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EXHIBIT 10.35
LOAN COMMITMENT LETTER
August 21, 1996
Xxxxxxx Xxxx, President and COO
Caraco Pharmaceutical Laboratories Ltd.
0000 Xxxxxx XxXxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Dear Xxxx:
Each of the undersigned, Xxxxx X. Xxxxxxxxxx, Xxx X. Xxxxxx, and Xxxx Xxxxxx
(each a "Lender", and collectively the "Lenders"), hereby commits to Caraco
Pharmaceutical Laboratories Ltd., a Michigan corporation (the "Borrower") to
lend the amount of one hundred thousand dollars ($100,000), in accordance with
the terms and conditions of this Loan Commitment Letter (the "Commitment").
This Commitment is subject to the satisfaction of all the conditions set forth
herein.
(1) Commitment Amount. Each Lender will loan the amount of one hundred
thousand dollars ($100,000), such that all three Lenders in aggregate
will loan the amount of three hundred thousand dollars ($300,000) to
Borrower on the Closing Date (the "Loan").
(2) Closing Date. Subject to the satisfaction of the terms and conditions
of this Commitment, the Loan will be funded on August 31, 1996, or
such other date as is satisfactory to the Lenders (the "Closing Date").
(3) Promissory Notes. On the Closing Date, the Borrower will execute three
promissory notes (the "Notes"), each in the principal amount of
$100,000, each payable to one Lender. The form and substance of each
Note must be satisfactory to the Lenders. Interest will accrue under
each Note at the per annum rate of fourteen percent (14%) so long as
there shall be no event of default, and at the per annum rate of
eighteen percent (18%) so long as there shall be an event of default.
Interest will be payable monthly, commencing on the one month
anniversary of the Closing Date. The entire principal balance, together
will all interest and other charges due and payable under the Note, will
be due and payable upon the first to occur of the one year anniversary
of the Closing Date or demand by the Lenders.
(4) Prepayment. Borrower shall be permitted to prepay the Note at any
time, without penalty, provided all prepayments will be applied first to
the payment of any fees or charges due under the Note, if any, second to
the payment of all outstanding interest, and third to the payment of all
outstanding principal in the inverse order of maturity.
(5) Security Agreement. On the Closing Date, in order to secure the full,
prompt and faithful performance by the Borrower of its obligations under
the Note, the Borrower will execute and deliver one or more loan and
security agreements (the "Security Agreements"), in form and substance
satisfactory to the Lenders, pursuant to which the Borrower will grant
to the Lenders a first, prior and senior, and continuing security
interest in and to all
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"Collateral". The term "Collateral" refers collectively to all of the
Borrower's tangible and intangible personal property, whether now owned
or hereafter acquired, or in which Borrower now has or may hereafter
acquire an interest, including without limitation all of the following
items of property:
(a) all of Xxxxxxxx's accounts, accounts receivable, notes receivable,
and other rights of Borrower in and to payments due for goods sold
or services rendered, whether owned, existing, or arising as of or
subsequent to the Closing Date;
(b) all of Borrower's inventory (whether raw materials, work in
process, or finished goods), supplies, parts, and goods, whether
owned, existing, or arising as of or subsequent to the Closing
Date;
(c) all of Borrower's furniture, fixtures, machinery, equipment, tools,
leasehold improvements, vehicles, together with all other tangible
personal property, whether owned, existing, or arising as of
subsequent to the Closing Date:
(d) all contract rights, chattel paper, leases and other general
intangibles, including without limitation all rights to any refund
or any taxes assessed against or paid by Borrower, insurance
premium refunds, unearned premiums, insurance proceeds, choses in
action, goodwill, going concern value, trademarks, copyrights,
service marks, tradenames, and patents, technology and knowhow,
whether owned, existing, or arising as of or subsequent to the
Closing Date, including without limitation all new drug
applications to, and approvals of such applications from, the
Federal Drug Administration;
(e) all securities held by or issued to Borrower, including without
limitation all shares of stock, warrants, options, and debentures,
whether owned, existing, or arising as of or subsequent to the
Closing Date;
(f) all instruments, documents of title, policies and certificates of
insurance, bank deposits, deposit accounts, checking accounts and
cash, whether owned, existing, or arising as of or subsequent to
the Closing Date;
(g) any and all proceeds (of sale, insurance, or otherwise),
replacements, substitutions, additions, improvements, products, and
accessions to, for or of the foregoing; and
(h) all books, records and documents relating to all of the foregoing.
The Lenders' rights in the Collateral will be perfected by the filing of
Uniform Commercial Code Financing Statements (Forms UCC-1 and UCC-1A) in
the State of Michigan and Xxxxx County, Michigan, and the Borrower shall
also execute and deliver such other instruments and do such other things
as is necessary from time to time to grant to Lenders a first, prior and
senior security interest in and to the Collateral.
(6) Inter-Creditor Agreement. The Lenders agree to enter into an
"Inter-Creditor Agreement", in form and substance satisfactory to
the Lenders, which will provide, among
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other things, for the relative rights and remedies of the Lenders with
respect to the Loan and Collateral.
(7) Fees. In consideration of the Lenders' commitment to make the Loan
pursuant to this Commitment, Borrower will pay all attorneys' fees,
financing statement filing fees, and other costs, fees and expenses
incurred by Borrower pursuant to the making, maintenance, collection,
and enforcement of the Loan, including without limitation document
preparation costs for this Commitment, the Notes, the Security
Agreements, and the Inter-Creditor Agreement (collectively, the "Loan
Documents") not to exceed $3,000.
(8) Indemnification. In further consideration of the Lenders' commitment
to make the Loan pursuant to this Commitment, Xxxxxxxx agrees to
indemnify, defend and hold harmless the Lenders from and against all
damages, liabilities, losses, costs, and expenses, including without
limitation attorneys' fees, arising out of or relating to any claims
brought by reason of the extension of the Loan or the transactions
contemplated hereby, except to the extent of a Xxxxxx's willful
misconduct.
(9) Conditions to Closing. The satisfaction of the following conditions
shall be conditions precedent to the making of the Loan:
(a) On or before the Closing Date, the Borrower's board of
directors shall have been reduced from 11 to 7 members, such
that 4 members shall have resigned, provided, the Lender, in its
discretion, shall be satisfied as to the composition of the
board of directors as of the Closing Date.
(b) On or before the Closing Date, the Lenders shall have reviewed
and approved, within their discretion, the budget and all
expenditures of the Borrower for the balance of the current
fiscal year.
(c) On or before the Closing Date, the Lenders shall have reviewed
and approved, within their discretion, the continuing employment
status and wage rates of all employees, and all employment
policies and contracts.
(d) the Lenders shall be satisfied, in their sole determination,
that there shall not have occurred any material adverse change
in the Borrower's business, operations, property, condition or
prospects, whether financial or otherwise.
(10) Affirmative and Negative Covenants. So long as Borrower shall be
indebted to the Lenders under the Notes, Xxxxxx agrees as follows:
(a) No dividends or distributions, whether in cash, stock or other
property, shall be declared or paid to any shareholder.
(b) The Borrower shall not enter into, or agree or make any
agreement to enter into, any transaction outside of the
ordinary course of business.
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(c) All budgets and expenditures shall be approved in advance by the
Lenders, within their discretion.
(d) The continuing employment status and wage rates of all
employees, and all employment policies and contracts, shall be
approved in advance by the Lenders, within their discretion.
(11) Events of Default. The occurrence of any one or more of the following
events, among such other occurrences as may be provided for in the
Notes, will be an event of default under each Note:
(a) The failure of Borrower to make any payment, as and when due, of
principal, interest or any other charge due and payable under
the Notes and/or under any other evidences of indebtedness of
the Borrower to any person;
(b) The death or termination of employment with the Borrower,
without regard to the reason or lack of reason therefor, of
Xxxxxxx Xxxx;
(c) Either Borrower shall voluntarily apply for the appointment of a
custodian, trustee or receiver to take custody or dispose of any
substantial portion of assets; or a court of competent
jurisdiction shall appoint a custodian, trustee or receiver to
take custody or dispose of any substantial portion of the assets
of the Borrower pursuant to any involuntary proceeding, and
either (i) Borrower shall indicate approval of, consent to, or
acquiescence to such appointment, or (ii) such custodian,
trustee, or receiver shall not be discharged within thirty (30)
days; or Borrower shall voluntarily seek protection from
creditors under any applicable state or federal bankruptcy,
liquidation or dissolution, insolvency, or debt reorganization
laws; or any of Borrower's creditors shall institute any
proceeding against Borrower under any applicable state or
federal bankruptcy, liquidation or dissolution, insolvency, or
debt reorganization laws, and the same shall not be dismissed or
discharged within thirty (30) days;
(d) The temporary or permanent liquidation, dissolution, or other
discontinuance of the Borrower's corporate existence; the merger
or consolidation of Borrower; the sale or transfer of all or
substantially all of Borrower's assets; and/or the sale or
transfer of not less than 50% of the outstanding shares of
capital stock of the Borrower;
(e) There shall be more than seven persons on the Borrower's board
of directors, and/or any one or more of the Lenders shall not be
a member of the Borrower's board of directors; and/or
(f) The occurrence of any breach or violation by Borrower under any
of the Loan Documents.
(12) Expiration. This Commitment shall expire at 5:00 pm (Eastern Standard
Time) on August 22, 1996, unless by that time and date, the Lenders
shall have received a signed copy of this Commitment.
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(13) General Provisions. This Commitment shall be governed by, construed,
interpreted, and enforced in accordance with the internal laws of the
State of Michigan. This Commitment may not be modified orally or by
contrary course of conduct, and no modification shall be effective unless
in writing and signed by the Lenders. This Commitment inures solely to the
benefit of the Borrower and may not be assigned or transferred by
Borrower. This Commitment may be negotiated and transferred by the
Lenders. BORROWER CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF
THE STATE OF MICHIGAN FOR ANY DISPUTES ARISING UNDER THIS COMMITMENT.
BORROWER EXPRESSLY WAIVES ALL OBJECTIONS IT NOW HAS OR MAY HAVE TO VENUE,
WHETHER BASED ON INCONVENIENCE OR ANY OTHER REASON. TO THE EXTENT THAT
BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM THE JURISDICTION
OF ANY COURT OR FROM ANY LEGAL PROCESS, HOWSOEVER OCCURRING, WITH RESPECT
TO BORROWER OR ITS PROPERTIES, BORROWER HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY. BORROWER HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY
IN ANY ACTION OR SUIT BROUGHT UNDER OR PURSUANT TO THIS COMMITMENT.
Very truly yours,
XXXXX X. XXXXXXXXXX
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Xxxxx X. Xxxxxxxxxx
XXX X. XXXXXX
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Xxx X. Xxxxxx
XXXX XXXXXX
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Xxxx Xxxxxx
The foregoing is hereby agreed and accepted:
Caraco Pharmaceutical Laboratories, Inc.
By XXXXXXX X. XXXX
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Xxxxxxx Xxxx, President
Date: 9/6/96
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