-----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, B0mZBZXY7niYc5FglMwT4vEKQGIaJcFEI61/7maucYXSOM9IDmQYwBZ6rF6DlghZ +bScFM0OoIA+qN32oTnE2A== 0000950115-96-001101.txt : 19960814 0000950115-96-001101.hdr.sgml : 19960814 ACCESSION NUMBER: 0000950115-96-001101 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NONE FILER: 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-18671 FILM NUMBER: 96610690 BUSINESS ADDRESS: STREET 1: 9 BLACKBURN DR CITY: GLOUCESTER STATE: MA ZIP: 01930 BUSINESS PHONE: 5082831800 MAIL ADDRESS: STREET 1: ONE MEDIQ PLZ CITY: PENNSAUKEN STATE: NJ ZIP: 08110 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 29, 1996 Commission File Number: 0-18671 NUTRAMAX PRODUCTS, INC. (Exact name of registrant as specified in its charter) Delaware 061200464 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 9 Blackburn Drive, Gloucester, Massachusetts 01930 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (508) 283-1800 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No____ As of August 8, 1996 there were 8,527,752 shares of Common Stock, par value $.001 per share, outstanding. NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Thirteen Weeks Ended June 29, 1996 PART I. FINANCIAL INFORMATION: Item 1. Financial Statements. Condensed Consolidated Statements of Operations - Thirteen Weeks and Thirty-Nine Weeks ended June 29, 1996 and July 1, 1995 (Unaudited) 4 Condensed Consolidated Balance Sheets - June 29, 1996 (Unaudited) and September 30, 1995 5 Condensed Consolidated Statements of Cash Flows - Thirty-Nine Weeks ended June 29, 1996 and July 1, 1995 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7-9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. 10-14 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 14 2 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Thirteen Weeks Ended June 29, 1996 PART I. FINANCIAL INFORMATION Item 1. Financial Statements. 3 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Thirteen Weeks Ended Thirty-Nine Weeks Ended --------------------------- -------------------------------- June 29, July 1, June 29, July 1, 1996 1995 1996 1995 ----------- ------------- ----------- ---------- NET SALES $20,071,000 $15,184,000 $58,043,000 $45,362,000 COST OF SALES 14,473,000 11,321,000 41,322,000 32,618,000 ----------- ----------- ----------- ----------- GROSS PROFIT 5,598,000 3,863,000 16,721,000 12,744,000 SELLING, GENERAL & ADMINISTRATIVE EXPENSES 3,105,000 2,158,000 8,800,000 6,554,000 ----------- ----------- ----------- ----------- OPERATING INCOME 2,493,000 1,705,000 7,921,000 6,190,000 OTHER CREDITS (CHARGES): Interest expense (380,000) (364,000) (1,071,000) (1,105,000) Other ( 8,000) 60,000 (308,000) 288,000 ------------ ----------- ------------ ----------- INCOME BEFORE INCOME TAX EXPENSE 2,105,000 1,401,000 6,542,000 5,373,000 INCOME TAX EXPENSE 826,000 544,000 2,571,000 2,167,000 ----------- ----------- ----------- ----------- NET INCOME $ 1,279,000 $ 857,000 $ 3,971,000 $ 3,206,000 =========== =========== =========== =========== EARNINGS PER SHARE $ .15 $ .10 $ .47 $ .38 =========== =========== =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING 8,523,000 8,520,000 8,521,000 8,520,000 =========== =========== =========== ===========
See notes to condensed consolidated financial statements. 4 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS
June 29, September 30, 1996 1995 ----------- ------------- (Unaudited) (See Note) ASSETS CURRENT ASSETS: Cash $ 285,000 $ 503,000 Accounts receivable, net 10,655,000 9,050,000 Inventories 17,052,000 12,497,000 Deferred income taxes 928,000 977,000 Prepaid expenses and other 465,000 525,000 ----------- ----------- TOTAL CURRENT ASSETS 29,385,000 23,552,000 PROPERTY, PLANT AND EQUIPMENT, net 27,789,000 23,714,000 RESTRICTED CASH 5,457,000 -- GOODWILL, net 13,555,000 13,978,000 OTHER ASSETS 2,191,000 1,830,000 ----------- ----------- $78,377,000 $63,074,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 5,887,000 $ 6,191,000 Accrued payroll and related taxes 904,000 366,000 Accrued expenses - other 321,000 939,000 Current maturities of long-term debt 13,652,000 1,904,000 ----------- ----------- TOTAL CURRENT LIABILITIES 20,764,000 9,400,000 LONG-TERM DEBT, less current maturities 12,183,000 12,550,000 DEFERRED INCOME TAXES AND OTHER LIABILITIES 2,191,000 1,891,000 STOCKHOLDERS' EQUITY 43,239,000 39,233,000 ----------- ----------- $78,377,000 $63,074,000 =========== ===========
Note: The balance sheet at September 30, 1995 has been condensed from the audited financial statements at that date. See notes to condensed consolidated financial statements. 5 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Thirty-Nine Weeks Ended ------------------------------- June 29, July 1, 1996 1995 ----------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 3,971,000 $ 3,206,000 Adjustments to reconcile net income to net cash provided by operating activities: Non cash items primarily depreciation and amortization 3,401,000 3,199,000 Increase (decrease), net of effect of acquisitions: Accounts receivable (360,000) 350,000 Inventories (3,061,000) (1,396,000) Prepaid expenses and other 65,000 444,000 Accounts payable (21,000) (1,373,000) Accrued payroll and related taxes 407,000 (146,000) Accrued expenses - other (275,000) (517,000) Federal and state taxes payable (442,000) 93,000 ----------- ---------- Net cash provided by operating activities 3,685,000 3,860,000 CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition-Oral Care, net of cash acquired (2,723,000) -- Acquisition-feminine hygiene assets (2,367,000) -- Restricted Cash (5,457,000) -- Purchases of property and equipment (3,979,000) (2,818,000) Deferred packaging costs (588,000) (406,000) Other -- 100,000 ----------- ----------- Net cash used in investing activities (15,114,000) (3,124,000) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings 12,878,000 -- Debt Repayments (1,497,000) (965,000) Other (170,000) -- ------------ ----------- Net cash provided by (used in) financing activities 11,211,000 (965,000) ------------ ------------ NET INCREASE (DECREASE) IN CASH (218,000) (229,000) CASH: Beginning of period 503,000 376,000 ------------ ----------- End of period $ 285,000 $ 147,000 ============ =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Income taxes paid $ 2,753,000 $ 1,786,000 ============ =========== Interest paid $ 912,000 $ 1,041,000 ============ ===========
See notes to condensed consolidated financial statements. 6 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Condensed Consolidated Financial Statements The condensed consolidated balance sheet as of June 29, 1996, the condensed consolidated statements of operations for the thirteen and thirty-nine weeks ended June 29, 1996 and July 1, 1995, and the condensed consolidated statements of cash flows for the thirty-nine weeks then ended have been prepared by the Company without audit. In the opinion of the Company, all adjustments (consisting only of normal, recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 29, 1996, and for all periods presented, have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 1995 Annual Report on Form 10-K. The results of operations for the period ended June 29, 1996 are not necessarily indicative of the operating results for the full year. Note B - Acquisitions Effective October 23, 1995, the Company acquired substantially all of the assets and assumed certain liabilities of Mi-Lor Corporation, Professional Brushes, Inc. and Codent Dental Products, Inc. ("Oral Care") which manufacture and market toothbrushes, dental floss and related products for store brand markets. The purchase price consisted of $1,800,000 in cash and liabilities assumed of $363,000, and the transaction resulted in related expenses of approximately $560,000. On February 29, 1996, the Company purchased certain of the assets, including machinery and inventory, of the Hospital Specialties Division of the Tranzonic Companies related to the manufacture and sale of feminine hygiene products. The purchase price consisted of $2,367,000 in cash which was financed with long term debt (see Note E). The transaction has been accounted for by the purchase method of accounting. Note C - Restricted Cash In connection with the proceeds received from two Massachusetts Industrial Finance Agency Variable Rate Industrial Development Bonds ("IDB") (see Note E), a total of $5,457,000 of unused proceeds remained as invested cash as of June 29, 1996. Of this total, $1,957,000 is restricted for capital expenditures at the Oral Care facility in Florence, Massachusetts and $3,500,000 is restricted for capital expenditures at the Powers Pharmaceutical facility in Brockton, Massachusetts. The "IDB" restricts the investment vehicles available for the excess cash. As of June 29, 1996 the $3,500,000 was invested in Treasury Bills for two months at $99.2361 and the $1,957,000 was invested at 4.76% in a money market account. 7 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note D - Inventories Inventories are stated at the lower of cost (first-in, first-out method) or market. July 29, September 30, 1996 1995 ----------- ------------- Raw materials $ 7,400,000 $ 5,278,000 Finished goods 7,881,000 6,088,000 Work-in-process 781,000 417,000 Machine parts and factory supplies 990,000 714,000 ----------- ----------- $17,052,000 $12,497,000 =========== =========== The inventory associated with the Oral Care and feminine hygiene acquisitions resulted in an increase in inventory of $2,550,000 as compared to September 30, 1995. Note E - Long-Term Debt On December 30, 1995, the Company's revolving credit facility was increased $1,000,000 to $9,000,000. On February 29, 1996, the revolving credit facility was increased an additional $1,000,000 to $10,000,000. The revolving credit facility was temporarily increased an additional $1,000,000 to $11,000,000 on March 27, 1996 in anticipation of the "IDB" financing (see below) to take place. The temporary $1,000,000 line extension expired April 29, 1996. As of June 29, 1996, $7,929,000 was outstanding on the revolving credit facility and approximately $2,000,000 was available based on balances of eligible accounts receivable and inventory. The revolving credit facility expires in December 1996. In addition, on February 29, 1996 the Company obtained a $2,750,000 term loan, with the same commercial lender, for the feminine hygiene acquisition (see Note B), payable February 29, 1997 at interest rates comparable to the Company's existing revolving credit facility, which effective November 30, 1995 was reduced to LIBOR plus 1.5% (as of June 29, 1996 the rate was 7.0%). The term loan interest rate was also reduced at the same time to LIBOR plus 2.25% (as of June 29, 1996 the rate was 7.75%). On May 3, 1996, the Company completed a $4,200,000 "IDB". Proceeds from the financing were used to reduce the outstanding balance under the company's revolving credit facility which was used to fund the Oral Care acquisition and for the capital expenditures made and scheduled to be made over the next twelve months for the Oral Care operation. It is anticipated that all proceeds will be expended by December 31, 1996. As of June 29, 1996 $2,243,000 of the proceeds of the bond had been used to repay a portion of the Company's outstanding balance under its existing revolving credit facility and to pay for equipment purchases. The variable interest rate on the bond as of June 29, 1996 was 3.4% and interest is payable monthly. Principal payments are funded monthly and are payable annually beginning May 1, 1997 at $400,000 per year through May 1, 2003, $200,000 due May 1, 2004 and $100,000 per year thereafter through May 1, 2016. The "IDB" is supported by a letter of credit with State Street Bank and Trust Company and contains certain financial covenants 8 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) with respect to minimum quarterly net earnings, tangible net worth, indebtedness to net worth ratios and cash flows. The "IDB" contains certain restrictions including limiting capital expenditures, made for the Oral Care operation, to $10,000,000 over the next three years. On June 7, 1996, the Company completed a second "IDB" for $3,500,000 for the purpose of funding the expansion of the Powers Pharmaceutical manufacturing facility and the purchase of additional manufacturing equipment at the facility. The variable interest rate on the bond as of June 29, 1996 was 3.4% and interest is payable monthly. Principal payments are funded monthly and are payable annually beginning May 1, 1997 at $400,000 per year, through May 1, 2001 and $100,000 per year thereafter through May 1, 2016. The "IDB" is supported by a letter of credit with State Street Bank and Trust Company and contains certain financial covenants with respect to minimum quarterly net earnings, tangible net worth, indebtedness to net worth ratios and cash flows. The "IDB" contains certain restrictions including limiting capital expenditures, made for the Powers Pharmaceutical operation, to $10,000,000 over the next three years. Note F - Special Committee The Board of Directors of MEDIQ Incorporated ("MEDIQ"), a 47% owner of the Company's Common Stock, has undertaken a process of exploring alternative ways to maximize MEDIQ's shareholder value, which could include the disposition of its holdings in the Company. In fiscal 1995, the Company formed a Special Committee of its Board of Directors to explore strategic alternatives for the Company. The Special Committee retained Wasserstein Parella & Co. as financial advisors to seek opportunities for the Company to enhance shareholder value. The financial statements contain a charge of $3,000 and $187,000, before taxes, related to the activities of the Special Committee for the quarter and nine month period respectively. 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. General The following discussion addresses the financial condition of the Company as of June 29, 1996 and its results of operations for the thirteen and thirty-nine week periods then ended, compared with the same periods last year. This discussion should be read in conjunction with the Management's Discussion and Analysis section included in the Company's Annual Report on Form 10-K for the year ended September 30, 1995 (pages 8-10) to which the reader is directed for additional information. Some of the information presented in this report constitutes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the Company believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operation, there can be no assurance that actual results will not differ materially from its expectations. Factors which could cause actual results to differ from expectations include the timing and amount of new product introductions by the Company, the timing of orders received from customers, the gain or loss of significant customers, changes in the mix of products sold, competition from brand name and other private label manufacturers, seasonal changes in the demand for the Company's products, increases in the cost of raw materials and changes in the retail market for health and beauty aids in general. For additional information concerning these and other important factors which may cause the Company's actual results to differ materially from expectations and underlying assumptions, please refer to the Company's Annual Report on Form 10-K for the year ended September 30, 1995 and other reports filed with the Securities and Exchange Commission. Results of Operations On October 23, 1995, the Company acquired substantially all of the assets and assumed certain liabilities of Mi-Lor Corporation, Professional Brushes, Inc. and Codent Dental Products, Inc. ("Oral Care") which manufacture and market toothbrushes, dental floss and related products for store brand markets. The purchase price consisted of $1,800,000 in cash and liabilities assumed of $363,000, and the transaction resulted in related expenses of $560,000. This acquisition represents the addition of the Company's Oral Care product line. On February 29, 1996, the Company purchased certain of the assets, including machinery and inventory, of the Hospital Specialties division of the Tranzonic Companies related to the manufacture and sale of feminine hygiene products. The purchase price consisted of $2,367,000 in cash which was financed with long term debt (see Note E). 10 The following table sets forth, for all periods indicated, the percentage relationship that items in the Company's Condensed Consolidated Statements of Operations bear to net sales.
Thirteen Weeks Ended Thirty-Nine Weeks Ended -------------------- ----------------------- June 29, July 1, June 29, July 1, 1996 1995 1996 1995 ---- ---- ---- ---- NET SALES 100% 100% 100% 100% COST OF SALES 72 75 71 72 ---- ---- ---- ---- GROSS PROFIT 28 25 29 28 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 16 14 15 14 ---- ---- ---- ---- OPERATING INCOME 12 11 14 14 OTHER CREDITS (CHARGES) (2) (2) (3) (2) ---- ---- ---- ---- INCOME BEFORE INCOME TAX EXPENSE 10 9 11 12 INCOME TAX EXPENSE 4 4 4 5 ---- ---- ---- ---- NET INCOME 6% 5% 7% 7% ==== ==== ==== ====
Thirteen Weeks Ended June 29, 1996 Compared with Thirteen Weeks Ended July 1, 1995 Net sales in 1996 increased $4,887,000 to $20,071,000, as compared to $15,184,000 for the prior year quarter. The increase in net sales was primarily attributable to $1,858,000 of sales of Oral Care products, $315,000 of sales of Adult Liquid Nutrition products (introduced in March 1995), $1,448,000 of Cough/Cold products which showed strength in both contract and private label sales, and $872,000 of Feminine Hygiene sales which resulted from continued increases in market penetration and the purchase of certain assets of the company's largest competitor in Disposable Douche. Gross profit for 1996 was $5,598,000 which was 28% of net sales, as compared to $3,863,000 or 25% of net sales for the prior year quarter. The improved margin is a result of lower raw material costs, primarily plastic resin, plastic film and corrugated materials as well as increased manufacturing volume spread over a fixed overhead base. Selling, general and administrative expenses for 1996 were $3,105,000, or 16% of net sales, as compared to $2,158,000, or 14% of net sales for the prior year quarter. The increase of $947,000 is primarily attributable to freight and commission expense related to increased sales, an increase in allowance for doubtful accounts associated with increased sales and management incentive compensation accruals for the quarter. Interest expense for 1996 was $380,000, as compared to $364,000 in the prior year quarter. This increase was primarily attributable to increased debt balances (see Note E) offset by lower interest rates. Other credits for the quarter were $8,000, primarily consisting of interest income on the restricted cash associated with the "IDB" financing. The prior year quarter was comprised primarily of gains on the sale of equipment. 11 The effective income tax rate for the quarter was 39% which was comparable to the prior year quarter. Thirty-Nine Weeks Ended June 29, 1996 Compared with Thirty-Nine Weeks Ended July 1, 1995 Net sales for 1996 were $58,043,000, an increase of $12,681,000, or 28%, compared to sales of $45,362,000 in the prior year period. The increase was primarily attributable to $5,318,000 of Oral Care, $3,310,000 of Cough/Cold products, $2,038,000 of Adult Liquid Nutrition, $1,968,000 of Feminine Hygiene products. Gross profit for 1996 was $16,721,000, or 29% of net sales, as compared to $12,744,000, or 28% of net sales for the prior year period. The increased gross margin is attributable to lower raw material costs primarily plastic resin, plastic film and corrugated items as well as increased manufacturing volume spread over a fixed overhead base. Selling, general and administrative expenses for 1996 were $8,800,000 or 15% of net sales, as compared to $6,554,000, or 14% of net sales in the prior year period. The increase of $2,246,000 was primarily attributable to increased freight and commission expense related to the increased sales, an increase in the allowance for doubtful accounts associated with increased sales and management incentive compensation accruals. Interest expense for 1996 was $1,071,000, as compared to $1,105,000 in the prior year period. This decrease was primarily attributable to lower interest rates offset by increased debt. Other charges for 1996 were $308,000 primarily consisting of costs associated with the Special Committee of the Board of Directors and Wasserstein, Parella & Co., it's financial advisors, as well as research and development costs. The prior year period primarily consisted of income from the sale of fixed assets. The effective income tax rate for the thirty nine weeks of fiscal 1996 was 39%, as compared to 40% in the prior year period. The decrease relates to the implementation of tax planning strategies undertaken during 1995 to maximize state tax benefits. Liquidity and Capital Resources As of June 29, 1996 the Company had working capital of $8,621,000 as compared to working capital of $14,152,000 as of September 30, 1995. The decrease in working capital was primarily attributable to the reclassification of long term debt to current debt offset by increased inventories and accounts receivable. Net cash provided by operating activities was $3,685,000 for the thirty-nine weeks ended June 29, 1996, as compared to $3,860,000 in the prior year period. This decrease was primarily attributable to increased inventory levels to support anticipated sales growth of Oral Care and Adult Liquid Nutrition product categories. 12 Net cash used in investing activities was $15,114,000 for 1996, consisting primarily of $5,457,000 of cash restricted under the terms of the "IDB" (see Note C), $5,090,000 for the Oral Care and feminine hygiene asset acquisitions, and capital expenditures of $3,979,000. The assets associated with the Oral Care and feminine hygiene acquisitions resulted in an increase in net property plant and equipment of $6,063,000 and in inventories of $2,550,000 as compared to September 30, 1995. The Company anticipates additional capital expenditures of approximately $1,600,000 for the remainder of fiscal 1996, $750,000 of which will be financed from the proceeds of the "IDB" (see note E). The remaining expenditures relate primarily to additional manufacturing capacity requirements and are expected to be financed through cash generated from operations. Net cash provided by financing activities was $11,211,000 for 1996, which consisted primarily of $7,700,000 of funds resulting from the "IDB" financing and borrowings under the line of credit facility of $5,178,000 primarily for the Oral Care and feminine hygiene asset acquisitions and equipment purchases, offset by debt repayments of $1,497,000. On December 30, 1995, the Company's revolving credit facility was increased $1,000,000 to $9,000,000. On February 29, 1996, the revolving credit facility was increased an additional $1,000,000 to $10,000,000. The revolving credit facility was temporarily increased an additional $1,000,000 to $11,000,000 on March 27, 1996 in anticipation of the "IDB" financing (see below) to take place. The temporary $1,000,000 line extension expired April 29, 1996. As of June 29, 1996, $7,929,000 was outstanding on the revolving credit facility and approximately $2,000,000 was available based on the balance of eligible accounts receivable and inventory. The revolving credit facility expires in December 1996. In addition, on February 29, 1996 the Company obtained a $2,750,000 term loan, with the same commercial lender, for the feminine hygiene acquisition (see Note B), payable February 29, 1997 at interest rates comparable to the Company's existing revolving credit facility, which effective November 30, 1995 was reduced to LIBOR plus 1.5% (as of June 29, 1996 the rate was 7.0%). The term loan interest rate was also reduced at the same time to LIBOR plus 2.25% (as of June 29, 1996 the rate was 7.75%). On May 3, 1996, the Company completed a $4,200,000 ("IDB"). Proceeds from the financing were used to reduce the outstanding balance under the company's revolving credit facility which was used to fund the Oral Care acquisition and for the capital expenditures made and scheduled to be made over the next twelve months for the Oral Care operation. It is anticipated that all proceeds will be expended by December 31, 1996. As of June 29, 1996 $2,243,000 of the proceeds of the bond had been used to repay a portion of the Company's outstanding balance under it's existing revolving credit facility and to pay for equipment purchases. The variable interest rate on the bond as of June 29, 1996 was 3.4% and interest is payable monthly. Principal payments are funded monthly and are payable annually beginning May 1, 1997 at $400,000 per year through May 1, 2003, $200,000 due May 1, 2004 and $100,000 per year thereafter through May 1, 2016. The "IDB" is supported by a letter of credit with State Street Bank and Trust Company and contains certain financial covenants with respect to minimum quarterly net earnings, tangible net worth, indebtedness to net worth ratios and cash flows. The "IDB" contains certain restrictions including limiting capital expenditures, made for the Oral Care operation, to $10,000,000 over the next three years. 13 On June 7, 1996, the Company completed a second "IDB" for $3,500,000 for the purpose of funding the expansion of the Powers Pharmaceutical manufacturing facility and the purchase of additional manufacturing equipment at the facility. The variable interest rate on the bond as of June 29, 1996 was 3.4% and interest is payable monthly. Principal payments are funded monthly and are payable annually beginning May 1, 1997 at $400,000 per year, through May 1, 2001 and $100,000 per year thereafter through May 1, 2016. The "IDB" is supported by a letter of credit with State Street Bank and Trust Company and contains certain financial covenants with respect to minimum quarterly net earnings, tangible net worth, indebtedness to net worth ratios and cash flows. The "IDB" contains certain restrictions including limiting capital expenditures, made for the Powers Pharmaceutical operation, to $10,000,000 over the next three years. The Company believes that its existing working capital and anticipated funds to be generated from operations will be sufficient to meet the Company's operating and capital needs. Depending upon future growth of the business, additional financing may be required. In addition, it is anticipated that the balance of the Company's revolving credit facility due December 1996 will be refinanced at maturity. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit 27 -Financial Data Schedule appears on page 15. Exhibit 99.1 -Letter to State Street Bank and Trust dated February 29, 1996, re: Amendment No. 2 to Revolving Credit, Term Loan and Security Agreement and Trademark Assignment Agreement. Exhibit 99.2 -Letter to State Street Bank and Trust dated March 4, 1996, re: Amendment No. 3 to Revolving Credit, Term Loan and Security Agreement and Revolving Time Note. Exhibit 99.3 -Form of Secured Acquisition Promissory Note. Exhibit 99.4 -Form of Amended and Restated Revolving Time Note. (b) Reports on Form 8-K. No reports on Form 8-K were filed in the quarter ended June 29, 1996. 14 NUTRAMAX PRODUCTS, INC. AND SUBSIDIARIES Thirteen Weeks Ended June 29, 1996 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NutraMax Products, Inc. ----------------------------- (Registrant) August 13, 1996 (Date) /s/ Robert F. Burns ---------------------------- Robert F. Burns Vice President and Chief Financial Officer 15 EX-27 2 ART.5 FOR 3RD QUARTER 10-Q
5 1,000 9-MOS SEP-28-1996 JUN-29-1996 285 0 11,360 705 17,052 29,385 39,857 12,068 78,377 20,764 12,183 0 0 9 43,230 78,377 58,043 58,043 41,322 41,322 8,800 0 1,071 6,542 2,571 3,971 0 0 0 3,971 .47 .47
EX-99.1 3 AMENDMENT 2 NutraMax Products, Inc. 9 Blackburn Drive Gloucester, Massachusetts 01930 Powers Pharmaceutical Corporation 170 Oak Hill Way Brockton, Massachusetts 02401 Optopics Laboratories Corporation 32 Main Street Fairton, New Jersey 08320 February 29, 1996 State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 Re: Amendment No. 2 to Revolving Credit, Term Loan and Security Agreement and Trademark Assignment Agreement ("Amendment") Gentlemen: We refer to the Revolving Credit, Term Loan and Security Agreement made the 30th day of December, 1994, as amended by the Amendment dated November 30, 1995, (as amended, the "Loan Agreement") by and among NutraMax Products, Inc., a Delaware corporation having its principal place of business at 9 Blackburn Drive, Gloucester, Massachusetts 01930 ("NutraMax"), Powers Pharmaceutical Corporation, a Delaware corporation having its principal place of business at 170 Oak Hill Way, Brockton, Massachusetts 02401 ("Powers"), Optopics Laboratories Corporation, a Delaware corporation having its principal place of business at 32 Main Street, Fairton, New Jersey 08320 ("Optopics"; NutraMax, Powers and Optopics are referred to hereinafter individually as a "Borrower" and collectively, and jointly and severally, as the "Borrowers"), and State Street Bank and Trust Company, a Massachusetts trust company having its principal place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank"). We also refer to the Trademark Assignment Agreement dated December 6, 1993 by and between NutraMax and the Bank (the "Trademark Assignment"). Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Loan Agreement. We have requested that you make certain amendments to the Loan Agreement and you have advised us that you are willing to make the amendments requested by us on the condition that we join with you in this Amendment. Accordingly, in consideration of these premises, the promises, mutual covenants and agreements contained in this Amendment, and fully intending to be legally bound by this Amendment, we hereby agree with you as follows: ARTICLE I AMENDMENTS TO LOAN AGREEMENT The Loan Agreement is hereby amended in each of the following respects: 1.1 Article I of the Loan Agreement is amended as follows: (a) The following definitions are hereby inserted as Sections 1.00(a) through 1.00(e) immediately preceding the definition of "Adjusted Libor" in Section 1.01: 1.00(a) "Acquisition Loan" shall mean the secured one-year term loan of an amount up to $2,750,000 for the purposes of acquiring certain assets of the Hospital Specialty Company Division of The Tranzonic Companies, pursuant to Section 3.04 hereof. 1.00(b) "Acquisition Loan Availability Period" shall mean that period commencing with the date of that certain Amendment No. 2 to Revolving Credit, Term Loan and Security Agreement dated February 29, 1996 and ending on March 7, 1996. 1.00(c) "Acquisition Loan Expiration Date" shall mean February 28, 1997. 1.00(d) "Acquisition Loan Funding" shall mean any sum of money loaned by the Bank to the Borrower pursuant to Section 3.04 hereof. 1.00(e) "Acquisition Loan Interest Payment Date" shall mean the first day of each month commencing the first day of April, 1996, through the Acquisition Loan Expiration Date. (b) The definition of "Financing Agreements" in Section 1.23 is hereby amended to read in its entirety as follows: "Financing Agreements" shall mean this Agreement and any and all amendments hereto including, without limitation, that certain Amendment dated November 30, 1995 and that certain Amendment No. 2 to Revolving Credit, Term Loan and Security Agreement dated February 29, 1996, and all documents including, without limitation, collateral documents, letter of credit agreements, notes, acceptance credit agreements, security agreements, pledges, guaranties, mortgages, title insurance, assignments, and subordination agreements required to be executed by Borrower or any Third Party in connection with the loan arrangements between the Borrower and Bank. -2- (c) The definition of "Interest Period" in Section 1.28 is hereby amended to read in its entirety as follows: "Interest Period" shall mean: (a) with respect to each Libor Loan, a period commencing on the Borrowing Date of such Advance, and ending one, two or three months thereafter, as the case may be, as determined in accordance with the provisions of this Agreement provided that (i) any Interest Period which would otherwise end on a day which is not a Banking Day, shall end and the next Interest Period shall commence on the next preceding or the next succeeding day which is a Banking Day as determined in good faith by the Bank in accordance with the then current bank practices in the relevant Interbank Market, and (ii) no Interest Period for a Libor Loan shall end after the Expiration Date; and (b) with respect to the Prime Rate Loan(s), a period commencing on the Borrowing Date of an Advance or Acquisition Loan Funding, as the case may be, and ending on the date of repayment of such Advance or Acquisition Loan Funding; and (c) with respect to each Libor Election, a period commencing on the Election Date, and ending one, two or three months thereafter, as the case may be, as determined in accordance with the provisions of this Agreement provided that (i) any Interest Period which would otherwise end on a day which is not a Banking Day, shall end and the next Interest Period shall commence on the next preceding or the next succeeding day which is a Banking Day as determined in good faith by the Bank in accordance with the then current bank practices in the relevant Interbank Market, and (ii) no Interest Period for a Libor Election shall end after the maturity date of the applicable Term Loan or Acquisition Loan, as the case may be. (d) The definition of "Libor Election" in Section 1.31 is hereby amended to read in its entirety, as follows: "Libor Election" shall mean a request by the Borrower, in accordance with Section 4.02 of this Agreement, to calculate interest on the outstanding principal balance of all or a portion of the Term Loans and Acquisition Loans at a fixed rate equal to Adjusted Libor plus two and one-quarter percent (2 1/4%) per annum. -3- (e) The definition of "Libor Loan(s)" in Section 1.32 is hereby amended to read in its entirety, as follows: "Libor Loan(s)" shall mean, when used in the singular, any Advance or Acquisition Loan Funding on which the interest rate is calculated by reference to Libor and, when used in the plural, shall mean all such Advances or Acquisition Loan Fundings. (f) The definition of "Prime Rate Loan(s)" in Section 1.40 is hereby amended to read in its entirety, as follows: "Prime Rate Loan(s)" shall mean, when used in the singular, any Advance or Acquisition Loan Funding on which the interest rate is calculated by reference to the Prime Rate and, when used in the plural, shall mean all such Advances or Acquisition Loan Fundings. (g) The definition of "Obligations" in Section 1.36 is hereby amended by adding the following new sentence at the end of the paragraph, as follows: Without limiting the generality of the foregoing, "Obligations" shall include the obligations of the Borrower under the Secured Acquisition Promissory Note dated February 29, 1996 made by the Borrowers in favor of the Bank. 1.2 Article III is hereby renamed "TERM LOANS AND ACQUISITION LOANS". 1.3 The following new Section 3.04 is hereby added as follows: 3.04 The Bank shall make the Acquisition Loan to the Borrower which shall bear interest and be payable in accordance with the terms and conditions of a Secured Acquisition Promissory Note in the form of "Exhibit E-1" attached hereto and made a part hereof, and as set forth herein. Subject to and upon the terms and conditions of this Agreement, during the Acquisition Loan Availability Period, at the request of the Borrower, as more particularly described in Section 4.02 hereof, the Bank will provide Acquisition Loan Funding to the Borrower in the form of Prime Rate Loans or pursuant to a Libor Election, provided, however, that no Acquisition Loan Funding will be made: (i) after the Acquisition Loan Availability Period; or (ii) if a Default exists. The total amount of outstanding principal on all Acquisition Loans and all accrued and unpaid interest thereon shall be due and payable on the Acquisition Loan Expiration Date. Any Acquisition Loan not made pursuant to a Libor Election shall be deemed a Prime Rate Loan. -4- 1.4 Sections 3.04, 3.05, 3.06 and 3.07 are hereby renumbered as Sections 3.05, 3.06, 3.07 and 3.08, respectively. All references in the Loan Agreement to such Sections shall be deemed to be made to such Sections as so renumbered. 1.5 Section 4.02 is hereby replaced in its entirety as follows: 4.02 Bank shall not be required to honor a Libor Election unless Bank receives from the Borrower a request for such Libor Election (herein a "Notice of Election"), which request complies with the requirements of this Section 4.02. Each Notice of Election shall designate (a) the Election Date for the requested Libor Election, (b) the amount of the Libor Election, which amount shall be no less than (i) One Million Dollars and no more than the then outstanding principal balance of the applicable Term Loan or (ii) Fifty Thousand Dollars and no more than the then outstanding principal balance of the applicable Acquisition Loan, minus the amount of any installments of principal which will become due thereunder during the Interest Period; and (c) the Interest Period. Each Notice of Election must be received by Bank not less than two Banking Days prior to the Election Date. A Notice of Election may be transmitted by telephone, telecopier, telex, cable or mail. If a Notice of Election is transmitted by telephone, telecopier, telex or cable, the Borrower shall immediately mail to Bank a written confirmation thereof. 1.6 Section 4.05 is hereby replaced in its entirety as follows: 4.05 All net proceeds of each Advance or Acquisition Loan Funding shall be credited to any demand deposit account maintained by the Borrower or any Affiliate with Bank, the specified amount and account to be designated by the Borrower in the Notice of Borrowing or Notice of Election, as the case may be, issued with respect to such Advance or Acquisition Loan Funding. 1.7 Section 5.01 is hereby replaced in its entirety as follows: 5.01(a) With respect to Advances, prior to the Expiration Date, the Borrower shall pay interest on the unpaid principal balance of each Prime Rate Loan from the Borrowing Date for such Advance at a variable per annum rate equal to the Prime Rate in effect from time to time. Interest accrued under this Section 5.01(a) shall be paid monthly in arrears on each Interest Payment Date. 5.01(b) With respect to Acquisition Loan Fundings, prior to the Acquisition Loan Expiration Date, the Borrower shall pay interest on the unpaid principal balance of each Prime Rate Loan from the Borrowing Date for such Acquisition Loan Funding at a variable per annum rate equal to the Prime Rate in effect from time to time plus one-half percent (1/2%). Interest accrued under this Section 5.01(b) shall be paid monthly in arrears on each Acquisition Loan Interest Payment Date. -5- 1.8 Section 5.02 is hereby replaced in its entirety as follows: 5.02(a) With respect to Advances, the Borrower shall pay interest on the aggregate unpaid principal balance of each Libor Loan from the Borrowing Date for such Advance through and including the Maturity Date chosen by the Borrower with respect to such Advance at a per annum rate equal to the aggregate of the Adjusted Libor plus Margin, and shall pay all interest accrued but unpaid under this Section 5.02(a) on such Maturity Date. 5.02(b) With respect to Acquisition Loan Fundings, the Borrower shall pay interest on the aggregate unpaid principal balance of each Libor Loan from the Borrowing Date for such Acquisition Loan Funding through and including the Maturity Date chosen by the Borrower with respect to such Acquisition Loan Funding at a per annum rate equal to the aggregate of the Adjusted Libor plus two and one-quarter percent (2 1/4%) per annum, and shall pay all interest accrued but unpaid under this Section 5.02(b) on such Maturity Date. 1.9 Section 5.03 is hereby replaced in its entirety as follows: 5.03(a) With respect to Advances, if a Libor Loan is not repaid in full on its Maturity Date, then such Advance shall bear interest at the rate described in Section 5.01(a) from and after such Maturity Date through the Expiration Date and thereafter, at the option of the Bank, as set forth in Sections 5.01(a) and 5.04 until paid in full. 5.03(b) With respect to Acquisition Loan Funding, if a Libor Loan is not repaid in full on its Maturity Date, then such Acquisition Loan Funding shall bear interest at the rate described in Section 5.01(b) from and after such Maturity Date through the Acquisition Loan Expiration Date and thereafter, at the option of the Bank, as set forth in Sections 5.01(b) and 5.04 until paid in full. 1.10 Section 5.04 is hereby replaced in its entirety as follows: 5.04 From and after the occurrence of an Event of Default, at the option of the Bank: (a) with respect to Advances and Term Loans, (i) all Prime Rate Loans shall bear interest at a variable per annum rate equal to the aggregate of the Prime Rate in effect from time to time plus two and one-half (2 1/2%) percent until paid in full; and (ii) each Libor Loan shall bear interest at the rate established therefor pursuant to Section 5.02(a) until such Advance's Maturity Date, and thereafter at the rate set forth in clause (a)(i) of this Section 5.04 until paid in full; and (b) with respect to Acquisition Loans, (i) all Prime Rate Loans shall bear interest at a variable per annum rate equal to the aggregate of the Prime Rate in effect from time to time plus three (3%) percent until paid in full; and (ii) each Libor Loan shall bear interest at the rate established therefor pursuant to Section 5.02(b) until such Acquisition Loan Fundings' Maturity Date, and thereafter at the rate set forth in clause (b)(i) of this Section 5.04 until paid in full. -6- 1.11 Section 6.08 is hereby replaced in its entirety as follows: 6.08 If, due to payments made by the Borrower pursuant to this Agreement or due to the acceleration of the maturity of the Revolving Loan, the Term Loans or the Acquisition Loans pursuant to Article XIII hereof or due to any other reason, including, without limitation, by reason of a payment made pursuant to Sections 6.07 or 2.04 of this Agreement, Bank receives payments of principal of any Libor Loan or Libor Election prior to the Maturity Date thereof, the Borrower shall, upon demand by the Bank, pay to Bank any amounts required to compensate Bank for any additional losses, costs or expenses which it may reasonably incur as a result of such payment, including, without limitation, any loss, costs or expenses incurred by reason of the liquidation or reemployment of deposits or other funds acquired by Bank to fund or maintain such Libor Loan or Libor Election, 1.12 Section 7.01 is hereby amended by inserting the following paragraph at the end of Section 7.01 immediately preceding Section 7.02, as follows: Without limiting in any way the generality of the foregoing, the above property shall include all of such property acquired by NutraMax from The Tranzonic Companies pursuant to a certain Agreement dated February 29, 1996 between NutraMax, as buyer, and The Tranzonic Companies, as seller. 1.13 The following new Section 10.15 is hereby added as follows: 10.15 Borrower will not at any time use any of the proceeds of the Acquisition Loan for any purpose other than for the acquisition of the certain assets from The Tranzonic Companies pursuant to a certain Agreement dated February 29, 1996 between NutraMax, as buyer, and The Tranzonic Companies, as seller. 1.14 Section 15.02(e) is hereby replaced in its entirety as follows: (e) If intended for Bank, to: State Street Bank and Trust Company 225 Franklin Street, Second Floor Boston, MA 02110 Attn: William F. Zola, Vice President Telecopier No.: (617) 654-4176 -7- with copies to: Peter S. Johnson, Esq. Gadsby & Hannah 125 Summer Street Boston, MA 02110 Telecopier No.: (617) 345-7050 ARTICLE II AMENDMENTS TO TRADEMARK ASSIGNMENT AGREEMENT 2.1 The introductory paragraph of the Trademark Assignment is hereby amended by adding the following new sentence at the end of the introductory paragraph immediately preceding the second grammatical paragraph, as follows: Without limiting the generality of the foregoing, "Obligations" shall include the obligations of the Borrower under the Secured Acquisition Promissory Note dated February 29, 1996 made by the Borrowers in favor of the Bank. ARTICLE III REPRESENTATIONS AND WARRANTIES The Borrowers hereby jointly and severally represent and warrant to you as follows: 3.1 Representations in Financing Agreements. Each of the representations and warranties made by or on behalf of any Borrower to you in any of the Financing Agreements, as amended by this Amendment, was true and correct when made and is true and correct on and as of the date hereof with the same full force and effect as if each of such representations and warranties had been made by such Borrower on the date hereof and in this Amendment. 3.2 Events of Default. No Event of Default exists on the date hereof (after giving effect to all of the arrangements and transactions contemplated by this Amendment). No condition exists on the date hereof which would, with notice or the lapse of time, or both, constitute an Event of Default. -8- 3.3 Binding Effect of Documents. (a) This Amendment has been duly executed and delivered to you by the Borrowers and is in full force and effect as of the date hereof, and the agreements and obligations of the Borrowers contained herein constitute legal, valid and binding obligations of the Borrowers enforceable against the Borrowers in accordance with their respective terms. (b) The obligations of the Borrowers to repay you all of the unpaid principal of each of the Revolving Loans and each of the Term Loans made pursuant to the Loan Agreement, to pay you all of the unpaid interest accrued or to accrue thereon, and to pay you all of the other obligations of the Borrowers are and will continue to be entitled to all of the benefits of and to all of the security created by the Loan Agreement and the other Financing Agreements. ARTICLE IV PROVISIONS OF GENERAL APPLICATION 4.1 No Other Changes. Except as otherwise expressly provided by this Amendment, all of the terms, conditions and provisions of the Loan Agreement and each of the other Financing Agreements remain unaltered. The Loan Agreement and this Amendment shall be read and construed as one agreement. 4.2 Governing Law. This Amendment is intended to take effect as a sealed instrument and shall be deemed to be a contract under the laws of The Commonwealth of Massachusetts. This Amendment and the rights and obligations of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of The Commonwealth of Massachusetts. 4.3 Binding Effect; Assignment. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors in title and assigns. 4.4 Counterparts. This Amendment may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. 4.5 Conflict with Other Agreements. If any of the terms of this Amendment shall conflict in any respect with any of the terms of any of the Financing Agreements, the terms of this Amendment shall be controlling. 4.6 Acknowledgment by Borrowers. Each of NutraMax, Powers and Optopics jointly and severally acknowledge that the Bank would not have entered into this Amendment (and, without limiting the generality of the foregoing, would not have made the Acquisition Loan) unless all of the Borrowers agreed to be and continue to be, Borrowers on a joint and several basis, and that the Bank would not have entered into any such arrangements with any individual Borrower alone. -9- 4.7 Conditions Precedent. This Amendment shall become effective as of the date hereof, but only if the Bank shall have received each of the following agreements and documents in form and substance satisfactory to the Bank and duly executed and delivered by the parties thereto: (a) this Amendment; (b) the Secured Acquisition Promissory Note evidencing the Acquisition Loan; (c) certification from the appropriate public officials of the state of incorporation of each Borrower evidencing the legal existence and tax good standing of such Borrower as of the most recent practicable date; (d) a certificate of the Secretary or Clerk of each Borrower as to authorizing resolutions, incumbency of officers, by-laws, specimen signatures, accuracy of representations and warranties, and absence of Defaults or Events of Default; (e) a favorable legal opinion addressed to the Bank from counsel to the Borrowers, in substantially the form of opinion delivered in connection with the closing of the Loan Agreement; (f) UCC-1 Financing Statements to be filed with the Secretary of State of Ohio and the Clerk of Pepper Pike, Ohio; (g) copies of all executed documents evidencing the acquisition of the assets from The Tranzonic Companies; (h) if trademarks have been acquired from the Tranzonic Companies, a Trademark Assignment Agreement with respect to such trademarks; and (i) payment of all outstanding fees and disbursements of Messrs. Gadsby & Hannah, counsel to the Bank, relating to this Amendment or the transactions contemplated hereunder. 4.8 Section Headings. Article titles and Section headings are for reference only and shall have no substantive effect. Without limiting the generality of the foregoing, Sections 3.05, 3.06, 3.07, 3.08 (formerly Sections 3.04, 3.05, 3.06 and 3.07), 4.03, 4.04, 5.06 and 5.07 shall, to the extent applicable, pertain to and govern the Acquisition Loans. [The remainder of this page is intentionally left blank.] -10- If you are in agreement with the foregoing, please sign below and return this Amendment to the undersigned, whereupon this Amendment, as so accepted by you, shall become a binding agreement among you and the undersigned. Very truly yours, THE BORROWERS: NUTRAMAX PRODUCTS, INC. By:_____________________________________ Robert F. Burns, Chief Financial Officer POWERS PHARMACEUTICAL CORPORATION By:_____________________________________ Robert F. Burns, Chief Financial Officer OPTOPICS LABORATORIES CORPORATION By:_____________________________________ Robert F. Burns, Chief Financial Officer The foregoing Amendment and each and every part thereof is hereby accepted by the undersigned effective as of February 29, 1996. THE BANK: STATE STREET BANK AND TRUST COMPANY By:_____________________________________ William F. Zola, Vice President -11- EX-99.2 4 AMENDMENT 3 NutraMax Products, Inc. 9 Blackburn Drive Gloucester, Massachusetts 01930 Powers Pharmaceutical Corporation 170 Oak Hill Way Brockton, Massachusetts 02401 Optopics Laboratories Corporation 32 Main Street Fairton, New Jersey 08320 March 4, 1996 State Street Bank and Trust Company 225 Franklin Street Boston, Massachusetts 02110 Re: Amendment No. 3 to Revolving Credit, Term Loan and Security Agreement and Revolving Time Note ("Amendment") Gentlemen: We refer to the Revolving Credit, Term Loan and Security Agreement made the 30th day of December, 1994, as amended by the Amendment dated November 30, 1995 and Amendment No. 2 to the Revolving Credit, Term Loan and Security Agreement dated February 29, 1996 (as amended, the "Loan Agreement"), by and among NutraMax Products, Inc., a Delaware corporation having its principal place of business at 9 Blackburn Drive, Gloucester, Massachusetts 01930 ("NutraMax"), Powers Pharmaceutical Corporation, a Delaware corporation having its principal place of business at 170 Oak Hill Way, Brockton, Massachusetts 02401 ("Powers"), Optopics Laboratories Corporation, a Delaware corporation having its principal place of business at 32 Main Street, Fairton, New Jersey 08320 ("Optopics"; NutraMax, Powers and Optopics are referred to hereinafter individually as a "Borrower" and collectively, and jointly and severally, as the "Borrowers"), and State Street Bank and Trust Company, a Massachusetts trust company having its principal place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank"). We also refer to the Revolving Time Note dated December 30, 1994 made by the Borrowers in favor of the Bank. Capitalized terms used herein without definition shall have the meanings ascribed to such terms in the Loan Agreement. We have requested that you make certain amendments to the Loan Agreement and you have advised us that you are willing to make the amendments requested by us on the condition that we join with you in this Amendment. Accordingly, in consideration of these premises, the promises, mutual covenants and agreements contained in this Amendment, and fully intending to be legally bound by this Amendment, we hereby agree with you as follows: ARTICLE I AMENDMENTS TO LOAN AGREEMENT The Loan Agreement is hereby amended in each of the following respects: 1.1 Article I of the Loan Agreement is amended as follows: (a) The definition of "Borrowing Base" in Section 1.08 is hereby amended by deleting the reference to the dollar amount "$2,500,000" in Section 1.08(b)(i) and inserting in place of such reference the dollar amount of "$3,500,000". (b) The definition of "Credit Limit" in Section 1.12 is hereby amended to read in its entirety as follows: "Credit Limit" shall mean Ten Million ($10,000,000) Dollars. (c) The definition of "Financing Agreements" in Section 1.23 is hereby amended to read in its entirety as follows: "Financing Agreements" shall mean this Agreement and any and all amendments hereto including that certain Amendment dated November 30, 1995, that certain Amendment No. 2 to Revolving Credit, Term Loan and Security Agreement dated February 29, 1996 and that certain Amendment No. 3 to Revolving Credit, Term Loan and Security Agreement dated March __, 1996, and all documents including collateral documents, letter of credit agreements, notes, including that certain Amended and Restated Revolving Time Note dated March 4, 1996, acceptance credit agreements, security agreements, pledges, guaranties, mortgages, title insurance, assignments, and subordination agreements required to be executed by Borrower or any Third Party in connection with the loan arrangements between the Borrower and Bank. (d) The definition of "Obligations" in Section 1.36 is hereby amended by adding the following new sentence at the end of the paragraph, as follows: Without limiting the generality of the foregoing, "Obligations" shall include the obligations of the Borrower under the Amended and Restated Revolving Time Note dated March __, 1996 made by the Borrowers in favor of the Bank. -2- 1.2 Section 2.05 is hereby replaced in its entirety as follows: 2.05 All Advances shall bear interest and, at the option of the Bank, shall be evidenced by notes in a form satisfactory to Bank, including that certain Amended and Restated Revolving Time Note dated March 4, 1996 in the form of Exhibit "B-1" attached hereto and made a part hereof, (which Amended and Restated Revolving Time Note amends, restates and replaces the terms and conditions of the Revolving Time Note dated December 30, 1994 in its entirety), but in the absence of notes, shall be conclusively evidenced by Bank's records of Advances and repayments. ARTICLE II AMENDMENTS TO REVOLVING TIME NOTE 2.1 The Revolving Time Note dated December 30, 1994 made by the Borrower in favor of the Bank is hereby amended, restated and replaced in its entirety by that certain Amended and Restated Revolving Time Note dated March 4, 1996 in the form of Exhibit "A" attached hereto. ARTICLE III REPRESENTATIONS AND WARRANTIES The Borrowers hereby jointly and severally represent and warrant to you as follows: 3.1 Representations in Financing Agreements. Each of the representations and warranties made by or on behalf of any Borrower to you in any of the Financing Agreements, as amended by this Amendment, was true and correct when made and is true and correct on and as of the date hereof with the same full force and effect as if each of such representations and warranties had been made by such Borrower on the date hereof and in this Amendment. 3.2 Events of Default. No Event of Default exists on the date hereof (after giving effect to all of the arrangements and transactions contemplated by this Amendment). No condition exists on the date hereof which would, with notice or the lapse of time, or both, constitute an Event of Default. -3- 3.3 Binding Effect of Documents. (a) This Amendment has been duly executed and delivered to you by the Borrowers and is in full force and effect as of the date hereof, and the agreements and obligations of the Borrowers contained herein constitute legal, valid and binding obligations of the Borrowers enforceable against the Borrowers in accordance with their respective terms. (b) The obligations of the Borrowers to repay you all of the unpaid principal of each of the Revolving Loans, each of the Term Loans and each of the Acquisition Loans made pursuant to the Loan Agreement, to pay you all of the unpaid interest accrued or to accrue thereon, and to pay you all of the other obligations of the Borrowers are and will continue to be entitled to all of the benefits of and to all of the security created by the Loan Agreement and the other Financing Agreements. ARTICLE IV PROVISIONS OF GENERAL APPLICATION 4.1 No Other Changes. Except as otherwise expressly provided by this Amendment, all of the terms, conditions and provisions of the Loan Agreement and each of the other Financing Agreements remain unaltered. The Loan Agreement and this Amendment shall be read and construed as one agreement. 4.2 Governing Law. This Amendment is intended to take effect as a sealed instrument and shall be deemed to be a contract under the laws of The Commonwealth of Massachusetts. This Amendment and the rights and obligations of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of The Commonwealth of Massachusetts. 4.3 Binding Effect; Assignment. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors in title and assigns. 4.4 Counterparts. This Amendment may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. 4.5 Conflict with Other Agreements. If any of the terms of this Amendment shall conflict in any respect with any of the terms of any of the Financing Agreements, the terms of this Amendment shall be controlling. 4.6 Acknowledgment by Borrowers. Each of NutraMax, Powers and Optopics jointly and severally acknowledge that the Bank would not have entered into this Amendment unless all of the Borrowers agreed to be and continue to be, Borrowers on a joint and several basis, and that the Bank would not have entered into any such arrangements with any individual Borrower alone. -4- 4.7 Conditions Precedent. This Amendment shall become effective as of the date hereof, but only if the Bank shall have received each of the following agreements and documents in form and substance satisfactory to the Bank and duly executed and delivered by the parties thereto: (a) this Amendment; (b) the Amended and Restated Revolving Time Note; and (c) UCC-3 Amendments to be filed with the Secretary of State of Ohio and the County of Cuyahoga adding an additional location of the property. 4.8 Section Headings. Article titles and Section headings are for reference only and shall have no substantive effect. [The remainder of this page is intentionally left blank.] -5- If you are in agreement with the foregoing, please sign below and return this Amendment to the undersigned, whereupon this Amendment, as so accepted by you, shall become a binding agreement among you and the undersigned. Very truly yours, THE BORROWERS: NUTRAMAX PRODUCTS, INC. By:_____________________________________ Robert F. Burns, Chief Financial Officer POWERS PHARMACEUTICAL CORPORATION By:_____________________________________ Robert F. Burns, Chief Financial Officer OPTOPICS LABORATORIES CORPORATION By:_____________________________________ Robert F. Burns, Chief Financial Officer The foregoing Amendment and each and every part thereof is hereby accepted by the undersigned effective as of March 4, 1996. THE BANK: STATE STREET BANK AND TRUST COMPANY By:_____________________________________ William F. Zola, Vice President -6- EX-99.3 5 PROMISSORY NOTE STATE STREET BANK AND TRUST COMPANY SECURED ACQUISITION PROMISSORY NOTE $2,750,000.00 February 29, 1996 Boston, Massachusetts For value received, the undersigned promises to pay to the order of State Street Bank and Trust Company (the "Bank") at the office of Bank at 225 Franklin Street, Boston, Massachusetts, 02110, or such other place as the holder hereof shall designate, Two Million Seven Hundred Fifty Thousand ($2,750,000) Dollars, or such lesser principal amount advanced to the undersigned under the credit facility established pursuant to a Revolving Credit, Term Loan and Security Agreement dated December 30, 1994, as amended by that certain Amendment dated November 30, 1995 and that certain Amendment No. 2 to the Revolving Credit, Term Loan and Security Agreement of even date (as amended, the "Agreement"), payable as to principal in one installment on April 28, 1997, together with interest on the unpaid balances from the date hereof, payable monthly in arrears on the first day of each calendar month at either: (i) a fluctuating interest rate per annum equal to one-half percent (1/2%) above the Bank's Prime Rate in effect from time to time; or (ii) for such portion of the principal balance subject to a Libor Election by the undersigned pursuant to Section 4.02 of the Agreement, at a fixed rate per annum equal to two and one-quarter percent (2 1/4%) above Adjusted Libor as determined in accordance with the Agreement. If no Notice of Election is received by Bank pursuant to and in accordance with the terms of Section 4.02 of the Agreement with respect to any loans hereunder, any such loan shall be deemed to be a Prime Rate Loan. Interest shall be calculated on the basis of actual days elapsed and a 360-day year. If this note is not paid on the due date, whether as stated or upon acceleration, interest on the unpaid balances shall thereafter be payable on demand at a rate per annum equal to three percent (3%) above the applicable rate as provided above. If a Libor Loan is not repaid in full on its Maturity Date, then such Libor Loan shall bear interest at the rate described in Section 5.01(b) of the Agreement from and after such Maturity Date through the Acquisition Loan Expiration Date and thereafter, or in the Event of Default, at the option of the Bank, as set forth in Sections 5.01(b) and 5.04 of the Agreement until paid in full. The principal balances outstanding hereunder which accrue interest at a fluctuating rate may be prepaid in whole or in part at any time and from time to time without premium or penalty. Any such amounts prepaid hereunder shall be applied first to interest and then to installments of principal in the reverse order of maturity. The principal balances outstanding hereunder which accrue interest at the Adjusted Libor shall not be prepaid prior to the applicable Maturity Date as set forth in the Agreement, except upon acceleration by the Bank. In the event such principal is prepaid prior to the applicable Maturity Date, whether voluntarily or upon acceleration by the Bank, the undersigned shall compensate the Bank as provided in Section 6.08 of the Agreement. This note shall, at the option of the holder, become immediately due and payable without notice or demand upon the occurrence of any of the following events: (a) Failure to make any payment of interest within five (5) Banking Days after the same becomes due hereunder; (b) Failure to make any payment of principal when due hereunder; (c) The occurrence of an Event of Default under the Agreement; or (d) Termination of the Agreement. Any deposits or other sums at any time credited by or due from the holder to any maker, endorser or guarantor hereof and any securities or other property of any such maker, endorser or guarantor at any time in the possession of the holder may at all times be held and treated as collateral for the payment of this note and any and all other liabilities (direct or indirect, absolute or contingent, sole, joint or several, secured or unsecured, due or to become due, now existing or hereafter arising) of any such maker to the holder. Regardless of the adequacy of collateral, the holder may apply or set off such deposits or other sums against such liabilities at any time after the occurrence of an Event of Default in the case of makers but only with respect to matured liabilities in the case of endorsers and guarantors. Every maker, endorser and guarantor hereof hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement hereof and consents that this note may be extended from time to time and that no such extension or other indulgence, and no substitution, release or surrender of collateral, and no discharge or release of any other party primarily or secondarily liable hereon, shall discharge or otherwise affect the liability of any such maker, endorser or guarantor. No delay or omission on the part of the holder in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder, and a waiver of any such right on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion. This note is secured by any and all collateral at any time granted to Bank to secure any obligations of any maker hereof. Every maker, endorser and guarantor hereof agrees to pay on demand all costs and expenses (including legal costs and reasonable attorneys' fees) incurred or paid by the holder in enforcing this note on default. -2- This note shall take effect as a sealed instrument and shall be governed by the laws of The Commonwealth of Massachusetts. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement. Witness: NUTRAMAX PRODUCTS, INC. ____________________ By:_____________________________ Robert F. Burns Chief Financial Officer Address: 9 Blackburn Drive Gloucester, MA 01930 POWERS PHARMACEUTICAL CORPORATION ____________________ By:_____________________________ Robert F. Burns Chief Financial Officer Address: 170 Oak Hill Way Brockton, MA 02401 OPTOPICS LABORATORIES CORPORATION ____________________ By:_____________________________ Robert F. Burns Chief Financial Officer Address: 9 Blackburn Drive Gloucester, MA 01930 -3- EX-99.4 6 REVOLVING TIME NOTE STATE STREET BANK AND TRUST COMPANY AMENDED AND RESTATED REVOLVING TIME NOTE $10,000,000.00 March 4, 1996 Boston, Massachusetts On December 1, 1996, for value received, the undersigned promises to pay to the order of State Street Bank and Trust Company (the "Bank") at the office of Bank at 225 Franklin Street, Boston, Massachusetts, 02110, or such other place as the holder hereof shall designate, Ten Million ($10,000,000) Dollars, or such lesser principal amount advanced to the undersigned under the line of credit established pursuant to a Revolving Credit, Term Loan and Security Agreement dated December 30, 1994, as amended by that certain Amendment dated November 30, 1995, that certain Amendment No. 2 to the Revolving Credit, Term Loan and Security Agreement dated February 29, 1996 and that certain Amendment No. 3 to the Revolving Credit, Term Loan and Security Agreement dated of even date (as amended, the "Agreement"), together with interest thereon as follows: (a) on outstanding principal designated as a Prime Rate Loan pursuant to Section 4.01 of the Agreement, interest shall accrue from the date hereof, payable monthly in arrears on the first day of each calendar month prior to the due date hereof, and upon the due date hereof, at a fluctuating interest rate per annum equal to the Bank's Prime Rate in effect from time to time. Each change in such interest rate shall take effect simultaneously with the corresponding change in such Prime Rate. "Prime Rate" shall mean the rate of interest announced by Bank in Boston, Massachusetts, from time to time as its Prime Rate. Interest shall be calculated on the basis of actual days elapsed and a 360-day year; (b) on outstanding principal designated as a Libor Loan pursuant to Section 4.01 of the Agreement, interest shall accrue from the Borrowing Date for such Advance through and including the Maturity Date chosen by the undersigned with respect to such Advance, at a fixed interest rate per annum equal to the aggregate of the Adjusted Libor plus Margin, and shall be payable on the Maturity Date. The Adjusted Libor interest rate shall change simultaneously with a change in the Reserve Rate. If a Libor Loan is not repaid in full on its Maturity Date, then such Advance shall bear interest at the rate described in (a) above until the Expiration Date or the occurrence of an Event of Default under the Agreement. All capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement. From and after the occurrence of an Event of Default under the Agreement, at the option of the Bank: (i) all Prime Rate Loans shall bear interest at a variable per annum rate equal to the aggregate of the Prime Rate in effect from time to time plus two and one-half (2 1/2%) percent until paid in full; and (ii) each Libor Loan shall bear interest at the rate described in (b) above until such Advance's Maturity Date, and thereafter at the rate set forth in clause (i) of this paragraph until paid in full. -1- This note shall, at the option of the holder, become immediately due and payable without notice or demand upon the occurrence of any of the following events: (a) Failure to make any payment of interest within five (5) Banking Days after the same becomes due hereunder; (b) Failure to make any payment of principal when due hereunder; (c) The occurrence of an Event of Default under the Agreement; or (d) Termination of the Agreement. Any deposits or other sums at any time credited by or due from the holder to any maker, endorser or guarantor hereof and any securities or other property of any such maker, endorser or guarantor at any time in the possession of the holder may at all times be held and treated as collateral for the payment of this note and any and all other liabilities (direct or indirect, absolute or contingent, sole, joint or several, secured or unsecured, due or to become due, now existing or hereafter arising) of any such maker to the holder. Regardless of the adequacy of collateral, the holder may apply or set off such deposits or other sums against such liabilities at any time after the occurrence of an Event of Default in the case of makers but only with respect to matured liabilities in the case of endorsers and guarantors. Every maker, endorser and guarantor hereof hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement hereof and consents that this note may be extended from time to time and that no such extension or other indulgence, and no substitution, release or surrender of collateral, and no discharge or release of any other party primarily or secondarily liable hereon, shall discharge or otherwise affect the liability of any such maker, endorser or guarantor. No delay or omission on the part of the holder in exercising any right hereunder shall operate as a waiver of such right or of any other right hereunder, and a waiver of any such right on any one occasion shall not be construed as a bar to or waiver of any such right on any future occasion. This note is secured by any and all collateral at any time granted to Bank to secure any obligations of any maker hereof. Every maker, endorser and guarantor hereof agrees to pay on demand all costs and expenses (including legal costs and reasonable attorneys' fees) incurred or paid by the holder in enforcing this note on default. -2- This note shall take effect as a sealed instrument and shall be governed by the laws of The Commonwealth of Massachusetts. Witness: NUTRAMAX PRODUCTS, INC. ________________ By:_____________________________ Robert F. Burns Chief Financial Officer Address: 9 Blackburn Drive Gloucester, MA 01930 POWERS PHARMACEUTICAL CORPORATION ________________ By:_____________________________ Robert F. Burns Chief Financial Officer Address: 170 Oak Hill Way Brockton, MA 02401 OPTOPICS LABORATORIES CORPORATION ________________ By:_____________________________ Robert F. Burns Chief Financial Officer Address: 9 Blackburn Drive Gloucester, MA 01930 -3- -----END PRIVACY-ENHANCED MESSAGE-----