NINTH AMENDMENT AND WAIVER TO
LOAN AND SECURITY AGREEMENT
NINTH AMENDMENT AND WAIVER, dated as of March 27, 2001 (this "Amendment"),
to the Loan and Security Agreement referred to below by and among GENERAL
ELECTRIC CAPITAL CORPORATION, a New York corporation ("Lender"), PAR
PHARMACEUTICAL, INC., a New Jersey corporation ("Borrower"), PHARMACEUTICAL
RESOURCES, INC., a New Jersey corporation ("Parent"), NUTRICEUTICAL RESOURCES,
INC., a New York corporation ("NRI"), and PARCARE, LTD., a New York corporation
("ParCare"). Parent, NRI and ParCare are hereinafter referred to as
"Guarantors".
W I T N E S S E T H
WHEREAS, Lender, Borrower and Guarantors are parties to that certain Loan
and Security Agreement, dated as of December 15, 1996 (as amended, supplemented
or otherwise modified prior to the date hereof, the "Loan Agreement"); and
WHEREAS, Lender, Borrower and Guarantors have agreed to amend the Loan
Agreement, and Lender has agreed to waive the violation of the Minimum EBIT
covenant contained in the Loan Agreement in the manner, and on the terms and
conditions, provided for herein.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties to this Amendment hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Loan Agreement.
2. Amendment to Section 5 of the Loan Agreement. As of the Amendment
Effective Date (as defined below), Section 5(b) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"(b) except as otherwise permitted in this Section 5 below, make
any investment (including any investment in or advance to any
other Person for research and development) in, or make or accrue
loans or advances of money to, any Person, other than investments
for research and development in Persons which are not Credit
Parties which, together with the aggregate amount of research and
development expenses of the Credit Parties, do not exceed
$10,250,000 in the Fiscal Year ending on or about December 31,
2001;"
3. Amendment to Schedule F to the Loan Agreement. As of the
Amendment Effective Date, Schedule F to the Loan Agreement is hereby
amended and restated in its entirety to read as set forth in Schedule
F hereto.
4. Waiver. Lender hereby waives as of the Amendment Effective Date all
Events of Default under Section 8.1(b) of the Loan Agreement solely arising out
of the failure of Parent and its Subsidiaries to maintain, on a consolidated
basis, the minimum EBIT required by Section 4.2 of the Loan Agreement and
paragraph 1 of Schedule F to the Loan Agreement for the four Fiscal Quarter
period ended December 31, 2000.
5. Representations and Warranties. To induce Lender to enter into this
Amendment, each Credit Party hereby represents and warrants that:
A. The execution, delivery and performance of this Amendment and
the performance of the Loan Agreement, as amended hereby (the "Amended
Loan Agreement"), by each Credit Party: (i) are within their
respective corporate powers; (ii) have been duly authorized by all
necessary corporate and shareholder action; and (iii) are not in
contravention of any provision of their respective certificates or
articles of incorporation or by-laws or other organizational
documents.
B. This Amendment has been duly executed and delivered by or on
behalf of each Credit Party.
C. Each of this Amendment and the Amended Loan Agreement
constitutes a legal, valid and binding obligation of each Credit Party
enforceable against each Credit Party in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
D. No Default (other than those waived pursuant hereto) has
occurred and is continuing both before and after giving effect to this
Amendment.
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E. No action, claim or proceeding is now pending or, to the
knowledge of each Credit Party, threatened against any Credit Party,
at law, in equity or otherwise, before any court, board, commission,
agency or instrumentality of any federal, state, or local government
or of any agency or subdivision thereof, or before any arbitrator or
panel of arbitrators, which challenges any Credit Party's right,
power, or competence to enter into this Amendment or, to the extent
applicable, perform any of its obligations under this Amendment, the
Amended Loan Agreement or any other Loan Document, or the validity or
enforceability of this Amendment, the Amended Loan Agreement or any
other Loan Document or any action taken under this Amendment, the
Amended Loan Agreement or any other Loan Document.
F. The representations and warranties of the Credit Parties
contained in the Loan Agreement and each other Loan Document shall be
true and correct on and as of the Amendment Effective Date with the
same effect as if such representations and warranties had been made on
and as of such date, except that any such representation or warranty
which is expressly made only as of a specified date need be true only
as of such date.
6. No Other Amendment/Waivers. Except as expressly provided in Sections 2
and 3 hereof, the Loan Agreement shall be unmodified and shall continue to be in
full force and effect in accordance with its terms. Except as expressly provided
in Section 4 hereof, this Amendment shall not be deemed a waiver of any term or
condition of any Loan Document and shall not be deemed to prejudice any right or
rights which Lender may now have or may have in the future under or in
connection with any Loan Document or any of the instruments or agreements
referred to therein, as the same may be amended from time to time.
7. Outstanding Indebtedness; Amendment of Claims. Each Credit Party hereby
acknowledges and agrees that as of the date hereof the aggregate outstanding
principal amount of the Revolving Credit Loan is $10,418,120.68. Each Credit
Party hereby waives, releases, remises and forever discharges Lender and each
other Indemnified Person from any and all Claims of any kind or character, known
or unknown, which each Credit Party ever had, now has or might hereafter have
against Lender which relates, directly or indirectly, to any acts or omissions
of Lender or any other Indemnified Person on or prior to the date hereof.
8. Expenses. Borrower hereby reconfirms its obligations pursuant to Section
10.2 of the Loan Agreement to pay and reimburse Lender for all reasonable
out-of-pocket expenses (including, without limitation, reasonable fees of
counsel) incurred in connection with the negotiation, preparation, execution and
delivery of this Amendment and all other documents and instruments delivered in
connection herewith.
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9. Effectiveness. This Amendment shall become effective as of the date
hereof (the "Amendment Effective Date") only upon satisfaction in full in the
judgment of the Lender of each of the following conditions on or prior to March
29, 2001:
A. Amendment. Lender shall have received two original copies of
this Amendment duly executed and delivered by Lender and each Credit
Party.
B. Payment of Expenses. Borrower shall have paid to Lender all
costs and expenses (including a non-refundable amendment and waiver
fee in the amount of $20,000 (which amendment and waiver fee shall be
credited to any fees to be paid by Borrower to Lender in the event the
Revolving Credit Loan is extended or renewed on or before May 29,
2001) owing in connection with this Amendment and the other Loan
Documents and due to Lender (including, without limitation, reasonable
legal fees and expenses).
C. Representations and Warranties. The representations and
warranties of each Credit Party contained in this Amendment shall be
true and correct on and as of the Amendment Effective Date.
10. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
11. Counterparts. This Amendment may be executed by the parties hereto on
any number of separate counterparts and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
Borrower:
PAR PHARMACEUTICAL, INC.
By: /s/ Xxxxxx X. X'Xxxxxx
---------------------------------
Name: Xxxxxx X. X'Xxxxxx
Title: Vice President, Chief
Financial Officer
Lender:
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxxx
Its: Duly Authorized Signatory
Parent:
PHARMACEUTICAL RESOURCES, INC.
By: /s/ Xxxxxx X. X'Xxxxxx
---------------------------------
Name: Xxxxxx X. X'Xxxxxx
Title: Vice President, Chief
Financial Officer
(SIGNATURES CONTINUED ON NEXT PAGE)
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Subsidiary Guarantors:
---------------------
NUTRICEUTICAL RESOURCES, INC.
By: /s/ Xxxxxx X. X'Xxxxxx
---------------------------------
Name: Xxxxxx X. X'Xxxxxx
Title: Vice President, Chief
Financial Officer
PARCARE, LTD.
By: /s/ Xxxxxx X. X'Xxxxxx
---------------------------------
Name: Xxxxxx X. X'Xxxxxx
Title: Vice President, Chief
Financial Officer
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Schedule F
FINANCIAL COVENANTS
1. Minimum EBIT. Parent and its Subsidiaries on a consolidated basis shall
maintain for each four Fiscal Quarter period, commencing with the four Fiscal
Quarter period ending on or about March 31, 2001, EBIT for such period of not
less than the amount for such period set forth below:
Four Fiscal Quarter Period Ending
on or about: Minimum EBIT
----------- ------------
March 31, 2001 $2,300,000
June 30, 2001 (300,000)
September 30, 2001 300,000
December 31, 2001 2,400,000
2. Minimum Tangible Net Worth. Parent and its Subsidiaries on a consolidated
basis shall maintain, as at the end of each Fiscal Quarter, Tangible Net Worth
of not less than the amount for such period set forth below:
Fiscal Quarter Ending
on or about: Minimum Tangible Net Worth
----------- --------------------------
March 31, 2001 $44,000,000
June 30, 2001 41,700,000
September 30, 2001 42,600,000
December 31, 2001 45,600,000
3. Capital Expenditures. Parent and its Subsidiaries on a consolidated basis
shall not make aggregate Capital Expenditures in excess of $7,500,000 for the
Fiscal Year ending on or about December 31, 2001.
For purposes of this covenant in Schedule F the following terms shall have the
meanings set forth below:
"EBIT" shall mean, for any period, the Net Income (Loss) of Parent and its
Subsidiaries on a consolidated basis for such period, plus interest expense, tax
expense and extraordinary losses and minus extraordinary gains, in each case, of
Parent and its Subsidiaries on a consolidated basis for such period determined
in accordance with GAAP to the extent included in the determination of such Net
Income (Loss).
"Net Income (Loss)" shall mean with respect to any Person and for any
period, the aggregate net income (or loss) after taxes of such Person for such
period, determined in accordance with GAAP.
"Tangible Net Worth" shall mean, with respect to any Person at any date,
all amounts which, in accordance with GAAP, would be included under
stockholders' equity on a consolidated balance sheet of such Person at such date
less the aggregate of all intangibles in conformity with GAAP (including
Intellectual Property, goodwill, organization expenses, treasury stock, all
deferred financing and unamortized debt discount expenses, and all current and
non-current deferred tax benefits).
