exv10w4



 







Exhibit 10.4




SECOND AMENDMENT




TO

LOAN AND SECURITY AGREEMENT




     This Second Amendment to Loan and Security Agreement is entered into as of May 6, 2005 (the
“Amendment”), by and between COMERICA BANK (“Bank”) and LAUREATE PHARMA, INC. (“Borrower”).



RECITALS




     Borrower and Bank are parties to that certain Loan and Security Agreement dated as of December
1, 2004, as amended, including without limitation by that certain First Amendment to Loan and
Security Agreement dated as of January 31, 2005 (collectively, the “Agreement”). The parties
desire to amend the Agreement in accordance with the terms of this Amendment.



     NOW, THEREFORE, the parties agree as follows:



     1. The following defined terms are hereby added to or amended in Section 1.1 of the Agreement
to read as follows:




     “Revolving Line” means a credit extension of up to Five Million Dollars
($5,000,000).




     “Tangible Net Worth” means at any date as of which the amount thereof shall be
determined, the sum of the capital stock and additional paid-in capital plus
retained earnings (or minus accumulated deficit) of Borrower and its Subsidiaries
minus goodwill and other intangibles, plus Subordinated Debt, on a consolidated
basis determined in accordance with GAAP.



     2. All references to “Equipment Line” are hereby deleted from the Agreement.



     3. The first sentence of Section 2.1(a)(i) of the Agreement is hereby amended to read as
follows: “Subject to and upon the terms and conditions of this Agreement, Borrower may request
Advances in an aggregate outstanding amount not to exceed the Revolving Line.”



     4. Section 2.1(c) of the Agreement is hereby amended in its entirety to read as follows:




     (c) [INTENTIONALLY OMITTED.]



     5. Section 2.2 of the Agreement is hereby amended in its entirety to read as follows:



           2.2 Overadvances. If the aggregate amount of the outstanding Advances
exceeds the Revolving Line at any time, Borrower shall immediately pay to Bank, in
cash, the amount of such excess.



     6. Section 4 of the Agreement is hereby amended to read as follows:




     4. [INTENTIONALLY OMITTED.]



     7. The second paragraph of Section 6.3 of the Agreement is hereby amended to read as follows:




     Within twenty (20) days after the last day of each month, Borrower shall
deliver to Bank aged listings of accounts receivable and accounts payable.



     8. The last paragraph of Section 6.3 of the Agreement is hereby deleted in its entirety.



1









 





     9. Section 6.8 of the Agreement is hereby amended in its entirety to read as follows:




     6.8 Tangible Net Worth. Borrower shall maintain a Tangible Net Worth
of not less than (i) Thirteen Million Dollars ($13,000,000) at all times from April
1, 2005 through December 31, 2005 and (ii) Eleven Million Dollars ($11,000,000) at
all times thereafter.



     10. Exhibit A to the Agreement is hereby deleted in its entirety.



     11. Exhibit D to the Agreement is hereby amended and replaced in its entirety by
Exhibit D attached hereto.



     12. Upon the effectiveness of this Amendment, Bank’s lien on the Collateral shall
automatically be released, and Bank shall terminate its UCC financing statement against Borrower.



     13. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as
defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and
effect in accordance with its respective terms and hereby is ratified and confirmed in all
respects. Except as expressly set forth herein, the execution, delivery, and performance of this
Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of
Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms
the continuing effectiveness of all promissory notes, guaranties, security agreements, mortgages,
deeds of trust, environmental agreements, and all other instruments, documents and agreements
entered into in connection with the Agreement.



     14. Borrower represents and warrants that the representations and warranties contained in the
Agreement are true and correct as of the date of this Amendment, and that no Event of Default has
occurred and is continuing.



     15. This Amendment may be executed in two or more counterparts, each of which shall be deemed
an original, but all of which together shall constitute one instrument.



     16. As a condition to the effectiveness of this Amendment, Bank shall have received, in form
and substance satisfactory to Bank, the following:




     (a) repayment in full of all outstanding Equipment Advances;




     (b) this Amendment, duly executed by Borrower;




     (c) Corporate Resolutions to Borrow;




     (d) Disbursement Instructions, Agreement to Provide Insurance, and Automatic Debit
Authorization;




     (e) an amount equal to all Bank Expenses incurred through the date of this Amendment; and




     (f) such other documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate.



2









 





     IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above
written.



	 	 	 	 	 
	 	LAUREATE PHARMA, INC.

 	 
	 	By:  	/s/ Christopher J. Davis
 	 
	 	Title: Vice President and Treasurer 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	COMERICA BANK

 	 
	 	By:  	/s/ Peter Gibson
 	 
	 	Title: Vice President 	 
	 	 	 	 
	 


The undersigned Guarantors acknowledge this Amendment and agree that the Unconditional Guaranty
dated as of December 1, 2004 which they signed on Bank’s behalf is and shall remain in full force
and effect with respect to Borrower’s Obligations (as defined in the Agreement) as modified by the
Amendment and otherwise. Upon repayment in full by Borrower of all Equipment Advances and the Term
Advance, Bank and the undersigned Guarantors will enter into an Affirmation and Amendment of
Guaranty in substantially the form provided by Bank as of the date hereof.




	 	 	 	 	 
	 	SAFEGUARD DELAWARE, INC.

 	 
	 	By:  	/s/ Christopher J. Davis
 	 
	 	Title: Vice President and Treasurer 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	SAFEGUARD SCIENTIFICS (DELAWARE), INC.

 	 
	 	By:  	/s/ Christopher J. Davis
 	 
	 	Title: Vice President and Treasurer 	 
	 	 	 	 



3









 






	 	 	 	 	 



EXHIBIT D




COMPLIANCE CERTIFICATE





			
	TO:	 	COMERICA BANK







			
	FROM:	 	LAUREATE PHARMA, INC.







     The undersigned authorized officer of LAUREATE PHARMA, INC. hereby certifies that in
accordance with the terms and conditions of the Loan and Security Agreement between Borrower and
Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending
                                         with all required covenants except as noted below and (ii) all representations and
warranties of Borrower stated in the Agreement are true and correct as of the date hereof.
Attached herewith are the required documents supporting the above certification. The Officer
further certifies that these are prepared in accordance with Generally Accepted Accounting
Principles (GAAP) and are consistently applied from one period to the next except as explained in
an accompanying letter or footnotes.



Please indicate compliance status by circling Yes/No under “Complies” column.




	 	 	 	 	 	 	 
	Reporting Covenant	 	Required	 	Complies
	Monthly financial statements

	 	Monthly within 30 days
	 	Yes
	 	No
	Annual (CPA Audited)

	 	FYE within 120 days
	 	Yes
	 	No
	10K and 10Q

	 	(as applicable)
	 	Yes
	 	No
	A/R & A/P Agings

	 	Monthly within 20 days
	 	Yes
	 	No
	Total amount of Borrower’s cash and investments

	 	Amount: $___
	 	Yes
	 	No
	Total amount of Borrower’s cash and
investments maintained with Bank

	 	Amount: $___
	 	Yes
	 	No






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	Actual	 	Complies
	Minimum Tangible Net Worth
	 	 	*	 	 	$	—	 	 	Yes	 	No








 




			
	*	 	(i) Thirteen Million Dollars ($13,000,000) at all times through December 31, 2005 and (ii) Eleven Million Dollars ($11,000,000) at all times thereafter





	 	 	 	 	 
	 

	 	 	 
	Comments Regarding Exceptions: See Attached.

	 	 	BANK USE ONLY	 
	 
	 	 	 	 
	 

	 	 	Received by:                                                                                                                       	 
	Sincerely,

	 	 	AUTHORIZED SIGNER	 
	 
	 	 	 	 
	 

	 	 	Date:                                                                                                                                     	 
	 

	 	 	 	 
	                                                                                

	 	 	Verified:                                                                                                                                 	 
	SIGNATURE

	 	 	AUTHORIZED SIGNER	 
	 
	 	 	 	 
	                                                                                

	 	 	Date:                                                                                                                                    	 
	TITLE
	 	 	 	 
	 

	 	 	Compliance Status                                             Yes               No	 
	 
	 	 	 	 
	                                                                                
	 	 	 	 
	DATE
	 	 	 	 
	 

	 	 






4