-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HugvkzOZh3SCbfIXmB37Tl6QHCBtC/KLg77W/xGA31bZxYJH4wILveNEx4h3ZsXa 9sTiSVwAGmx9eEg1fQ1Llg== 0000903423-00-000274.txt : 20000504 0000903423-00-000274.hdr.sgml : 20000504 ACCESSION NUMBER: 0000903423-00-000274 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000503 GROUP MEMBERS: CAPE ANN INVESTORS, L.L.C. GROUP MEMBERS: CHILMARK FUND II, L.P. GROUP MEMBERS: CHILMARK II, L.L.C. GROUP MEMBERS: CHILMARK PARTNERS LLC GROUP MEMBERS: DAVID M. SCHULTE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NUTRAMAX PRODUCTS INC /DE/ CENTRAL INDEX KEY: 0000818467 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 061200464 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-41183 FILM NUMBER: 618145 BUSINESS ADDRESS: STREET 1: 51 BLACKBURN DRIVE CITY: GLOUCESTER STATE: MA ZIP: 01930 BUSINESS PHONE: 9782831800 MAIL ADDRESS: STREET 1: 51 BLACKBURN DRIVE CITY: GLOUCESTER STATE: MA ZIP: 01930 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CHILMARK PARTNERS LLC CENTRAL INDEX KEY: 0001046371 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 364101709 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 875 NORTH MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 BUSINESS PHONE: 31298498711 MAIL ADDRESS: STREET 2: 845 NORTH MICHIGAN AVE CITY: CHICAGO STATE: IL ZIP: 60611 SC 13D/A 1 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 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 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 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 EX-11 2 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 ---------------------------- 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. EX-12 3 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: 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: 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: FLORENCE REALTY, INC. By:_________________________ Title: NUTRAMAX ACQUISITION CORPORATION By:_________________________ Title: NUTRAMAX OPHTHALMICS INC. By:_________________________ Title: ORAL CARE, INC. By:_________________________ Title: 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. -----END PRIVACY-ENHANCED MESSAGE-----