EXHIBIT 10.13
TERM LOAN AND SECURITY AGREEMENT
TERM LOAN AGREEMENT dated as of April 1, 1999 between PHARMACEUTICAL
FORMULATIONS INC., 000 Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000, a New Jersey
corporation (the "Borrower"), and ICC INDUSTRIES INC., 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, a New York corporation (the "Lender")).
RECITALS
WHEREAS, the Borrower is presently indebted to the Lender in the sum of
$3,000,000 in connection with the invoices for goods sold and delivered, which
invoices are identified in EXHIBIT A attached hereto; and
WHEREAS, the Lender has agreed to convert said indebtedness into a loan to
Borrower in the sum of $3,000,000, on the terms and conditions contained herein,
the proceeds of said loan to be used by Borrower for working capital; and
NOW, THEREFORE, in consideration of the foregoing and the covenants
contained herein, the Borrower and the Lender agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 1.1. THE LOAN. The Lender agrees, on the terms and conditions
hereinafter set forth, to make an advance (the "Loan") to the Borrower on the
date hereof in an aggregate amount of three million dollars ($3,000,000).
SECTION 1.2. INTEREST AND REPAYMENT. The Borrower shall repay, and shall
pay interest on, the aggregate unpaid principal amount of the Loan in accordance
with a promissory note of the Borrower, in the form of EXHIBIT B hereto (the
"Note"), evidencing the indebtedness resulting from such Loan and delivered to
the Lender pursuant to Article 11.
SECTION 1.3. OPTIONAL PREPAYMENTS. The Borrower may prepay the Note in
whole or in part with accrued interest to the date of such prepayment on the
amount prepaid.
SECTION 1.4. CONVERSION OF INVOICES. The amounts due to Lender under the
invoices identified in EXHIBIT A are no longer due and payable under the terms
set forth in said invoices. Instead, said indebtedness to Lender is hereby
converted to the indebtedness covered by the Loan set forth herein.
SECTION 1.5. PAYMENTS AND COMPUTATIONS. The Borrower shall make each
payment under any Loan Document (as hereinafter defined) not later than 3:00
p.m. (New York City time) on the day when due in lawful money of the United
States of America to the Lender at its address referred to in Section 6.2 in
same day funds. All computations of interest under the Note shall be made by the
Lender on the basis of a year of 360 days, for the actual number of days elapsed
(including the first day but excluding the last day).
SECTION 1.6. PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a Saturday, Sunday or a
public or bank holiday or the equivalent for banks generally under the laws of
the State of New York (any other day being a "Business Day"), such payment may
be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest.
ARTICLE II
CONDITIONS OF LENDING
SECTION 2.1. CONDITIONS OF LENDING. The obligation of the Lender to make
the Loan is subject to the satisfaction of the following conditions precedent:
(A) The Lender shall have received the Note, dated as of the date
hereof, in form and substance satisfactory to the Lender:
(B) The following statements shall be true as of the date hereof
and the Lender shall have received a certificate signed by a duly
authorized officer of Borrower, dated the date hereof, stating that:
(i) The representations and warranties contained in Section
3.1 of this Agreement are correct on and as of the date hereof;
and
(ii) No event has occurred and is continuing, or would
result from such Loan, which constitutes an Event of Default (as
hereinafter defined) or would constitute an Event of Default but
for the requirement that notice be given or time elapse or both;
(C) The Lender shall have received a certified copy of the
resolutions of the Board of Directors of Borrower, approving each Loan
Document to which it is a party, and of all documents evidencing other
necessary corporate action, if any, with respect to each such Loan
Document;
(D) The Lender shall have received such other approvals, opinions
or documents as the Lender may reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows:
(A) The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of Delaware,
has the power to own its assets and to transact the business in which
it is now engaged and is duly qualified as a foreign corporation in
good standing under the laws of each jurisdiction where its ownership
or lease of property or the conduct of its business requires such
qualification.
(B) The execution, delivery and performance by the Borrower of
this Agreement are within the Borrowers corporate powers, have been
duly authorized by all necessary corporate action, do not contravene
(i) the Borrower's charter or by-laws or (ii) any law or contractual
restriction binding on or affecting the Borrower, and do not result in
or require the creation of any lien, security interest or other charge
or encumbrance (other than pursuant hereto) upon or with respect to
any of its properties.
(C) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
the Borrower of this Agreement.
(D) This Agreement is a legal, valid and binding obligation of
the Borrower enforceable against the Borrower in accordance with its
terms.
(E) There is no pending or threatened action or proceeding
affecting the Borrower before any court, governmental agency or
arbitrator, which may materially adversely affect the financial
condition or operations of the Borrower.
(F) The proceeds of the Loan will be used solely for the purpose
of Borrowers working capital and will not be used to acquire any
security in any transaction which is subject to Sections 13 and 14 of
the Securities Exchange Act of 1934.
ARTICLE IV
COVENANTS OF THE BORROWER
SECTION 4.1 AFFIRMATIVE COVENANT. So long as the Note shall remain unpaid,
the Borrower will, unless the Lender shall otherwise consent in writing:
(A) COMPLIANCE WITH LAWS, ETC. Comply, and cause each of its
subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, paying before the same become delinquent all
taxes, assessments and governmental charges imposed upon it or upon
its property except to the extent contested in good faith.
SECTION 4.2. NEGATIVE COVENANT. So long as the Note shall remain unpaid,
the Borrower will not, witho6t the written consent of the Lender:
(A) LIENS, ETC. Other then those liens that presently exist,
create or suffer to exist any lien, security interest or other charge
or encumbrance, or any other type of preferential arrangement, upon or
with respect to any of its properties or assets, whether now owned or
hereafter acquired, or assign any right to receive income.
ARTICLE V
SECURITY INTEREST
SECTION 5.1. SECURITY INTEREST. In order to secure Borrower's loans under
this agreement, the Borrower shall provide to the Lender a security interest in
all of its assets in form and substance satisfactory to Lender's counsel,
including the execution of UCC 1 forms appropriate for filing with the State of
New Jersey and county of Middlesex.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. EVENTS OF DEFAULT. If any of the following events ("Events of
Default") shall occur and be continuing:
(A) The Borrower shall fail to pay any installment of principal
of, or interest on, the Note within one Business Day of title date
when due; or
(B) Any representation or warranty made by Borrower (or any of
its respective officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(C) Borrower shall fail to perform or observe any other term,
covenant or agreement contained in any Loan Document on their
respective parts to be performed or observed; or
(D) Borrower or any of its subsidiaries shall generally not pay
their respective debts as such debts become due, or shall admit in
writing their inability to pay their respective debts generally, or
shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against Borrower or any of its
subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it
or for any substantial part of its property; or Borrower or any of its
subsidiaries shall take any corporate action to authorize any of the
actions set forth above in this subsection (E); or
(E) Any judgment or order for the payment of money shall be
rendered against Borrower or any of its subsidiaries and either (i)
enforcement proceedings shall have been commenced by any creditor upon
such judgment or order or (ii) there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. AMENDMENT, ETC. No amendment or waiver of any provision of
this Agreement or the Note, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Lender and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
SECTION 7.2. NOTICES, ETC. Any notice, demand, request or other
communication hereunder shall be in w6ting and shall be delivered by personal
service or mailed certified mail, postage prepaid, return receipt requested, to
the parties at the addresses for such notices set forth below, with a copy also
sent by telefax to the telefax number listed below. Such notices shall be
effective upon receipt by the respective addresses thereof. The parties hereto
may change their respective addresses for such notices by delivering or mailing
to the other party hereto, as aforesaid, a notice of such change.
If to the Borrower:
PHARMACEUTICAL FORMULATIONS INC.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: President
Fax No.: 000-000-0000
If to the Lender:
ICC INDUSTRIES INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Fax No.: 000-000-0000
SECTION 7.3. NO WAIVER: REMEDIES. No failure on the part of the Lender to
exercise, and no delay in exercising, any right under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right under any Loan Document preclude any other or further exercise thereof or
the exercise of any other right. The remedies provided in the Loan Documents are
cumulative and not exclusive of any remedies provided by law.
SECTION 7.4. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles consistently applied, except as otherwise stated herein.
SECTION 7.5. 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 the Loan Documents and the
other documents to be delivered under the Loan Documents, including, without
limitation, the fees and out-of-pocket expenses of counsel for the Lender, with
respect thereto and with respect to advising the Lender as to its rights and
responsibilities under the Loan Documents, and all costs and expenses, if any
(including counsel fees and expenses), in connection with the enforcement of the
Loan Documents and the other documents to be delivered under the Loan 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 the Loan Documents and the other documents to be
delivered under the Loan Documents, and agrees to save the Lender 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 7.6. RIGHT OF SET-OFF. Upon the occurrence and during the
continuance of any Event of Default the Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under any Loan Document,
irrespective of whether or not the Lender shall have made any demand under such
Loan Document and although such obligations may be unmatured. The Lender agrees
promptly to notify the Borrower after any such set-off and application, provided
that the failure to give such notice shall not affect the validity of such
set-off and application. The rights of the Lender under this section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Lender may have.
SECTION 7.7. BINDING EFFECT; GOVERNING LAW: JURISDICTION.
(A) This Agreement shall be binding upon and inure to the benefit
of the Borrower and the Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign
its rights hereunder or any interest herein without the prior written
consent of the Lender. This Agreement and the Note shall be governed
by, and construed in accordance with, the laws of the State of New
York.
(B) The Borrower agrees that any legal action or proceeding with
respect to this Agreement or to enforce any judgment obtained against
the Borrower in connection herewith may be brought by the Lender in
the courts of the State of New York or in the United States District
Court for the Southern District of New York, or any other court to the
jurisdiction of which the Borrower or any of the Borrower's property
is or may be subject. The Borrower irrevocably submits to the
jurisdiction of the courts of the State of New York or of the United
States District Court for the Southern District of New York, and
irrevocably waives any present or future claim that any such court is
an inconvenient forum, in connection with any action or proceeding
arising out of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
PHARMACEUTICAL FORMATIONS INC. ICC INDUSTRIES INC.
(Borrower) (Lender)
By: /S/ XXXXXXX X. XXXXXX By: /S/ XXXXX XXXXXXXX
-------------------------- ---------------------------
Name: Xxxxxxx X. XxXxxx Name: Xxxxx Xxxxxxxx
Title: President & CEO Title: V.P. Treasurer
EXHIBIT A
The list of PFI outstanding invoices as of 03/30/99:
INV# AMOUNT DUE DATE PRODUCT
ICC CHEMICAL
14414 $395,000.00 10/04/98 CIMETIDINE
14460 $121,000.00 10/10/98 PSEUDOEPHEDRINE
14776 $32,335.001 1/13/98 DEXTROMETHORPHAN
14909 $21,800.001 1/30/98 DEXTROMETHORPHAN
14916 $121,000.00 12/04198 PSEUDOEPHEDRINE
105490 ($6,400.00) (6.400.00) CREDIT
14991 $76,300.00 12/11/98 DEXTROMETHORPHAN
15042 $121,000.00 12/18198 PSEUDOEPHEDRINE
15077 $32,000.00 12/21/98 ASPRIN
15222 $32,000.00 01/15/99 ASPIRIN
15240 $32,700.00 01/08/99 DEXTROMETHORPHAN
15465 $47,200.00 01/30/99 ASPIRIN
15469 $121,000.00 02/02/99 PSEUDOEPHEDRINE
15483 $32,000.00 02/06/99 ASPIRIN
15576 $3,750.00 02/19/99 FAMOTIDINE
15625 $123,863.60 02/28/99 PSEUDOEPHEDRINE
15663 $32,000.00 03/09/99 ASPIRIN .
15776 $32,700.00 03/09/99 DEXTROMETHORPHAN
DNI03/98 $12,979.99 INTEREST-SEPT'98
DN113/98 $20,147.85 INTEREST-OCT'98
DN126/98 $19,146.43 INTEREST-NOV'98
DN135/98 $6,935.93 INTEREST-DEC'98
DN002/99 $7,174.46 INTEREST-JAN'99
DN010/99 $8,037.78 INTEREST-FEB'99
DN018/99 $802.57 PARTIAL INTEREST-MAR'99
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TOTAL $1,446,473.61
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ICC INDUSTRIES:
09/01/98 $85,065.00 BOND
$250,000.00 12/31/98 LOAN DATED 12/31/98
$350,000.00 01/11/99 LOAN DATED 01/11/99
$252,688.91 02/01/99 LOAN DATED 02/11/99
$320,000.00 02123/99 LOAN DATED 2/23/99
$282,000.00 03/17199 LOAN DATED 3/17199
DN1 36/98 $2,612.80 SEPT-DEC98 INT. ON BOND
DNO03/99 $3,670.14 JAN-INT. ON LOAN
DNO04/99 $640.94 JAN-INT. ON BOND
DN011/99 $6,269.69 FEB-INT. ON LOAN
DNO12/99 $578.91 FEB-INT. ON BOND
TOTAL $1,553,526.39
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Grand Total $3,000,000.00
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EXHIBIT B
PROMISSORY NOTE
$3,000,000 New York, New York
(Three Million Dollars) April 1, 1999
FOR VALUE RECEIVED, the undersigned, PHARMACEUTICAL FORMULATIONS INC., 000
Xxxxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx-00000, a New Jersey corporation (the
"Borrower") HEREBY PROMISES TO PAY to the order of ICC INDUSTRIES INC., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, a New York corporation (the "Lender") the
principal sum of three million dollars ($3,000,000) on the following dates in
the following amounts:
DATE AMOUNT TO BE REPAID
---- ----------------------
From present date until April 1, 2000 Interest-only payments on
the 1st of each month
May 1, 2000 $75,000 plus interest
June 1, 2000 $75,000 plus interest
July 1 , 2000 $75,000 plus interest
August 1, 2000 $75,000 plus interest
September 1, 2000 $75,000 plus Interest
October l, 2000 $75,000 plus Interest
November 1, 2000 $75,000 plus interest
December 1, 2000 $75,000 plus interest
January 1, 2001 $75,000 plus interest
February 1, 2001 $75,000 plus interest
March 1, 2001 $75,000 plus interest
April 1, 2001 $75,000 plus interest
May 1, 2001 $100,000 plus interest
June 1, 2001 $100,000 plus interest
July 1, 2001 $100,000 plus interest
August 1, 2001 $100,000 plus interest
September 1, 2001 $100,000 plus interest
October 1, 2001 $100,000 plus interest
November 1, 2001 $100,000 plus interest
December 1, 2001 $100,000 plus interest
January 1, 2002 $100,000 plus interest
February 1, 2002 $100,000 plus interest
March 1, 2002 $100,000 plus interest
April 1, 2002 $100,000 plus interest
May 1, 2002 $900,000 plus interest
The interest shall be on any and all principal amounts remaining unpaid
hereunder from time to time outstanding from the date hereof until said
principal amounts are paid in full, payable monthly in arrears commencing April
1, 2000, and thereafter during the term hereof and on the final day when said
principal amounts are paid and, with respect to interest on any overdue
principal amount, payable on demand, at a fluctuating interest rate per annum
equal to eleven per cent (11%) per annum above the rate of interest announced
publicly by Standard Chartered Bank in New York, New York, USA, from time to
time as said bank's prime or base rate (the "Base Rate"). The Borrower
acknowledges that the Base Rate does not necessarily reflect the lowest rate of
interest charged by said bank to any class of customer or in respect of any
class of loan. Each change in the fluctuating interest rate hereunder shall take
effect simultaneously with the corresponding change in the Base Rate and all
computations of interest shall be made on the basis of a year of 360 days, for
the actual number of days elapsed.
Both principal and interest are payable in lawful money of the United
States of America to the Lender at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
not later than 12:00 noon (New York City time) on the day when due in same day
funds, or at such other address as the holder hereof may direct. Whenever any
payment shall be stated to be due on a Saturday, Sunday or a public or bank
holiday or the equivalent for banks generally under the laws of the State of New
York (any other day being a "Business Day"), such payment may be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest.
In the event of any default in connection with any payment under the
aforementioned payment schedule, all remaining unpaid amounts shall immediately
become due and payable demand.
The Loan made by the Lender to the Borrower pursuant to the Term Loan
Agreement between the Borrower and the Lender of even date herewith (the "Term
Loan Agreement") and all payments made on account of principal hereof shall be
recorded by the Lender and, prior to any transfer hereof, endorsed on the grid
attached hereto which is part of this Note.
This Note is the Note referred to in, and is entitled to the benefits of,
the Term Loan Agreement. The Term Loan Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
This Note shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be performed therein
(without giving effect to any principles of conflicts of law).
The Borrower unconditionally and irrevocably agrees that any legal action,
suit or proceeding against it with respect to its obligations or liabilities
hereunder or arising out of or in connection with this Note or the transactions
contemplated hereby for recognition or enforcement of any judgment rendered in
any such action, suit or proceeding may be brought in the United States Federal
Court for the Southern District of New York or in the courts of the State of New
York, as the holder hereof may elect.
PHARMACEUTICAL FORMULATIONS INC.
By:_____________________________
Name:
Title:
