EXHIBIT 10.3
CREDIT AGREEMENT
CREDIT AGREEMENT (the "Agreement") dated as of May 22, 2006 between
SYNOVICS PHARMACEUTICALS, INC, a Nevada corporation (the "Borrower"), having an
office at 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000, and BANK
OF INDIA, New York Branch (the "Bank") located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000
WITNESSETH:
WHEREAS, the Borrower has requested the Bank to extend to it a
certain credit facility in the principal sum of Ten Million Five Hundred
Thousand Dollars ($10,500,000.00); and
WHEREAS, the Bank is willing to extend to the Borrower such credit
facility on the terms and conditions described herein;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants herein, the mutual benefits to be derived therefrom and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the
following terms have the following meanings and, unless otherwise indicated,
terms defined in the singular have the same meaning when used in the plural and
vice-versa:
"ACQUISITION" means purchase by Borrower of (i) the outstanding
ownership units of Xxxx Pharmaceuticals, LLC pursuant to the purchase agreement,
dated as of July 18, 2005, between the Borrower (formerly known as Bionutrics,
Inc.), as purchaser and Xxxx X. Xxxxxxx and Xxxx X. Xxxxxxx, as sellers, which
is annexed hereto as Exhibit A-1, and (ii) the outstanding ownership units of
Andapharm, LLC pursuant to the purchase agreement, dated as of July 28, 2005,
between the Borrower and Xxxx X. Xxxxxxx, which is annexed hereto as Exhibit
A-2.
"ACQUISITION LOAN" means amount advanced or to be advanced by the
Bank to the Borrower for Acquisition.
"ADVANCE" means any and all amounts advanced or to be advanced as
Acquisition Loan and Working Capital Loan pursuant to this Agreement.
"AFFILIATE" means any Person that directly or indirectly controls,
or is controlled by, or is under common control with the Borrower. The term
control means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
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"AGREEMENT" means this credit agreement and any amendments,
supplements or modifications thereto.
"ANDAPHARM, INC." means Andapharm, Inc., a Nevada corporation.
"ANDAPHARM, LLC" means Andapharm, LLC., a Florida limited liability
company.
"BHP" means Bionutrics Health Products Inc., a Delaware corporation.
"BORROWER" has the meaning given this term in the introductory
paragraph hereto.
"BORROWER CONSOLIDATED GROUP" means the Borrower, together with
Xxxx, Inc., Xxxx, LLC, Andapharm, Inc., Andapharm, LLC, BHP, Lipogenics,
Nutrition Technology, SL, and Incon, the entities the financial condition and
results of operations of which are, or are required to be, included on a
consolidated basis in the financial statements as filed with the United States
Securities and Exchange Commission immediately prior to the Acquisition.
"BORROWER PRO FORMA CONSOLIDATED GROUP" means the Borrower
Consolidated Group together with Xxxx, LLC and Andapharm, LLC, giving effect to
the Acquisition.
"BORROWER SEC DOCUMENTS" means all forms, reports, schedules,
statements, and other documents required to be filed by Borrower under the
Securities Exchange Act of 1934, as amended, since at November 1, 2000 as such
documents have been amended since the time of the filing thereof.
"BRANCH OFFICE" means the office of the Bank at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 in the United States of America.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any date
that is a legal holiday under the laws of the State of New York and any day on
which banking institutions located in such state are authorized by law or other
governmental action to close.
"CLOSING DATE" means the date on which this Agreement is executed by
the Borrower and the Bank.
"COLLATERAL" means all property that is subject or is to be subject
to the lien granted by the Security Agreements and other Credit Documents.
"CORPORATE GUARANTORS" means the Borrower Pro Forma Consolidated
Group (other than Borrower) and Nostrum.
"CREDIT DOCUMENTS" means this Agreement, the Note, the Security
Agreements, the Guaranties and any and all documents, exhibits, schedules,
amendments, modifications and supplements delivered in connection therewith.
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"DEBT" means (a) indebtedness or liability for borrowed money or for
the deferred purchase price of property or services (including trade
obligations); (b) current liabilities in respect of unfunded vested benefits
under any plan; (c) obligations under letters of credit issued for the account
of any Person; (d) all obligations under acceptance facilities; (e) all
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase, to provide
funds for payment, to supply funds to invest in any Person, or otherwise to
assure a creditor against loss; and (f) obligations secured by any Lien on
property owned by the Person, whether or not the obligations have been assumed.
"DOLLAR" and the sign "$" each mean the lawful currency of the
United States of America.
"DRAWING POWER FOR WORKING CAPITAL LOAN" means an amount equal to
70% of the value of fully paid inventory and accounts receivable of Borrower
together with 100% of cash in accounts maintained by any member of the Borrower
Pro Forma Consolidated Group at the Bank, or $5,250,000.00, whichever is less.
"EVENT OF DEFAULT" means any of the events specified in Section
8.01.
"FACILITY LETTER" means the letter of the Bank, annexed hereto as
Exhibit B, duly accepted by the Borrower and Guarantors, and dated as of April
17, 2006 setting forth the terms and conditions for allowing the Advance.
"GAAP" means generally accepted accounting principles in effect from
time to time in the United States of America.
"GUARANTOR" means Personal Guarantor and Corporate Guarantors.
"GUARANTIES" means the Guaranty Agreements executed by the
Guarantors and to be delivered to the Bank under the terms of this Agreement.
"INCON" means Incon Technologies, Inc., a Delaware corporation.
"INTEREST DEFICIT" has the meaning given this term in Section 3.02.
"XXXX, INC." means Xxxx Pharmaceuticals, Inc., a Nevada corporation.
"XXXX, LLC" means Xxxx Pharmaceuticals, LLC., a Florida limited
liability company.
"LIPOGENICS" means Lipogenics, Inc., a Delaware corporation.
"NOTE" means the promissory note executed by the Borrower, in the
principal amount of [up to] Ten Million Five Hundred Thousand U.S. Dollars
($10,500,000.00), dated as of the date of this Agreement and payable to the
Bank.
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"NOSTRUM" means Nostrum Pharmaceuticals, Inc., a Delaware
corporation.
"NUTRITION TECHNOLOGY" means Nutrition Technology Corp., a Nevada
corporation.
"OBLIGATIONS" means (1) the due, punctual and complete performance
and repayment of all of the Advances outstanding from time to time in the
account of the Borrower with the Bank, all interest accrued thereon and all
other obligations of and amounts payable by the Borrower or the Guarantor under
this Agreement, the Note, the other Credit Documents and with regard to any
other transactions whatsoever between the Borrower or the Guarantor and the Bank
and (2) the performance of all representations, warranties, agreements,
covenants and other obligations of the Borrower or the Guarantor under this
Agreement, the Note and the other Credit Documents.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"PERSONAL GUARANTOR" means Xxxxxx Xxxxx a/k/a Xx. Xxxxxx Xxxxx.
"PRIME RATE" means the floating commercial loan rate declared by the
Bank from time to time and adopted by the Bank as its "prime rate". The Borrower
acknowledges that the Prime Rate is a base rate for calculating interest on
certain loans and is not intended to be and is not necessarily the lowest or
most favorable rate charged by the Bank to any borrower or category of
borrowers.
"SECURITY AGREEMENTS" means the Security Agreements, dated as of the
date of this Agreement, to be executed and delivered by the Borrower or
Guarantors to the Bank under the terms of this Agreement.
"SL" means Synovics Laboratories, Inc., a Nevada corporation.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as the
same may, from time to time, be in effect in the State of Nevada; provided,
however, that, in the event that, by reason of mandatory provisions of law, any
or all of the attachment, perfection or priority of the Bank's lien on the
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Nevada, the term "Uniform Commercial Code"
means the Uniform Commercial Code or such other law as in effect in such other
jurisdiction for purposes of the provisions thereof relating to such attachment,
perfection or priority and for purposes of definitions related to such
provisions.
"WORKING CAPITAL LOAN" means amount advanced or to be advanced by
the Bank for the long term working capital requirements of Borrower and its
Affiliates.
SECTION 1.02. ACCOUNTING TERMS. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP
consistent with that applied in the
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preparation of the financial statements referred to in Section 5.04 and 6.09(a),
and all financial statements submitted pursuant to this Agreement shall be
prepared in accordance with such principles.
ARTICLE II
AMOUNT AND TERMS OF ADVANCE
SECTION 2.01. BANK'S AGREEMENT. The Bank agrees that, upon the
execution of this Agreement and subject to the terms of this Agreement, it shall
allow the Borrower an Advance, through an escrow account maintained by the Bank
for this purpose, in the principal amount not exceeding Ten Million Five Hundred
Thousand Dollars ($10,500,000.00); PROVIDED, HOWEVER, the Acquisition Loan and
Working Capital Loan, each shall not exceed the principal sum of Five Million
Two Hundred and Fifty Thousand Dollars ($5, 250,000.00). The Borrower will not
be allowed to re-borrow any amount of the Advance repaid under this Agreement
and the Note.
SECTION 2.02. CONDITION PRECEDENT. The obligation of the Bank to
allow the Advance shall be subject to the condition precedent in Article IV
hereof and further conditions that:
(a) Borrower maintains the Drawing Power for Working Capital Loan. In
the event Borrower becomes unable to maintain the Drawing Power for working
Capital Loan, Bank may allow the Working Capital Loan for working capital
requirements by routing the Working Capital Loan through an escrow account,
PROVIDED, HOWEVER, Borrower and Affiliates use same for building inventory and
accounts receivable for the purpose of maintaining Drawing Power for Working
Capital Loan; and
(b) Bank has received such other approvals, opinions or documents that
the Bank may reasonably request.
SECTION 2.03. BORROWER'S AGREEMENT.
(a) The Borrower shall repay the Advance in accordance with the
terms of the Agreement and the Note.
(b) In the event Borrower prepays the Advance, Borrower shall pay
by way of prepayment fee an amount equal to 1% of the amount prepaid for each
year or portion thereof the remaining between the date of prepayment and the
date upon which the final payment hereunder and under the Note shall be due and
payable.
(c) The Borrower shall use the Acquisition Loan for the purpose of
partly funding Acquisition and the Working Capital Loan for long term working
capital requirements of the Borrower and its Affiliates.
SECTION 2.04. EVIDENCE OF INDEBTEDNESS. All Advances under this
Agreement shall be evidenced by, and repaid with interest in accordance with the
Note and the records of the Bank, which shall constitute prima facie evidence of
the amount of the principal and interest.
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ARTICLE III
INTEREST, PAYMENTS, FEES, USE OF
FACILITY, ADJUSTMENTS, SECURITY
SECTION 3.01. INTEREST. The Borrower shall pay interest to the Bank
on the Advance at a rate per annum equal to the Prime Rate plus one percent
(1.0%). Any amount of Advance remaining outstanding beyond the date when due,
whether at maturity, by notice of prepayment, by acceleration or otherwise,
shall bear interest at a default rate (the "Default Rate") per annum equal to
three percent (3.0%) above the Prime Rate from the date when due until paid in
full. Any change in the interest rate resulting from a change in the Prime Rate
shall become effective as of the opening of business on the day on which such
change in the Prime Rate shall become effective. Interest shall be calculated on
the basis of a year of 365 days for the actual number of days elapsed.
SECTION 3.02. INTEREST ADJUSTMENTS. Notwithstanding anything in the
Credit Documents to the contrary, if this Agreement, the Note or the Credit
Documents would at any time otherwise require payment to the Bank of an amount
of interest in excess of the maximum amount then permitted by law, such interest
payments to the Bank shall be reduced to the extent necessary so as to ensure
that the Bank shall not receive interest in excess of such maximum amount. To
the extent that, pursuant to the foregoing sentence, the Bank shall receive
interest payments hereunder or under the Note in an amount less than the amount
otherwise provided, such deficit (the "Interest Deficit") will cumulate and will
be carried forward until the termination of this Agreement. Interest otherwise
payable to the Bank hereunder and under the Note for any subsequent period shall
be increased by the maximum amount of the Interest Deficit that may be so added
without causing the Bank to receive interest in excess of the maximum amount
then permitted by the law.
SECTION 3.03. METHOD OF PAYMENTS.
(a) The Borrower shall make each repayment of principal under this
Agreement and under the Note to the Bank at the Branch Office in Dollars in
immediately available funds by no later than the close of business in New York
City on the following dates: December 31, 2006 the sum of $250,000.00; March 31,
2007 the sum of $250,000.00; June 30, 2007 the sum of $250,000.00; September 30,
2007 the sum of $250,000.00; December 31, 2007 the sum of $250,000.00; March 31,
2008 the sum of $500,000.00; June 30, 2008 the sum of $500,000.00; September 30,
2008 the sum of $500,000.00; December 31, 2008 the sum of $500,000.00; March 31,
2009 the sum of $750,000.00; June 30, 2009 the sum of $750,000.00; September 30,
2009 the sum of $750,000.00; December 31, 2009 the sum of $750,000.00; March 31,
2010 the sum of $1,000,000.00; June 30, 2010 the sum of $1,000,000.00; September
30, 2010 the sum of $1,000,000.00; and December 31, 2010 the sum of
$1,250,000.00. The Borrower and the Guarantor, hereby irrevocably authorize the
Bank, if and to the extent any payments of principal are not made when due under
this Agreement, to charge any amount so due from time to time against any
account of the Borrower or the Guarantor with the Bank.
(b) The Borrower shall make each payment of interest under this
Agreement or under the
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Note to the Bank at the Branch Office in Dollars in immediately available funds
by no later than the close of business in New York City on the fifteenth day of
each succeeding month or at the maturity of each instrument as may be required
by the Bank from time to time, commencing on the last day of the month next
following the Closing Date, in an amount sufficient to pay all unpaid interest,
if any, accrued as of the date of payment. The Borrower and the Guarantor hereby
irrevocably authorize the Bank to charge any account of the Borrower or the
Guarantor with the Bank to the extent the Borrower fails to pay such amounts.
Bank shall send a statement to the Borrower before the seventh (7th) day of
every month setting forth the amount of interest due for such month.
(c) Whenever any payment to be made under this Agreement shall be stated
to be due on a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day and any resulting extension of time shall in such
case be included in the computation of the payment of interest.
SECTION 3.04. MANDATORY PREPAYMENT. If the Borrower receives any
insurance proceeds with respect to Collateral that has been damaged or
destroyed, the Borrower shall utilize such proceeds to replace the Collateral so
damaged or destroyed, provided, however, that in the event that Borrower does
not intend to so utilize such insurance proceeds or does not do so within a
reasonable period of time following the receipt of such insurance proceeds by
Borrower, Borrower shall promptly pay to the Bank the lesser of (i) such
insurance or (ii) the sum of the aggregate principal outstanding Obligations
under this Agreement and all interests accrued on any amount prepaid, and the
Bank shall reduce the outstanding Obligations by an amount equal to such
insurance proceeds. All insurance proceeds shall be maintained at the Bank in an
escrow account for a period of thirty (30) days or until such time Borrower
notifies the Bank of its intention to replace the Collateral, whichever occurs
earlier. All replacement costs shall be paid directly to the sellers by the
Bank.
SECTION 3.05. FEES, COMMISSION AND EXPENSES. The Borrower shall pay
to the Bank such fees, commission and expenses as may be regularly charged by
the Bank to its other customers for allowing Advance. In addition, Borrower
shall pay the Bank a non-refundable front-end processing fee in the sum of
$78,750.00. The Borrower and Guarantor hereby irrevocably authorize the Bank to
charge any account of the Borrower and Guarantor with the Bank to be extent the
Borrower fails to pay such amounts.
SECTION 3.06. LEGAL FEES. On the Closing Date, the Borrower shall
pay to the Bank the reasonable fees and disbursements of Menon & Posner, counsel
to the Bank, incurred in the preparation and negotiation of the Credit
Documents. The Borrower and Guarantor hereby irrevocably authorize the Bank to
charge any account of the Borrower and Guarantor with the Bank to be extent the
Borrower fails to pay such amounts.
SECTION 3.07. APPLICATION OF PAYMENTS. All amounts received by the
Bank from the Borrower relative to the Agreement and the Note shall be applied,
regardless of any designations to the contrary, at the discretion of the Bank.
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SECTION 3.08. CAPITAL ADEQUACY.If the imposition of, or any change
in, any law, rule, regulation or guideline or the interpretation or application,
including, without limitation, any request or policy not having the force of
law, of any thereof by any court or administrative or governmental authority
shall impose, modify or make applicable any taxes (except United States federal,
State or local income or franchise taxes imposed on the overall income of the
Bank), reserve requirements, capital adequacy requirements or other obligations
that would in the Bank's judgment (a) increase the cost to the Bank for
extending or maintaining the credit facilities to which this Agreement relates,
(b) reduce the amounts payable to the Bank under the Credit Documents or (c)
reduce the rate of return on the Bank's capital as a consequence of the Bank's
obligations with respect to the Advances, then the Borrower shall pay to the
Bank such additional amounts as will compensate the Bank therefor within five
days after the Bank's written demand, which shall be accompanied by an
explanation of such imposition or charge and shall be conclusive in the absence
of manifest error.
SECTION 3.09. USE OF ADVANCE. The Borrower shall use the Advance for
the purpose of Acquisition and working capital requirements as set forth in
Section 2.03 (c) of this Agreement.
SECTION 3.10. SECURITY. As security for the Obligations, the
Borrower herewith grants to the Bank (i) a first priority security interest in
the Collateral pursuant to the Security Agreement and (ii) Guaranty of
Guarantors.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01. CONDITIONS PRECEDENT TO INITIAL ADVANCE. The
obligation of the Bank to allow any initial Advance under this Agreement to the
Borrower is subject to the conditions precedent that the Bank shall have
received on the date of this Agreement each of the following, in form and
substance satisfactory to the Bank and its counsel:
(a) NOTE. The Note duly executed by the Borrower in the principal
sum of $10,500,000.00 and dated as of the date of this Agreement; and
(b) GUARANTY. The forms of Guaranty duly executed by Guarantors
and dated as of the date of this Agreement; and
(c) SECURITY AGREEMENTS. The Security Agreements duly executed by
the Borrower and Guarantors and dated as of the date of this Agreement together
with acknowledgment copies of the financing statements duly filed under the
Uniform Commercial Code of all jurisdictions to perfect the security interest
created by the Security Agreements; and
(d) PAYOFF LETTER FROM BANK OF AMERICA. A pay off letter from Bank
of America setting forth the amount due from Xxxx, LLC as of the date of
Closing; and
(e) LIST OF EQUIPMENTS UNDER LEASE. A list setting forth the
description of the equipments under lease by the Borrower, Xxxx, LLC and
Andapharm, LLC as of the date of Closing; and
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(f) LEASES. Copy of the leases of the operational facility of
Borrower, Xxxx, LLC, and Andapharm, LLC, which evidence that said leases do not
expire until December 31, 2010; and
(g) UNDERTAKING BY NOSTRUM. An undertaking by Nostrum and Personal
Guarantor that they shall not dispose of or otherwise alienate their shares in
Borrower; and
(h) STATUS REPORT FROM XXXXX FARGO. A status report from Xxxxx
Fargo as to Borrower's loan; and
(i) SUBSCRIPTION AGREEMENT. A copy of the subscription agreement
between Xxxxxxx Pharmaceuticals PVT. LTD or any other investor and Borrower; and
(j) CERTIFICATE OF BORROWER AS TO FUNDS RAISED. A Certificate of
Borrower stating that Borrower has raised funds in the sum of $9.682 Million by
equity capital ($6 Million) and convertible debt/notes ($3.682); and
(k) FEDERAL FOOD AND DRUG ADMINISTRATION ("FDA") APPROVALS. FDA
approvals received by the Borrower and Guarantors as of the date of the
Agreement with respect to their products; and
(l) STATEMENT OF PATENTS/INTELLECTUAL PROPERTY RIGHTS. A Statement
of Borrower setting forth the patent/intellectual property rights held by the
Borrower and Guarantors along with their registration information with the
governmental authorities.
(m) INSURANCE CERTIFICATES. The certificates of insurance as
required by Section 6.06 of this Agreement; and
(n) APPLICATION FEE. The application fee as stated in Section 3.05
of this Agreement; and
(o) OPINION OF BORROWER'S COUNSEL. An opinion of Borrower's
counsel in form and substance satisfactory to the Bank and its counsel.
(p) CORPORATE RESOLUTION. A Corporate Resolution in form and
substance satisfactory to the Bank authorizing an officer of Borrower to execute
the Credit Documents; and
(q) LEGAL FEES. Reasonable legal fees and disbursements incurred
by Messrs. Menon & Posner, Counsel to the Bank, in the preparation and
negotiation of the Credit Documents; and
(r) OTHER APPROVALS, ETC. The Bank shall have received such other
approvals, opinions or documents that the Bank may reasonably request.
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ARTICLE V
REPRESENTATION AND WARRANTIES
The Borrower represents and warrants to the Bank that:
SECTION 5.01. INCORPORATION, GOOD STANDING AND DUE QUALIFICATION. The
Borrower is a corporation duly incorporated, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation. The Borrower
is qualified to do business wherever such qualification is necessary and has
full power and authority, corporate and otherwise, to enter into this Agreement
and other Credit Documents required hereunder on its behalf.
SECTION 5.02. CORPORATE POWER AND AUTHORITY. The execution, delivery, and
performance by the Borrower of the Credit Documents to which it is a party have
been duly authorized by all necessary corporate action and do not and will not
(a) require any consent or approval of the stockholders of such corporation; (b)
contravene such corporation's charter or bylaws;(c) violate any provision of any
law, rule, regulation (Regulation U of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to such corporation; (d) result
in a breach of or constitute a default under any indenture, loan or credit
agreement or any other agreement, lease or instrument to which such corporation
is a party or by which it or its properties may be bound or affected, other than
the Convertible Promissory Notes due April 2007 of the Borrower in the aggregate
principal amount of approximately $3,345,000; (e) result in or require the
creation or imposition of any lien, except the lien created by the Security
Agreement, upon or with respect to any of the properties now owned or hereafter
acquired by such corporation; or (f) cause such corporation to be in default
under any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award or any such indenture, agreement, lease or instrument.
SECTION 5.03. LEGALLY ENFORCEABLE AGREEMENT. This Agreement is, and each
of the other Credit Documents to which any member of the Borrower Pro Forma
Consolidated Group is a party when delivered under this Agreement, will be
legal, valid, and binding obligations of the Borrower and/or such members of the
Borrower Pro Forma Consolidated Group, party thereto, enforceable against such
party, in accordance with their respective terms, except to the extent that such
enforcement may be limited by applicable bankruptcy, insolvency, and other
similar laws affecting creditors' rights generally.
SECTION 5.04. FINANCIAL STATEMENTS AND PROJECTIONS.
(a) The consolidated balance sheet of the Borrower Consolidated Group
for the fiscal year ended October 31, 2005 and for the previous years submitted
in connection with its application for Advance, and the accompanying footnotes
are complete and correct and fairly and accurately represent the financial
condition of the Borrower Consolidated Group as at such dates and the results of
the operations of the Borrower Consolidated Group for the periods covered by
such statements, all in accordance with GAAP consistently applied (subject to
year end adjustments in the case of the interim financial statements), and,
except as otherwise set forth in the Borrower SEC Documents, since the November
1, 2005 there has been no material adverse change in the condition (financial or
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otherwise), business or operations of the Borrower Consolidated Group. There are
no liabilities of the Borrower Consolidated Group, fixed or contingent, that are
material but are not reflected in the financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of business since
the beginning of current fiscal year. No information, exhibit, or report
furnished by any member of the Borrower Consolidated Group to the Bank, or, to
the knowledge of the Borrower, by Xxxx, LLC or Andapharm, LLC, in connection
with the negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein, in light of the circumstances under which they were
made, not misleading.
(b) The projections provided by the Borrower to the Bank have been
prepared in good faith by Borrower and are based upon assumptions which, in
light of the circumstances under which they are made, are fair and reasonable.
SECTION 5.05. FINANCIAL STATEMENT OF GUARANTORS. The financial
statement of Guarantors are complete and correct in all respects, and fairly
represent the financial condition of the Personal Guarantor and Guarantors as of
that date.
SECTION 5.06. ASSUMPTIONS MADE FOR ACQUISITION AND APPLICATION FOR
ADVANCE. Borrower's assumptions in connection with its application for Advance
for the Acquisition are fair and reasonable in all respects.
SECTION 5.07. OTHER AGREEMENTS. No members of the Borrower Pro Forma
Consolidated Group are, nor shall be, without the Bank's prior consent, a party
to any indenture, loan or credit agreement, or to any lease or other agreement
or instrument or subject to any charter or corporate restriction that could have
a material adverse effect on the business, properties, assets, operations to
conditions, financial or otherwise of the Borrower Pro Forma Consolidated Group
or the ability of the Borrower or any member of the Borrower Pro Forma
Consolidated Group to carry out their obligations under the Credit Documents. No
member of the Borrower Pro Forma Comsolidated Group is in default in any respect
in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument material to its
business.
SECTION 5.08. LITIGATION. There is no pending or threatened action
or proceeding against or affecting any member of the Borrower Pro Forma
Consolidated Group before any court, governmental agency, or arbitrator that
may, in any one case or in the aggregate, materially adversely affect the
financial condition, operation, properties, or business of the the Borrower Pro
Forma Consolidated Group or the ability of the members of the Borrower Pro Forma
Consolidated Group to perform their respective obligations under the Credit
Documents.
SECTION 5.09. NO DEFAULT ON OUTSTANDING JUDGMENTS OR ORDERS. No
member of the Borrower Pro Forma Consolidated Group is in default with respect
to any judgment affecting their respective business, properties, or assets,,
writ, injunction, decree, rule, or regulation of any court, arbitrator or
federal, state, municipal or other governmental authority, commission, board,
bureau, agency or instrumentality, domestic or foreign.
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SECTION 5.10. OWNERSHIP AND LIENS. The relevant member or members of
the Borrower Pro Forma Consolidated Group has title to, or valid leasehold
interest in, their respective properties and assets, real and personal and none
of the properties and assets owned thereby and none of their leasehold interest
is subject to any lien, other than filings under the Uniform Commercial Code
evidencing leasehold interests, except such as may be permitted pursuant to this
Agreement.
SECTION 5.11. OPERATION OF BUSINESS. The Borrower possesses all
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
or rights thereto, necessary to conduct its business as it is now conducted and
as it is proposed to be conducted, and, to the knowledge of the Borrower, the
Borrower is not in violation of any valid rights of others with respect to any
of the foregoing.
SECTION 5.12. TAXES. Each member of the Borrower Consolidated Group
has, and the Borrower believes that Xxxx, LLC and Andapharm, LLC have, filed all
tax returns required to be filed and have paid all taxes, assessments,
governmental charges and levies thereon to be due, including interest and
penalties.
SECTION 5.13. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) To the best of its knowledge, the Borrower has complied in all
material respects with, is currently in compliance in all material respects with
and will continue to be in compliance in all material respects with all
environmental laws, ordinances, orders or decrees of every state, federal,
municipal or other governmental body or agency, including without limitation
every state, federal or local environmental law applicable to it.
(b) To the best of its knowledge, no solid or hazardous or toxic
wastes or hazardous substances (as defined in the Comprehensive Environmental
Response Compensation and Liability Act, the Resources Conservation and Recovery
Act and the Super Fund Amendments and Reauthorization Act of 1986, as amended)
or under any successor or similar law or any applicable state or local law, are
processed, discharged, stored, treated, disposed of or managed at any facility
owned, leased or operated by the Borrower, at the request or behest of the
Borrower or at any facility owned, leased or operated by the Borrower, at the
request or behest of the Borrower or at any adjoining site, so as to require
license, permit or authorization of any type from any governmental authority
other than adverse effect on the Borrower. No governmental or private action to
enforce environmental or pollution control laws have been initiated against the
Borrower or against or with respect to any facility of the Borrower.
(c) To the best of its knowledge, there is not pending against the
Borrower before any court, arbitrator or governmental body, agency or official
any action, suit or proceeding that (1) is based on alleged damage to health
caused by any hazardous or toxic substance or by any waste or by-product thereof
and (2) involves (A) a claim for damages in excess of $10,000 or (B) claims for
damages under $10,000 that, in the aggregate, could have a material adverse
effect on the Borrower Consolidated Group.
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SECTION 5.14. LABOR RELATIONS. No work stoppage that could
materially adversely affect the business, financial position, results of
operations or prospects of the Borrower has occurred or is continuing or, to the
knowledge of the Borrower, is threatened, and no material union representation
questions exist with respect to the employees of the Borrower. There are not
charges of unfair labor practices pending or, to the knowledge of the Borrower,
threatened before any governmental or regulatory agency or authority, nor are
there any pending labor negotiations or union organization efforts, involving or
affecting employees of the Borrower.
ARTICLE VI
AFFIRMATIVE COVENANTS
So long as the Note shall remain unpaid or the Bank shall have any
payment outstanding under this Agreement, the Borrower will:
SECTION 6.01. MAINTENANCE OF EXISTENCE. Preserve and maintain its
existence as a corporation and in good standing in the jurisdiction of its
incorporation, and qualify and remain qualified as a corporation in each
jurisdiction in which such qualification is required.
SECTION 6.02. MAINTENANCE OF RECORDS. Maintain, keep and preserve
adequate records and books of account, in which complete entries will be made in
accordance with GAAP consistently applied, reflecting all financial transactions
of the Borrower.
SECTION 6.03. MAINTENANCE OF COLLATERAL. Maintain keep and preserve
all Collateral (tangible and intangible) necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted.
SECTION 6.04. INSPECTION OF COLLATERAL AND RELATED RECORDS.
Maintain, keep and preserve with respect to the Collateral accurate records that
are as complete and comprehensive as those customarily maintained by others
engaged in the same business and make available to the Bank or its
representatives, at Borrower's sole cost and expense, on the Bank's reasonable
advance request, all books, records, contracts, notes and all other information
and data of every kind relating to its business and the collateral. The Bank
shall have the right to examine all such books, records, contracts and other
information and to make abstracts therefrom or copies thereof at any time and
from time to time upon reasonable advance notice to the Borrower. At any time or
times that the Bank may reasonably request in advance, the Borrower will, at its
cost and expense, prepare a list or lists in such form as shall be satisfactory
to the Bank, certified by duly authorized officers, describing the Collateral in
such detail as the Bank shall require and specifying the location of such
Collateral and the records pertaining thereto, and permit the Bank to inspect
such Collateral or any part thereof at Borrower's cost and expense at such place
as the Collateral may be held or located or at such other reasonable place
chosen by the Bank.
SECTION 6.05. CONDUCT OF BUSINESS. Continue to conduct in an
efficient and economical manner a business of the same general type as conducted
by the Borrower on the date of this Agreement.
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SECTION 6.06. MAINTENANCE OF INSURANCE.
(a) At its sole cost and expense, maintain insurance against loss
or damage to the Collateral with responsible and reputable insurance companies
or associations satisfactory to the Bank in such amounts and covering such
risks, including, without limitation, fire, comprehensive and general and
automobile liability, property damage, workers' compensation, and miscellaneous
equipment floaters, and for such terms as are usually carried by corporations
engaged in similar businesses; and
(b) Cause all insurance policies issued or maintained pursuant to
this Section and name the Borrower and/or other member of the Borrower Pro Forma
Consolidated Group as insured and the Bank as loss payee without the Bank being
liable for premiums or other costs or expenses; and
(c) At least thirty days prior to the expiration of each such
policy, furnish the Bank with evidence satisfactory to the Bank of the payment
of premiums and the reissuance of a policy continuing insurance in force as
required by this Agreement. All such policies or certificates shall contain a
provision that such policies will not be subject to cancellation or material
amendment, including without limitation, any amendment reducing the scope of
limits of coverage, without at least thirty days prior written notice by
certified or registered mail to the Bank. In the event the Borrower fails to
provide, maintain, keep in force or deliver and furnish to the Bank the policies
of insurance required by this Section, the Bank may, but shall not be obligated
to, procure such insurance or single interest insurance for such risks covering
the Bank's interest, and the Borrower will pay all premiums thereon promptly
upon demand by the Bank, together with interest thereon at the rate then
applicable to the Advance made to the Borrower hereunder from the date of
expenditure by the Bank until reimbursement in full by the Borrower; and
(d) Attach or cause to be attached to all insurance policies
required to be furnished by any member of the Borrower Pro Forma Consolidated
Group pursuant to this Section, a lender's loss payable endorsement or its
equivalent, or a loss payable clause acceptable to the Bank, for the benefit of
the Bank; and
(e) Observe and comply with the requirements of all material
policies of insurance required to be maintained in accordance with this
Agreement and perform and satisfy the material requirements of the companies
writing such policies so that at all times companies of good standing
satisfactory to the Bank shall be willing to write and to continue such
insurance; and
(f) Upon request by the Bank, furnish the Bank with a certificate
f an officer of the Borrower, containing a detailed list of the insurance
policies of the members of the Borrower Pro Forma Consolidated Group required by
or referred to in this Section, then outstanding and in force.
SECTION 6.07. COMPLIANCE WITH LAWS. Comply in all respects with all
applicable laws, rules, regulations and orders, including, without limitation,
paying before the same become delinquent all taxes, assessments, and
governmental charges imposed upon it or upon its property unless such taxes,
assessments and governmental charges are being diligently contested, in good
faith, by the Borrower.
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SECTION 6.08. RIGHT OF INSPECTION. At its sole cost and expense,
upon request by the Bank and in any event at least once in three months, permit
the Bank or any agent or representative thereof to examine, audit and make
copies of and abstracts from the records and books of account of, and inspect
the Collateral and properties of the Borrower and to discuss the affairs,
finances and accounts of the Borrower with any of its officer, directors and
independent accountants. For the purpose of this Section, cost and expense
include reasonable travel and hotel expenses, allowance paid to the inspecting
officer of the Bank and such other expenses that are reasonably and customarily
charged by Bank to the Borrower's account.
SECTION 6.09. REPORTING REQUIREMENTS. Furnish to the Bank:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event within ninety (90) days after the close of each fiscal year of the
Borrower Pro Forma Consolidated Group, a consolidated and/or consolidating
balance sheet of the Borrower Pro Forma Consolidated Group as of the end of such
fiscal year and a consolidated and/or consolidating statement of income and
retained earning of the Borrower Pro Forma Consolidated Group for such fiscal
year, and a consolidated and/or consolidating statements of change in financial
position of the Borrower Pro Forma Consoldiated Group for such fiscal year, all
in reasonable detail and stating in comparative form the respective consolidated
and/or consolidating figures for the corresponding date and period in the prior
fiscal year and all audited in accordance with GAAP consistently applied by
independent certified public accountant selected by the Borrower and acceptable
to the Bank; and
Compiled half-yearly financial statements of the Borrower Pro Forma Consolidated
Group every six months during the continuation of the Agreement. Such financial
statement shall be submitted within ninety (90) days of the expiry of the
relevant half fiscal year; and
(c) MANAGEMENT LETTERS. Promptly upon receipt thereof, copies of
any reports submitted to the Borrower by independent certified public
accountants in connection with examination of the financial statements of the
Borrower made by such accountants; and
(d) ACCOUNTANT'S REPORT. Simultaneously with the delivery of the
annual financial statements referred to in this Section, a certificate of the
independent public accountants that audited such statements to the effect that,
in making the examination necessary for the audit of such statements, they have
obtained no knowledge of any condition or event that constitutes an Event of
Default, or if such accountants shall have obtained knowledge of any such
condition or event, specifying each such condition or event of which they have
knowledge and the nature and status thereof; and
(e) NOTICE OF LITIGATION. Promptly after the commencement thereof
or notice of all actions, suits and proceedings before any courts or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, affecting any member or members of the Borrower Pro Forma
Consolidated Group, could have a material adverse effect on the financial
15
condition, properties or operations of the Borrower Pro Forma Consolidated
Group; and
(f) NOTICE OF EVENTS OF DEFAULT. As soon as possible and in any
event within fifteen days after the occurrence of each Event of Default a
written notice setting forth the details of such Event of Default and the action
which is proposed to be taken by the Borrower with respect thereto; and
(g) REPORTS TO OTHER CREDITORS. Promptly after the furnishing
thereof, copies of any statements or report furnished to any other party
pursuant to the terms of any indenture, loan, credit or similar agreement not
otherwise required to be furnished to the Bank pursuant to any other clause of
this Section; and
(h) PROXY STATEMENTS, ETC. Promptly after sending or filing
thereof, copies of all proxy statements, financial statements and reports that
the Borrower sends to its stockholders or members and copies of all regular,
periodic and special reports and registration statements the Borrower filed with
the Securities and Exchange Commission or any governmental authority that may be
substituted therefor or with any national securities exchange; and
(i) QUARTERLY STATEMENT OF ACCOUNTS RECEIVABLE. Within forty-five
(45) from the end of every quarter (i.e., January 31, April 30, July 31 and
October 31), submit to the Bank a quarterly statement of accounts receivable for
the quarter then ended duly certified by the chief financial officer of Borrower
with details of aging. Failure to provide the quarterly statement as aforesaid
shall make Borrower liable for interest at the Default Rate in the sole
discretion of the Bank.
(j) MONTHLY STATEMENT OF ACCOUNTS RECEIVABLE. Within fifteen (15)
days from the beginning of the month, submit a statement of accounts receivable
as of the last day of the preceding month.
SECTION 6.10. MAINTENANCE OF BANK ACCOUNTS. Maintain in good
standing all deposit accounts with the Bank at its Branch Office.
SECTION 6.11. POLLUTION CONTROL AND EMISSION CONTROL CERTIFICATE.
Furnish to the Bank a certificate from appropriate authorities that Borrower
Consolidate Group is in compliance with the applicable laws relating to
pollution and emission control during the term of this Agreement. In the event
no such certificate is required due to Borrower's nature of business, Borrower
shall give a statement in writing to the Bank that such certificate cannot be
obtained.
SECTION 6.12. ACQUISITION OF ANDAPHARM, LLC. Upon the closing of the
Acquisition, cause Andapharm, LLC to be promptly acquired by Andapharm, Inc.
SECTION 6.13. ACQUISITION OF XXXX, LLC. Upon the closing of the
Acquisition, cause Xxxx LLC to be promptly acquired by Xxxx, Inc.
SECTION 6.14. BANK OF AMERICA'S LOAN TO BORROWER. At the closing pay
off Bank of America's loan to Borrower.
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ARTICLE VII
NEGATIVE COVENANTS
So long as the Note shall remain unpaid or the Borrower shall have
any Obligations under this Agreement, the Borrower shall not without the Bank's
prior written consent:
SECTION 7.01. LIENS. Create, incur, assume or suffer to exist any
lien upon or with respect to any of its properties, now owned or hereafter
acquired, except:
(a) Liens in favor of the Bank;
(b) Liens for taxes or assessments or other government charges or
levies not yet due and payable or, if due and payable, contested in good faith
by appropriate proceeding and for which appropriate reserves are maintained;
(c) Liens, deposits or pledges to secure the performances of bids,
tenders, contracts (other than contracts for the payment of money), leases
(permitted under the terms of this Agreement) or public or statutory
obligations; surety, stay, appeal, indemnity, performance or other similar
bonds; or other similar obligations arising in the ordinary course of business;
(d) Purchase-money liens on any property hereafter acquired or the
assumption of any lien on property existing at the time of such acquisition, or
a lien incurred in connection with any conditional sale or other title retention
agreement or a capital lease; provided that
(1) Any property subject to any of the foregoing is acquired
by the Borrower in the ordinary course of business and
the lien on any such property is created
contemporaneously with, or prior to, such acquisition;
and
(2) The obligation secured by any lien so created, assumed
or existing shall not exceed fifty percent (50%) of the
lesser of cost or fair market value as of the time of
acquisition of the property covered thereby to the
Borrower, except for liens existing before the date of
this Agreement; and
(3) Each such lien shall attach only to the property so
acquired and fixed improvements thereon; and
(4) The debt secured by all such liens shall not exceed
Fifty Thousand Dollars ($50,000.00) at any time
outstanding in the aggregate except for debt existing
prior to the date of this Agreement and liens pursuant
to this Agreement; and
17
(5) The obligation secured by such lien is permitted by the
provisions of the Section 7.02.
SECTION 7.02. DEBT. Create, incur, assume or suffer to exist any
debt, except:
(a) Debt of the Borrower under this Agreement or the Note;
(b) Debt of the Borrower owed to lenders other than Bank and
subordinated on terms satisfactory to the Bank to the Borrower's Obligations
under this Agreement and the Note;
(c) Accounts payable to trade creditors for goods or services that
are not aged more than one hundred and eighty (180) days from billing date and
current operating liabilities (other than for borrowed money) which are not more
than sixty (60) days past due, in each case incurred in the ordinary course of
business and paid within the specified time, unless contested in good faith and
by appropriate proceedings;
(d) Debt of the Borrower owed to lenders or banks other than the
Bank and secured by purchase-money liens permitted by Section 7.01(d).
SECTION 7.03. MERGERS, ETC. Merge or consolidate with, or sell,
assign, lease or otherwise dispose of (whether in one transaction or in a series
of transactions), all or substantially all of its assets (whether now owned or
hereafter acquired) to any Person or acquire all or substantially all of the
assets or the business of any Person.
SECTION 7.04. LEASES. Create, incur, assume or suffer to exist,
other than in the ordinary course of business, any obligation as lessee for the
rental or hire of any real or personal property, except: (a) capital leases
permitted by Section 7.01; and (b) leases existing on the date of this Agreement
and any extensions or renewals thereof.
SECTION 7.05. SALE AND LEASEBACK. Sell, transfer or otherwise
dispose of any real or personal property to any person and thereafter directly
or indirectly lease back the same or similar property.
SECTION 7.06. DIVIDENDS. Declare or pay dividends or profits without
prior written consent of the Bank.
SECTION 7.07. SALE OF ASSETS. Without the Bank's prior consent, not
to be unreasonably withheld, sell, lease, assign, transfer or otherwise dispose
of any of its now owned or hereafter acquired assets (including, without
limitation, receivables and leasehold interest), except: (a) for inventory
disposed of in the ordinary course of business and (b) the sale or other
disposition of assets no longer used or useful in the conduct of its business.
SECTION 7.08. INVESTMENTS. Without the Bank's prior consent, not to
be unreasonably withheld, make any loan or advance to any Person or purchase or
otherwise acquire any capital stock, assets, obligations or other securities of,
make any capital contribution to or otherwise
18
invest in or acquire any interest in any Person, except stock, obligations or
securities received in settlement of debts owing to the Borrower and created in
the ordinary course of business.
SECTION 7.09. GUARANTIES, ETC. Without the Bank's prior consent, not
to be unreasonably withheld, assume, guarantee, endorse or otherwise be or
become directly or contingently responsible or liable (including, but not
limited to, an agreement to purchase any obligation, stock, assets, goods or
services to supply or advance any funds, assets, goods or services to maintain
or cause such Person to maintain a minimum working capital or net worth or
otherwise to assure the creditors of any person against loss) for obligations of
any Person, except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business.
SECTION 7.10. TRANSACTIONS WITH AFFILIATES. Without the Bank's prior
consent, not to be unreasonably withheld, enter into any transaction with any
Affiliate of the Borrower, including, without limitation, the purchase, sale or
exchange of property or the rendering of any services, except in the ordinary
course of and pursuant to the reasonable requirements of the Borrower's business
and upon fair and reasonable terms no less favorable to the Borrower than would
obtain in a comparable arm's-length transaction with a Person that is not an
Affiliate of the Borrower.
SECTION. 7.11. EXPENDITURES FOR ADDITIONS OR IMPROVEMENTS. Incur,
directly or indirectly, any expenditure for additions or improvements to the
Borrower Pro Forma Consolidated Group's fixed assets or enter into agreement to
make any additions or improvements which will result in expenditure in excess of
an aggregate amount of $250,000.00 in any given financial year.
SECTION 7.12. MATERIAL ADVERSE CHANGE. Permit or suffer to permit
any material adverse change in the financial condition or business of the
Borrower or Affiliates on a consolidated financial basis.
SECTION 7.13. CHANGE OF CORPORATE STRUCTURE. Permit to effect any
change in the corporate structure or shareholding of the Borrower which would
cause a cessation or diminution of the priority of the security interest of the
Bank pursuant to the Credit Documents.
SECTION 7.14. CHECKING ACCOUNT WITH OTHER BANKS. Maintain any
checking account with any other bank than the Bank without making arrangements
with such banks to send a copy of the monthly statement of the Borrower to the
Bank within ten (10) days of the beginning of the succeeding month.
SECTION 7.15. NAME. Change the name of the Borrower.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.01. EVENTS OF DEFAULT. If any of the following events
shall occur:
19
(a) The Borrower shall fail to pay the principal, interest, fees
or commissions relating to any Advance when due and payable; or
(b) Any representation or warranty made or deemed made by the
Borrower in this Agreement or by any Guarantor or any other statement furnished
at any time under or in connection with any Credit Document shall prove to have
been incorrect in any material respect as of the date made or deemed made; or
(c) The Borrower or any Guarantor shall fail to perform or observe
any term, covenant, or agreement contained in any Credit Documents (other than
the Note) to which it is a party; or
(d) The Borrower or any Guarantor shall (1) fail to pay any
installment pursuant to the terms of the Note when due or any interest or
premium thereon, when due by scheduled maturity, required prepayment,
acceleration, demand or otherwise within thirty (30) days following the due
date, or (2) fail to perform or observe any term, covenant or condition required
to be performed or observed by it under any agreement or instrument relating to
any such indebtedness if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration after the giving of notice or passage
of time or both, of the maturity of such indebtedness, whether or not such
failure to perform or observe is waived by the holder of such indebtedness; or
any such indebtedness shall be declared to be due and payable or required to be
prepaid (other than by a regularly scheduled required prepayment) prior to the
stated maturity thereof; or
(e) The Borrower or any Guarantor (1) shall generally not, or
shall be unable to, or shall admit in writing their inability to, pay their
Debts as such debts become due; or (2) shall make an assignment for the benefit
of creditors or petition or apply to any tribunal for the appointment of a
custodian, receiver or trustee for them or a substantial part of their assets;
or (3) shall commence any proceeding under any bankruptcy, reorganization,
arrangements, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect; or (4) shall have any such
petition or application filed or any such proceeding commenced against them in
which an order for relief is entered or adjudication or appointment is made and
remains undismissed for a period of sixty (60) days or more; or (5) by any act
or omission shall indicate their consent to, approval of or acquiescence in any
such petition, application, proceeding or order for relief or in the appointment
of a custodian, receiver, or trustee for all or any substantial part of their
properties; or (6) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of sixty (60) days or more; or
(7) shall die; or
(f) One or more judgments, decrees or orders for the payment of
money in excess of $150,000.00 shall be rendered against the Borrower or any
Guarantor and such judgments, decrees or orders shall continue unsatisfied and
in effect for a period of sixty (60) consecutive days without being vacated,
discharged, satisfied, stayed or bonded pending appeal; or
20
(g) The Security Agreement shall at any time and for any reason
cease (1) to create a valid and perfected first priority security interest in
and to the collateral and purported to be the subject thereto or (2) to be in
full force and effect or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Borrower or any Guarantor or
the signatory; or
(h) The Guaranty shall, at any time and for any reason, cease to
be in full force and effect or shall be declared null and void, or the validity
or enforceability thereof shall be contested by any Guarantor or any Guarantor
shall deny any further liability or obligation under or shall fail to perform
their respective obligation under the Guaranty;
THEN, and in every such event, the Bank may (1) declare the Note,
all interest thereon, and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the Note, all such interest, and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Borrower and the Guarantors; and (2) with or without taking
possession thereof, sell or cause to be sold, at such price or prices as the
Bank shall so determine in a commercially reasonable manner, and for cash or on
credit or for future delivery, without assumption of any credit risk, all or any
portion of the Collateral, at any public or private sale, without demand of
performance or notice of intention to sell or of time or place of sale. Each
purchaser at any such sale (including, if applicable, the Bank) shall acquire
and hold the Collateral sold absolutely free from any claim or right of whatever
kind including any equity or redemption, and the Borrower and the Guarantor
hereby waive (to the extent permitted by law) all rights of redemption, stay
and/or appraisal which they now have or may have at any time in the future under
any rule of law or statute now existing or hereafter enacted. Any public or
private sale of the Collateral or any part thereof shall be held at such time or
times within ordinary business hours and at such place or places as the Bank may
fix in the notice of such sale. At such sale, the Collateral, or any portion
thereof, to be sold may be sold in one lot as an entirety or in separate
parcels, as the Bank may (in its sole discretion) determine and, if permitted by
law, the Bank may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for and purchase the Collateral or any portion
thereof for the account of the Bank. The Bank shall not be obligated to make any
sale of the whole or any part of the Collateral if it shall determine not to do
so. The Bank may, by announcement at the time and place fixed for sale, without
prior notice or publication, adjourn any public or private sale of collateral or
cause the same to be adjourned from time to time, and such sale may, without
further notice, be made at the time and place to which the same was adjourned.
In the case of all or any part of the Collateral is made on credit or for future
delivery, the collateral so sold may be retained by the Bank until the sale
price is paid by the purchaser or purchasers thereof, but the Bank shall incur
no liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENTS, ETC. No amendment, modification,
termination or waiver of any provision of any Credit Documents to which the
Borrower or any Guarantor are a party, nor consent to any departure by the
Borrower or any Guarantor from any Credit Documents to
21
which they are a party, shall in any event be effective unless the same shall be
in writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
SECTION 9.02. NOTICES, ETC. All notices and other communications,
provided for under this Agreement and under the other Credit Documents to which
any member of the Borrower Pro Forma Consoldiated Group is a party shall be in
writing and mailed or telecopied or delivered, if to any member of the Borrower
Pro Forma Consolidated Group, at the Borrower's address at c/o Synovics
Pharmaceuticals, Inc., 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx
00000 in the United States of America, and if to the Bank, at its address at 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 in the United States America; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other party complying as to delivery with the terms of
this Section. All such notices and communications shall when mailed or
telegraphed, be effective when deposited in the mails or delivered to the
telegraph company, respectively, addressed as aforesaid, except that notices to
the Bank pursuant to the provisions of this Agreements shall not be effective
until received by the Bank.
SECTION 9.03. NO WAIVER; REMEDIES. No failure on the part of the
Bank to exercise, and no delay in exercising, any right, power or remedy under
any Credit Documents shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any Credit Documents preclude any other or
further exercise thereof or the exercise of any other right. The remedies
provided in the Credit Documents are cumulative and not exclusive of any
remedies provided by law.
SECTION 9.04. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower and the Guarantors
may not assign or transfer any of their respective rights under any Credit
Document to which the Borrower or such Guarantor is a party without the prior
written consent of the Bank.
SECTION 9.05. COSTS, EXPENSES AND TAXES. The Borrower agrees to pay
on demand all costs and expenses in connection with the preparation, execution,
delivery, filing, recording and administration of any of the Credit Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Bank with respect thereto and with respect to advising the Bank
as to its rights and responsibilities under any of the Credit Documents and all
costs and expenses, if any, in connection with the enforcement of any of the
Credit Documents. In addition, the Borrower shall pay any and all stamp and
other taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of any of the Credit Documents and the
other documents to be delivered under any such Credit Documents, and agrees to
hold the Bank harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay such taxes and fees.
SECTION 9.06. RIGHT TO SETOFF. Upon the occurrence of any Event of
Default, the Bank is hereby authorized at any time and from time to time,
without notice to the Borrower and the Guarantors (any such notice being waived
by the Borrower and the Guarantors), to setoff and
22
apply any and all deposits (general or special, time or demand, provisions or
final) with the Bank at any time held and other indebtedness at any time owing
the Bank to or for the credit or the account the Borrower against any and all of
the Obligation of the Borrower now or hereafter existing under this Agreement,
the Note, or any advance, irrespective of whether or not the bank shall have
made any demand under this Agreement, the Note or such other Credit Documents
and although such Obligation may be unmatured. The rights of the Bank under this
Section are in addition to other rights and remedies (including without
limitation, other rights of setoff) that the Bank may have.
SECTION 9.07. SEVERABILITY. In case any provision of this Agreement,
the Note or any other Credit Documents shall be invalid, illegal or
unenforceable in any jurisdiction than, as to such jurisdiction only, such
provision shall to the extent of such invalidity, illegality or enforceability
be deemed severed from the remainder of the relevant agreement or document and
the validity, legality and enforceability of the remaining provisions shall not
in any way be effected or impaired thereby.
SECTION 9.08. APPLICABLE LAW. This Agreement, the Note, the other
Credit Documents, and all other documents provided for herein or therein and the
rights and obligations of the parties thereto shall be governed by and construed
and enforced in accordance with the internal laws, excluding any laws regarding
the conflict of laws, of the State of New York.
SECTION 9.09. WAIVER OF JURY TRIAL. THE UNDERSIGNED HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
PREMISED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER CREDIT
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION AND THE BANK/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. To the
extent permitted by law, the Bank and the undersigned hereby also irrevocably
waive any objection, including, without limitation, any objection to the laying
of venue or based on the grounds of forum non conveniens, that may now or
hereafter have to the bringing of any such action or proceeding in such
jurisdiction. The scope of this waiver is intended to be all encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation, contract claims, tort
claims, breach of duty claims and all other common law and statutory claims.
Each party acknowledges that this waiver is a material inducement to enter into
a business relationship, that each has already relied on the waiver in their
related future dealings. The undersigned hereby irrevocably consent and submit
to the jurisdiction and venue of any court of competent jurisdiction sitting in
the City, County and State of New York for adjudication of any dispute
concerning this Agreement, the Note, the other Credit Documents and all other
documents provided for herein or therein. The undersigned further warrants and
represents that each has reviewed this waiver with its legal counsel and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO
THE ADVANCES. In the event of litigation, this Agreement may be filed as a
written consent to a trial by the Court.
23
SECTION 9.10. COUNTERPARTS. This Agreement and the other Credit
Documents may be executed in any number of counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument, respectively.
SECTION 9.11. SECTION HEADINGS. The various headings used in this
Agreement are inserted for convenience of reference only and shall not affect
the meaning or interpretation of this Agreement or any provision hereof.
SECTION 9.12. FURTHER ASSURANCES. At any time and from time to time
upon the request of the Bank, and at the sole expense of the Borrower, the
Borrower and the Guarantor will promptly and duly execute and deliver any and
all such further agreements, documents and instruments and do such other acts
and things as the Bank may request in order to effect fully the purposes of this
Agreement, the Note and the other Credit Documents and to provide for the
payment and performance of the Obligations of the Borrower in accordance with
the terms of this Agreement, the Note and other Credit Documents.
SECTION 9.13. PARTICIPATION. The Bank shall have the right to sell
participation or assign its interests, in whole or in part, in the Note, this
Agreement or any of the Credit Documents without further notice to the Borrower
or the Guarantor.
SECTION 9.14. DISCONTINUATION OF FACILITIES. The Bank shall have the
right to discontinue the credit facilities without notice to the Borrower, in
the event the Borrower commits any breach of the material terms of this
Agreement, or if the Bank is satisfied that any of the representations made
herein was found to be materially incorrect.
SECTION 9.15. PRIOR FACILITIES AND AGREEMENTS. This Agreement does
not affect the validity or enforceability of the terms and conditions set forth
in the Facility Letter. In the event of an inconsistency between the terms and
conditions of the Facility Letter and this Agreement, the terms and conditions
of this Agreement shall prevail. Subject to the foregoing, this Agreement
supersedes all prior written and oral agreements, which it replaces in their
entirety. Any amounts outstanding, upon the satisfaction or waiver of all
conditions precedent shall become the initial amounts drawn hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
24
IN WITNESS WHEREOF, the parties have caused this agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
SYNOVICS PHARMACEUTICALS, INC.
By:____________________________
Name:
Title:
Tax I.D. No.
BANK OF INDIA
By:____________________________
Name : Xx. X. Xxxxxxxxxxx
Title: Vice President
[GUARANTOR ACKNOWLEDGEMENTS FOLLOW]
25
GUARANTORS:
ACKNOWLEGED AND AGREED TO:
XXXX PHARMACEUTICALS, INC. ANDAPHARM INC.
By__________________________ By__________________________
Name: Name:
Title: Title:
XXXX PHARMACEUTICALS, LLC. ANDAPHARM LLC
By__________________________ By__________________________
Name: Name:
Title: Title:
BIONUTRICS HEALTH PRODUCTS INC. LIPOGENICS, INC.
By__________________________ By__________________________
Name: Name:
Title: Title:
NUTRITION TECHNOLOGY CORP. INCON TECHNOLOGIES, INC.
By__________________________ By__________________________
Name: Name:
Title: Title:
SYNOVICS LABORATORIES, INC.
By__________________________
Name:
Title:
26
NOSTRUM PHARMACEUTICALS, INC.
___________________________________
By_______________________________ Xxxxxx Xxxxx a/k/a Xx. Xxxxxx Xxxxx
Name:
Title:
ACKNOWLEDGEMENT
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the _____th day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
_______________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the ______th day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared X.
Xxxxxxxxxxx, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s), in the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK)
On the _____th day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
_______________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the ______th day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared X.
Xxxxxxxxxxx, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual(s) whose name(s) is (are) subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their capacity(ies), and that by his/her/their signature(s), in the
instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK)
On the _____ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
_______________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the _______ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK)
On the _______ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the _______ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK)
On the _______ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the _______ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK)
On the _______ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On the _______ day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
________________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
00
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK)
On the _____th day of April in the year 2006 before me, the
undersigned a notary public in and for said state, personally appeared
_______________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s), in
the instrument, the individual(s), or the person upon behalf of which the
individual(s) acted, executed the instrument.
--------------------------------
Signature and office of
individual taking acknowledgment
33
