Exhibit 10.1
Amalgamated Bank
April 3, 2007
Integrated BioPharma, Inc.
000 Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Re: $10,000,000 Term Loan
Ladies and Gentlemen:
You have requested that Amalgamated Bank (the "Bank") provide to Integrated
BioPharma, Inc., a Delaware corporation (the "Borrower"), a term loan in the
aggregate principal amount of $10,000,000 (the "Term Loan"). The proceeds of the
Term Loan will be used for working capital and general corporate purposes of the
Borrower and its subsidiaries.
The Bank is pleased to advise you that it is willing to provide the Term Loan on
and subject to the terms and conditions set forth herein and in the other Term
Loan Documents (as defined herein).
This letter agreement (as it may be amended, modified or supplemented from time
to time, this "Letter Agreement") is the "Letter Agreement" referred to in the
Term Loan Documents and, notwithstanding anything herein or in any of the other
Term Loan Documents to the contrary, each of the other Term Loan Documents is
subject to the terms and conditions of this Letter Agreement. In the event of
any conflict between the terms and conditions of any other Loan Document and the
terms of this Letter Agreement, the terms and conditions of this Letter
Agreement shall control.
Capitalized terms used, and not defined, in this Letter Agreement shall have the
meanings given such terms on Schedule A attached hereto and made a part hereof.
1. Term Loan. Subject to the terms and conditions hereof, upon execution
and delivery of this Letter Agreement and the other Term Loan
Documents, the Bank will advance to Borrower the Term Loan in the
aggregate amount of Ten Million Dollars ($10,000,000) by causing an
amount of same day funds in dollars equal to the Term Loan to be
credited to the account of the Borrower at the Bank or such other
account as may be designated in writing to the Bank by the Borrower.
The Term Loan shall be repaid as set forth in the Note, as defined
below. Amounts borrowed pursuant to this Letter Agreement and the Term
Loan Documents, once repaid, may not be reborrowed.
2. Conditions Precedent as of the Date Hereof. The making of the Term Loan
is subject to the satisfaction of the following conditions precedent as
of the date hereof:
(a) Term Loan Documents. The Bank shall have received from the Borrower a
complete and duly executed and delivered original of each of the
following (collectively, the "Term Loan Documents"):
(1) This Letter Agreement;
(2) The Term Promissory Note (the "Note");
(3) The Reaffirmation Agreement pertaining to the following existing
documents, delivered by Borrower to Bank and each dated on or about
September 1, 2006: (i) the Accounts Receivable Security Agreement (the
"Accounts Receivable Security Agreement"); (ii) the Equipment Rider to
the Accounts Receivable Security Agreement (the "Equipment Rider");
(iii) the Inventory Rider to the Accounts Receivable Security Agreement
(the "Inventory Rider"); and (iv) the Deposit Account Pledge Agreement
(the "Deposit Account Pledge Agreement");
(4) A Reaffirmation of Subsidiary Guaranty from each of Borrower's direct
and indirect subsidiaries; and
(5) From each of Borrower's direct and indirect subsidiaries: (i) an
Accounts Receivable Security Agreement; (ii) an Equipment Rider to the
Accounts Receivable Security Agreement; and (iii) an Inventory Rider to
the Accounts Receivable Security Agreement.
(b) Organizational Documents. The Bank shall have received the following:
(1) a copy of each of the Borrower's and each Subsidiary's certificate of
incorporation, as amended, and its by-laws, as amended, and, to the
extent applicable, certified as of a recent date by the appropriate
governmental official;
(2) signature and incumbency certificates of the officers of the Borrower
and each Subsidiary;
(3) resolutions of the board of directors of the Borrower approving and
authorizing the execution, delivery and performance of this Letter
Agreement and the other Term Loan Documents, certified as of the date
hereof by Xxxxxxxx's corporate secretary as being in full force and
effect without modification or amendment;
(4) resolutions of the board of directors of each Subsidiary approving and
authorizing the execution, delivery and performance of the
Reaffirmation of Subsidiary Guaranty, Accounts Receivable Security
Agreement, Equipment Rider to the Accounts Receivable Security
Agreement, and Inventory Rider to the Accounts Receivable Security
Agreement, certified as of the date hereof by such Subsidiary's
corporate secretary as being in full force and effect without
modification or amendment;
(5) a good standing certificate for the Borrower and each Subsidiary from
the applicable governmental authority of the Borrower's and each such
Subsidiary's jurisdiction of formation; and
(6) such other documents as the Bank may reasonably request.
(c) Lien Searches; UCC Financing Statements. The Bank shall have received
the following:
(1) the results of a recent search of all effective UCC financing
statements (or equivalent filings) made with respect to any personal or
mixed property of the Borrower in the State of New York, together with
copies of all such filings disclosed by such search, together with UCC
termination statements (or similar documents) duly executed by all
applicable persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements (or
equivalent filings) disclosed in such search; and
(2) the results of a recent search of all effective UCC financing
statements (or equivalent filings) made with respect to any personal or
mixed property of each Subsidiary in its state of incorporation or
formation, together with copies of all such filings disclosed by such
search, together with UCC termination statements (or similar documents)
duly executed by all applicable persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC
financing statements (or equivalent filings) disclosed in such search;
and
(3) evidence satisfactory to the Bank of the compliance by the Borrower of
its obligations under the Term Loan Documents with respect to UCC
financing statements.
3. Representations and Warranties. The Borrower represents and warrants to
the Bank, on the date hereof, that the following statements are true
and correct:
(a) Good Standing. Borrower is duly organized and in good standing in the
state of Borrower's formation, Borrower has obtained and maintained all
licenses or permits required in the operation of its business, and
Borrower is duly qualified or licensed in good standing to do business
in all jurisdictions where the nature of Borrower's activities requires
such qualification or licensing, and Borrower's business is conducted
in accordance with law;
(b) Authority. Xxxxxxxx has full right, power and authority to enter into,
execute and deliver this Letter Agreement, any officer's certificate
and other documents executed and/or delivered by Borrower to Bank in
connection with this Letter Agreement or the other Term Loan Documents,
and Borrower has and shall have full right, power and authority to
perform each and all matters and things required to be performed under
this Letter Agreement and the other Term Loan Documents; each of this
Letter Agreement and the other Term Loan Documents have been duly
authorized, executed and delivered and constitutes the legal, valid and
binding contract of Borrower, enforceable in accordance with its terms
(subject to (i) bankruptcy and other laws of general application
affecting the rights of creditors and (ii) the award by courts of
monetary damages rather than specific performance of contractual
provisions involving matters other than the payment of money);
(c) Compliance. The Borrower conducts its business and operations and the
ownership of its assets in compliance with each applicable statute,
regulation and other law, including, without limitation environmental
laws and the Patriot Act. All approvals, including authorizations,
permits, consents, franchises, licenses, registrations, filings,
declarations, reports and notices (the "Approvals") necessary for the
conduct of the Borrower's business have been duly obtained and are in
full force and effect. The Borrower is in compliance with the
Approvals. The Borrower is in compliance with its certificate of
incorporation, by-laws, partnership agreement, articles of
organization, operating agreement or other applicable organizational or
governing document as may be applicable to the Borrower depending on
its organizational structure ("Governing Documents"). The Borrower is
in compliance with each agreement to which it is a party or by which it
or any of its assets is bound.
(d) Legality. The execution, delivery and performance by the Borrower of
this Letter Agreement and all related documents, including the Term
Loan Documents, (i) are in furtherance of the Borrower's purposes and
within its power and authority; (ii) do not (A) violate any statute,
regulation or other law or any judgment, order or award of any court,
agency or other governmental authority or of any arbitrator with
respect to the Borrower or (B) violate the Borrower's Governing
Documents, constitute a default under any agreement binding on the
Borrower or result in a lien or encumbrance on any assets of the
Borrower; and (iii) have been duly authorized by all necessary
organizational actions.
(e) Fiscal Year. The fiscal year of the Borrower is the calendar year
unless the following blank states otherwise: year ending June 30.
(f) Full Disclosure. Neither this Letter Agreement nor any certificate,
financial statement or other writing provided to the Bank by or on
behalf of the Borrower contains any statement of fact that is incorrect
or misleading in any material respect or omits to state any fact
necessary to make any such statement not incorrect or misleading. The
Borrower has not failed to disclose to the Bank any fact that might
have a material adverse effect on the Borrower.
(g) No Defaults. No Event of Default or event which, with the giving of
notice or the passage of time or both, would be an Event of Default,
has occurred or continues or will occur as a result of Borrower's
entering into or performing its obligations pursuant to this Letter
Agreement or the other Term Loan Documents;
(h) No Conflict. Xxxxxxxx's execution and delivery of this Letter Agreement
and the other Term Loan Documents and performance of its obligations
thereunder are not and will not be in contravention of any provision of
law or any charter or by-law provision or any covenant, indenture or
agreement of or affecting Borrower or any property of Borrower;
(i) No Claims. There is no action, suit, investigation or proceeding
pending or threatened against Borrower in or before any court or any
administrative or governmental authority, or any arbitration forum,
which if determined against Borrower would affect Borrower's ability to
enter into this Letter Agreement or the other Term Loan Documents or
prejudice in any way Borrower's ability to fulfill the obligations set
forth in this Letter Agreement or the other Term Loan Documents;
(j) Solvency. On the date hereof, after consummation of the transactions
contemplated herein, and after giving effect to the Term Loan and other
obligations and liabilities being incurred, Borrower is and will be
solvent.
(k) Margin Regulations. No part of the proceeds of the Term Loan will be
used for the purpose of buying or carrying any "margin stock," as such
term is used in Regulations G and U of the Board of Governors of the
Federal Reserve System, as amended from time-to-time, or to extend
credit to others for the purpose of buying or carrying any "margin
stock." Xxxxxxxx is not engaged in the business of extending credit to
others for the purpose of buying or carrying margin stock. Borrower
does not own any "margin stock." Neither the making of the Term Loan
nor any use of proceeds of the Term Loan will violate or conflict with
the provisions of Regulation G, T, U or X of the Board of Governors of
the Federal Reserve System as amended from time to time.
(l) Subsidiaries. Except as set forth on Schedule 3(l) hereto, Borrower is
not a partner (general or limited) of any partnership, is not a party
to any joint venture, is not a member or manager of a limited liability
company, is not a shareholder of any corporation, or is not an owner
(beneficially or of record) of any equity or similar interest in any
Person (including, but not limited to, any interest pursuant to which
Borrower has or may in any circumstance have an obligation to make
capital contributions to, or be generally liable for or on account of
the liabilities, acts or omissions of such other person).
(m) Taxes. All tax and information returns required to be filed by or on
behalf of Borrower have been properly and timely prepared, executed and
filed or appropriate extensions have been properly obtained and remain
in effect. All taxes, assessments, fees and other governmental charges
upon Borrower or upon any of its properties, incomes, sales, use or
franchises (collectively, "Taxes") which are due and payable have been
paid other than those not yet delinquent and payable without premium or
penalty, and except for those being diligently contested in good faith
by appropriate proceedings, and in each case adequate reserves and
provisions for Taxes have been made on the books of Borrower. The
reserves and provisions for Taxes on the books of Borrower are adequate
for all open years and for its current fiscal period. Borrower does not
know of any proposed additional assessment or basis for any material
assessment for additional Taxes against Borrower (whether or not
reserved against) which could have a Material Adverse Effect (as
defined below).
(n) Environmental Matters.
(i) Borrower is and has been in compliance with all
applicable Environmental Laws.
(ii) All Environmental Approvals necessary for the
ownership and operation of Xxxxxxxx's business as
presently owned and operated and as presently
proposed to be owned and operated have been duly
obtained and are in full force and effect.
(iii) There is no Environmental Claim pending or
threatened, and there are no present acts, omissions,
events or circumstances and no past acts, omissions,
events or circumstances, including, but not limited
to, any dumping, leaching, deposition, removal,
abandonment, escape, emission, discharge or release
of any Environmental Concern Material at, on or under
any facility or property now or previously owned,
operated or leased by Borrower or any of its
respective Environmental Affiliates, that could form
the basis of any Environmental Claim against Borrower
or any of its respective Environmental Affiliates.
(iv) Neither Borrower nor, any of its Environmental
Affiliates, has directly transported or directly
arranged for the transportation of any material
quantities of Environmental Concern Materials to any
Environmental Cleanup Site. No lien exists and no
condition exists which is reasonably likely to result
in the filing of a lien against any property of
Borrower or any of its respective Environmental
Affiliates under any Environmental Law.
(o) Investment Company Act. Borrower is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, or a
company "controlled" by, an investment company, each within the meaning of the
Investment Company Act of 1940, as amended.
(p) ERISA.
With respect to each Pension Plan subject to Title IV of
ERISA:
(i) The plan is qualified under Section 401(a) of the
Code, and any trust through which the plan is funded
meets the requirements to be exempt from federal
income tax under Section 501(a) of the Code.
(ii) There is no accumulated funding deficiency (as
defined in Section 412(a) of the Code) with respect
to the plan, whether or not waived.
(iii) All contributions required to be made to the
plan under the terms of the plan or any collective
bargaining agreement or applicable law have been made
to the plan.
(iv) If the plan is a defined benefit plan (as
defined in Section 3(35) of ERISA), had the plan
terminated and benefits been distributed on the last
plan valuation date, the plan would have been
sufficient for benefit liabilities (within the
meaning of Sections 4001(a)(16) and 4041(d) of ERISA)
as of that date.
(v) No ERISA Title IV Liability Event has occurred or
is expected to occur with respect to any Pension Plan
subject to Title IV of ERISA that is not sufficient
for liabilities within the meaning of Section 4041(d)
of ERISA.
With respect to each Multiemployer Plan:
(i) Neither any Borrower nor any Controlled Group
Member has withdrawn or expects to completely or
partially withdraw from the plan at such time as any
Loan is outstanding or the Bank has any obligation to
make any Loan pursuant to this Letter Agreement.
(ii) Each Borrower and each Controlled Group Member
has made all contributions it is required to make to
the plan under the terms of the plan or any
collective bargaining agreement or applicable law.
(iii) Neither any Borrower nor any Controlled Group
Member has been notified that the plan is in
reorganization (within the meaning of Section 4241 of
ERISA) or that it is expected to go into
reorganization or be terminated.
With respect to each Pension Plan and Welfare Plan, there is
no litigation pending, or threatened, that, if adversely determined, would have
a material adverse effect on the financial condition of the Borrower and its
subsidiaries taken as whole and there are no existing facts or circumstances
likely to give rise to any such litigation with respect to any Pension Plan or
Welfare Plan.
(q) Adverse Contracts. Borrower is not a party to, nor is any of the property of
Borrower subject to or bound by any long term lease, forward purchase contract
or futures contract, covenant not to compete, or other agreement, which, in each
case, materially adversely restricts its ability to conduct its business, or has
a material adverse effect or would be reasonably likely to have a material
adverse effect on the financial condition, results of operations or business of
the Borrower.
(r) Representations and Warranties. The representations and warranties contained
herein and in the other Term Loan Documents are true and correct in all material
respects as of the date hereof to the same extent as though made on and as of
that date;
(s) No Event of Default or Default. As of the date hereof, no event shall has
occurred and is continuing or would result from the making of the Term Loan that
would constitute an Event of Default or a Default.
4. Affirmative Covenants. Borrower covenants and agrees that until payment in
full of all Liabilities (as such term is defined in the Note), Borrower shall
perform, and shall cause each of its subsidiaries to perform, all covenants in
this Section 5.
(a) Annual Financial Statements. As soon as available and in any event within
180 days after the end of each fiscal year of Borrower and its affiliates, the
Borrower shall deliver to the Bank a balance sheet as of the end of such fiscal
year and a statement of revenue and expenses and a statement of cash flows for
such fiscal year, all in reasonable detail and all prepared in accordance with
to generally accepted accounting principles in effect from to time in the United
States ("GAAP") consistently applied and accompanied by an opinion thereon
acceptable to the Bank by independent accountants selected by the Borrower and
acceptable to the Bank.
(b) Quarterly Financial Statements. As soon as available and in any event within
45 days after the end of each of the three quarters of each fiscal year of
Borrower and its affiliates, the Borrower shall deliver to the Bank financial
statements as presented to Xxxxxxxx's Board of Directors and a statement by the
Chief Financial Officer of the Borrower certifying that, to the best of his
knowledge: (i) such statements adequately represent the Borrower's financial
condition, and (ii) no material adverse changes to the Borrower's accounting
policies or changes in the Borrower's business have occurred.
(c) Monthly Accounts Receivable Aging Schedules. As soon as available and in any
event within 10 days after the end of each month, the Borrower shall deliver to
the Bank a schedule aging accounts, as of the end of the preceding month.
(d) Notices of Default. Xxxxxxxx must notify the Bank in writing of any material
default by the Borrower under any agreement.
(e) Material Adverse Changes. Borrower shall not change the nature of its
business in a material manner.
(f) Maximum Total Leverage Ratio. Borrower shall
not permit the Total Leverage Ratio at the end of any quarter ending during any
period set forth in the table below, to exceed the ratio set forth opposite such
period in the table below:
Test Period Leverage Ratio
January 1, 2007 - March 31, 2007 4.50 to 1.00
April 1, 2007 - June 30, 2007 4.50 to 1.00
Each successive Quarterly Test Period thereafter 4.50 to 1.00
Test Periods will be quarterly and the EBITDA calculation shall be cumulative
for the four quarters ending as of each Test Period.
(g) Minimum Consolidated EBITDA. Borrower shall not permit Consolidated EBITDA
for any Test Period ending during any period set forth in the table below, to be
less than the amount indicated:
Minimum
Test Period Consolidated EBITDA
July 1, 2006 - March 31, 2007 $4,125,000
July 1, 2006 - June 30, 2007 $5,500,000
Each successive Quarterly Test Period thereafter $5,500,000
Test Periods will be quarterly and the EBITDA calculation shall be cumulative
for the four quarters ending as of each Test Period.
(h) Minimum Fixed Charge Coverage Ratio. Borrower shall not permit the
Consolidated Fixed Charge Coverage Ratio, for any Test Period ending during any
period in the table set forth below, to be less than the ratio set forth
opposite such period in the table below:
Fixed Charge
Test Period Coverage Ratio
January 1, 2007 - March 31, 2007 1.75 to 1.00
April 1 - June 30, 2007 1.75 to 1.00
Each successive Quarterly Test Period thereafter 1.75 to 1.00
Test Periods will be quarterly and the EBITDA calculation shall be cumulative
for the four quarters ending as of each Test Period.
(i) Required Balances. For as long as the Credit Facility remains in
effect, unless otherwise agreed by the Bank, the Borrower shall maintain all
operating accounts under its taxpayer identification number (EIN: 00-0000000)
with the Bank. Commencing on the date hereof, Borrower shall maintain Two
Million Dollars ($2,000,000) in a six month time deposit with Bank and shall not
have the option for early withdrawal unless (i) aggregate combined borrowings on
the Revolving Credit Facility and Term Loan are less than or equal to $10
million and (ii) the ratio of Borrower's consolidated total liabilities to
stockholders' equity is 0.5 or less (collectively, the "Withdrawal
Requirements"). Borrower and Bank agree that, upon expiration of such
certificate of deposit, it shall be renewed by Bank for another six month term
unless the Borrower meets the Withdrawal Requirements set forth above. If such
Withdrawal Requirements are met prior to the maturity of the deposit and the
Borrower exercises its right to early withdrawal, such withdrawal shall be
subject to an early withdrawal penalty. If the Borrower meets the Withdrawal
Requirements and does not withdraw the time deposit prior to its maturity, the
Borrower shall not be obligated to continue maintaining a $2 million time
deposit.
(j) Use of Proceeds. Proceeds of the Credit Facility
will be used on the date hereof for working capital and general corporate
purposes.
(k) Mandatory Prepayments. Loans shall be prepaid and/or commitments reduced (in
the order set forth below) in an amount equal to (a) 100% of the net proceeds
received from the sale or other disposition of all or any part of the assets of
Borrower, (b) 100% of the net proceeds received from the sale or other
disposition of all or any portion of the subsidiaries of the Borrower, (c) 100%
of the net proceeds received by the Borrower from the issuance of debt or
preferred stock, other than exceptions to be agreed, (d) net proceeds received
from the issuance of common equity (including, but not limited to, upon the
exercise of warrants and options) by Borrower in an amount equal to the minimum
of $5,000,000 or, if less, the amount of net proceeds actually received by
Borrower from such issuance, (e) 100% of the proceeds received under "key man"
life insurance policies held by Borrower or any of its subsidiaries and (f) the
occurrence of a material adverse effect defined as, but not limited to, (i) a
material adverse effect on the business, property, results of operations,
prospects or condition, financial or otherwise, of the Borrower and its
Subsidiaries, taken as a whole; or (ii) material impairment of the ability of
the Borrower to fully and timely perform any of its obligations under the Credit
Facility ("Material Adverse Effect"). All mandatory prepayments shall be applied
to payments of the term loan in inverse order of maturity until the same has
been repaid in full and any remaining mandatory prepayments shall be applied to
Borrower's revolving loan from Bank, except that mandatory prepayments under
clause (d) above shall be applied to prepayment of Borrower's existing revolving
loan from Bank.
(l) Compliance. The Borrower will conduct its business and operations and the
ownership of its assets in compliance with all material contractual obligations
and each applicable statute, regulation and other law, including environmental
laws.
(m) Payment of Obligations and Continuation of Business. The Borrower will pay
all outstanding obligations and continue its business and operations,
maintaining all rights and privileges existing as of the date hereof.
(n) Annual Meetings. The Borrower will meet annually with the Bank to review its
business, financial condition and results and its operations.
(o) Property and Insurance. The Borrower will maintain its property in good
repair and will on request provide the Bank with evidence of insurance coverage
satisfactory to the Bank, including fire and hazard, liability, workers'
compensation and business interruption insurance and flood hazard insurance as
required.
5. Negative Covenants. During the term of this Letter Agreement and so long as
any portion of the Liabilities remains unpaid the Borrower shall not and shall
not permit any Subsidiary to:
(a) Indebtedness. Incur or permit to exist any
indebtedness except for trade indebtedness or current liabilities for salary and
wages incurred in the ordinary course of business and not substantially overdue.
(b) Guaranties. Become a guarantor, a surety, or otherwise liable for the debts
or other obligations of another, whether by guaranty or suretyship agreement,
agreement to purchase indebtedness, agreement for furnishing funds through the
purchase of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging
indebtedness, or otherwise, except as an endorser of instruments for the payment
of money deposited to its bank account for collection in the ordinary course of
business.
(c) Liens. Permit any of its assets to be subject to any security interest,
mortgage or other lien or encumbrance except for liens for property taxes not
yet due; pledges and deposits to secure obligations or performance for workers'
compensation, bids, tenders, contracts other than notes, appeal bonds or public
or statutory obligations; and materialmens', mechanics', carriers' and similar
liens arising in the normal course of business.
(d) Investments. Make any investment outside of the ordinary course of business,
other than in FDIC insured deposits or United States Treasury obligations of
less than one year, or in money market or mutual funds administering such
investments.
(e) Loans. Make any loan, advance or other extension of credit except for
endorsements of negotiable instruments deposited to the Borrower's deposit
account for collection, trade credit in the normal course of business and
intercompany loans approved in writing by the Bank.
(f) Sale or Transfer of Assets; Suspension of Business Operations. Sell
(including as part of a sale-leaseback transaction), convey, assign, lease,
transfer, abandon or otherwise dispose of, voluntarily or involuntarily,
(i) all or a substantial part of its assets, or (ii) any collateral or any
interest therein (whether in one transaction or in a series of transactions)
to any other Person other than the sale of inventory in the ordinary course of
business and, so long as no Event of Default has occurred and is continuing, the
sale or disposal of obsolete, worn out or other equipment not needed for the
operation of Xxxxxxxx's business, and will not liquidate, dissolve or suspend
business operations, or agree, become or remain liable (contingently or
otherwise) to do any of the foregoing with respect to any collateral.
(g) Dealings with Affiliates. (i) Enter into any transaction with any director,
officer, employee, shareholder, or Affiliate of the Borrower or any Subsidiary
except transactions upon terms which are fair and reasonable and which shall be
at least as favorable as would result in a comparable arm's-length transaction
with a Person not a director, officer, employee, shareholder or Affiliate of the
Borrower or any Subsidiary; or (ii) pay any management, consulting or other
similar fees to any Affiliate.
(h) Modification/Waiver. Modify any material documents or waive any material
requirements that would adversely affect the Bank's rights and interests
hereunder.
(i) Fiscal Year. Change its fiscal year from that stated in Section 4
above.
(j) Distributions. Make any Distributions except to another Loan Party.
(k) Subsidiaries. Create, acquire or suffer to exist any Subsidiary without the
prior written consent of the Bank, which may be conditioned upon the execution
and delivery by such Subsidiary of an amendment to one or more Term Loan
Documents, a guarantee of the obligations under the Loan, a security agreement
with respect to such Subsidiary's assets, a pledge of some or all of the Equity
Interests in such Subsidiary, other documents, certificates and/or instruments
and satisfactory results of due diligence with respect to liens, title and
environmental matters relating to such entity and its assets and Equity
Interests.
6. Events of Default. Each of the following shall be an "Event of Default":
(a) Any failure of the Borrower to perform or comply with any term or condition
contained in Section 4 or 5 hereof or to pay any fee set forth in Section 7
hereof shall be deemed to be an "Event of Default" for all purposes of the Term
Loan Documents.
(b) Any failure of the Borrower to perform or comply with any term or condition
contained in this Letter Agreement or any of the Term Loan Documents.
(c) Any Event of Default as defined in the Note or any other Term Loan Document.
(d) Any Event of Default (i) as defined in the Revolving (Grid) Promissory Note
given by Borrower to Bank and dated on or about September 1, 2006 in the
original principal amount of $15,000,000.00, as the same may be amended,
supplemented or restated from time to time or (ii) as defined in the letter
agreement executed by Borrower and Bank in connection with such Revolving (Grid)
Promissory Note, as the same may be amended, supplemented or restated from time
to time, or (iii) as defined in any Revolving Loan Document, as defined in such
letter agreement.
7. Commitment Fee. Borrower shall pay a Commitment Fee upon execution and
delivery of this Letter Agreement in the amount of 0.50% of the amount of the
Term Loan.
8. Expenses and Indemnification. All reasonable out-of-pocket expenses
(including but not limited to reasonable legal fees and expenses and expenses
incurred in connection with due diligence and travel, courier, reproduction,
printing and delivery expenses) of the Bank and with the preparation, execution
and delivery, administration, amendment, waiver or modification (including
proposed amendments, waivers or modifications) of the documentation contemplated
hereby are to be paid by Borrower. In addition, all out-of-pocket expenses
(including but not limited to reasonable legal fees and expenses) of the Bank
for workout proceedings, enforcement costs and documentary taxes associated with
the Term Loan are to be paid by Xxxxxxxx.
Borrower will indemnify the Bank, and hold the Bank harmless from and
against all reasonable out-of-pocket costs, expenses (including but not limited
to reasonable legal fees and expenses) and liabilities arising out of or
relating to the transactions contemplated hereby and any actual or proposed use
of the proceeds of the Term Loan.
9. Governing Law: This Letter Agreement and the other Term Loan Documents will
be governed by the laws of the State of New York.
10. USA PATRIOT Act: The Bank subject to the Act hereby notifies the Borrower
and the Guarantors that pursuant to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it
is required to obtain, verify and record information that identifies the
Borrower and the Guarantors, which information includes the name and address of
the Borrower and the Guarantors and other information that will allow the Bank
to identify the Borrower and the Guarantors in accordance with the "Act."
By executing this Letter Agreement, you acknowledge that this Letter Agreement
and the Term Loan Documents are the only agreement between you and the Bank with
respect to the Term Loan and set forth the entire understanding of the parties
with respect thereto. The letter agreement dated March 9, 2007 from Bank to
Borrower is hereby terminated except for the provisions thereof that, by their
terms, survive such termination. This Letter Agreement may not be changed except
pursuant to a writing signed by each of the parties hereto. This Letter
Agreement shall be governed by, and construed in accordance with, the laws of
the State of New York. This Letter Agreement may be executed in any number of
counterparts all of which, when taken together, shall constitute one and the
same instrument.
Very truly yours,
AMALGAMATED BANK
By: /s/ Xxxx Xxxxxxx
---------------------
Name: Xxxx Xxxxxxx
Title: Vice President
Accepted and agreed to as of the date first above written:
INTEGRATED BIOPHARMA, INC.
By: /s/ X. Xxxxxx Xxx
-----------------------
Name: X. Xxxxxx Xxx
Title: CEO
Schedule A
Defined Terms
"Affiliate" shall mean, with respect to any Person, any other person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person or is a director, officer, general partner, member or manager
of such Person or, with respect to an individual, has a relationship with such
individual by blood, adoption or marriage not more remote than first cousin. For
purposes of this definition, the term "control" (including the terms
"controlling," "controlled by" and "under common control with") of a Person
shall mean the possession, direct or indirect, of the power to vote 10% or more
of the outstanding Voting Interests in such Person or to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Interests, by virtue of being a general partner or managing
member, by contract or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended, and any successor
statute of similar import, and regulations thereunder, in each case as in effect
from time to time. References to sections of the Code shall be construed also to
refer to any successor sections.
"Consolidated Net Income" shall mean, for any period, the consolidated net
income (or loss) of Borrower and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net Income for
such period, adjusted by (x) adding thereto:
(a) Consolidated Interest Expense for such period,
(b) Consolidated Amortization Expense for such period,
(c) Consolidated Depreciation Expense for such period,
(d) Consolidated Tax Expense for such period, and
(y) subtracting therefrom the aggregate amount of all non-cash items increasing
Consolidated Net Income (other than the accrual of revenue or recording of
receivables in the ordinary course of business) for such period and (z) adding
thereto the aggregate amount of all non-cash items decreasing Consolidated Net
Income for such period.
"Consolidated Fixed Charge Coverage Ratio" shall mean, for any Test Period, the
ratio of (a) Consolidated EBITDA for such Test Period to (b) Consolidated Fixed
Charges for such Test Period.
"Consolidated Fixed Charges" shall mean, for any period, the sum, without
duplication, of:
(a) Cash Interest Expense for such period;
(b) the aggregate amount of Capital Expenditures for such period (other
than to the extent financed by Excluded Issuances);
(c) all cash distributions made by Borrower and its Subsidiaries made
during such period;
(d) all cash dividends made by the Borrower and its Subsidiaries on the
Series B 7% Redeemable Convertible Preferred Stock; and
(e) the principal amount of all scheduled amortization payments on all
Indebtedness including the principal component of all Capital Lease
Obligations of Borrower and its Subsidiaries for such period (as
determined on the first day of the respective period.)
"Consolidated Indebtedness" shall mean, as at any date of determination, the
aggregate amount of all Indebtedness of Borrower and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period, the total
consolidated interest expense of Borrower and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP plus, without
duplication:
(a) imputed interest on Capital Lease Obligations of Borrower and its
Subsidiaries for such period;
(b) commissions, discounts and other fees and charges owed by Borrower or
any of its Subsidiaries with respect to letters of credit securing
financial obligations, bankers' acceptance financing and receivables
financings for such period;
(c) amortization of debt issuance costs, debt discount or premium and other
financing fees and expenses incurred by Borrower or any of its
Subsidiaries for such period;
(d) cash contributions to any employee stock ownership plan or similar
trust made by Borrower or any of its Subsidiaries to the extent such
contributions are used by such plan or trust to pay interest or fees to
any Person (other than Borrower or a Wholly Owned Subsidiary) in
connection with Indebtedness incurred by such plan or trust for such
period;
(e) cash distributions paid on the Series B 7% Redeemable Convertible
Preferred Stock.
(f) all interest paid or payable with respect to discontinued operations of
Borrower or any of its Subsidiaries for such period;
(g) the interest portion of any deferred payment obligations of Borrower or
any of its Subsidiaries for such period;
(h) all interest on any Indebtedness of Borrower or any of its Subsidiaries
of the type described in clause (f) or (j) of the definition of
"Indebtedness" for such period;
"Controlled Group" means a controlled group of corporations of which the
Borrower is a member within the meaning of Section 414(b) of the Code, any group
of corporations or entities under common control with a Borrower within the
meaning of Section 414(c) of the Code or any affiliated service group of which a
Borrower is a member within the meaning of Section 414(m) of the Code.
"Controlled Group Member" means each trade or business (whether or not
incorporated) which is a member of a Controlled Group.
"Distributions" shall mean, with respect to any Person for any period, all
dividends and other distributions on any of the outstanding Equity Interests in
such Person (in the case of any Loan Party including, without limitation, all
tax distributions), all purchases, redemptions, retirements, defeasances or
other acquisitions of any of the outstanding Equity Interests in such Person and
all returns of capital to the equity holders, partners or members (or the
equivalent persons) of such Person, in each case to the extent paid in cash by
or on behalf of such Person during such period.
"Environmental Affiliate" shall mean, with respect to any Person, any other
person whose liability (contingent or otherwise) for any Environmental Claim
such Person has retained, assumed or otherwise is liable for (by law, agreement
or otherwise).
"Environmental Approvals" shall mean any governmental action pursuant to or
required under any Environmental Law.
"Environmental Claim" shall mean, with respect to any Person, any action, suit,
proceeding, investigation, notice, claim, complaint, demand, request for
information or other communication (written or oral) by any other person
(including, but not limited to, any governmental authority, citizens' group or
present or former employee of such Person) alleging, asserting or claiming any
actual or potential (a) violation of any Environmental Law, (b) liability under
any Environmental Law or (c) liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
the presence, or release into the Environment, of any Environmental Concern
Materials at any location, whether or not owned by such Person.
"Environmental Cleanup Site" shall mean any location which is listed or proposed
for listing on the National Priorities List, on CERCLIS or on any similar state
list of sites requiring investigation or cleanup, or which is the subject of any
pending or threatened action, suit, proceeding or investigation related to or
arising from any alleged violation of any Environmental Law.
"Environmental Concern Materials" shall mean (a) any flammable substance,
explosive, radioactive material, Hazardous Material, hazardous waste, toxic
substance, solid waste, pollutant, contaminant or any related material, raw
material, substance, product or by-product of any substance specified in or
regulated or otherwise affected by any Environmental Law (including, but not
limited to, any "hazardous substance" as defined in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601, et seq.) ("CERCLA") or any similar state Law), (b) any
toxic chemical or other substance from or related to industrial, commercial or
institutional activities, and (c) asbestos, gasoline, diesel fuel, motor oil,
waste and used oil, heating oil and other petroleum products or compounds,
polychlorinated biphenyls, radon and urea formaldehyde.
"Environmental Law" shall mean any law, whether now existing or subsequently
enacted or amended, relating to (a) pollution or protection of the environment,
including natural resources, (b) exposure of persons, including, but not limited
to, employees, to Environmental Concern Materials, (c) protection of the public
health or welfare from the effects of products, by-products, wastes, emissions,
discharges or releases of Environmental Concern Materials or (d) regulation of
the manufacture, use or introduction into commerce of Environmental Concern
Materials including their manufacture, formulation, packaging, labeling,
distribution, transportation, handling, storage or disposal. Without limitation,
"Environmental Law" shall also include any Environmental Approval and the terms
and conditions thereof.
"Equity Interests" shall mean, with respect to any Person, all of the shares of
capital stock of (or other ownership, partnership, membership or profit
interests in) such Person, all of the warrants, options or other rights for the
purchase or other acquisition from such Person of shares of capital stock of (or
other ownership, partnership, membership or profit interests in) such Person,
all of the securities convertible into or exchangeable for shares of capital
stock of (or other ownership, partnership, membership or profit interests in)
such Person or warrants, rights or options for the purchase or other acquisition
from such Person of such shares (or such other interests), and all of the other
ownership, partnership, membership or profit interests in such Person
(including, without limitation, partnership, member or trust interests therein),
whether voting or nonvoting, and whether or not such shares, warrants, options,
rights or other interests are authorized or otherwise existing on any date of
determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute of similar import and regulations thereunder, as in
effect from time to time. References to sections of ERISA shall be construed
also to refer to any successor sections.
"Governmental Authority" shall mean any government or political subdivision or
any agency, authority, branch, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or public or
private mediator or arbitrator, in each case whether foreign or domestic.
"Hazardous Material" shall include, without limitation, any flammable or
ignitable (as such term is used under the statutes, codes, laws, ordinances,
rules and regulations described in this paragraph) materials, explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, pollutant, hazardous or toxic pollutant, polychlorinated biphenyls
(PCBs), solid waste, petroleum, petroleum product, pesticide, asbestos or any
other material as defined and/or subject to regulation by: (1) any Federal,
state or local environmental health or safety statutes, code, law, ordinance,
rule, or regulation including, without limitation, CERCLA, the Hazardous
Materials Transportation Act, as amended (49 U.S.C. Section 1801, et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 9601, et
seq.), the Federal Water Pollution Control Act, as amended (33 U.S.C. Section
1251, et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section
2601, et seq.), and statutes codified in the New York Environmental Conservation
Law, as amended, and the New York Navigation Law, as amended and in the rules
and regulations adopted pursuant to each of the foregoing, or (2) any Federal,
state or local governmental authority having or claiming jurisdiction over the
property or assets of any Loan Party. The term "Hazardous Material" shall
include any constituent and degradation product of a Hazardous Material.
"Indebtedness" of any Person shall mean, without duplication, (a) all
obligations of such Person for borrowed money or advances; (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments; (c)
all obligations of such Person upon which interest charges are customarily paid
or accrued; (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property purchased by such Person; (e)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services (excluding trade accounts payable and accrued
obligations incurred in the ordinary course of business on normal trade terms
and not overdue by more than 90 days); (f) all Indebtedness of others secured by
any Lien on property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, but limited to the fair market
value of such property; (g) all obligations of such Person for the reimbursement
of any obligor in respect of letters of credit, letters of guaranty, bankers'
acceptances and similar credit transactions; and (h) all obligations of such
Person for the Series B 7% Redeemable Convertible Preferred Stock.
"Loan Parties" shall mean each of Borrower and each of its Subsidiaries and
"Loan Party" shall mean any of them.
"Multiemployer Plan" means any employee pension plan which is a "multiemployer
plan" within the meaning of Section 4001(a)(3) of ERISA that is subject to Title
IV of ERISA and to which a Borrower or any Controlled Group Member has or had on
or after September 26, 1980 an obligation to contribute.
"Multiple Employer Plan" means any employee pension benefit plan subject to
Title IV of ERISA and described in Section 4063 of ERISA of which a Borrower or
another Controlled Group Member at any time during the five preceding plan years
is or has been a contributing sponsor and which has at least one other
contributing sponsor who is not a Controlled Group Member.
"Pension Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) as defined in Section 3(2) of ERISA maintained for employees
of a Borrower or any Controlled Group Member or to which a Borrower or any
Controlled Group Member made, or was required to make, contributions at any time
within the preceding six years.
"Person" shall mean an individual, corporation, partnership, limited liability
company, trust, unincorporated association, joint venture, joint-stock company,
Governmental Authority or any other entity.
"Subsidiary" of a Person at any time shall mean any Person of which a majority
(by number of shares, equity interests or number of votes) of any class of
outstanding capital stock or equity interest (determined by value) is at such
time owned directly or indirectly, beneficially or of record, by such Person or
one or more Subsidiaries of such Person, and any trust or other Person of which
a majority of any class of outstanding equity interest is at such time owned
directly or indirectly, beneficially or of record, by such Person or one or more
Subsidiaries of such Person.
"Total Leverage Ratio" shall mean, at any date of determination, the ratio of
Consolidated Indebtedness on such date to Consolidated EBITDA for the Test
Period then most recently ended.
"Voting Interests" shall mean shares of capital stock issued by a corporation,
or equivalent equity interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even if
the right to so vote has been suspended by the happening of such a contingency.
"Welfare Plan" means an employee welfare benefit plan as defined in Section 3(1)
of ERISA, maintained for employees of any Borrower or any Controlled Group
Member.
Schedule 3(l)
Subsidiaries
A Delaware Corporation
Schedule of Subsidiaries
Parent State of
Subsidiary Name Company Incorporation
InB: Manhattan Drug Company, Inc. ("MDC") INB New York
Xxxx Industries, Inc. - Inactive INB New Jersey
Scientific Sports Nutrition, Inc. (f/k/a Media Consultants, Inc.) MDC Delaware
Vitamin Factory, Inc. INB Delaware
Connaught Press, Inc. - Inactive INB New Jersey
Designer Nutrition Labs, Inc. - Inactive MDC New Jersey
AgroLabs, Inc. MDC New Jersey
The Organic Beverage Company (f/k/a Bioscience Technologies, Inc.) INB New Jersey
IHT Health Products, Inc. INB Delaware
IHT Properties Corp. INB Delaware
InB: Biotechnologies, Inc. (f/k/a NuCycle Therapy, Inc.) INB New Jersey
InB: Paxis Pharmaceuticals, Inc. (f/k/a Paxis Pharmaceuticals, Inc.) INB Delaware
InB: Xxxxxx Pharmaceutical Services, Inc. (f/k/a Xxxxxx Technical Services, Inc.) INB Delaware
Liquifill, Inc. - Inactive INB Delaware
