SECOND AMENDMENT TO LOAN AGREEMENT
EXHIBIT
10.32
SECOND
AMENDMENT TO LOAN AGREEMENT
THIS
SECOND AMENDMENT TO LOAN AGREEMENT, dated as of October 9, 2009 (“Second
Amendment”), is made by and among CARACO PHARMACEUTICAL LABORATORIES,
LTD., a Michigan corporation, with an address at 0000 Xxxxxx XxXxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000 (“Borrower”), and RBS CITIZENS, N.A., a national association,
d/b/a Charter One, with an address of 00000 Xxxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxxxxx, Xxxxxxxx 00000 (together with its affiliates, successors and
assigns, “Bank”).
W I T N E
S S E T H :
WHEREAS,
Borrower and Bank are parties to that certain Loan Agreement dated February 27,
2009, as amended by First Amendment to Loan Agreement dated August 11, 2009
(collectively, the “Loan Agreement”), together with other Loan Documents related
thereto as described in the Loan Agreement; and
WHEREAS,
Borrower and Bank desire to extend a revolving line of credit loan, increase the
minimum deposit account requirement to cash-collateralize the amount of
available credit to Borrower, and modify other provisions of the Loan Agreement
as provided herein.
NOW,
THEREFORE, in consideration of the amended provisions herein and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Section
1.1 shall be amended to delete the definition of Loan and Note, and replace with
the following:
“Loan” means the Equipment
Term Loan, and the Revolving Line of Credit Loan, individually or collectively,
as appropriate.
“Note” means the Equipment
Term Note, and the Revolving Line of Credit Note, individually or collectively,
as appropriate.
2. Section
2 shall be amended to delete said Sections in its entirety and replaced with the
following:
SECTION
2.
LOAN
FACILITIES
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2.1
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Equipment
Term Loan.
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(a) Equipment Term
Loan. Bank hereby grants an “Equipment Term Loan” pursuant
to which Bank agrees to make on the Funding Date, a non-revolving advance to
Borrower, for the purposes of financing new machinery and equipment and building
improvements (the “Assets”), in the amount of
Eighteen Million Dollars ($18,000,000). Funding of the loan shall be
in accordance with the conditions set forth in Section 4 below.
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(b) Equipment Term
Note. The advance of the Equipment Term Loan shall be
evidenced by and be repayable to Bank in accordance with the terms of the
Equipment Term Note, which Borrower shall execute and deliver to Bank
simultaneously herewith. All provisions of the Equipment Term Note
are incorporated herein by this reference as terms and conditions of this Loan
Agreement.
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2.2
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Revolving
Line of Credit Loan.
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(a)
Revolving Line of Credit
Loan. Bank hereby establishes a “Revolving Line of Credit
Loan” pursuant to which, until October ___, 2010 or such earlier termination as
provided herein, and subject to the terms and conditions hereof, Bank agrees to
make, from time to time, revolving credit loan advances in the form of letters
of credit issued to the United States Food and Drug Administration, or cash
demands thereon, as may be requested by Borrower or beneficiaries of the letters
of credit (“Revolving Line of Credit Loan Advances”), in accordance with the
borrowing procedures below. The sum of the aggregate amount of
outstanding Revolving Line of Credit Loan Advances shall not at any one time
exceed Fifteen Million Dollars ($15,000,000) (the “Revolving Line of Credit Loan
Amount”). Amounts borrowed hereunder and repaid may be reborrowed as
provided herein, it being agreed and understood this is a revolving credit
facility.
(b)
Borrowing
Procedure. Borrower may request Revolving Line of Credit Loan
Advances in the form of a letter of credit by submitting to Bank a fully
completed Revolving Line of Credit Loan Advance request in the form acceptable
to Bank and other reasonable requirements for the issuance of the letter of
credit. Bank shall make the requested Revolving Line of Credit Loan
Advances available to Borrower as directed in the Revolving Line of Credit Loan
Advance request, in the amount requested, unless:
(i) The
requested Revolving Line of Credit Loan Advance, when aggregated with all of
Borrower's previously unpaid Revolving Line of Credit Loan Advances under the
Revolving Line of Credit Loan, would cause the unpaid principal balance of the
Revolving Line of Credit Loan Note to exceed the Revolving Line of Credit Loan
Amount; or
(ii) Bank
has not been furnished with sufficient reports or other information to determine
eligibility for such Revolving Line of Credit Loan Advance; or
(iii) An
Event of Default has occurred and is continuing.
Such
Revolving Line of Credit Loan Advances will then be made available to Borrower
by Bank issuing its letter of credit within ten (10) days of said request, or by
crediting the account of Borrower on the books of Bank if demand for payment is
made on such letters of credit, by the close of Bank's business on such
date.
(c) Revolving Line of Credit
Note. The Revolving Line of Credit Loan Advances shall be
evidenced by and be repayable to Bank upon demand in accordance with the terms
of a Revolving Line of Credit Note, which Borrower shall execute and deliver to
Bank simultaneously herewith. All of the provisions of the Revolving
Line of Credit Note are incorporated herein by this reference as terms and
conditions of this Loan Agreement.
(d) Letters of Credit;
Fees. Borrower may request an Advance only in the form of a
letter of credit from time to time until thirty (30) days prior to the expiry of
the Revolving Line of Credit Loan, in an amount, when aggregated with all other
outstanding letters of credit, not to exceed the available Revolving Line of
Credit Loan Amount, and provided such letters of credit expire on the earlier of
one hundred eighty (180) day after issuance, or the expiry of the Revolving Line
of Credit Loan and Maturity Date of the Revolving Line of Credit
Note. Borrower shall provide Bank any reasonable information
requested in order to confirm the use of the letter of credit meets the
requirements of this Loan Agreement. Borrower agrees to pay Bank a
letter of credit fee equal to seventy basis points (70 bps) of the face value of
each letter of credit when issued by Bank. Borrower shall also
reimburse Bank for its standard documentation, administration and cancellation
charges based on its standard rates. Notwithstanding anything herein
to the contrary, if demand for payment pursuant to a letter of credit is
presented to Bank by the benefiting party, notice shall be provided to Borrower
and such funds shall be paid to the benefiting party from the Revolving Line of
Credit Loan as if a cash Advance request had been made to Borrower, and such
amount shall be reflected on the Revolving Line of Credit Loan Note as of such
day.
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2.3
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Security.
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(a) Borrower
hereby grants to Bank as security for any Note, a security interest in: (i) all
fixed assets of Borrower; (ii) cash deposits in possession and control of Bank
in accounts numbered 4512225217 and 4514958602 or successor accounts; (iii)
other cash deposits not in possession or control of Bank, provided such cash are
proceeds of subsection (i) hereof,, all as described in the Security Agreement,
as amended; and (iv) a mortgage on the real estate and improvements constituting
real property located at 0000 Xxxxxx XxXxx Xxxxx, Xxxxxxx, Xxxxxxxx, as more
particularly described in the Mortgage executed simultaneously
hereto.
All of
the specified property in this subsection (a) above shall be collectively
referred to as the “Collateral”. Notwithstanding
the foregoing, if Borrower pays off the Equipment Term Loan and all charges
related thereto, including any Hedging Obligations, and is not otherwise in
default hereof, upon request from Borrower, Bank shall release its security and
mortgage interests and liens in that certain portion of the Collateral described
in (a) (i), (iii) and (iv). All remaining Collateral described in (a)
(ii) shall continue to be secured by Bank until all remaining obligations
relating to the Revolving Line of Credit Loan and Revolving Line of Credit Note
have been paid in full and cancelled, and not further obligations or liabilities
remain outstanding on behalf of Borrower or Bank thereunder.
(b) Borrower
shall execute and deliver to Bank such documents in addition to those documents
specified in this Loan Agreement, on the Closing Date, Funding Date, and
thereafter from time to time, as Bank shall request, for the purpose of
perfecting and continuing the perfection of Bank’s security interest and
mortgage in the Collateral.
(c) It
is further agreed that any security agreement, mortgage, or other document
hereafter executed by Borrower in favor of Bank shall secure repayment of all of
the Obligations, whether or not presently contemplated by the parties, including
that created under the Loan Agreement of the same date relating to any Note;
and, that an Event of Default under any note, security agreement, mortgage or
other agreement from Borrower to Bank after any applicable grace period shall
constitute an Event of Default under all notes, security agreements and other
agreements, and that Bank may, at its option, proceed in exercising its rights
thereunder in any order or manner it may choose, the purpose of this Loan
Agreement being to cross-collateralize and cross-default all of the
Obligations.
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3. Section
5.11 shall be amended to delete said section in its entirety and replace with
the following:
5.11 Use of
Proceeds. The
advance of either Loan hereunder shall be used only for purposes stated in
Section 2.1 and 2.2 respectively.
4. Borrower
acknowledges that the continuance of regulatory enforcement efforts by the Food
and Drug Administration or other restrictions on Borrower’s operations,
voluntarily imposed by Borrower or otherwise, on or after February 26, 2010,
shall constitute a violation of the covenants described in Section 6.7 (b) of
the Loan Agreement and shall be deemed an “Event of Default” without further
notice or an opportunity to cure, notwithstanding any other provision of the
Loan Agreement or other document to the contrary.
5. Bank
agrees to suspend testing of Minimum Fixed Charge Coverage Ratio and Minimum
EBITDA described in Sections 6.8 and 6.9 respectively, until February 26,
2010.
6. Section
6.10 of the Loan Agreement is hereby amended to increase the minimum balance of
the deposit account to be not less than the outstanding balance of the
Indebtedness of Borrower to Bank from time to time, which is approximately
$32,400,000 as of the date hereof, which shall be reduced by the amount of
principal repaid toward the Equipment Term Loan. The required balance
shall increase by the amount of accrued and unpaid interest as of the date of
any required interest payment if such payment is not made on or before the date
the failure to make such payment would become an Event of Default.
7. Nothing
herein shall be deemed or implied as a waiver of any rights, interests or
remedies available to Bank pursuant to the Loan Agreement or any other Loan
Document, whether previously occurring, now existing, or arising in the
future. Bank reserves all such rights, interests and remedies,
including those existing but temporarily suspended pursuant to any other
documents executed in connection with this Second Amendment. No
failure by Bank to take any action in respect of a default of any
covenant or obligation under the Loan Agreement or other Loan Documents by
Borrower shall be deemed a waiver of any subsequent or future default of
Borrower, and any partial action or exercise of rights remedies will not
prohibit further action or exercise of rights and remedies by
Bank. No course of dealing will be deemed to amend any terms of the
Loan Agreement or other Loan Documents or preclude Bank from exercising its
rights or remedies notwithstanding such course of dealing.
8. Except
as hereby amended, the Loan Agreement shall remain in full force and
effect. If any conflict exists between the terms and provisions of
the Loan Agreement, and the terms and provisions of this Second Amendment, the
terms and provisions of this Second Amendment shall govern and
control.
9. Each
party covenants, warrants and represents that it has the authority to execute
and bind each respective party to this Second Amendment. Borrower
further reconfirms all of its obligations under the Loan Documents, along with
all of its representations and warranties to Bank as set forth in the Loan
Documents as being true in all respect, and that there are no existing Events of
Default under any provision of the Loan Agreement or any of the related Loan
Documents or other Indebtedness to Bank other than as noted herein that have not
otherwise been suspended by Bank. The Loan Agreement and Loan
Documents executed in connection therewith, whether prior to, or simultaneously
herewith, are hereby ratified and certified as being in full force and
effect.
10. Borrower
acknowledges and agrees that Bank has fully performed all of its obligations
under all documents executed in connection with the Loan Documents and all
actions taken by Bank have been reasonable and appropriate under the
circumstances and within their rights under the Loan Agreement and the Loan
Documents. Borrower represents and warrants that it is aware of no
claims or causes of action against Bank or its officers, directors, employees or
agents. Notwithstanding such representation and warranty, and as
further consideration for the agreements set forth in this Second Amendment,
Borrower, for itself and its successors and assigns, releases Bank and it
officers, directors, employees, agents, attorneys, affiliates, subsidiaries, and
successors and assigns, from any liability, claim, right or cause of action
which now exists or hereafter arises, whether known or unknown, arising from or
in any way related to facts in existence as of the date
hereof. Borrower also acknowledges and agrees to pay or otherwise
reimburse Bank, upon the execution of this Second Amendment, for all reasonable
out-of-pocket costs incurred by Bank in the enforcement of the Loan Agreement,
and the negotiations and drafting of this Second Amendment and related Loan
Documents.
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11. This
Second Amendment constitutes the entire agreement between the parties and
supersedes all prior and contemporaneous agreements or understandings, whether
written or oral, between the parties with respect to the subject matter
hereof. This Second Amendment shall be binding on the parties hereto,
and their respective successor and assigns, and shall not be further amended,
altered, modified, or changed in any way except in writing signed by all the
parties to this Second Amendment, or their successors or assigns.
12. The
submission of this Second Amendment for examination or its negotiation of the
terms described herein does not constitute an offer to amend the Loan Agreement,
and this Second Amendment does not constitute a binding agreement until such
time as the Second Amendment has been fully and finally executed by all parties
to this Second Amendment.
THE UNDERSIGNED individuals have
executed this Second Amendment on behalf of the respective parties hereto,
effective as of the day and year first above written.
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BANK:
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RBS
CITIZENS, N.A.
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(d/b/a
CHARTER ONE)
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By:
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/s/ Xxxx Xxxxxxx
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Name:
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Xxxx Xxxxxxx
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Its:
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Senior Vice President
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BORROWER:
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CARACO
PHARMACEUTICAL
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LABORATORIES,
LTD.
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By:
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/s/ Xxxxxxxx Xxxxx
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Name:
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Xxxxxxxx Xxxxx
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Its:
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Chief Executive Officer
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and
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By:
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/s/ Xxxxx Xxxxx
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Name:
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Xxxxx Xxxxx
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Its:
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Interim Chief Financial
Officer
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