by the other Investors of their Shares;
(f) the repayment in full and termination of the Interim DIP
Agreement;
(g) not later than 60 days following the commencement of the Cases,
entry of an order of the Court in form and substance satisfactory
to the Investors (the "Final Order") on an application or motion
by the Borrowers that is satisfactory in form and substance to
the Investors, which Final Order shall have been entered on such
notice to such parties as may be satisfactory to the Investors,
approving the transactions contemplated herein and granting the
Superpriority Claim and liens and security interests referred to
above, which Final Order, among other things, shall (i) authorize
extensions of credit in amounts satisfactory to the Investors,
(ii) treat any adequate protection claims with respect to the
Existing Facility in a manner satisfactory to the Investors
(which shall be so deemed if consistent with the Letter
Agreement) and (iii) not have been reversed, modified, amended or
stayed; and
(h) the Final Order shall find and conclude that the Junior
Subsequent DIP Agreement was negotiated in good faith and that
the Investors are entitled to the protections of section 364(e)
of the Bankruptcy Code.
Covenant of the Investors
- -------------------------
On a weekly basis, each Investor hereby agrees to provide notice
to the Company (with a copy to the Existing Lenders, through Fleet
Bank, as agent therefor) that if all conditions to closing were met as
of the date thereof, such Investor would be in a position to fund its
entire Share hereunder.
Miscellaneous
- -------------
If any of the instruments evidencing or agreements governing or
order authorizing the Junior Subsequent DIP Agreement are modified,
stayed or vacated by subsequent order, such modification, stay or
vacating will not affect the validity of and indebtedness owed to the
Agent or the Lenders or the priority authorized by such order.
Governing Law
- -------------
Illinois, except as governed by the Bankruptcy Code.
Out-of-Pocket-Expenses
- ----------------------
The Borrowers shall reimburse the Investors (whether or not this
transaction is consummated) for out-of-pocket costs and expenses
(including fees and expenses of outside legal counsel) incurred in
connection with the Junior Subsequent DIP Agreement, including, but
not limited to, those incurred by the Investors in connection with the
preparation, execution and closing of this financing transaction and
the perfection of liens and security interests.
