Ex-10.3 Amend. to Revolving Credit & Security Agmt



 





Exhibit 10.3

EXECUTION DOCUMENT





FIFTH AMENDMENT TO AMENDED AND RESTATED 

REVOLVING CREDIT AND SECURITY AGREEMENT




          This FIFTH AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT (the
“Fifth Amendment”) is made as of this 28th day of February, 2005 by and between CAPITALSOURCE
FINANCE LLC, a Delaware limited liability company, with its chief executive office located at 4445
Willard Avenue, Chevy Chase, Maryland 20815 (“Lender”) and UNITED STATES PHARMACEUTICAL GROUP,
L.L.C. d/b/a NATIONSHEALTH, a Delaware limited liability company, NATIONSHEALTH HOLDINGS, L.L.C., a
Florida limited liability company and NATIONSHEALTH, INC. (f/k/a MILLSTREAM ACQUISITION
CORPORATION), a Delaware corporation (jointly and severally, the
“Borrower”).



W I T N E S S E T H:




          WHEREAS, Lender and Borrower (other than Nationshealth, Inc.) entered into a certain Revolving
Credit and Security Agreement dated as of the 30th day of April, 2004 (the “Original
Credit Agreement”) whereby Lender agreed to make loans, advances and other extensions of credit to
Borrower thereunder; and



          WHEREAS, Lender and Borrower (other than Nationshealth, Inc.) entered into a certain Amended
and Restated Revolving Credit and Security Agreement dated as of the 29th of June, 2004
(as amended by the Prior Amendments (defined below) and hereby, and as amended, restated,
supplemented or otherwise modified from time to time, the
“Agreement”) whereby Lender made
available to Borrower (other than Nationshealth, Inc.) a separate Overadvance Facility and
permitted Borrower (other than Nationshealth, Inc.) to include its inventory within the Borrowing
Base for the Revolving Facility; and



          WHEREAS, Lender and Borrower (other than Nationshealth, Inc.) amended the Agreement in certain
respects pursuant to a certain First Amendment to Amended and Restated Revolving Credit and
Security Agreement dated as of the
10th day
of August, 2004 (the “First Amendment”); and



          WHEREAS, on August 31, 2004, Millstream Acquisition Corporation (“MAC”) changed its name to
Nationshealth, Inc.; and



          WHEREAS, on August 31, 2004, N Merger, LLC, a wholly owned subsidiary of MAC, was merged with
and into NationsHealth Holdings, L.L.C. and as a result of the merger, NationsHealth Holdings,
L.L.C. continued as the surviving limited liability company; and



          WHEREAS, Lender and Borrower amended the Agreement in certain respects pursuant to a certain
Joinder and Second Amendment to Amended and Restated Revolving Credit and Security Agreement dated
as of the 14th day of September, 2004 in order to join Nationshealth, Inc. as a party to
the Agreement (the “Second Amendment”); and



          WHEREAS, Lender and Borrower amended the Agreement in certain respects pursuant to a certain
Third Amendment to Amended and Restated Revolving Credit and Security Agreement dated as of the 3rd
day of November, 2004 (the “Third Amendment”) and a certain Fourth Amendment to Amended and
Restated Revolving Credit and Security Agreement dated as of the 10th day of February, 2005 (the
“Fourth Amendment” and together with the First Amendment, the Second Amendment and the Third
Amendment, collectively, the “Prior Amendments”); and



          WHEREAS, Lender and Borrower desire to further amend the Agreement in certain respects upon
the terms and conditions set forth herein to provide for the foregoing; and



 









 





          WHEREAS, Borrower has requested and Lender has agreed to the modification of certain
provisions of the Agreement upon the terms and subject to the conditions set forth herein; and



          WHEREAS, Section 12.8 of the Agreement provides that no modification or amendment of the
Agreement shall be effective unless the same shall be in writing and signed by the parties thereto.



          NOW, THEREFORE, in consideration of the promises and other mutual covenants contained herein,
the receipt and sufficiency of which is hereby acknowledged, Lender and Borrower agree as follows:



          1. Amendments of Agreement. As of the Effective Date (defined below),
Lender and Borrower hereby agree to amend the Agreement as follows:



          (a) Section 7.3 of the Agreement, entitled “Permitted Liens,” is hereby amended to
read as follows:



               7.3 Permitted Liens




          Borrower shall not create, incur, assume or suffer to exist any Lien upon, in or against,
or pledge of, any of the Collateral or any of its properties or assets or any of its
authorized but unissued or treasury shares, securities or other equity or ownership or
partnership interests, whether now owned or hereafter acquired, except the following
(collectively, “Permitted Liens”): (i) Liens under the Loan Documents or otherwise arising in
favor of Lender, (ii) Liens imposed by law for taxes (other than payroll taxes), assessments
or charges of any Governmental Authority for claims not yet due or which are being contested
in good faith by appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained by such Person in accordance with GAAP to the
satisfaction of Lender in its sole discretion, (iii) (A) statutory Liens of landlords
(provided that any such landlord has executed a Landlord Waiver and Consent in form and
substance satisfactory to Lender) and of carriers, warehousemen (provided that any such
warehousemen have executed a Warehouse Waiver and Consent in form and substance satisfactory
to Lender), mechanics, materialmen, and (B) other Liens imposed by law or that arise by
operation of law in the ordinary course of business from the date of creation thereof, in each
case only for amounts not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP to the satisfaction of Lender in its
sole discretion, (iv) Liens (A) incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in connection with workers’
compensation, unemployment insurance and other types of social security benefits or to secure
the performance of tenders, bids, leases, contracts (other than for the repayment of
Indebtedness), statutory obligations and other similar obligations, or (B) arising as a result
of progress payments under government contracts, (v) purchase money Liens (A) securing
Indebtedness permitted under Section 7.2(iii), or (B) in connection with the purchase
by such Person of equipment in the normal course of business, provided that such
payables shall not exceed any limits on Indebtedness provided for herein and shall otherwise
be Permitted Indebtedness hereunder, (vi) Liens securing the MHR Subordinated Debt and (vii)
Liens disclosed on Schedule 7.3.



          (b) Section 7.5 of the Agreement, entitled “Dividends; Redemptions,” is hereby amended
to read as follows:



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               7.5 Dividends; Redemptions




          Borrower shall not (i) declare, pay or make any dividend or Distribution on any shares
of capital stock or other securities or interests (other than dividends or Distributions
payable in its stock, or split-ups or reclassifications of its stock), (ii) apply any of its
funds, property or assets to the acquisition, redemption or other retirement of any capital
stock or other securities or interests or of any options to purchase or acquire any of the
foregoing (provided, however, that Borrower may redeem its capital stock from terminated
employees (other than the Employees except to the extent permitted under the Employee
Subordination Agreements) pursuant to, but only to the extent required under, the terms of
the related employment agreements as long as no Default or Event of Default has occurred and
is continuing or would be caused by or result from the payment thereof and as long as the
aggregate amount of payments made to such terminating employees in any fiscal year does not
exceed $50,000), (iii) otherwise make any payments or Distributions to any stockholder,
member, partner or other equity owner in such Person’s capacity as such, or (iv) make any
payment of any Management or Service Fee; provided, however, Borrower may
(A) make payments in the ordinary course of business in accordance with the terms of the
Employment Agreements to the extent that such payments are not otherwise prohibited under
the terms of the Employee Subordination Agreements, (B) payments of Tax Distributions as
long as no Event of Default has occurred and is continuing or would result therefrom and (C)
payments for redemptions or puts as contemplated by Section 5 of the MHR Subordinated Note
to the extent that such payments are not otherwise prohibited under the terms of the MHR
Subordination Agreement and, if such redemption occurs under (a) Section 5(a), either the
Lender has consented to Borrower’s incurrence of the Indebtedness necessary to consummate
the Contravening Transaction under Section 7.1 of the Senior Loan Agreement (which consent
shall be deemed to be a consent to such redemption under Section 7.5 of the Senior Loan
Agreement) or the Obligations are being simultaneously paid in full in cash, (b) Section
5(b) or 5(c) of the MHR Subordinated Note, either the Lender has consented thereto or the
Obligations are being simultaneously paid in full in cash, or (c) Section 5(d) of the MHR
Subordinated Note, such redemption is made only in strict accordance with such Section 5(d),
as in effect on February 28, 2005 and without amendment or modification and the proceeds
(net of fees, expenses, commissions and other amounts required to be paid from such
proceeds) to Borrower from the exercise of warrants contemplated and described in such
Section 5(d) are at least four (4) times the proceeds utilized by Borrower to effect such
redemption; provided, further, that Borrower shall not make or suffer to
exist any such payment described in (i) through (iii) above if a Default of Event of Default
has occurred and is continuing or would result therefrom.



          (c) The definition of the term “Permitted Subordinated Debt” set forth in Appendix A
of the Loan Agreement is hereby amended to read as follows:




          “Permitted Subordinated Debt” shall mean the MHR Subordinated Debt and other
indebtedness incurred by Borrower to which is subordinated to Borrower’s indebtedness owed
to Lender pursuant to a written agreement approved by Lender in writing.



          (d) The definition of the term “Subordination Agreement” set forth in Appendix A of
the Loan Agreement is hereby amended to read as follows:




          “Subordination Agreement” shall mean, collectively and each individually, the
Employee Subordination Agreement, the MHR Subordination Agreement and each other
subordination agreement to which Lender and other service providers, employees or creditors
of any Borrower are a party.



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          (e) The following definitions of the terms “Contravening Transaction”, ”MHR
Subordinated Debt”, “MHR Subordinated Note” and “MHR Subordination Agreement”
are hereby added to Appendix A of the Loan Agreement is hereby amended to read as follows:




          “Contravening Transaction” shall have the meaning set forth in that certain
side letter dated February 28, 2005 between Borrower, MHR Capital Partners LP, MHR Capital
Partners (100) LP and OTQ LLC setting forth certain procedures with respect to redemptions
of the MHR Subordinated Debt and related equity and equity related securities and attached
hereto as Exhibit A-1.




          “MHR Subordinated Debt” shall mean all Junior Obligations as defined in the MHR
Subordination Agreement.




          “MHR Subordinated Note” shall mean, individually or collectively, the note or
notes dated as of February 28, 2005 issued by the Borrower to MHR Capital Partners LP, MHR
Capital Partners (100) LP and OTQ LLC in the aggregate principal amount of $15,000,000 and
in the form attached hereto as Exhibit A-2.




          “MHR Subordination Agreement” shall mean the Senior Subordination Agreement
dated as of February 28, 2005 by and among the Lender as the Senior Lender, MHR Capital
Partners LP, MHR Capital Partners (100) LP and OTQ LLC as the Junior Lender and MHR Capital
Partners LP in its capacity as the collateral agent for the Junior Lender.



          (f) The Agreement is hereby amended by inserting Exhibits A-1 and A-2 attached to this Fifth
Amendment as Exhibits A-1 and A-2 of the Agreement.




	 	2.  	Conditions to Effectiveness. This Fifth Amendment shall be effective
on the date (the “Effective Date”) upon which the following conditions precedent are
satisfied:





               (a) Borrower shall have delivered to Lender an executed copy of this Fifth Amendment duly
executed by an authorized officer of Borrower and each other agreement, document or instrument
reasonably requested by the Lender in connection with this Fifth Amendment, each in form and
substance reasonably satisfactory to Lender;



               (b) the representations and warranties contained herein and in all other Loan Documents shall
be true and correct;



               (c) no Default or Event of Default shall be in existence; and



               (d) Lender shall have received all fees, charges and expenses payable to Lender as required by
this Fifth Amendment and in connection with this Fifth Amendment and the documentation related
hereto, including, but not limited to, legal fees and out-of-pocket costs (including in-house
counsel fees and expenses).



          3. Representations and Warranties.



               (a) Notwithstanding any other provision of this Fifth Amendment, Borrower hereby confirms and
makes all of the representations and warranties set forth in the Agreement and other Loan Documents
with respect to such Borrower and this Fifth Amendment as of the date hereof and as of the
Effective Date and confirms that they are true and correct and no Default or Event of Default has
occurred and is continuing as of the date hereof.



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               (b) Borrower hereby represents and warrants as of the date of this Fifth Amendment and as of
the Effective Date as follows: (i) it is duly incorporated or organized, validly existing and in
good standing under the laws of its jurisdiction of organization; (ii) the execution, delivery and
performance by it of this Fifth Amendment, as applicable, are within its powers, have been duly
authorized, and do not contravene (A) its articles of organization, operating agreement, or other
organizational documents, or (B) any applicable law; (iii) no consent, license, permit, approval or
authorization of, or registration, filing or declaration with any Governmental Authority or other
Person, is required in connection with the execution, delivery, performance, validity or
enforceability of this Fifth Amendment, as applicable, by or against it; (iv) this Fifth Amendment
has been duly executed and delivered by it; (v) this Fifth Amendment constitutes its legal, valid
and binding obligations enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally or by general principles of
equity; and (vi) after giving effect to this Fifth Amendment, it is not in default under the
Agreement and no Default or Event of Default exists, has occurred or is continuing.



          4. Expenses. Borrower shall pay all costs and expenses incurred by Lender or any of
its Affiliates, including, without limitation, documentation and diligence fees and expenses, all
search, audit, appraisal, recording, professional and filing fees and expenses and all other
out-of-pocket charges and expenses and reasonable attorneys’ fees and expenses, in connection with
entering into, negotiating, preparing, reviewing and executing this Fifth Amendment contemplated
hereby and all related agreements, documents and instruments, and all of the same, to the extent
incurred and not promptly reimbursed by Borrower, may be charged to Borrower’s account and shall be
part of the Obligations. If Lender or any of its Affiliates uses in-house counsel for any of the
purposes set forth above Borrower expressly agrees that its Obligations include reasonable charges
for such work commensurate with the fees that would otherwise be charged by outside legal counsel
selected by Lender or such Affiliate in its sole discretion for the work performed.



          5. Effect of Amendment. Lender and Borrower hereby acknowledge and agree that except
as provided in this Fifth Amendment, the Agreement (as amended by the Prior Amendments), the Note
and the other Loan Documents remain in full force and effect and have not been modified or amended
in any respect, it being the intention of Lender and Borrower that this Fifth Amendment and the
Agreement (as amended by the Prior Amendments) be read, construed and interpreted as one and the
same instrument. The foregoing amendments are subject to Borrower executing and delivering this
Fifth Amendment and all additional documents required to be executed and delivered herein. In
addition, the foregoing does not constitute a waiver by Lender of any Default or Event of Default.



          6. Confirmation of Agreements. Lender and Borrower hereby acknowledge and agree that,
except as provided in this Fifth Amendment, the Agreement (as amended by the Prior Amendments), the
Note and the other Loan Documents, and the grant of the liens, security interests and other
encumbrances thereunder, and their agreements, covenants, obligations, representations and
warranties thereunder and therein, are hereby expressly ratified, confirmed and restated as of the
date hereof.



          7. References to Loan Documents. Each of the other Loan Documents are hereby modified
in such a manner as to be consistent with all modifications and agreements contained herein and to
the extent that all references therein to and descriptions therein of the Agreement and the Note
shall be deemed to refer to and describe the Agreement (as amended by this Fifth Amendment and the
Prior Amendments).



          8. Capitalized Terms. All capitalized terms not otherwise defined in this Fifth
Amendment shall have the meanings ascribed to such terms in the Agreement (as amended by the Prior
Amendments).



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          9. Benefit. This Fifth Amendment shall inure to the benefit of and bind the parties
hereto and their respective successors and assigns.



          10. Amendments. This Fifth Amendment may not be changed, modified, amended,
restated, waived, supplemented, discharged, canceled or terminated orally or by any course of
dealing or in any other manner other than by the written agreement of Lender and Borrower. This
Fifth Amendment shall be considered part of the Agreement for all purposes under the Agreement.



          11. Headings and Counterparts. The captions in this Fifth Amendment are intended for
convenience and reference only and do not constitute and shall not be interpreted as part of this
Fifth Amendment and shall not affect the meaning or interpretation of this Fifth Amendment. This
Fifth Amendment may be executed in one or more counterparts, all of which taken together shall
constitute but one and the same instrument. This Fifth Amendment may be executed by facsimile
transmission, which facsimile signatures shall be considered original executed counterparts for all
purposes, and each party to this Fifth Amendment agrees that it will be bound by its own facsimile
signature and that it accepts the facsimile signature of each other party to this Fifth Amendment.



          12. Governing Law; JURY TRIAL WAIVER. THIS FIFTH AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS FIFTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET FORTH IN THE AGREEMENT AND SHALL BE
SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF THE AGREEMENT.



          13. RELEASE BY BORROWER. By execution of this Fifth Amendment, Borrower acknowledges
and confirms that Borrower does not have any offsets, defenses or claims against Lender, or any of
its present or former subsidiaries, affiliates, officers, directors, shareholders, employees,
agents, representatives, attorneys, predecessors, successors or assigns whether asserted or
unasserted. To the extent that Borrower may have such offsets, defenses or claims, Borrower and
each of its successors, assigns, parents, subsidiaries, affiliates, predecessors, employees,
agents, heirs, executors, as applicable, jointly and severally, knowingly, voluntarily and
intentionally waive, release and forever discharge Lender, its subsidiaries, affiliates, officers,
directors, shareholders, employees, agents, attorneys, predecessors, successors and assigns, both
present and former (collectively the “Lender Affiliates”) of and from any and all actual or
potential claims, demands, damages, actions, requests for sanctions and causes of action, torts,
obligations, suits, debts, controversies, damages, judgments, executions, claims and demands
whatsoever, all other liabilities whether known or unknown, matured or unmatured, contingent or
absolute, of any kind or description whatsoever, either in law or in equity, asserted or unasserted
which against Lender and/or Lender Affiliates they ever had, now have, claim to have or may later
have or which any of any Borrower’s successors, assigns, parents, subsidiaries, affiliates,
predecessors, employees, agents, heirs, executors, as applicable, both present and former ever had,
now has, claim to have or may later have, upon or by reason of any manner, cause, causes or thing
whatsoever, including, without limitation, any presently existing claim or defense whether or not
presently suspected, contemplated or anticipated, and Borrower hereby agrees that Borrower is
collaterally estopped from asserting any claims against Lender or any of the Lender Affiliates
relating to the foregoing.



          14. Entire Agreement. This Fifth Amendment, the Agreement (as amended by the Prior
Amendments), and the other Loan Documents constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof and thereof and may not be
contradicted by evidence of prior,



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contemporaneous or subsequent oral agreements between the parties. There are no unwritten
oral agreements between the parties.




          15. Miscellaneous. Whenever the context and construction so require, all words used
in the singular number herein shall be deemed to have been used in the plural, and vice versa, and
the masculine gender shall include the feminine and neuter and the neuter shall include the
masculine and feminine. This Fifth Amendment shall inure to the benefit of Lender, all future
holders of any Note, any of the Obligations or any of the Collateral and all Transferees, and each
of their respective successors and permitted assigns. No Borrower may assign, delegate or transfer
this Fifth Amendment or any of its rights or obligations under this Fifth Amendment without the
prior written consent of Lender. No rights are intended to be created under this Fifth Amendment
for the benefit of any third party donee, creditor or incidental beneficiary of Borrower or any
Guarantor. Nothing contained in this Fifth Amendment shall be construed as a delegation to Lender
of any Borrower’s or any Guarantor’s duty of performance, including, without limitation, any duties
under any account or contract in which Lender has a security interest or Lien. This Fifth
Amendment shall be binding upon Borrowers and their respective successors and assigns.



[SIGNATURES APPEAR ON THE FOLLOWING PAGE]




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          IN WITNESS WHEREOF, Lender and Borrower have executed this Fifth Amendment as of the date
first above written.



	 	 	 	 	 	 	 	 
	LENDER:	 	 	 	CAPITALSOURCE FINANCE LLC
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	/s/ Keith D. Reuben
	

	 	 	 	 	 	 
	

	 	 	 	 	 	Name: Keith D. Reuben
	

	 	 	 	 	 	Title: Managing Director
	 
	 	 	 	 	 	 
	BORROWER:
	 	 	 	 	 	 
	 	 	 	 	UNITED STATES PHARMACEUTICAL
	 	 	 	 	GROUP, L.L.C. d/b/a NATIONSHEALTH
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Glenn Parker
	

	 	 	 	 	 	 
	

	 	 	 	 	 	Name: Glenn Parker, M.D.
	

	 	 	 	 	 	Title:
	 
	 	 	 	 	 	 
	 	 	 	 	NATIONSHEALTH HOLDINGS, L.L.C.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Glenn Parker
	

	 	 	 	 	 	 
	

	 	 	 	 	 	Name: Glenn Parker, M.D.
	

	 	 	 	 	 	Title:
	 
	 	 	 	 	 	 
	 	 	 	 	NATIONSHEALTH, INC.
	 
	 	 	 	 	 	 
	

	 	 	 	By:
	 	/s/ Glenn Parker
	

	 	 	 	 	 	 
	

	 	 	 	 	 	Name: Glenn Parker, M.D.
	

	 	 	 	 	 	Title:







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